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Valuing the Economic Benefits of Regeneration

By David Pendlebury, former RTPI Economic Research Officer

Last month, as part of its Economic Value of Planning workstream, the RTPI published its latest research Working Paper on the economic benefits delivered by the Gorbals regeneration project in Glasgow.

The positive results from the regeneration showed a 31% fall in unemployment and a 35% fall in income deprivation, which compared favourably with the wider Glasgow averages for these metrics of 16% and 21% respectively. 

However, as noted in a response to these results by the What Works Centre for Local Economic Growth, which performs meta-analyses of empirical studies on a variety of place-based policies, including ‘estate renewal’ amongst others, the results do not accord with their collated data. In fact, of the 21 out of 1050 studies they reviewed on this topic which scored highly enough on the Scientific Maryland Scale (SMS) for the assessment of empirical rigour, most did not show significant positive economic outcomes. The planning community needs to do more to develop the scientific arguments for the value of its work.

Planners and the planning community fundamentally believe in the benefits of creating great places for people to live in. Creating places in which people feel safe, inspired, confident, places in which people are able to be healthy and active, places where people can easily access jobs and social and recreational infrastructure, and places in which people are able to take an active part in their community and civil society. Are these social objectives that we should invest in for moral or ethical reasons, for protecting and promoting human dignity and helping individuals to flourish?  Or are these economic objectives, which can boost productivity by helping people become economically active, both through providing them with connectivity to jobs and by developing their human capital?

The answer is: probably both. But why only ‘probably’?

Social benefits can be articulated by appealing to moral and ethical arguments, which by their nature do not need to be empirical or quantitative. But economic arguments need to be underpinned by empirical evidence. We live in a society which values both types of reasoning, but the RTPI’s policy to embark on a project of promoting better empirical understanding of the economic benefits of planning, via its economic value of planning workstream, derives from the fact that in an era where planning faces drastic funding cuts, it needs to be able to convincingly promote its empirical value to policy makers.

Those who believe in planning in its broadest sense, in its ability to create great places through all its functions – regeneration, development management, urban design, master-planning, enforcement, heritage management, transport, health and social planning, economic development, planning for demographic change, planning for climate change – and to avoid the negative externalities of badly planned places – urban sprawl, isolated communities, excessive commuting, resource exhaustion – need to be able to better articulate these economic benefits. That is, the role of planning both in preventing negative externalities and, as importantly, promoting the achievement of positive outcomes.

Therefore, it is disappointing that of all the professional and academic reports on ‘estate renewal’ such a small number are deemed to meet the SMS standard. The lack of scientifically empirical studies on this topic, along with the other topics reviewed by What Works Centre, including a review of the benefits of investments in ‘public realm’ and ‘sports and culture’, should suggest to those involved in academic and professional research within the broad scope of the built environment disciplines, including planning, that much more needs to be done to properly and empirically assess ‘the Value of Planning’.

The RTPI’s paper on the Gorbals regeneration is an initial attempt to point out some basic economic data emanating from a particular project and then shine a light as to where further study could produce an empirically robust piece of work which would add to the economic data.

For example, in our Working Paper we did not have before and after data, given that the project commenced in 1990, but low level Scottish census data is only publically available from 2004. Whilst we did have qualitative historical research that provided us with an objective assessment of the social and economic challenges that affected pre-recession Gorbals and which allowed us to hypothesise that in 1990 we had a relatively poorly performing economic area, this is an area where further research could dig deeper into City Council data for non-publically available quantitative data.

Secondly, as we mention in the paper, we have to account for the fact that some of our regeneration benefits may be derived from ‘gentrification’ effects, that is to say existing residents moving out to be replaced by wealthier, and economically more successful incoming residents, who would improve the local economic results, whilst the previous residents move to a poorer part of town where the economic statistics do not improve.

This argument is a challenge for analysing the economic success of all regeneration schemes, and whilst we included objective safeguards against it in our research – such as the fact that some social housing stock was retained meaning that these residents wouldn’t have financial incentives to move, and that displaced home owners had a discounted, first-refusal to purchase new private stock, we can’t say for certain there were no gentrification effects at all. However, further study could look at the effects on a sample of specific individuals involving, for example, survey research to ascertain length of residency and tracked lifetime economic performance, and thus providing an acceptable sized sample of individuals whose life outcomes could be studied before and after regeneration.

Finally, in addition to the comparison of the Gorbals results to the wider-Glasgow City area control group results, we also studied economic changes for the same metrics in a 'comparator area', Govanhill East and Aikenden, which is located within a similar part of South Glasgow to the Gorbals area (though not too close to be impacted by overspill effects), and had a similar Scottish Index of Multiple Deprivation Score at the start-year of the study, but did not receive regeneration ‘treatment’. As noted by the What Works Centre’s response, and as highlighted in previous reviews of regeneration policy, such as Sheffield Hallam’s review of the New Labour Government’s New Deal for Communities (NDC) programme, this use of a 'comparator area' is essential to develop a hypothesis of what might have happened in the Gorbals area without ‘treatment’. Further study might track the development of our studied metrics in additional areas so that we could compare outcomes from a sample of ‘untreated' areas.

There are many areas in which empirical research will help planning to better articulate its economic value. With this paper and analysis we hope to be able to provide some initial inspiration for the kind of topics that could be explored and how they could be scientifically evaluated.

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