Local Employment and Economic Development Programme (LEED) Andrea Lee & Joe Huxley
A 27 year Mandate created to respond to economic restructuring and rising unemployment With a mission to: • improve the quality of public policy, both economic and social, designed and implemented at the local level; • assess and propose methods for the growth of high-quality self-employment and entrepreneurship as a means of local economic development and employment creation; • serve as a critical link both between sub-national institutions, and between the OECD and sub-national bodies; • analyse and promote forms of local partnership between the private, public and non-profit sectors with the aim of complementing public policy and supporting local economic and social development.
Enhanced engagement • A Committee which embraces member and non-member countries. • A capacity building centre in Trento, Italy. • A Partners Club connecting stakeholders to national government and international policy-making. • Four international fora: Development Agencies and Investment Strategies; Social Innovation; Partnerships and Local Governance and Entrepreneurship.
Overview • Impacts • 2. Responses • 3. Discussion points • 4. The way forward
Overview • Impacts • Complexity • “Analysis lags behind real time because data on the ground don’t come online until quite a bit later” • CLG, British Government • “There are plenty of things that are working their way through the system” • - Stephanie Flanders, BBC Chief Economics Editor • Importance • “There is a real risk of a lack of income for the Council in Glasgow to provide the levels of service provision that the city needs” • – Glasgow City Council
Complexity ...Over time April 2008:
Complexity...Over time January 2009:
Global recession, Local impact • OECD LEED Programme paper (July 2009) “Recession, Recovery and Reinvestment: the role of local economic leadership” • The impact of, and response to the economic crisis in 30 local economies: • Aarhus • Auckland • Barcelona • Basel • Berlin • Bilbao • Birmingham • Brussels • Cologne • Glasgow • - Hamburg • Helsinki • Hong Kong • Lille • Liverpool • London • Los Angeles • Lyon • Marseille • Miami • Mumbai • Munich • New York • Paris • Pittsburgh • Prague • Toronto • Vienna • Warsaw • Zurich
Impacts # 1 ...tangible • Reduced fiscal base • Warsaw: 40% of the local tax income in Warsaw is derived from institutions such as UBS, Credit Suisse or Swiss Re. Tax incomes from financial service sector were EUR 270 million less that predicted in the last fiscal year • Slow-down in economic growth rates • Hong Kong: The Hong Kong economy contracted by 2.5% in the fourth quarter of 2008. Predicted fall of 2-3% decrease in 2009. • Unemployment • London: Losses could reach as high as 40,000 in the City of London and around 370,000 jobs London-wide (7.9% of all jobs in London - by December 2012). • Poor business conditions • Cologne: The number of firms that have been declined credit recently increased to 3.8%, compared to 1% the year before. • Construction/investment reduction/pause • Mumbai: The redevelopment of Asia's largest slum, the 535-acre Dharavi, has been stalled.
Impacts # 2 ...tangible • Property market decline • Paris: House prices are expected to fall by approximately 7% over 2009 with worse falls expected in certain neighbourhoods such as the 14th and 18thArondissements. • Firms closing/downsizing • Lyon: Bankruptcy procedures up 213% in first quarter of 2009 compared to figures from the first quarter of 2008. Renault Truck (7,000 employees) announced reduced working hours in March 2009. • viii. Financial sector turmoil • New York: Wall Street firms were expected to lose a total of USD 47.2 billion in 2008. • Civic unrest • Paris: On the 29th January 2009 Parisians took to the streets in response to a perceived lack of effective action by President Sarkozy in response to the recession • Trade reduction • Marseilles: Traffic at the Port of Marseilles has fallen by 21% year-on-year since the beginning of 2009
Impacts # 3 ...intangible • xi. Tourism reduction • Prague: In the first two months of 2009, tourist revenues in Prague were 35% lower than in the same period of 2008. • Locality identity worsened • New York and London: Confident local economies such as New York and London, whose economies were defined by their financial services cluster and high levels of global connectivity, now question the inevitability of these perceived strengths. • xiii. Business confidence reduction • Cologne: At the beginning of 2009, the confidence index has dropped by 23 points and reached a historic low level of 77.7 points. • xiv. Consumer confidence reduction • Helsinki: According to an economist at Sampo Bank, ‘people are trying to rearrange their loans, asking for non-amortizing months, while some difficulties have already emerged with credit cards and general-purpose consumer loans.’ • Uncertainty • Auckland: New Zealand Herald wrote in mid-January 2009, ‘Business waits for signs of leadership.’
Impact analysis ...complex and emerging • Three broad types of impact • People • Businesses • Long term positioning for development and investment • Depth and rate of impact determined by: • Size • Economic composition • Location and global positioning • Social composition and culture • Global connectivity • Media cultures • Preventive and mitigation strategies • Dependence and position in national hierarchy.
Overview • 2. Responses • Global recession, local response • “Policymakers ignore how recessions play out locally at their peril. [We should focus] much more attention on the large cities…that can drive the recovery, as well as recognising which areas need the most support to survive and prepare for better times.” • - Naomi Clayton, The Work Foundation • “We must continue to make people feel proud of our city” - Deputy Mayor Jordi William Carnes, Barcelona City Council • Four main categories • (1) Supporting people • (2) Supporting businesses • (3) Positioning for long term development and investment • (4) Governance and leadership.
Responses # 1 ...Global recession, local response • Supporting people • Workforce investment • Los Angeles: introduced a strategy to put 16,500 young people in job placements. • Tax cuts or freezes • Hong Kong: budget of 2009 instituted a one-off tax reduction of 50% of salaries and self-assessment tax for 2008-09 • Supporting businesses • SME support • Birmingham: the City Council advertises all contracts worth over GBP 50,000 on its publicly available website. • ii. Rate relief • Hong Kong: a business rates waiver for the first two quarters of the 2009 fiscal year has been introduced representing a total cost of about HK$4.2 billion (US$550 million).
Responses # 2 ...Global recession, local response • Positioning for long term development and investment • Innovation promotion • New York: USD 7.2 billion has been earmarked for broadband technology projects. • ii. Budget adjustments • Toronto: from scenario work and a risk assessment, the 2009 Toronto municipal budget has been adjusted to take into account the impact and potential impacts of the recession. • iii. Long term strategy • Aarhus: the City Development Team is currently engaged in the process of preparing a new urban strategy: ‘Growth in Aarhus III’ • Branding • Mumbai: the city’s Chief Minister announced that the entire metropolitan region be branded to enable it to have a higher post recession profile • Hard infrastructure investment • Miami: the delayed USD 1 billion Port of Miami Tunnel project has been pushed back onto the agenda as a result of the crisis. • vi. Tourism promotion • Helsinki: Helsinki and the neighbouring Espoo have renewed their web sites.
Responses # 3 ...Global recession, local response • vii. Innovative Financing and PPPs • Los Angeles: the Mayor is exploring whether to privatise the L.A. Zoo and lease locality parking garages and meters, which together could raise hundreds of millions of dollars. • viii.Green sector investment • Los Angeles: The Solar L.A. plan aims to transform the locality into a clean energy hub • Governance and leadership • Recession strategy • London: The Mayor’s Economic Recovery Action Plan (December 2008) • SPV creation or direction • Glasgow: an Economic Advisory Board has been created to advise on the recession. • Cost saving • Mumbai: the city has been forced to rethink its original plan to construct a third Metro line (Metro-III) between Colaba & Bandra totally underground. Now it is part overground. • Central and regional government alignment • Similar Cities Network: Involves a number of logistically similar European localities share experience and strengths to find best practices within many areas.
The Barcelona Principles # 1 i. “Don’t over-react, but respond with purpose” Provide pro-active and collaborative leadership at the local level ii. “Make the case for investment” Make the case for continued public investment and public services and the taxes and other sources of investment required iii. “Build a robust long term economic strategy” In the long term: build local economic strategies which align with long term drivers and identify future sources of jobs, enterprise, and innovation iv. “Purposeful short term action is needed” In the short term: focus on retaining productive people, business, incomes, jobs, and investment projects v. “Investment attraction and readiness is critical” Build the tools and approaches to attract and retain external investment over the long term
The Barcelona Principles # 2 vi. “Relationships matter and need increased attention” Building genuine long term relationships with the private sector, trade unions, and other key partners vii. “Effective public works and major investments are crucial” Take steps to ensure the sustainability and productivity of public works, infrastructure, and major developments/events viii. “Stay close to the people” Local leaders should act purposefully to support their citizens in the face of increased hardship ix. “Stay open to the World” Local economies have benefitted and should continue to benefit from being open and attractive to international populations and capital x. “Build National-Local Alliances” Communicate and align with National and other higher tiers Governments
The Principles in action • Scottish Enterprise has used the Barcelona Principles in undertaking a review of its “Downturn Action Plans / 2009 -12 Business Plan” (‘Working for Economic Recovery and Growth’) http://www.scottish-enterprise.com/se-operating-plans-current • “They are being used to inform policy, provide short-term operational responses and place action in a longer, more structural change perspective.” • Kevin Kane, Director, Policy Development, Scottish Enterprise • “In the coming months, not doubt these principles will evolve and adapt and I hope that Scottish Enterprise will both contribute and benefit.” - Kevin Kane, Director, Policy Development, Scottish Enterprise
Overview • 3. Discussion points • What is the impact of the economic crisis on neighbourhoods? • Declining tax base • Rising social costs • Increasing social tensions • Risk of declining services • What is the response of neighbourhoods to the economic crisis? • Socio-economic surveillance • Frontline and locally sensitive people and business support • Social cohesion initiatives • Communication
Deprived neighbourhoods in the recession • A typology of deprived areas developed for CLG illustrates the functional role that deprived neighbourhoods play within cities. • Some areas play an important transit role (yellow) as people move through the housing market • Other areas are more isolated (from wider housing and labour markets) and are associated with deep rooted problems (red). • Isolate areas are associated with a degree of entrapment of poor households who are unable to break out of living in deprived areas, reinforcing economic disparities. • Isolates have: • A higher proportion of neighbourhoods with high levels of social renting • Very few neighbourhoods with very high percentages of employers, managers and professionals • Higher proportions of areas with very low churn
Overview • 4. The way forward • International conference in London (July 2nd) • Hosted by OECD LEED and The Work Foundation • Presentation of material prepared by Greg Clark & Debra Mountford (OECD LEED) and Alexandra Jones (The Work Foundation). • Keynote speakers : • Rt Hon Hazel Blears Secretary of State for Communities • Sergio Arzeni, Director of the OECD LEED Programme • Will Hutton, Vice Chief Executive, The Work Foundation • Network meeting in London (July 3rd) • Hosted by OECD LEED, Barcelona City Council and The Work Foundation. • Discuss findings and determine a future collaborative agenda to ensure that neighbourhoods, cities and regions emerge stronger and fairer.