Applying The Barca Approach to Placed Based Regeneration to the National and

Regional Level in England

Fabrizio BarcaGeneral Director for DevelopmentMinistry of Economy and Finance, Italy

Context (EU)

• Globalisation vs. comparative long term structural challenges (ageing, low birth rates, skills, technology, mass migration, climate change - see Regions 2020, McCann etc)

• ‘Anglo Saxon’ vs. Franco / German ‘social model’?

• Highly contested evidence of ‘convergence’ (reduced disparities), especially of causal relationships (see Sapir)

• Towards Transnational (e.g. EGTC, FP8) or Renationalisation?

• Some places or all places?

• Equity (need) and/or Efficiency (opportunity)?

• Ever more complex and multi-level governance; what borders? what unit(s) of sub national geography?

• What future availability of public sector investment capital?

Barca defining ‘place based’ development•A long term, ‘complex and risky’ strategy which aims to reduce persistent inefficiency (underutilisation of full potential) and inequality (share of people below a given standard) in ‘specific places’

•Bundles of integrated public goods and services, designed and implemented by eliciting and aggregating local preferences through participatory political institutions

•Promoted within a system of multi level governance with transfer of grants from higher to lower levels; with higher level strategies being implemented at the lower (subject to conditionalities on both objectives and institutions)

where

place must be defined as a social concept, a contiguous/continuous area within whose boundaries a set of conditions conducive to development apply more than they do across boundaries (i.e. relative to other places): natural and cultural circumstances and the preferences of people are more homogeneous or complementary, the knowledge of people is more synergetic, and positive externalities and formal and informal institutions are more likely to arise.

The boundaries of places are thus independent of administrative boundaries, endogenous to the policy process and can change over time.’

Barca’s Misconceptions • Investments in efficiency and social inclusion objectives

require a similar and/or linked approach

• Place based development restricts mobility

• Place based interventions artificially limit agglomeration by distorting market forces

• ‘Trade offs’ between local objectives and global efficiency are inevitable

• Place based policies are only for poor places

• Financial distribution is necessary

• The necessary aim is convergence (of GDP per capita)

The 10 Pillars of Barca (1-5)

• Concentration of 2/3rds of funding on 3-4 core priorities (from innovation, climate change, migration, children, skills & ageing) – at least 1-2 for both efficiency and social inclusion)

• Stronger strategic (vertical) dialogue setting ‘clear cut’ principles for core priorities

• A new contractual relationship based on performance and institutional requirements (priorities, targets, (variable) funding allocations, institutional framework to deliver each priority, and administrative capacity)

• Strengthened proportionate governance, including ex-ante ‘conditionalities’on the institutional framework, high quality indicators and targets, and rewards & sanctions

• More innovative & flexible spending; monitored at the national level; leading to a national ‘de facto’ market for credit’

The 10 Pillars of Barca (6-10)

• Promoting local experimentalism (including more pilot funding programmes) whilst preventing policy from being captured by local actors

• Use of (ex ante) counterfactual impact assessments in order to improve policy making and performance measurement (see later)

• Stronger and more co-ordinated client side

• More proportionate financial management & control

• ‘Much improved’ political debates – based more on better information on results and on ‘what’ works and for ‘whom’

Characterising Barca? (1)

• Supporting investments in both efficiency and equity – but outlining a clear distinction between each – and a need to pursue them through different and distinct interventions

• ‘Clear consensus’ on benefits and need for publicinvestments supporting (naturally limited) agglomeration and on networking with hinterlands and other big cities

• Retaining endogenous growth theory (better utilisation of (current and future) immobile factors of production)…but as a (more informed) exogenous intervention - and not for limiting migration or for the purposes of financial redistribution or weak local fiscal capability)

Characterising Barca? (2)

• Moving away from investments in firms –and providing a new focus for investments in public goods i.e. law/order, education, training, basic research, water supply, waste disposal, business support, transport and healthcare

• Addressing specific market failures (limiting influence of local elites, strong path dependency, public goods needed by agglomeration)

A Critique?• Hard hitting, critical text but analysis and proposals necessarily balanced

to fit known existing institutional / national lobbies

• Probably primarily focused on accessionary states and other ‘poor places’

• Requires fundamental institutional reform of both client and contractor side; especially difficult in fiscally centralised & non federal states

• Ignores rural development; little discussion of new environmental economics

• ‘Place’ as ‘cross border’ but no discussion of problems of horizontal governance

• Ignores need and problems of reform of allocating resources between places and between departments

Rethinking UK Regional Policy in England in the Context of Barca

• A few departments of central government as the ‘dominant actor’ in regional development; most interventions directed to people and firms regardless of their location; largely designed, funded and directed by/from national level; horizontal integration at sub national level very difficult.

• Nominally pooled devolved budgets often required to seek specific centrally determined outcomes e.g. Single Programme, Area Based Grant etc

What potential for Total Place?

• Tendency for ambitious and / or unevidenced targets, with few, if any, real connections between regional (RES,RSS,RFA), city/sub regional (MAA) and local targets (LAA).

What importance of (transferred) risk based investment e.g. Accelerated Development Zones? Capability of local level?

• Sub national institutional boundaries largely historic / artificial - public identities rooted much more in parochialism than regionalism or city-regionalism.

• Some progress towards ‘fewer, bigger’ strategic priorities but ‘democratic deficit’ of sub national institutions makes prioritisation very difficult

What potential for Economic Prosperity Boards? Metro Mayors?

• Creeping renationalisation e.g; TSB, SIF, HCA, UK Finance for Growth (UKFG), UK Innovation Investment Fund, Technology Innovation Centres and Regional Growth Funds, Business Support Simplification, abolition of LSC, Cultural Consortia, Arts Council etc.

What new future for RDAs? EU Regional Policy?

Counterfactual (Ex Ante) Impact Assessments

‘an impact evaluation assesses changes in the well-being of individuals, households, communities or firms that can be attributed to a particular project, program or policy. The central impact evaluation question is what would have happened to those receiving the intervention if they had not in fact received the program’ (World Bank, 2008)

‘assessing the impact of (planned) investments by estimating what the outcome would have been had the intervention not taken place …in similar enough individuals, organisations, or areas not targeted by the policy’ (Barca, 2009)’

or ‘(knowing when we design the policy) what we need to measure to know what works for whom’?

Challenges of Counterfactual Assessments

• Institutional capacity (‘visionary & humble’) and consistency across places

• Defining a (legible) strong initial policy proposition and evaluation framework at the same time (not ex post)

• Availability of good quality data at local levels (valid, clear, objective, & especially, responsive to policy)

• Estimating deadweight & displacement; identifying the ‘active component’within bundles

• Selection of beneficiaries (random or political?) and other ‘similar’ non beneficiaries

• Managing ethical issues

• External validity – will it work elsewhere?