[A-List] New economy bull: cooking the books

["Michael Keaney" <michael.keaney@xxxxxx>]

Apparently Tony and Gordon's answer to the problem of backwash effects
within the core is a third way: the fire and brimstone Calvinism of Gordon,
who will be employing the full powers of the state to bear down on those not
looking hard enough for work in much the same way that TV licence detector
vans roam around the back streets trying to pick up illicit signals from
those who haven't yet contributed to John Birt's pension plan.



Full text: Gordon Brown's speech

Speech given by the chancellor, Gordon Brown, to the Urban Summit in
Birmingham.

Friday November 1, 2002
The Guardian

It is a pleasure to be here in Birmingham today - a city which is a leading
example of urban renaissance in progress.

A city with some of the largest regeneration projects in Europe, with new
arts facilities, top quality commercial developments and now your nomination
this week for the 2008 European City of Culture.

But here to in Birmingham - one of the country's most successful cities - we
have growth side by side with large pockets of deprivation, and so today I
want to talk about the challenges of poverty and unemployment in our urban
areas:

The steps we have taken, the challenges ahead, the lessons we have learned
and the new policies I think we must introduce.

And I want to congratulate participants here - councillors, local
authorities, public servants, academics, community groups, companies, urban
specialists in every field - on the huge advances that have been made in our
understanding of, and action on, what makes for quality of life in our urban
areas: advances in the study and practice of geography, planning, the built
environment, the role of cities in regions and - my theme today -
understanding of the economic and social forces at work in poorer urban
areas. And I want to thank you for the work you do, the service you give and
contribution you make.

I think most of you would agree that 50, 20 or even 10 years ago the idea
that the treasury would be interested in issues like public space, the
design quality of public procurement in urban areas, devolution, regionalism
and social exclusion would be almost unthinkable. But we know that not only
are these questions vital to successful, economically vibrant cities but
they are at the heart of the agenda for social and economic progress.

And I can genuinely say that I and the treasury are privileged to be
associated with the challenge, led by the deputy prime minister, John
Prescott, of creating sustainable communities in our towns and cities.

One hundred years ago, Winston Churchill, then an economics minister, spoke
to an audience in the midlands about the unacceptable gap in Britain between
the excesses of accumulated wealth and the gaping sorrows of the left out
millions.

And I know that today - as one hundred years ago - we must and can do
better.

I know that we cannot talk of real prosperity for all of Britain if
thousands are left behind on the margins; that for economic efficiency and
social justice reasons Britain needs an economy that works not just for some
people some of the time but for all of the people all of the time; and that,
learning from the work many of you here have done and the service you have
given, we must - to achieve our objective that no area is bypassed and no
one excluded from the mainstream of economic prosperity:

Not only continue to make the right long term choices about stability and
growth - avoiding the old economic instability of boom and bust so damaging
to economic activity in the past. Not only ensure the finance necessary to
back reform and modernisation in local public services - the task of last
July's spending review for health, education, the environment, tackling
crime and local government services where - for deprived areas where
outcomes are worst and the need for good schools, hospitals and other
services is greatest - we have introduced new floor targets to raise the
performance of public services. And not only directly tackle low incomes -
with the introduction of the new child and working tax credits - expenditure
of £4.5 billion pounds more for low paid workers, families with children and
pensioners.

But we must also, more fundamentally, tackle not just the consequences of
unemployment and poverty and its symptoms, but the underlying causes - being
aware more than ever before of just how much poverty and deprivation are
rooted in low levels of economic activity. People are poor because they have
no jobs, no skills for jobs - or if disabled, old or sick are poor because
of inadequate provision where they or their families have had historically
low earnings from employment.

And second - and this is the main point I wish to make to you today - we
must recognise that the old approaches to renewing economic activity which
have been less than successful must give way to the new:

Neither an old style bricks and mortar only approach which, for example with
the experience of enterprise zones in the 1980s, targeted subsidies for
property development, often at huge public cost diverting economic activity
from one area to another with no overall economic gain; Nor the old style
benefits approach which gave hand-outs to compensate for unemployment but
provided no real help to get people back to work, leaving whole communities
abandoned on the dole. Both of which failed to tackle the causes of
unemployment and poverty or secure long-term environmental regeneration and
social inclusion. And both of which failed to invest, as we must, in the
forces of renewal - education, training, jobs, enterprise and business
development

So increasingly the emphasis of our approach will be measures to encourage
and foster the indigenous skills, talents and potential of local people and
communities.

This focus on the drivers of homegrown local economic activity is also at
the heart of our new approach to regional policy.

There have been three phases of regional policy in our country

The first generation of British regional policy - from the 1930s - was
designed to support hard up areas with emergency measures.

So the second generation - from the 1960s - sought to encourage inward
investment with new incentives.

Now we are moving to the third stage of modern regional policy - creating
regional development agencies where the emphasis is not just on encouraging
inward investment but also on local innovation and local investment and
building indigenous strength with freedom and flexibility for local people
to make decisions based on local needs.

So first today I want to put the spotlight specifically on measures to renew
economic activity and encourage enterprising communities across the country.

And I will secondly suggest that in modern economic regeneration our aims -
high and stable levels of economic growth and employment - can best be met
by protecting and enhancing the local environment.

Third, modern economic regeneration with its emphasis on local activity not
only means but requires the devolution of power - local people making local
decisions about local needs.

And fourth, special new measures will be needed to tackle unemployment,
measures that recognise that the problems are not simply in the creation of
jobs but in the employability of the unemployed.

First, because our comprehensive solution to urban poverty and unemployment
has to involve raising levels of economic activity - more businesses if you
like rather than more benefit offices - we should start to see inner cities
and old industrial areas not as no-go areas for business or simply "problem"
areas but as areas of opportunity: new markets where businesses can thrive
because of the competitive advantages they often offer - with strategic
locations, untapped resources, a high density of local purchasing power and
the potential of their workforce.

In the late 1990s the rate of business creation in our high unemployment
communities was one sixth of our prosperous areas so we recognise not only
that barriers to enterprise are greater in poor communities - many people,
for example, trying to start up businesses face special problems - but also
that we need to put in place the right incentive structure to stimulate
business-led growth.

So if a key that unlocks inner city regeneration is fostering the potential
strengths of local people, we need to systematically tackle all barriers to
development: cutting the cost of buying, starting up, investing, hiring,
training, attracting equity, and growing.

Renewing the economic base is one of the main aims behind not only
neighbourhood renewal funding in 88 areas worth almost £1.9 billion pounds
over this parliament and the new deal for communities in 39 areas worth £2
billion pounds over ten years; but the creation of regional development
agencies and the small business service; the new encouragement for local
authorities in their economic role; and the creation of local strategic
partnerships which can do more to drive forward policies on enterprise and
employment at the local level.

And it has led to our policies for enterprise in high unemployment areas to
help firms start up, invest, hire and expand:

Encouraging investment - through the community investment tax credit, the
community venture capital fund, the phoenix fund, and reforms to the small
firms loan guarantee scheme; Help with hiring, employing and training - the
special work of the new deal and training programme; Support and advice for
business - the remit of the new small business service; Cutting the cost of
property purchases - with reforms in stamp duty; And reforming our planning
system to make it quicker, more flexible and more responsive.

Central to this is recognising the importance of regenerating the
environment, attracting new businesses to our inner cities. And following
the recommendations by Lord Rogers - to whom we owe a debt of gratitude -
measures to renew local high streets and urban estates have included:

A 150 per cent accelerated tax credit to clean up contaminated land and
bring it back into productive use. 100 per cent capital allowances to enable
owners and occupiers to obtain full tax relief when creating flats for
letting over shops and other commercial premises. Breaking with flat rate
vat by targeted vat reductions to encourage the renovation and conversion of
existing properties to bring vacant homes back into use. And measures to
tackle the crime that hits businesses, particularly retailers, in inner city
areas, showing that our objectives for growth and employment are not at odds
with but complimentary to our objectives for environmental care and
protection.

We talk a great deal about the 1944 economic objectives that governments
across the western world have followed - high and stable levels of growth
and employment. With the understanding we have now I believe that these
objectives are better expressed as high and stable levels of growth,
employment and sustainable development.

Good management of public spaces and high standards of urban design are key
to creating urban areas that are attractive, sustainable places to live in,
invest in and do business in, as John Prescott said. And so too is investing
one billion pounds more in housing over the next three years - the most
sustained rise in housing investment for 25 years - with an additional four
billion pounds for the transport infrastructure, including money for local
authorities to provide transport systems that revitalise recently renovated
urban areas and improve the quality of the urban environment.

But there is still much more to do.

So, working in partnership with local authorities and regional development
agencies, we will designate 2000 new enterprise areas - not the old
enterprise zones of the 1980s where property subsidies diverted activity
from one area to another, but 2000 new enterprise areas where we encourage
home grown economic activity by cutting the cost of starting up, investing,
hiring, training, managing the payroll.

In these enterprise areas - the 2000 most deprived wards in the country - I
can state that:

First, having already cut stamp duty in these areas, we plan to abolish it
entirely with full stamp duty exemption for all business property purchases.

Second, we will give planning authorities powers to create business planning
zones that will cut red tape for growing businesses by removing the need to
apply for planning permission.

Third, we will offer businesses special investment help through the
community investment tax credit - which offers for every hundred pounds of
private investment an extra 25 pounds of public investment - and risk
capital from the community venture capital fund.

Fourth, we will increase funding for the phoenix fund by £50 million pounds
- providing support to thousands of small businesses with special
encouragement for women entrepreneurs and entrepreneurs from ethnic
minorities.

Fifth, the small business service will provide additional help to firms in
these areas - a package of advice and support worth at least £2000 for each
new businessman or woman.

Sixth, we will make improvements to the business incubation fund to
stimulate the availability of flexible managed workspace for start-up
companies; And all businesses will benefit from financial incentives to help
them bring their tax and payroll systems on line.

And because we know that to get the deeper and wider entrepreneurial culture
we need we must start in our schools and colleges, by 2006 every school
pupil will have the opportunity of five days worth of enterprise education,
with extra help for schools and colleges in high unemployment areas.

Together, these measures - combined with help for infrastructure and
employment - offer substantial additional resources based on a systematic
and coordinated attempt to create a stronger economic base in previously run
down and high unemployment areas. And all these measures are underpinned by
devolution of power and responsibility - local people making local decisions
about meeting local needs - as the way forward.

While it is right for central government to establish clear long term goals,
the people closest to the ground in the regions and our local communities
should be equipped and empowered with maximum local flexibility and
discretion to innovate, respond to local conditions and meet special needs.

That is why the regional development agencies, who have been given
responsibility to promote enterprise in their regions, have been given
substantial resources and unprecedented freedoms - within a single budget
without the old ring fencing - to decide how to use these resources to
create the right conditions for local businesses to grow and prosper.

And because it is crucial for city growth strategies to be embedded within
wider regional policies for growth and development, we are making regional
planning a statutory activity, and setting up regional housing bodies with a
single regional housing budget to match policy decisions to the regional
housing market, and link policies on housing with decisions on planning,
transport, infrastructure and anti-poverty programmes.

Local public service agreements between central government and local
councils are also playing their part in regenerating our urban centres.

Across the country, councils are being given additional powers and
flexibilities to allow them to tackle national priorities in the way that
works best for them locally. Newcastle city council has set a target to
regenerate an extra five hectares of brownfield land each year for the next
three years - a one third increase. Hammersmith and Fulham are concentrating
on working with government agencies to increase job entry and retention
rates. And Leeds city council are using their local PSA to close the gap in
the educational attainment of Bangladeshi pupils who lag behind those from
other communities.

But the true devolution of power goes beyond regional and local devolution
to public authorities - it means devolving more power from government
altogether, and into the hands of local communities. Giving local people the
tools to make improvements to their own neighbourhoods.

Neighbourhood renewal and new deal for communities are excellent examples of
policy areas where local communities are in the driving seat; where we know
that Whitehall does not always know best. Within a strategic national
framework, including challenging floor targets, neighbourhood renewal gives
local strategic partnerships both responsibility for deciding what is needed
in their area and discretion for deciding how it will be delivered.

And we must also harness the expertise of the private and voluntary sector
alongside the public sector. Sure Start, the New Deal, Neighbourhood
Renewal, New Deal for Communities, Urban Regeneration Companies - all these
programmes are putting these principles into practice.

But any solution based on renewing economic activity in our urban areas must
tackle the persistent, often chronic, problems of employment and
employability

In the mid 1980s, Glasgow had over seventy thousand unemployed, in Liverpool
there were over fifty thousand and in London over four hundred thousand -
rising to nearly half a million in the early 1990s; an arithmetic of poverty
and deprivation so great that the whole fabric of community life was
undermined. So when we came to power, five years ago, our new programme -
the new deal - was not only based on the principle that work was the best
route out of poverty and the need for rights and opportunities to work to be
accompanied by new responsibilities and obligations to work, but the new
deal and our make-work-pay measure - the working families tax credit - was
designed to offer special help to people and areas left behind.

Helped by the new deal, and our other employment programmes, 1.5 million
more people are in work than in 1997. And I can report that unemployment has
fallen furthest, and vacancies risen fastest, in those regions that were hit
the hardest in the 1980s. It is a measure of the achievement of the new deal
- for which i thank local authorities, voluntary and charity groups and the
public services - that in the 1980s 350,000 young people were long term
unemployed. Today the figure is less than 5,000. But this is not the time to
relax our efforts but to step them up.

Improving employment means improved employability - with more investment in
inner city schools, more further education places, a 50 per cent target for
young people reaching universities by 2010 with enhanced measures to ensure
access, and for the unemployed, literacy and numeracy training and help.

But while more people are in work than ever before, there are still areas of
high unemployment in every region of the country, and particularly in our
most deprived urban areas where a quarter of the unemployed live.

Our analysis shows that too often side by side with long lists of vacancies
are large pools of the unemployed.

In Liverpool, while there are no longer fifty thousand unemployed there are
now fifteen thousand people registered as unemployed but eighteen thousand
vacancies registered at jobcentres over the last six months. In Glasgow,
while there are no longer seventy thousand there are now seventeen thousand
unemployed, but over thirty thousand vacancies. Here in Birmingham, there
are thirty thousand unemployed and over thirty six thousand vacancies.

Too often in too many areas the long-term unemployed have slipped through
the net in these areas. Too often there are workers without jobs side by
side with jobs without workers. Tottenham, for example, has 3,500 men, 4,800
adults, unemployed while neighbouring jobcentre plus districts have seen
over sixty thousand vacancies in the last six months, with many more in the
wider London economy.

Labour shortages exist today in large numbers in retail, hotels and
restaurants, transport and communications and in every region. To match the
unemployed to vacancies we have introduced intensive area-based initiatives
in difficult areas: fifteen employment zones 63 action teams Which have
helped nearly seventy thousand people into jobs so far.

And building on this, we are piloting the step up scheme in fourteen areas,
with another six starting in December --- obliging the long-term unemployed
to accept a guaranteed job which will offer, instead of the dole, secure
waged employment. In London and selected cities, we are matching this new
regime with mandatory work preparation courses for the long-term unemployed.

But we must go further and so tackling the barriers to full employment and
encouraging the unemployed back to work in our most deprived areas will form
a major feature of the pre-budget report.

Because we must break the destructive culture that "no-one around here
works" which damages both the areas themselves and people's chances of jobs,
we will provide far more help than in the past in these areas, using the
sanctions and opportunities available in the new deal and where necessary
taking job advisers onto estates, and extending access to the help available
through the new deal and equip the unemployed with the skills they need to
get into work, including providing training in literacy, numeracy and other
basic skills. But in return we will expect the unemployed to take up the
jobs that are available.

In pilot areas, we will look to test a more intensive approach to tackling
the worst concentrations of unemployment, street by street, estate by
estate. As we insist on unemployed adults and young people getting back to
work, we will identify the barriers to their employability, offering them
training, advice and sometimes cash help, and linking them to jobs in the
vicinity.

This will be an onslaught in favour of full employment and against the
unacceptable culture of worklessness that ruined some of our communities in
the 1980s and early 1990s as we address the underlying causes of poverty in
Britain.

So in conclusion I want to match the radical environmental, social and
quality of life improvement that you are all contributing to with three
changes, economically, over the next few years in our urban areas that will
help enhance the quality of life:

More people moving into jobs, with the work ethic reinvigorated in every
community of Britain as we advance to full employment not just in one
region, but in every region.

More people able to transfer their ideas and hopes into small firm start ups
and growing businesses as we create a Britain of high and stable levels of
growth and sustainable development where enterprise is open to all.

And more people taking advantage of education, thus true equality of
opportunity in education - life-long recurrent education open to all,
regardless of where they live.

I want Britain's cities to be world leaders.

And just as this conference has already shown that public space, quality of
life, the built environment and quality infrastructure can help create world
class cities, so too I hope I have shown that new economic and employment
policies can contribute to urban regeneration with Britain leading the world
in its commitment to full employment and enterprise for all. More
importantly I believe this conference shows that working together - central
and local government, business, voluntary organisations and local
communities - we can, and will, deliver our aim that prosperity should be
not for some but for all in every city, every town, every community in our
country.