Alexandra Jones: New approach is needed to revive our cities

GOING for private sector employment growth has been the key mantra of the coalition since it has been in power. As the Government deals with the deficit, the jury is still out on whether enough jobs can be created to fill the gap left by reduced employment opportunities in those cities hit hardest by industrial decline and most dependent on public sector jobs.

Recognition of the additional economic and social challenges faced by post industrial cities is long standing. Over the past decade, national government and city leaders have sought to address this in a number of ways. Central to this was physical regeneration and property development.

Derelict industrial sites and vacant housing in declining neighbourhoods across the country, including in Leeds, Sheffield and Doncaster, have been cleared, with new housing, offices, science parks and retail developments built in their space.

The hope has often been that property development would spark economic growth in any urban area or neighbourhood by creating high quality space that would pull in the businesses, people and investment desired.

The Labour Government used targets to support this approach and regional development agencies to deliver growth. The coalition has abolished RDAs, established local enterprise partnerships, and is relying on incentives like the new homes bonus to encourage all cities or neighbourhoods to expand. But the consistent theme for both is the emphasis on growth for all, rather than a more tailored approach reflecting local economies and their potential.

In a week in which a very tough financial settlement was announced, it is clear that the approach to physical regeneration needs to change. So the question is: can cities 'build' an economic recovery?

The Centre for Cities' latest research shows that physical regeneration projects have not 'turned around' city economies or the lives of local residents in the way that had been hoped.

There have been successes, like the transformation of Sheffield city centre. But evaluations also show that half of all projects across England underperformed, generating on average 40 per cent fewer jobs than anticipated when originally planned. In places where the local population or employment opportunities have declined, and despite the construction of science parks, offices and apartment blocks, vacant homes have remained and office space can be difficult to let.

Barnsley, for example, has seen a net loss of 2,300 private sector jobs from its economy between 1998 and 2008. Yet during this time, the Gateway Plaza was completed – a city centre commercial project, subsidised by the public sector.

The development cost 70m, inclu-ding 5m EU funding. Barnsley Council recently bought this site and is set to occupy over three quarters – potentially saving running costs in doing so but unlikely to have been the plan when it was first developed as it did not attract sustainable private sector jobs.

But if physical regeneration cannot necessarily achieve job creation, what can it achieve, especially with limited money? And what should be done to help neighbourhoods address the visual scars of industrial decline such as empty housing and disused factory sites?

There's a lot that UK cities can learn from pioneering projects in US and German cities that have confronted these issues head on. In Philadelphia in the US, vacant lots and abandoned properties were cleared and trees and parkland were planted, increasing property values by an average of 30 per cent. In Youngstown in the US, the mayor was actually elected on his agenda to 'shrink' the city. And while the problems Youngstown faced (due to mass redundancies in the city's steel industry in the 1970s) were far more severe than those affecting UK cities, examples like these show how a different approach can reap rewards.

This approach avoids knocking business confidence further where developments stay empty. But it also directly benefits local residents and is cost-effective at a time when public funding is scarce.

Altering plans from building a science park to creating a public park or turning tiny terraces into larger homes, rather than demolishing them and building one-bed apartment blocks in these neighbourhoods is not giving up on growth. It's about making the area more attractive and improving it for the people that live there – who should be at the heart of what developments are proposed.

City leaders must lead the way. But central government has a role too. We are recommending that the coalition introduces a permanent transformation fund in the next spending review to support cities to introduce these kinds of projects. And that new money is found for the recently wound up Housing Market Renewal Pathfinder areas – including those in Sheffield, Doncaster, Barnsley and Rotherham that had aimed to address urban decay. The projects needed review as they hadn't always delivered on original aims – but the pulled funding risks leaving these communities in limbo.

As the Government continues with its 'going for growth' mission, it must remember that localism means places taking approaches that build on individual strengths and respond to local weaknesses. And with limited funding and a challenging economy, that means it's time for a re-think for the physical rejuvenation of the places hit hardest by industrial decline.

Alexandra Jones is the chief executive of the Centre for Cities, a Uk think-tank dedicated to improving the economies of Uk cities.