Mind the gap: What gap? – An urban/rural dimension

Andy Bevan says the rural economy is being left out of the debate around Wales’ wealth.

There has been a lively economic debate on these pages since the IWA published its Economic Strategy for Wales in March 2015 and particularly since the Learned Society of Wales/IWA symposium in Portmeirion in mid-April. The debate has focused on “closing the gap” between GVA per head in Wales and the much higher GVA per head of the UK as a whole. There has been recent controversy too over the advocacy of city regions as a key to Wales’ economic future and salutary warnings (from Dr Daniel Evans on 16 April and Dr John Ball on 22 April) against the shortcomings of Foreign Direct Investment.

Let’s examine this concept of “the gap” a bit further. The majority of the land area of Wales (the whole of the West  and the Valleys) still produces less than 75% of the EU average GDP per head  – even after the accession of Poland, Latvia, Hungary, Bulgaria, Romania et al – and is still classified as a Convergence area (as shown below), qualifying for special EU structural and cohesion funding. So, where’s the most worrying gap: between Wales and the UK, between Convergence Wales and the UK, or between Convergence Wales and UK South-East’s Golden Triangle? Each of these “gaps” presumes a different perspective and a different scale of challenges. And, in all of this, rural Wales is most often overlooked.

Image: Convergence Funding areas in Wales

But there is a school of thought developing about a new rural paradigm which makes it important to re-value our rural areas and their resources. Equally, we need to examine the economic whirlpool which exists within the M25, sucking in resources, inflating accommodation costs to unaffordable levels, and we should question its logic.

On the IWA website there is a podcast interview with Professor Steve Gibbons (LSE Department of Geography and Environment) which seeks to tease out some of the key points which he made at the Portmeirion symposium. In the interview, Lee Waters asks Prof. Gibbons whether he thinks that Wales should focus its economic efforts on the cities, rather than “spreading wealth across the country ”. The question is clearly set in the context of seeking ways to close the productivity gap between Wales and the UK as a whole.

In reply, Steve Gibbons argues that “We don’t know how to stimulate economy and bring high-tech clusters to remote and peripheral areas, but we do know that the mechanisms for this exist in big cities.” He goes on to suggest that Welsh economic policy should concentrate on the “big cities of the south” and admits that there may be a cost to other areas as a result. Asked if cities are “engines of growth , he replies, “That is what I think the evidence and the theory (sic) points to.”

Perhaps we shouldn’t read too much into that; after all, it is a truism. For more than 300 years , in developing economies, there has been a general shift of population from the country to the town, accelerating urbanisation – and ultimately the rise of metro-cities.

We should take care, though, to avoid the mistake of simply advocating at the level of Wales what is happening to the UK economy as a whole, with certain sectors (finance in particular) in London and the SE expanding (unsustainably) at the expense of the rest of the UK and at the cost of affordability and liveability within the M25 itself as well. It seems that “the theory” which Steve Gibbons is referring to in his interview is none other than the theory of the free market.  Surely, though, we should avoid in Wales an abnegation of responsibility for social planning, democratic governance and considerations of sustainability?

This debate ties in neatly with two current and burgeoning strands of thought in economic geography and planning:

  1. The concept of place-based city development – as outlined by keynote speaker,  Prof.  Robin Hambleton (Centre for Sustainable Planning and Environments, UWE) at the RTPI Cymru Spring Conference in Llandudno on 12 March. This challenges the short-termist, dividend-maximising social irresponsibility of rootless, multinational capital in favour of a long-term approach based on social “loyalty” to local communities and values. Welsh academics have spoken out loud and clear too. Dr Daniel Evans (WISERD) wrote on these pages 16 April: “Capital’s inherent mobility means that firms are never tied to one particular region. Once they have squeezed as much profit as possible out of a region, they have the ability to move to new regions at a moment’s notice.”  On 27 May last year, Dr Calvin Jones (Cardiff Business School) argued: “The Economics of Place is the Economics of Empire, then and now…For example the ‘problem regions’ of 1930s Britain are largely the ‘problem regions’ of today – eighty years of economic history, a World War, fundamental industrial transformation and the death of an empire has done precisely nothing to rearrange the hierarchy of places in Britain…”

  1. Studies in the new rural paradigm (cf Prof Terry Marsden, Cardiff School of Planning and Geography and Ina Hörlings, Wageningen University). Their approach has been developed in practice and further clarified in the Rural Alliances project, in which they have both been active, along with academic partners at UWTSD’s School of Business and Marburg University’s Faculty of Geography, working with 10 rural partners in 6 countries across north-west Europe since 2011.

Looking back a bit, in March 2011 Steve Gibbons himself was co-author of a paper entitled The amenity value of English nature. In this paper, we read: “We analysed 1 million housing transactions over 1996-2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude…Increasing distance to natural amenities such as rivers, National parks and National Trust sites is unambiguously associated with a fall in house prices…Overall, we conclude that the house market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities.”

This analysis aligns more comfortably with the approach argued by Prof. Terry Marsden, keynote speaker at the Rural Alliances Conference in Brecon 24-26 March, when he drew attention to the “New Rural Paradigm”, identified by the OECD in 2009, which points to the need for rural areas and rural resources to complement urban growth in a planned and sustainable way. Terry Marsden argued  that there is a need for a new, multi-sector, place-based approach to rural development, with closer links between the rural and urban economy. He pointed out that rural areas are the source and origin of “distributed and distributive” systems and that rural eco-system services are dispersed, not centralised. For example, the Brecon Beacons National Park provides 90% of water services to Cardiff, and 78% to Swansea and the three National Parks in Wales provide £557 million GVA (1.2% Wales Economy) attracting 12 million visitors and providing 13,000 jobs across Wales.

As we face the challenges of carbon descent and the need for more localised production and distribution, we ignore the “rural areas” at our peril. Their needs and resources must be factored in to the debate about “gaps”. Let’s remember too that, in Wales, there is a big and important tract wedged in the no man’s land between “rural” and “big city”: the depressed, post-industrial peri-urban, small town and semi-rural areas of the South Wales Valleys, Ffestiniog and the North-East.

Andy Bevan is based at University of Wales Trinity St David, Lampeter, working on Rural Alliances, an EU Interreg IVB NWE project. He was author of the IWA Senedd Paper, A Real Citizen Service for Wales in 2014.

5 thoughts on “Mind the gap: What gap? – An urban/rural dimension

  1. This is a stimulating article which seeks to challenge the prevailing consensus in Wales which is that we should concentrate on the Capital City Region as the next area of growth. Their is a need for our focus still to be there as Edwina Hart appears to be holding back on this development, the suspicion being that she is afraid of letting go of control of such a key project and passing it to a delivery body. The danger is that she will kill the momentum that has been building behind the idea, a momentum that is crucial for investment.

    However, I cannot help but want to look beyond the confines of the CCR and ask what benefits it could bring to the region’s hinterland, in particular Mid-Wales. I may have made this point before on the blog but I am reliably informed by friends living in the Brecon area that they do not look to Cardiff as their capital but rather Hereford and, to a lesser extent, Abergavenny. This is significant for a number of reasons. Brecon is a centre of urban population that links the CCR with the Mid-Wales region and so should be a bridge between the two. However it does not seem to see itself in that role. Wales ends at Merthyr Tydfil and Brecon looks to England. The two perspectives do not need to be mutually exclusive but it appears that they are.

    One idea that is still developing in my mind is that of establishing a new rail connection between Merthyr Tydfil and Brecon with a view to establishing a railhead in Mid-Wales that is connected to the CCR. With electrification allowing for limited stop trains between Merthyr and Cardiff taking about half-an-hour, even an added 20 minutes for the extra 18 mile journey to Brecon puts Mid-Wales within comparative easy reach of the capital city. However this is to oversimplify the matter. The relationship between Mid-Wales and the CCR, between a rural and urban economy, is complex. But we should be thinking about how Powys can benefit from the CCR and how people living in the CCR can have access to its rural hinterland.

    This requires strategic thinking, something the National Assembly appears to be lacking. It is possible to throw one’s hands up in despair at this stage with the view that they are unlikely to listen. However the political question is what pressure is needed from outwith the Assembly, or within, to get them to start moving in this direction?

  2. There has to be an answer to the question “why?” before the question “How?” is addressed Rhobat. For many areas in the East of Wales, for much of West Wales and all of North Wales England and English cities are the logical destinations. They are also the nearest markets for agricultural products. There is nothing wrong with that in the eyes of many but of course it’s anathema to nationalists who cannot accept geographical logic because of the imposition of an artificial political boundary.

  3. ‘Steve Gibbons argues that “We don’t know how to stimulate economy and bring high-tech clusters to remote and peripheral areas…’
    Professor Gibbons might not ‘know how’ but there are many examples of where this has been done. I cite the transformation of uber rural North Carolina by the high tech cluster of Research Triangle Park, Durham. This small area less than the size of Carmarthenshire has a GDP and economic output higher than the entire economy of Wales including Deeside. It has more PhD level people working there than almost 20 years output from Welsh universities. So yes, go figure, it can be done. So why isn’t it being done here in Wales? Maybe the academics should get out more into the real world?

  4. @ J Jones

    I thought I had given reasons for making the connection but I’m happy to clarify the position. We have in the process of development the Capital City Region which is intended to be an engine of prosperity for the south coast and valleys. It is hoped that this will provide a mechanism for higher living standards which in turn leads to burgeoning market opportunities. Currently Mid-Wales appears disconnected from the Region and therefore less able to take advantage of the economic opportunities there. By improving the infrastructural connections with the capital, the aim would be to overcome those obstacles which prevent market entry and thus enable mid-Wales access to another source of prosperity.

    Conversely, unless you have a car, access to the Brecon Beacons and beyond is limited. Providing an opportunity for lower income families to enjoy the National Park would, in my view, be a good thing and it could also contribute to less car usage in the area and thus reduce pollution there.

    There are other issues such as the opportunity to develop Brecon as a commuter town for work in the Capital Region but I hope I’ve said enough to answer the question “why”.

  5. This is an extremely important and timely article. It presents a challenge to the prevailing logic surrounding the Cardiff ‘city region’ and should be welcomed unreservedly by anyone with a critical bone in their body.

    “Steve Gibbons argues that “We don’t know how to stimulate economy and bring high-tech clusters to remote and peripheral areas, but we do know that the mechanisms for this exist in big cities.” ”

    How about improved transport and communications infrastructure Steve? Politicians keep scratching their heads about Wales’ underdevelopment when we have a transport network which is frankly nearly third world standard. Can you think of another Western country with such an underdeveloped rail and road network? You really have to travel to appreciate how poorly served rural Wales and the Valleys are.

    “He goes on to suggest that Welsh economic policy should concentrate on the “big cities of the south” and admits that there may be a cost to other areas as a result.”

    This is exactly the issue at hand. Just like London has become a city state which sucks wealth and resources from the rest of England, so is Cardiff becoming a city state where all the jobs and opportunities in Wales are based. The logic of agglomeration means that capital follows the path of least resistance- people invest in places with already established transport networks and infrastructure. That is what Calvin Jones pointed out in his article on ‘problem regions’ – the areas which get rich first tend to stay rich, because it is too risky for development/investment to gamble on developING areas unless they are bribed to, something I alluded to in my article. It is also worth pointing out that cities are the ‘engines of growth’ because excess capital profit is invested in them, in property (see David Harvey)

    So what those in charge of the city region project don’t address is how exactly this model will enrich the valleys? What is the logic behind this claim other than trickle down economics?

    My suspicion is that they believe that if enough wealth is attracted to Cardiff, the valleys will become rejuvenated through gentrification as young professionals are forced to relocate to places like Caerphilly, Ystrad Mynach and Llantwit Fardre. But what about Merthyr and the Gwent valleys?

    I suspect that those places which are too far North of Cardiff to ‘benefit’ from overspill will just remain propped up by the public sector. This is in fact the distillation of the Welsh government’s economic plan: FDI on the one hand, focused on the Cardiff city region and the North East because of their amenable infrastructure. On the other, a continuation of the ‘propping up’ of the Valleys and rural Wales rather than sustainable intervention.

    This will continue indefinitely because the WAG lacks the political will to begin the unglamourous and long term project of improving Wales’ infrastructure (which is the only way to help rural and semi-rural Wales).

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