It has been posited in this chapter that the central dilemma of local and regional government during the period explored is that an increase in responsibility for welfare and job creation falls on those scales of government due to the national state’s abandonment of spatial Keynesianism, yet at the same time there is a reduction in powers and funds available to aid in exercising this responsibility, as these are lost to externally appointed agencies outside of local and regional control. The process by which institutions were formed and by which a system of regional governance came about has been explored, under these conditions, at the regional and city regional scales within the North West region.
The institutional emergence of the North West into a new political space, following the creation of an institutional void there during the previous decade, represents an attempt on the part of local government, together with other public, private and third sector bodies, and with encouragement from the European Commission, to form a stable basis on which to take on this responsibility. This was a task made more difficult by the historical lack of regional government, with the consequence
that an incoming institutional presence must establish a sense of regional awareness and identity, in addition to a creating a forum for government (Burch and Holliday, 1993).
By the early 1990s, the market-friendly, centrally imposed and institutionally diverse array of bodies that had been divested upon the regions in place of strategic regional planning and centrally
administered regional policy had given way to a renewed regional coordination in the North West. An antagonistic relationship between Thatcherite centralist and market-oriented tendencies and leftist regionalist tendencies suggests itself, yet the dynamic of industrial restructuring, by the early 1980s focused on spatial differentiation and local entrepreneurship, was common in some sense to both left and right (Cooke, 2006). In this context the renewed faith expressed in a regional strategic approach to development appears to be based on objective agreement between the variety of public, private and voluntary bodies that took part in it, on the need to give strategic direction to, and coordinate resources in the name of, the local and regional distinctiveness observed at that time (see, for instance, Piore and Sabel, 1984; Scott, 1988; Saxenian, 1996).
In a relatively short space of time, the North West was able to organise itself into a form of governance that achieved its immediate goals of satisfying the requirements of the European
Commission for the programming of Structural Funds and of producing a regional economic strategy. The formation of regional governance arrangements appears to have gained buy-in from across the region’s institutions, given the commitment towards the production of the regional economic strategy from the regional CBI, TUC, TECs, Chambers of Commerce and others, though the NWRAss was made up only of local authorities and the NWP, while being a public-private partnership, in fact limited its private sector membership to the NWBLT. In the background to the construction of regional governance were the European Commission, the Labour Party and the professional membership bodies of the RTPI and the TCPA, while bodies such as those contributing to the production of the regional economic strategies continued to be active in the North West. The balance of power during this era lay firmly in the hands of the elected politicians, acting in partnership, together with the influence of the NWBLT. The rules and norms of governance in the North West at this time appear to be strongly influenced by the logic behind the setting up of regional governance, this being the prospect of receiving Structural Funds coupled with the
‘enlightened self-interest’ (interview with former Liverpool City Council senior officer) of the private sector. Some interviewees suggested that this more cynical understanding of the region’s
institutionalisation meant a regional governance configuration in which relations between governance bodies were predicated on the extent of their immediate mutual interdependence. These accounts are leant weight by the difficulty had by the NWRAss in making politically difficult
decisions such as on the location of regional airport expansion and in the selection of regional investment sites in its contribution to RPG. Burch and Holliday’s (1993) more positive interpretation that the North West’s institutionalisation made the space for a shared dialogue to take place and allowed for the creation, perhaps for the first time, of a ‘regional voice’ that could influence policy and spending in London and Brussels is also persuasive, however.
Tickell et al (1993) make the point that while partnership and cohesion are necessary conditions, they are not sufficient for the renewal of the regional economy, which would require a reorientation to prevalent patterns of economic growth and would need the national state, as well as
supranational governance mechanisms, to invest strongly in the region’s future. Jones and MacLeod (1999) suggest that the North West’s claims of regional governance through collective
representation are in fact limited to a fragile institutional fix tied to national government-imposed criteria of public-private partnerships. While much was expected of regional governance during this era, following configurations of governance observed in some of Europe’s resurgent regions (Amin and Thrift, 1994) the emergent institutions of the North West were charged with the task of reinvigorating a lagging region without the benefit of any formal tier of government or regionally- based investment agency. Thus the overwhelming need to secure common funds limited the regional arrangements to their status as ‘grant’ as opposed to ‘growth’ coalitions (Jones and MacLeod, 1999).
At the city regional scale, the dissolution of the metropolitan counties removed a scale of urban strategic government to leave a much more loosely tied together form of joint working on a limited range of policy areas. This caused difficulties in governance due to the disconnection between elected representation and policy-making, the concomitant routinisation of city region scale functions, and the fragmentation of decision-making (Leach et al, 1986). While the task of joint working in the metropolitan counties was a more difficult one than had been the case under the two-tier system of government, the legacy of the metropolitan county councils and the mutual interdependence between metropolitan district authorities meant that a basis for governance coordination at the city regional scale was there that did not exist at the regional scale. The difference in effectiveness of governance arrangements between Merseyside and Greater Manchester reveals a difference in inherited structures, but also in the scale of the social and economic problems faced and in the nature and success of the process by which the new governance arrangements emerged.
In terms of inherited structures, the extent of mutual interdependence between the Manchester district authority area and the other local authorities in Greater Manchester was more pronounced
than was the case in Merseyside, with Manchester as a tightly-bounded local authority supplying employment and retail to the more suburban surrounding districts. While this same functional relationship existed in Merseyside, Liverpool’s employment core was reduced to a greater extent than Manchester’s had been during the 1970s and 1980s, and did not recover, as Manchester’s did, in the early to mid-1990s. That Greater Manchester’s infrastructure needs, which would require cross-county consensus, were located at the fringes of the city region was also helpful in this respect, as was the fact that Manchester Airport was owned jointly by the local authorities. Liverpool’s social and economic difficulties, worse than those of the surrounding districts, and associated image problem, made the prospect of unified Merseyside governance with buy-in across the district authorities difficult. With regard to the nature of the interactions between governance agencies that contribute to the process of institutional emergence, the roles played by Manchester City Council, in its engagement with an agenda of economic development cognate with the approach of central government, and Wigan Borough Council, as a large peripheral local authority with the ability to convince other districts to commit to a unified approach, were seen as crucial. By contrast, Liverpool City Council disengaged entirely from economic development concerns in the mid-1980s and went through a process of normalisation following this, while Merseyside’s district authorities remain, at the time of writing in 2014, unable to present a unified front.
The institutionalisation of the North West region and of the city regions of Merseyside and Greater Manchester embodies the transition from government to governance. This process appears to echo a more widely occurring ‘institutional turn’ and ‘spatial turn’ in which the institutions engaged in the governance of economic development are connected to the scale at which contemporary capitalism is held to function (Jones, 2001). In the case of the North West during the early to mid-1990s, however, governance institutions were created not only to address the scale at which economic processes were seen to operate, but to fulfil the basic functions of strategic governance that had existed in previous decades. The extent to which the form of institutional governance taken during this era was successful must be judged in terms of this weakened starting position.
At the city regional scale, the ability of the Greater Manchester districts to act strategically without formal government has enabled them to forge a strong image for the city region while securing investment from central government and the private sector alike and placing it in the vanguard of more recent central government schemes to grant greater powers to city regions (HM Treasury, 2009). The extent to which Greater Manchester’s success in this endeavour is replicable, or whether it is an outlier of city regional governance (Deas and Giordano, 2001; 2002), is open to question,
though its coherence as a governance entity may be strongly connected to the local structural conditions under which it emerged as such.
Scale Construction and the Spatial Approach to Local and Regional
Development: the North West in the Europe of the Regions
3.1 Introduction
This chapter examines the use of spatial concepts in the programming of the European Union Structural Funds (EUSF). It is suggested here that the EUSF have been associated with spatial concepts above all in two respects: the rescaling of governance, from the national to other scales; and the strategic spatial approach to local and regional economic development. The chapter is divided into three sections: a literature review that covers the revival of interest in regions in the context of the ‘Europe of the regions’ narrative; a literature and policy review that covers the
changing nature of regional development policy in the context of the European Structural Funds; and an empirical investigation into the application of the European Structural Funds in Merseyside and the North West.
These are examined in the case of the application of the EUSF in Merseyside, a NUTS 2 region, within the North West, a NUTS 1 region, according to the European Commission’s system of regional classifications. For this chapter, the geographical focus thus turns to the sub-regional, rather than the regional scale. The reason for this is that the variability of the size of areas over which the Structural Funds can be applied has allowed localities, regions and member states to forward their own interpretations of what might be termed a ‘region’, with the result that separate bidding and governance arrangements have been used within the North West region. In sacrificing breadth for depth, this chapter chooses to examine the use of the European Structural Funds in Merseyside, while making reference to the use of the Structural Funds in other parts of the North West and covering the region more extensively in its analysis of the 2007-13 Structural Funds programming period, for which Structural Funds addressing Merseyside and the North West were programmed within the same document. Merseyside is seen as the most interesting example of EUSF
programming in the North West for three reasons: its status as one of the first urban Objective One regions in Europe; the exceptional characteristics of economic and social decline that led to the designation of this status; and the fractured nature of the governance arrangements there prior to the first Objective One programming period.
The application of the EUSF has been associated with a purported process of governance rescaling, as the process of ‘hollowing-out’ that is said to have taken place with regard to the nation state transfers powers upwards, to supranational bodies, downwards, to sub-national bodies, and sideways, in trans-border governance linkages (Jessop, 1997), resulting in a ‘recomposition of political space’ (Keating, 1997). The notion of a ‘Europe of the Regions’ describes the role attributed to sub-national governance institutions as state powers are re-territorialised at the regional scale, a process mediated through the evolving territorial politics of the European Union and, moreover, through the mechanism of the EUSF. This ‘hollowing-out’ process is a response to the failure of the national state to address the challenges of globalisation, with a concomitant reassignment of responsibility to the regional scale as a necessary conduit to the recuperation of some state control over the functioning of the economy.
Associated with this change in scale is a change in understandings of the role of space in economic development. The invigoration of the regional scale has been accompanied by an approach to the delivery of public goods that emphasises the mobilisation of place-based assets and potential, as well as the use of place-based knowledge. This approach can be seen in the use of spatial planning as a tool for the coordination in space of policies from a range of spheres, alongside a renewed strategic focus in land-use and infrastructure planning. It is also evident in the application of the EUSF, as the involvement of place-based institutions and actors, the spatially-delimited focus of the funds, and the programmatic approach taken all integrate aspects of space into regional
development policy.
The Structural Funds thus exemplify both of these traits, as their effects in increasing the influence of sub-national governance and in building capacity at sub-national scales are accompanied by a strategic, spatially-focused approach to regional policy that contrasts with the traditional emphasis on directly intervening in order to influence the location of firms and industries.
Jessop’s (1997) three facets of state restructuring, discussed in chapter two, can be used to interpret the effects of the Structural Funds on the sub-national governance of economic development within this wider context. The use of Jessop’s (1997) hollowing-out metaphor in the context of what is seen as the increasing influence of the European Union in building regional governance capacity has proven fruitful (Hudson et al, 1997; Brenner, 1999; MacLeod, 1999), while the notion of the ‘destatization of the state’ has been investigated in the use of partnerships and the associated transition from government to governance in the context of the Structural Funds in the case of Merseyside (Lloyd and Meegan, 1996). Furthermore, Jessop’s (ibid) ‘internationalization of policy regimes’ can be seen in the formation of a pan-European policy community around the normative
design of Structural Funds programming. This is evident in the proliferation of policy documents emanating from DG Regio and the willing engagement of academics in debates around the Cohesion Policy (for the most prominent recent examples of which see Barca, 2009; CEC, 2008; Barca et al, 2012).
MacLeod (1999), drawing on criticism of the new regionalism that emphasises the difficulty in reproducing the particular economic, institutional and political facets that contribute towards the success of certain regional economies (Hudson et al, 1997; Dunford and Hudson, 1996), notes that the reassignment of power from the national state to the regions is not a theoretical explanation but an empirical trend. Thus not only should the inference of a causal relationship be discounted in regional research but the focus of such research might be best served by approaches that account for ‘the conjunctural, the complex and the contextual’ (MacLeod, 1999: 232). MacLeod goes on to examine the process by which the governance of economic development in the case of the
Strathclyde region of Scotland has evolved in close relation to the application of the EUSF there, emphasising that the rescaling of governance in Strathclyde has been a process of structuration, in which scales of governance are produced, rather than of contagion, in which a model of governance is unreflexively applied.
There are parallels between the rescaling of governance and the developmental approach to
regional policy that has been described as the ‘new paradigm’ (Bachtler, 2010) as both are responses to the decline in inter-regional convergence in economic performance and the associated shift in the objective of social and economic policy with regard to space, from the achievement of balance across the national space to the differential engagement of regions in inter-territorial competition (Jessop, 1997). While governance rescaling is concerned with the shifts in power between scales and the ways in which scales are constructed, however, the new paradigm addresses space in multiple ways, from its sometimes variable conception of territory, expressed through spatially- bound externalities; the prominence afforded by it to place, as the location of assets valuable in inter-territorial competition; and the role of networks of various sorts, from knowledge networks extant in clusters to governance networks spanning territories. These aspects, associated with the new paradigm, have gained a presence in the application of the Structural Funds over their periodic reforms, from the introduction of a ‘non-quota section’ in the 1979 reforms that allowed the Commission to finance programmes rather than projects, to the establishment of programming, partnership, additionality and a concentration on particular objectives, as principles of the Cohesion Policy in the 1988 reforms (Manzella and Mendez, 2009).
The reforms to the Structural Funds that introduced a more strategic approach through spatially delimited programmes of interventions took place during the transition outlined by Brenner (2004) as having taken place throughout the course of the 1980s, from an agenda aimed at reviving declining cities and regions within an overriding framework of spatial redistribution, to one whose intention was to position cities and regions in global and European spatial divisions of labour, within an overall framework of inter-territorial competition. Thus the rescaling of political space and the increasingly spatial rationale of regional policy are intrinsically linked as aspects of the same process of transformation in the economic role of cities and regions.
While issues around state restructuring in the context of the Structural Funds have been addressed to some extent in the previous chapter, this chapter attempts to integrate scalar concerns with other