Neighbourhood renewal and co-operative communities

ANDY HANSFORD looks at the causes of social exclusion, and unpicks the government’s plans for regeneration.

A year ago, parts of the left press were highly critical of some measures coming out of the Social Exclusion Unit, which had recently published its ‘national strategy action plan’, called A new commitment to neighbourhood renewal. Neighbourhood super-managers were instantly held up for ridicule as the epitome of the bankrupt and anti-democratic thinking coming out of Number 10 and Whitehall.

In the ILP, we tend to let the passage of time inform our analysis and we will be looking at how the many various urban and rural renewal projects are working on the ground, as part of a particular review of regeneration, co-operation and democratic renewal under new Labour, at our national day-school on this topic in Manchester this autumn.

Before then, we should recap what we know of the theory and the ambitions which emerged from the SEU in January 2001, after four years of consultation and joined-up thinking. We should measure this against the tasks communities face and, cheekily, we might as well add in a more radical prescription which seems, with variations, to do the job elsewhere.

In researching this work and the phenomenon of social exclusion, evidence was taken from a variety of sources, including the United States, and the thoughts of French and other sociologists, including Manuel Castells. For short-hand ‘deprived neighbourhoods’, a peculiarly British term, are referred to by their (less accurate) 1960s term: ghettos.

Ghetto history – what makes a deprived neighbourhood?

In all the disagreement about the credibility and utility of the term ‘social exclusion’, what no-one disputes is that it enables us to address the interplay of many factors. These areas exhibit the UK’s massive inequality in health, education, child poverty, disease, unemployment, and housing conditions. Typically, deprived neighbourhoods are:

• health blackspots: coronary heart disease is 26 per cent above average in the poorest 20 per cent of health authority areas
• education blackspots: if a school has over 35 per cent of pupils on free school meals, statistics say just 2.25 per cent will get national average GCSE pass rates; so at schools, say, in Hulme, Manchester, nine per cent of pupils are capable of reaching national average; in Buckinghamshire, more than 70 per cent reach it
• housing blackspots: in the poorest 10 per cent of English wards, 19 per cent of all housing is vandalized, boarded up, vacant or derelict, not the English average of 5 per cent.

They also display:

• child poverty: three savage statistics show poverty passing to the next generation: 60 per cent of kids in the poorest 10 per cent of wards are in households living off means-tested benefits; child poverty in the poorest 10 per cent of English wards is three times the national average; child poverty trebled, from 1979 to 1995-96
• higher infant mortality
• higher unemployment.

What are the causes of social exclusion and ‘pockets’ of deprivation?

Social exclusion, a term imported from France via the USA, has many causes in each country. In the UK, specific causes include:

• manufacturing industry closing down, especially in England’s north east and north west, in the west of Scotland and south Wales
• several recessions, Thatcherite economics and the oil crisis
• concentrations of poor people in given neighbourhoods due to previous government policies, including the ‘right to buy’ council homes and the spread of home ownership, the consequent ‘residualisation’ of council property and, recently, housing association homes – the housing choice of last resort (70 per cent of new housing association tenants are on full housing benefit, just a smidgen less than new council tenants).

Once an area has the reputation of being a ghetto area, the problems spiral:

• employers discriminate against applicants from certain post-codes
• local services are worse than in posher districts
• there is little or no local business or entrepreneurs
• people have to travel long distances to buy food at fair prices
• there are no banks or cash machines
• insurance is hard to come by, as insurance companies ‘red-line’ areas
• few people own cars
• the area is blighted by the presence of junkies and gangsters
• housing is rationed, so that allocation policies mean only the poorest get to move into ghetto housing
• there is low demand for housing (except in some parts of south east England where any roof is a good roof)
• crime rates are high, and most crimes aren’t reported because people feel the police will or can do nothing.

It is not too far fetched to assert, therefore, that these areas are the landfill sites of both the state and the market. These areas contain the housing the market doesn’t want, the services that markets and the state can’t seem to provide, and are populated by the people the markets and the state can’t quite move themselves to serve.

Deprived communities over the past 25 years

Over the last quarter of a century in the UK and the USA, the slope leading to these pits has grown ever steeper. Partly this has been ascribed to globalisation, the removal of low-skilled but capital- and labour-intensive work to other regions or countries. Partly it is the desired or accidental result of deliberate government polices towards the poor – Reaganomics, Thatcher’s assault on local councils and universal benefits.

This is not to say that governments on both sides of the Atlantic, whatever their ideological stances, and however antipathetic they were to their most needy citizens, did nothing. Here, the Tory measures included:

• Estate Action (repairs and make-over for council housing)
• choose-a-landlord schemes and Housing Action Trusts (HATs)
• offering tenants themselves, in areas where the council had really lost control, some power to turn things around through Tenant Management Organisations (TMOs): either Estate Management Boards (65 per cent tenant controlled); or Tenant Management Co-ops (100 per cent tenant controlled)
• City Challenge (a five-year holistic programme, whose best known example is Hulme City Challenge, which so strongly focused on demolishing housing, it was almost a HAT).

Indeed, one criticism of Tory policies since the 1980s urban riots, was that it led to ‘initiative-itis’ – too much change and too many distinct, even contradictory initiatives led to confusion, compounded by their own vague rules. However, it did result in one important achievement: if you stuck a TV camera on the back of a truck, moving past bright new Tory-funded homes (similar to the ones Labour built in 1960s and 1970s), with Heseltine grinning at the natives and their babies, you could just about show that the government was doing something.

The Tories were in power, and responsible for poor neighbourhoods, for a very long time. Inevitably, they also learned, over time. Their last wheeze, City Challenge, was the most sophisticated and – though this is unspoken – forms the basis for current best practice. It was a break-through in that it insisted on partnerships between council, central government, local communities, and the private and voluntary sectors. In today’s jargon, it was joined up, supposedly focusing on bricks and mortar, roads and dereliction, but also on people, skills shortages, and health.

Whether this was a fore-runner of Ian Duncan Smith’s and Michael Portillo’s ‘caring Conservatism’, or whether it would have happened under a government of any colour, is a question we’d need a backwards crystal ball to answer. My guess is that old Labour would eventually have got to City Challenge. It did believe intensely in bricks-and-mortar solutions to poor areas, alongside a wider application of less intensive job-seeking help. Old Labour solutions would have relied on stronger council control and therefore been indirectly accountable to local people (via the local authority’s whole electorate). Put another way, it would have been less open to local community structures.

How is the Social Exclusion Unit aiming to tackle this nexus of impoverishing factors?

New Labour’s new approach is new, and it isn’t afraid to say so. The Tories may say it’s just a logical progression from their last wheeze, but for socialists that is irrelevant. Instead, we have to ask, were our government forced into this new approach by low levels of resources, or are they just smarter than the Tories, and old Labour? Those who believe the latter can find support in Paying for Inequality, a rather good account of how health and economic inequalities cost the nation dearly, co-edited by the then head of the Number 10 Policy Unit, David Milliband.

One impact of the new thinking is a belief that social exclusion is joined up so government must be joined-up. This is complemented by two further axioms of pragmatic policy-making:

1. ‘What works’ – this is people-focused, not about bricks or drains; ‘what works’ also signifies a determined focus on people, not on the ‘market/state’ duopoly of service provision or agency. This has good and bad spin-offs, with the good including a respect for the capacity of individuals in poor neighbourhoods to solve their own problems using the resources of the state and the market, without needing experts to do it for them.
2. It’s more efficient to use core funding for core local services to combat social exclusion by ‘aligning’ it and giving local people or managers power over it. Also, it is more effective to permit local bureaucrats, politicians and communities to experiment (for example, with benefit tapers, and planning regulations) by removing perverse incentives in the system, than to insist that the rules stay the same while new initiatives contort around them.

A second impact of the new thinking is that the problems of ‘inner city Britain’ are actually seen as solvable. The degree of experimentation, the focus on particular targets, and the political will to tackle social exclusion in ghetto areas, are testimony to this. You don’t advertise a product you are fairly sure people won’t want. The government shows every sign of expecting to succeed. Hence, the ‘presidential’ addresses from council estates. Remember the images? Tony Blair‘s first TV appearance as prime minister was at a council estate in Southwark.

Since 1997, the Social Exclusion Unit has launched two weighty consultations, plus 17 ‘policy action teams’, drawing together voluntary sector expertise with bureaucrats from different government departments, looking at everything from low housing demand to arts in communities, via health, education, work and enterprise, and including their own, or their civil servants’, hobby horses (like neighbourhood managers).

There has been a lot of theory (some of it, predictably, silly or hopelessly out of touch), a lot of analysis, plenty of questions. What is interesting is that overall,  for the first time, the theory, the analysis and the questions they ask are right.

However, in practice there is still a lot of scope for cocking it up at a local level.

‘A New Commitment To Neighbourhood Renewal: national strategy action plan’

In January 2001, after four years’ work, the Social Exclusion Unit published a practical ‘action plan’ – 67 pages long, with 60 pages of annexes, containing 105 commitments to people in the worst-off bits of the UK.

Blair was zesty in his foreword to the tome: the strategy action plan “puts in place new ideas … for empowering residents and getting public, private and voluntary organizations to work in partnership”. Among the ideas were:

• seven New Deal for Communities ‘pathfinders’
• Action zones for health (covering 13 million people) and education (covering 73 areas)
• a new Community Investment Tax Credit, to be launched by the Treasury and the DTI, plus an Inner City 100 index of businesses, and a Community Development Venture Fund.

So does the new ‘new commitment’ empower poor communities? Let’s take a closer look at four of the 105 new measures, all of them with money attached: the Neighbourhood Renewal Fund; the Phoenix Fund; the Community Chest; and the Community Empowerment Fund.

The Neighbourhood Renewal Fund is made up of £800 million over four years, split between 88 local authorities. It will be used for different purposes in different neighbourhoods, even within the same neighbourhood. The key idea is to get core local services to communities to focus on social exclusion and neighbourhood renewal.

The Phoenix Fund is £96 million over four years, for all 88 councils. It aims to create business opportunities, plus community and third sector enterprises, to pump-prime local employment and commerce.

The Community Chest, £50 million over three years spread over the 88 council areas, is meant to enable local people to apply for small amounts of money for virtually any purpose of benefit to the community. This is easy to lampoon. But look at the symbolism: the people might know better than regeneration experts how to spend the money.

The Community Empowerment Fund, £400,000 over three years spread over the 88 councils, is to be deployed to enable communities to participate on equal terms with council professionals.

We could equally have selected, as evidence of the new approach:

• The Small Business Service, which replaces the Tory initiative, ‘Business Links’, and is meant to stimulate business start-ups and investment.
• An end to the previous total ignorance from governments about co-ops, employee ownership, and community enterprise in housing, signalled by the new requirement on every local authority to elaborate Tenant Participation Compacts to establish the tenants’ perspective as a valid, essential, part of neighbourhood management and regeneration. The results will be unpredictable.
• Credit unions, which are getting the central support services unit they campaigned for.

What the Social Exclusion Unit doesn’t know

First, what they’re proposing isn’t nearly radical enough.

For example, in the Neighbourhood Renewal Fund, why are councils going to get more money to provide core services which, in the ghetto areas, we don’t get properly now? Isn’t that ‘perverse’?

With the Phoenix Fund in Manchester, the vaguely run competition was won by the Chamber of Commerce. Why? They’ve put it into a revolving loan fund, which sounds nice. All the people of devastated east Manchester, or the deprived north side, now have to do is get life skills, a fair education, a strong skills base, become entrepreneurs, find out about the money, resist generations of fear about this kind of debt, and then apply for it. Is this a recipe for lots of new local businesses and community or co-operative enterprises?

What’s more, the Community Chest: seems just like a gimmick, or an insult. And the Community Empowerment Fund, if  my calculations are correct, amounts to £6 per week for each neighbourhood. Perhaps this is for tea and biscuits. Compare this sum with the £750 million available for school sports facilities from the New Opportunities Fund, 1,875 times more.

Secondly, the way they got to these proposals was timid.

The Policy Action Teams (the second or third of many stages of gathering information and commissioning research) were staffed by the architects of current best practice, and they called the witnesses and commissioned the research they wanted.

What a surprise that they recommended… current best practice! Where were the nay-sayers, the awkward squad, the consumers? The Policy Action Teams came up with ideas such as, in housing, super-caretakers, in neighbourhood management, a super-neighbourhood manager employing super-housing officers. What can we call this … super-paternalism?

Thirdly, what are they not making clear?

In housing: the collective ‘right to manage’ is being removed for 200,000 council households per year (and every year till almost all are gone). Although the first wave of applicants for this ‘stock transfer’ bonanza all failed, 400,000 homes are already in the pipeline. All will lose their least well-publicised and potentially, their most basic democratic right as a tenant. Will this result in over a quarter of a million people per year becoming disenfranchised, every year for a decade?

Also in housing: the pressure to evolve new models for ‘resident control’ for the super-powerful housing quango, the Housing Corporation, is leading to ever bigger numbers of ‘housing units’ being considered as a single project, ensuring less direct, local control, and ever more complex management with minimal control for the many.

If this is what’s happening in housing, what else is really going on? Is this what they mean by ‘community empowerment’?

What if they were serious about ‘bottom-up’ regeneration?

If we take government professions of intent about ‘community empowerment’ seriously, if we accept that the neighbourhood renewal portfolio of programmes is really about neighbourhoods renewing themselves, instead of, as in the past, people being parachuted in to do it to them, then we will grasp the chances offered by local strategic partnerships (mostly set up and run by local councils) to recognize and remove perverse incentives, and pressure national agencies to do so too.

Stop rewarding:

• landlords who set poverty trap rents: blacklist them (no more taxpayers money)!
• landlords who develop unwanted or rubbish housing: blacklist them!
• public sector service providers who break the terms of ‘service level agreements’, or contracts to poor neighbourhoods. Instead, the customer group should be king and funding should be made available for them to do it themselves, or contract another service provider, perhaps using an automatic bar – ‘three strikes and out’.

Start rewarding:

• volunteers who are jobless: get the DSS off their backs if they are genuine community activists and making efforts to find paid work via a period of volunteering (employability)
• volunteers with jobs: get the employers off their backs by giving, for example, employer tax credits for community secondments.

Take the money (Community Whatever Fund) and use it to:

1. Set up community empowerment programmes, run by locals with paid input from experts (from Co-operative Development Agencies, tenant empowerment agencies, community development teams and charities, for example).
2. Work up a community plan to cover crime, health, unemployment, credit, education, housing, and anti-poverty measures.
3. Create a community development organisation (CDO). This is an idea imported from the United States. The US ghettos are not the only areas where these are highly successful vehicles; they vary greatly with a few covering more than a few neighbourhoods, while one or two cover whole states. In the British context, community development organisations should:
   • be elected by universal suffrage (of those who live, or live and work, in the area)
   • demand and develop community owned and run assets
   • demand the ability to borrow, or cross-subsidise, from successful projects, to seed new projects, even new organizations
   • be built around existing successful democratic ‘beacons’ (such as a community association, credit union, housing co-op, or community shop) and not emerge from scratch (to limit the danger of busybodies and parasites).
   In this radical scenario, with the people of poor neighbourhoods taking control:
4. The CDO refurbishes buildings and puts in social enterprises to meet needs for furniture, household goods, a recycling service, cafes, food stores, social facilities, healthy living clubs, gyms, childcare, nursery and crèche facilities, training, homework clubs, electronic village halls, community activities and advice, and local or social businesses from a tenant co-op housing office to a post office, car repair workshop, and painters and decorators.
5. The CDO makes all its component enterprises into hybrid co-ops, with community, worker and consumer seats on board.
6. The CDO internalises responsibility in the community, and in each component co-op, for success, failure and innovations.
7. The CDO externalises risk and problems – to the council, the market, and its paid experts (the historic risk of polluted land, for example, or technical problems with particular business structures).
8. The CDO, representing the community in this respect, negotiates service level agreements and contracts, so that the ghetto consumer is king (not a welfare recipient).

It can reasonably be countered that this is impossible, and it will never happen here. Certainly, that seems to be what was said when the black churches and the voluntary sector started setting up just this kind of operation in the US ghettos.

They said they could create social and community capital where the state and market had failed. They were told they couldn’t.. They did.

They said they could take property at nil value and get investors in, raising the standing of the ghetto areas, and enabling the CDO and residents to access credit again. They were told they couldn’t. They did.

They said they could tackle and reduce crime, especially gun- and drug-related crime. They were told they couldn’t. They did.

They said they could make the ghettos desirable places to live for public and private sector tenants, and for homeowners. They were told they couldn’t. They did.

They bluffed that they could provide training, work, and social entrepreneurship in sustainable, locally-owned, democratically-run businesses, meeting real needs, and even demands, in the neighbourhoods and outside. They were laughed at. They did it.

But it didn’t happen overnight. And here, it won’t happen overnight. This will take a generation; and there will be setbacks. But, for communities on the edge of the abyss, or already in it,  it is worth a shot.

Community empowerment on this scale hasn’t been done before so it will be expensive; will require intensive help and support and more experts than exist to go round. Radical democrats, inside and outside poor neighbourhoods, should build alliances to demand a massive expansion of support networks, with each neighbourhood demanding funding to buy in training for new experts to be employed by a co-operative development agency or equivalent empowerment business. They should also insist the CDA is accountable to the people of the neighbourhood – via a legal contract; by regular oversight and evaluation; and by taking a seat on its board.

The only practical medium and long term way to empower communities to this degree, and on this scale, is to set up more CDAs, seeded from existing agencies.

Researchers have noticed a ‘halo effect’ from regeneration schemes which work in this way, where additional social and economic benefits materialise alongside those targeted originally. For example, neighbourhoods on the area’s borders – which remain un-regenerated – improve as their property values rise, and education, health and other harder to measure aspects get better. Within the regeneration area itself, there is an indirect positive impact on social and economic factors.

The lesson might be, ‘social capital builds social capital’. At least, we can say we have already tried the opposite.