Regen 2017: Urban Regeneration – Making Local Economies More Resilient
IED Chair, Bev Hurley CBE, is today speaking at Regen Cardiff on Urban Regeneration - Making Local Economies More Resilient. Below you can read her speech.
Good morning everyone – and welcome to the first panel session of Regen 2017. I feel very privileged to be invited to speak to you today here in Cardiff, a wonderful city full of history which has been undergoing significant regeneration for several decades as Councillor Thomas outlined. Cardiff is, of course, a proud cultural and sporting city, and attending a rugby match at the old Cardiff Arms Park ranks as one of my best ever live sporting experiences.
The title of my presentation is Urban Regeneration – Making Local Economies More Resilient. However, unlike colleagues speaking over the next two days and the distinguished panel of experts we’re going to be hearing from after my talk, I’m not a planner, a developer or an environmental specialist. I come at this topic from a slightly different perspective.
In my role as Chair of the Institute of Economic Development, the UK’s leading body for economic development professionals, I’m a strong advocate for supporting the creation and growth of sustainable and resilient businesses as a means of creating shared local prosperity. For me, many of our members, and colleagues on the board, this area of focus is absolutely critical for effective urban and economic regeneration.
The collapse of our industrial and manufacturing economy and the transition to a global knowledge-based one has left has left many inner city – and rural areas – blighted by unemployment, riddled with poor housing, and the average citizen being increasingly
excluded from more prosperous areas – let alone the already socially and economically disadvantaged. Nowhere is this more obvious than in London, but it is a problem right across the UK from Cornwall to Scotland.
I’m pleased that over the years, the focus of urban regeneration has moved away from purely physical infrastructure to become much more involved with stimulating social and economic regeneration in parallel. This is an agenda I’ve championed throughout my career, starting from my early days working in the worst areas of Hackney, Tower Hamlets and Southwark in the 70s and 80s, regenerating the physical assets of a large social landlord, but pioneering community-based support activities at the same time.
Then, our housing stock had no central heating, no bathrooms, just shared bath houses, and it was in huge demand. Now much of Hackney is unaffordable and rough sleeping is rising dramatically. I was a member of the Chartered Institute of Housing for much of my working career, and the industry and politicians – and us – still haven’t cracked this issue.
As well as my role at the IED, since 2000 I’ve been Chief Executive of the YTKO Group, which helps businesses to start, sustain and scale. Our clients range from the most disadvantaged individuals furthest from the labour market and living in deprived areas, to knowledge economy entrepreneurs, established SMEs and corporate clients.
As I said in my opening, I believe that achieving sustainable social and economic regeneration depends on successful businesses, and a productive and diverse business base. This means having the right infrastructure, culture and support services for start-up and incubation, sustainability and grow-on, and growth and scale, including affordable spaces and premises at each stage – if you like, a combined continuum of hard and soft support to take individuals and businesses up the growth escalator.
Why is this so important?
Firstly, sole traders, micro businesses and SMEs are critical in creating local prosperity – there are about 5.3 million sole traders and small businesses in the UK, responsible for around 60% of employment, but representing 99% of all private sector employment. Regeneration activities must therefore recognise and really support this agenda. SMEs are the lifeblood of our economy. Creatives and digital start-ups, for example, are often the sector that kick off the physical transformation of a run-down area – moving and clustering there because it is run down and therefore affordable. The challenge becomes how to retain and nurture that entrepreneurial community after physical redevelopment.
That brings me on to a second critical point. The UK is definitely one of the best places to start a business – indeed, sometimes I think that policymakers are obsessed with start-up and scale up, but the point is, will they survive? Only 60% of new businesses get to three years, and with disadvantaged clients and in deprived areas that failure rate is a lot higher. For stronger, more prosperous local economies, we also need to improve business survival rates through much better education of, and support for, new and early stage businesses through their early commercial life.
The third thing I hold dear, and is central to everything YTKO does, is diversity, accessibility and social inclusion, ensuring a measurable financial, economic and social return on public sector investment – the triple bottom line. This is particularly important when considering how to regenerate the most deprived areas of our towns and cities. Ensuring that the socially and financially excluded are aware of, reached by, and supported by any revenue investment in skills and business support is vital – otherwise we will never eradicate areas of blight.
A huge segment of unlocked economic and social potential is represented by women. At best, they own and run 20% of our businesses, but there is no specialised and targeted support encouraging more women to start or grow. BAME entrepreneurs and businesses similarly have significant entrepreneurial potential, but both women and BAME individuals are generally not being reached by the support provision that is out there in some places.
Another major gap is the needs of established SMEs who are ambitious to grow but stuck. They’ve survived the first few years, and can create more prosperity, job opportunities, business rates and GVA – but again, there is very little targeted support help them overcome their challenges.
What frustrates me about business failure rates, lack of sustainable growth and social and financial exclusion, all of this is that it can be achieved. I’m not here at all to promote YTKO, but our Outset start-up provision, focused on supporting entrepreneurship in deprived communities, has engaged over 20,000 individuals, created over 5,000 new businesses since 2010, just over half of them women, with survival rates of 75% after three years compared to 61% in the general population – and we know that the service delivers £3.36 of financial, economic and social return on every £1 invested.
For sustainability, growth and scale, access to markets and finance are the two biggest barriers, and our GetSet for Growth service is specifically tailored to help SMEs overcome these challenges. In total, we’ve raised over £50 million for the 15,500+ businesses we’ve supported over the last decade, half of them women, with a 98% success rate, even throughout the recession. And that body of work has created nearly 8,000 new jobs and multi-millions of GVA in deprived areas so far, helping make them become more resilient and inclusive and prosperous, and in turn, supporting the goals of urban regeneration.
In closing, I’d like to return briefly to the bigger picture. With national funding for economic development and regeneration continuing to nosedive, and mechanisms for disbursing the proposed UK Shared Prosperity Fund – like most things Brexit, unknown in quantum and structure – as we gather together here today, we all face a daunting challenge. A key opportunity presented by Brexit is around the localism and devolution agendas, particularly with combined authorities, new mayors and Local Enterprise Partnerships. However, this doesn’t mean there are no significant obstacles to be overcome.
There is a great deal more to do to improve leadership skills, capacity and capability at local levels, and particularly around effective collaboration in the face of political differences. Many LEPs depend on local authority partners for staff and expertise, but continuing deep funding cuts, and statutory services having the first call on local authority money, has highlighted a growing skills and resource gap, reinforced by recent IED research. In addition, long-term transport and infrastructure projects in particular require certainty, collective commitment, and funding stability beyond political cycles, and sadly all these things are in pretty short supply right now.
All these challenges, together with the non-statutory nature of economic development, are major issues for the effectiveness of urban regeneration interventions, and the goal of improving our shared prosperity, productivity and competitiveness. This is something the IED is seeking to change, beginning with the publication of a research paper and accompanying call to action at our annual conference in November, to which I warmly welcome you all.
Thank you for listening.