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11
THE UNEVEN IMPACT OF THE GLOBAL ECONOMIC
RECESSION ON PLACES AND PEOPLE: THE ROLE OF
POLITICS AND POLICY
‘40 Years of Policy and Politics: Critical Reflections and
strategies for the future’
Bristol, UK, 18–19 September 2012
Richard Meegan, Patricia Kennett,
Gerwyn Jones and Jacqui Croft
ESRC Grant Number: RES-062-23-2963
1
INTRODUCTION
• Research project: ‘The Uneven impact of the
Economic Crisis on Cities and Households:
Bristol and Liverpool compared’
• Research team (SPS, University of Bristol and
EIUA, LJMU)
• Focus here on policies and politics
• Argument:
– recessions ‘pressure points’ exposing and
testing political positions – politics and
policies - and their underlying economic
theories
– local responses conditioned by nationallocal state relationships
– local context conditions national policy
40 YEARS – 4 RECESSIONS
1. Mid-1970s: ‘last gasp Keynesianism’
2. Early 1980s: Neoliberalism - monetarist
experiment tried and failed
3. Early 1990s: Neoliberalism ‘post-Lawson
boom’
4. Late 2000s Great (‘double dip’) Recession –
Keynesianism revisited or ‘strange nondeath of neoliberalism’ (Crouch, 2010)?
40 years - four recessions in the UK
GDP annual % change, and Unemployed
Persons, Aged 16 and Over, 1971 – 2011
GDP annual % change
Conservative
Unemployed Persons
Conservative – Liberal Democrat Coalition
Labour
8.0
3,500,000
6.0
3,000,000
4.0
2,000,000
0.0
1,500,000
-2.0
1,000,000
-4.0
500,000
-6.0
2011
2011Q3-2012Q2
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
Great Recession:
Keynesianism re-visited
or ‘strange non-death of
neo-liberalism’?
Neo-liberalism/
post-‘Lawson
Boom’ recession
Neo-liberalism/
monetarist experiment
1977
1976
1975
1974
1973
-8.0
1972
Last gasp
Keynesianism
1971
GDP % change
2.0
0
Unemployed persons
2,500,000
The four post-war recessions in the UK:
GDP annual % change, and UK public
spending as a % of GDP, 1971–2011
GDP annual % change
UK Public Spending as % of GDP
Conservative
UK Public Spending Forecast
Conservative – Liberal Democrat Coalition
Labour
8.0
60.0
6.0
50.0
40.0
0.0
30.0
-2.0
20.0
-4.0
10.0
-6.0
2016
2015
2014
2013
2012
2011
2011Q3-2012Q2
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
-8.0
Great Recession:
Keynesianism re-visited
or ‘strange non-death of
neo-liberalism’?
Neo-liberalism/
post-‘Lawson
Boom’ recession
Neo-liberalism/
monetarist experiment
Last gasp
Keynesianism
1971
GDP % change
2.0
0.0
UK Public Spending as % of GDP
4.0
Net Borrowing £m (excl. financial interventions)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
Labour
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Conservative
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
UK Net Borrowing £m (excl. financial
interventions) 1971-2011
Conservative – Liberal Democrat Coalition
-40,000
-20,000
DIFFERENT POLITICAL & ECONOMIC
INTERPRETATIONS OF CURRENT CRISIS
• 5 groups (Gamble, 2009)
– ‘Market Fundamentalists’
– ‘National Protectionists’
– ‘Regulatory Liberals’
– ‘Cosmopolitan Liberals’
– ‘Anti-Capitalists’
• Contested theories
– ‘Freshwater’ versus ‘saltwater’ economists
– Orthodox vs. political economists (Marxist
and Green)
DIFFERENT POLITICAL & ECONOMIC
INTERPRETATIONS OF CURRENT
CRISIS/2
• Neoliberal politics/policies tested to
destruction - with Great Recession
administering coup de grace?
YET
• ‘Strange non-death’ (Crouch, 2012)
POLICY RESPONSES - EU
• ‘Regulatory liberal’
• Combination of:
– financial stability measures
– fiscal consolidation programmes
– structural reforms “to boost smart,
sustainable and inclusive growth” (Europe
2020); and, increasingly
– reinforcing economic governance
• overriding imperative to tackle sovereign debt
issues in Eurozone (UK ‘outside looking in’)
• concerted inter-state political response
different to 1930s’ national protectionism
POLICY RESPONSES – EU/2
Within EU (Davies et al, 2011):
• 3 main categories of national government
responses
– support for the financial sector and system
– monetary policy
– discretionary fiscal policy
• in some cases fiscal and monetary policy
interventions combined with cuts in public
sector expenditure and social welfare
POLICY RESPONSES – UK UNDER
LABOUR (Third term - 2005-2010)
Interventionist and regulatory (with some
Keynesian overtones):
• nationalising banks/ regulating financial
system (e.g. one-off levy on bank bonuses)
• bringing forward capital investment projects
• jobs initiative for young people (‘Future Jobs
Fund’)
• vehicle scrappage scheme
• monetary policy - ‘quantitative easing’ and
support for Bank of England’s decision to
lower interest rates (to lowest level for over
300 years)
• fiscal policy - including temporary reduction
in VAT and new top rate for income tax
POLICY RESPONSES – UK UNDER
COALITION (2010 -)
Market fundamentalist, neo-liberal:
• policy focused on reduction of government
borrowing deficit (from recession peak in
2009 of just under 48% to 39% by 2016)
• public spending cuts
• monetary policy: continued quantitative
easing and support for low interest rates
• fiscal policy: increased VAT and personal
allowances for income tax, reduced
Corporation Tax, with top rate for income tax
to be reduced next year
• austerity versus growth
SUB-NATIONAL RESPONSES –
EUROPEAN CITIES
URBACT SURVEY (Guidorn et al, 2010) - 130
cities/ 24 European countries
• 70% had implemented measures of some sort
• 4 key factors influencing response:
– national context
– degree of decentralisation and financial
autonomy
– legal power of cities to act
– national and local political expectations of
cities’ role
SUB-NATIONAL RESPONSES
– UK CITIES
Degree of decentralisation and financial
autonomy/power of cities to act been important
• 1980s recession: combined with uneven
spatial impact produced polarised local
government responses (Gordon et al, 2009)
• e.g. Liverpool - laid ground for ‘Militant’
opposition to Thatcher government/ public
spending cuts
• coincided with reductions in local
government power reflected in urban policy
• e.g. Liverpool got Development Corporation
SUB-NATIONAL RESPONSES
– UK CITIES (2)
1990s recession
• interventions limited by local tax reform and
rate capping
• lobbying of central government for
partnership role and ‘challenge’ regeneration
funding programmes
• e.g. City Challenge: Liverpool got it,
Bristol tried and failed
SUB-NATIONAL RESPONSES
– UK CITIES (3)
Current recession
• Mix of measures using central government
funding and more locally designed ones
implemented and financed by City Councils,
RDAs (RIP), URCs/EDCs
• Currently: balancing act mitigating impact of
public spending cuts and exploiting ‘localism’
growth agenda in context of dismantling of
regional economic development architecture
SUB-NATIONAL RESPONSES – UK CITIES:
BRISTOL & LIVERPOOL
Bristol
• spending cuts - some cuts passed on to
voluntary sector but less than Liverpool
• West of England LEP & Bristol City Deal
• elected Mayor (following referendum)
Liverpool
• massive cuts in spending – exacerbated by
loss of area-based grants/ protecting core
services – but reductions in others
• some cuts passed on to voluntary sector impacting ‘Big Society’/ pulls out of ‘Big
Society Vanguard Areas’
• job cuts (voluntary to date)
• Liverpool City Region LEP and City Deal
• elected Mayor (without referendum)
SPENDING CUTS - LIVERPOOL
“... we’ve been hit the worst of all the core
cities, or, indeed, the worst in the country, for
two consecutive years. The principle reason
for that... is that they’ve taken most of the
funding cuts from lines of funding that were
allocated towards deprivation. So, I mean,
putting it simply, the Tories regarded it as
funny money... so that meant that the cuts are
spread very unevenly and, effectively
speaking, the more deprived you are as a
local authority, the harder you’ve been hit”
(Local councillor, Liverpool, February 2012)
Cuts in Spending Power vs. Indices of
Deprivation
‘BIG SOCIETY’? - LIVERPOOL
“In 2009 we laid off about half a dozen people and
at the beginning of this financial year [April 2011]
we laid off 60% of our staff... 34 people out the
door.... If the City doesn’t have the money and
we’re not saving babies, then we’re not going to
be a priority. And lots and lots of organisations
found themselves taking cuts. And some are
being told ‘Well we want a 7% plus reduction year
on year over the next four years’. Well that means
7% over four years, that’s surely getting on for a
30% cut in your prices. Who can cut their prices
by that when the service is 80 to 90% human
labour?” (Chief Executive, local voluntary sector
organisation, September 2011)
CONCLUDING COMMENTS
• Recessions test political positions and their
underpinning economic theories
• Neoliberalism been tested in the UK and
failed but ‘strange non-death’? Current
government’s economic programme and in
the debates it has provoked over ‘austerity
versus growth’ testify to this
 Local responses conditioned by central-local
government relationships
CONCLUDING COMMENTS (2)
• Bristol and Liverpool as examples of local
policy response:
 from ameliorative measures for businesses
and households to coping with public
spending cuts and ‘localism’ growth
agenda:
o cuts hitting Liverpool particularly hard
o VCS also being hit in both cities –
undermining ‘Big Society’?
o ‘City deals’ – and Elected Mayors - in
both