Why we have to build back differently with a City Region Green Deal
Why we have to build back differently with a City Region Green Deal
The pandemic has focused minds. This virus seems to search out every single weakness in our social, political, economic as well as biological systems.

What we’re concerned with is our city region, our own politics and our own local economy.

For some this may seem too parochial, but this is the way we have experienced the last forty years of globalisation; locally, in our neighbourhoods, in our workplaces and in our own homes. This pandemic should focus our minds on what our local economy should look like.

Our local economy is wealthy – just not for us!

It isn’t the case that our local economy does not produce wealth. Where there has been development – economic growth – in the city region economy is visible. Probably most noticeable is the employment growth in our hospitality sector – in the bars, restaurants and hotels that are associated with tourism and leisure. This sector has been battered by the fallout from the virus.

Before the virus, we did see an increase in employment in retail. This has occurred even though the local High Street, or local shopping arcade, in many areas across the city region has suffered. Another area that has experienced a growth in employment is in health and social care. More people have found work in this sector as demand for care increases.

You might notice something common with the jobs in these sectors. Generally, those who work in hospitality, retail and health and social care experience low-pay, with people often moving in and out of employment within and between each of these sectors.

Too much of our employment is experienced as low-paid and precarious. It is hard to create secure families, households and communities if this is a major part of our local economy.

Then there are those sectors that generate wealth. Lo and behold, these are pretty visible too. The main one, and this is very topical, is real estate. All that development you see in the city centre is creating wealth. So too is health and social care, and retail. Finally, another wealth generator is education.

It turns out that in recent years the four sectors creating the most wealth are: those involving property development, in some cases buying up public land, building on it and turning a profit; those with lots of low paid employees; and the universities who bring in lots of students, who in turn go and live in those properties developed in the real estate sector and purchase those point of consumption services provided by retail and hospitality!

The question is, if this wealth is being created, where is it going?

We know from the pandemic (and one or two other things) that a local economy over reliant on these sectors is not sustainable. It isn’t good for local people, many of whom remain in low paid occupations, or for students who are taking out loans to pay for their accommodation.

So, the next question is what can we do to change the local economy? And, how can we make it operate in the interests of the people of the city region and in a way that is both socially and environmentally sustainable?

What do our political and business leaders argue for?

Many of the economic characteristics described here can be seen across the UK. Urban local economies often look similar in structure and are reliant on the same things as our city region; such as retail, tourism and hospitality, often with low value-added service jobs bringing low pay and part-time hours, and town or city centre physical development and regeneration – depending on how attractive it is for some hedge fund to invest in.

When there are problems like we are experiencing, usually the response from political and business leaders is to argue for more of the same.

We get rhetorical boosterism and arguments for creative or knowledge quarters, fabric districts, innovation and science centres and incubator space. We get calls for the public sector to take the negative equity out of any brownfield land that is available, and then create development opportunities for faceless investment.

It doesn’t stop there. We then get the pathological blame passed on to local people as we are told: you need more training, you need more education, you need to be more entrepreneurial, you need to start up your own business… and on it goes. This is how to manage your local economy so it looks like a sweetheart place for a passing equity fund.

Many of these things are important. We do need to make sure there are opportunities for education and training for local people. We do need to make sure that the right premises and types of finance are at hand if people have an idea for starting up a business. We should shape these supply-side components of a local economy for people and to do this we have to get to the real problem that we have – that of aggregate demand.

There simply hasn’t been enough demand in the city region over the last four decades to sustain the types of businesses and well-paid jobs that we need. This is what we have to change – we must get demand up and then make sure supply-side questions (skills, education, finance, buildings etc.) are in synch. To increase demand, we need investment, public and private.

What we need – and what we need to do for us

What we need to do is to stimulate, through public investment first, manufacturing and innovation based on a ‘Liverpool City Region Green Deal’. We need this to replace insecure employment by providing better jobs and incorporating a fair employment charter.

We need investment into housing through new build and energy saving and heating replacement, and we need to use the opportunity to create more community and

worker cooperatives, more social enterprises operating in the private sector, and greater levels of investment in public services, especially local transport. Stimulate demand and create the jobs.

We need more manufacturing. The city region has a good productivity record in manufacturing and we need to think how we turn this into more skilled, well-paid jobs and wealth creation that communities can share. Historically, the city region has been less reliant on manufacturing than other places in the North West and our maritime focus, and trade through the ports, has been dominant.

Facing the Atlantic also means we have an increased threat from the effects of climate change, particularly rising sea levels. We are well placed to alleviate these threats though.

We can think about this strategically for our local economy. Investing in a Liverpool City Region Green Deal will create new manufacturing initiatives that provide the opportunity for strong, secure, well-paid employment for the people of the city region.

By encouraging green manufacturing and innovation within the city region, it can become more self-sufficient (while reducing its carbon footprint) and we can shape it so we keep more of the wealth we generate within the area. It would also allow the development of a higher skills base, which would help the city region protect against other threats to secure employment, such as increased levels of automation and artificial intelligence.

Let’s think about what is possible and take this further. This type of economic planning has to be accompanied with employment rights, economic democracy and accountability. We can see in places like Mondragon, in the Basque country in Spain, that worker cooperatives play an important role in their manufacturing sector.

Why not here? Why not create a ‘Mondragon on the Mersey’ of worker cooperatives, social enterprises and community businesses to deliver the Liverpool City Region Green Deal? There is no reason why this cannot be at a scale to deliver for local people and be internationally competitive. This type of development has to be

accompanied by a fully involved trade union movement and wide ranging community representation.

We can invest in our housing stock. Much of the former housing stock owned by the councils has been transferred to housing associations or sold off under Right to Buy and many of these have found their way into the hands of private landlords.

Apart from a few isolated attempts at community housing, we simply haven’t been able to protect our housing stock in a way that prevents the transfer of wealth from our communities to private investors. We have too few homes of the standard we need. That means increased housing costs, which are a significant factor in the poverty and financial insecurity of many communities within the city region.

It is an absolute necessity that investment is made into council housing in order to meet local need and prevent the exploitation of renters by private landlords. This has to mean more investment in energy saving and heating replacement, so homes can be made warmer and more energy efficient and costs be brought down.

We need to invest into our transport infrastructure. The Merseyrail service is generally regarded as good, although the network is unfinished and large swathes of the city region including much of the eastern part of Liverpool, is not covered, being instead reliant on unreliable and lengthy bus services.

Bridges and tunnels between different parts of the city region are tolled, adding an increased cost to residents travelling for work or pleasure and creating an even more fragmented infrastructure within the city region.

The Liverpool City Region must receive a much fairer share of infrastructure spending. Just think about the significant amount of money that has been spent on the ‘Crossrail’ project in London. Investment must be provided so we can upgrade our transport infrastructure, with greater levels of connectivity within it.

The transport network should be taken back into public ownership, with the Liverpool City Region Combined Authority having direct control by means of a Transport for

London style body, allowing for an integrated transport system that serves the needs of the people of the city region. Our current arrangements are not empowered to shape these things for the benefit of local people.

How we govern our city region and local economy

The points we have raised here are critical to the future of the Liverpool City Region. However, it is also clear that the capability of the city region to drive forward many of these changes lies beyond the current powers afforded to either the Combined Authority or individual councils.

Local politicians are waiting on government to produce their White Paper on the next steps in our devolved governance, but this Tory government are not friends of our city region. They won’t help.

We need a new devolution deal that grants significantly greater powers and responsibilities than the current devolution deal currently offers. In addition to the Metro Mayor position, there should be an elected city region assembly, one that is capable of making decisions for the city region, as well as providing effective scrutiny of the chief policymakers and representing the interests of citizens.

However, accountability must run much deeper than this.

All elected officials should be directly accountable to the communities that elect them for their full-term in office, not just when they are up for election once every four years. We propose the setting up of community forum based Neighbourhood Committees, to which all elected members would be answerable and which they would be obliged to discuss matters of policy with.

We believe that this involvement of communities in the decision-making process, and the direct accountability of their elected representatives, will lead to more democratic and transparent local government and ensure that decisions are taken with the interests and priorities of the community at the forefront.

Conclusion

We know the economy is suffering, but for us this is not simply a matter of a downturn or a more severe economic recession. We have structural problems in our local economy. Put simply, inequality is built into the structures of our city region economy.

This is different from building back better to overcome a recession driven by the fall in how much people spend. We need a local economy that changes where wealth goes.

The big problem here is that, as it is set out, we don’t have the power to radically change these structures. There are things we can do, however, under the devolved powers of city region and through our local authorities, and of course, through our own local campaigns to make things different and better.

We have only just begun to scratch the surface with this piece and we welcome more discussion on what we have suggested.

Carl Hughes, PhD Student, and Dr Alan Southern of the University of Liverpool December 2020

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Carl Hughes, at the University of Liverpool, is a PhD student looking into the impact of the fourth industrial revolution on the relationship between capital and labour.

Dr Alan Southern is at the University of Liverpool where he leads research into the social economy.