On an international scale, in the European Union there are two main regionally based funds – the European Regional Development Fund (ERDF) and the European Social Fund (ESF). The ERDF attempts to reduce regional disparities within its member states by providing relevant assistance to regions that are comparatively undeveloped with little industry or employment. Grants are given to both public authorities and private firms, with assistance in the form of improvements to the public infrastructure and the available land (e.g. redevelopment of derelict industrial sites) The second fund, the ESF, gives financial aid to areas in order to retrain redundant workers from older traditional industries with modern skills and techniques. This is increasingly important due to the shift that has taken place over the last 20 years from traditional large metal and chemical based industries to smaller hi-tech firms. In 1993 regional policies accounted for 25 per cent of the EC’s budget, with 80 per cent of it allocated to remote rural locations, and the remaining 20 per cent to regions with traditional industry that were suffering from the effects of de-industrialisation. For smaller countries on the periphery of the European Union, such as Ireland and Greece, the ERDF’s contribution to regional development has been important, but generally the EC’s policies have only achieved a slight reduction in regional disparities.
The ERDF have undertaken various schemes within the United Kingdom, with varied success; its partial funding towards the redevelopment of Hownsgill Industrial Estate, as an element of the regeneration of the Consett area, was successful as it created a new sector of local industry. The local economy and regional employment was once based solely upon steelworks and heavy industry, but it has now almost disappeared, replaced by a small number of light service industries (e.g. food manufacture) and retail outlets. Positively this has widened the employment base in the Consett area, and cleaned up the environmental pollution greatly, but it has also caused the collapse of the townspeople’s previous way of life. Consett was a one-industry town, and whilst the redevelopment is undeniably for the better when looking to the future, the removal of the heart of the old town has had a substantial impact on the current workforce.
In the United Kingdom, the government have been keen to adopt regional policies in order to discourage any disparities between the north and the south. Looking at the UK’s political history, the Conservative party have generally shown the regional policy concept less enthusiasm than the Labour party, particularly highlighted in the 1980’s where spending on regional policies was almost halved under Mrs Thatcher’s government. Her Conservative party believed strongly in the ‘free market’ and in minimal government intervention, although a contributing factor beyond the government’s control was the influence of the recession of the early 1980’s.
In an attempt to prevent further decline, the Conservatives remodelled the regional policy in the 80’s. Industrial Development Certificates, which controlled the location of any new industries wanting to set up business in already prosperous areas, were scrapped in 1981, along with Special Development Areas. In the mid and late 1980’s, regional policies were made even more cost-effective, with the number of regions that qualified for financial assistance dramatically reduced. Automatic Regional Development Grants were completely abolished in 1987, and with a shift in emphasis to the creation of jobs, the preference of financial aid was given to small sized businesses.
In addition, Enterprise Zones formed another of the government’s major policy drives in the 1980’s. They were designed to tackle the problems of inner cities and areas severely hit by de-industrialisation in the 1980’s. Launched in 1981, there were 25 created up and down the country by 1983. The idea behind the schemes was to encourage private investment through offering financial incentives and simplified planning controls. (E.g. firms locating in Enterprise Zones received a rates exemption from development land tax for a period of ten years.)
Enterprise Zones were no longer designated after 1983, as the government became concerned about the rising costs of a programme that only touched a minority of the United Kingdom’s decaying urban and industrial areas.
One of the more successful Enterprise Zones is that of Merry Hill, Dudley. Previously Round Oak Steelworks, the site of the Enterprise Zone now lies beneath the Merry Hill Shopping Centre and the ‘Waterfront’ development. Encouraged by the governments10 years tax-free incentive, a number of retail outlets established themselves in the mid 1980’s within purposefully built warehouse units on the site of the old steelworks. These ranged from Allied Carpets to B&Q, and attracted more and more retailers to the area. In 1987 a covered shopping complex was completed as phase one of the project, encompassing a wide diversity of national chain stores, specialist shops and restaurants. These provided many unemployed in the area with new jobs in the service sector, and the cumulative causation effects have brought further extensions to the shopping malls, a development nearby known as ‘The Waterfront’, a congregation of nightclubs, bars and public services including finance and telecommunications (several office blocks and canal side developments owned by the likes of EGG, Prudential and Telewest Communications) with a monorail service linking the two. The monorail has now been scrapped due to ownership disagreements, although planning permission has recently been granted for an extension to the Midland Metro light rail service, linking the area to the cities of Wolverhampton and Birmingham.
Although the Merry Hill Enterprise Zone has not succeeded in replacing the jobs of all those made redundant by the closure of Round Oak Steelworks, it has employed thousands in new jobs in the service sector. The downside to the success story of Merry Hill is that through the major migration of retail outlets to the site, smaller shops in local town centres have been forced to close. The once thriving markets of the area, in Dudley, Brierley Hill and Wednesbury in particular have been affected significantly.
To conclude, individual development policies have been received to great acclaim and with great success in the UK, in particular Dudley, West Midlands and Corby, East Midlands, but as a whole, regional development policies have been a fundamental failure. Their original basis was to balance the regional disparities between certain areas within a country, but if the original assisted areas in the UK (1934) of South Wales North England and Scotland are compared with the recent assisted areas (1984) of Central and West Scotland, South Wales, and Northeast England, it is clear that there has been little or no change. The least prosperous regions of the UK today are very much the same as they were half a century ago.
Although regional policies are believed to have created around 800,000 new jobs in assisted areas in the decades between 1960 and 1981 and the same policies in the 60’s and 70’s helped to protect and rejuvenate these areas, each new job in the 1970’s cost the government approximately £35,000. Much of the increase in manufacturing firms was in the form of externally controlled branch plants, usually belonging to trans-national corporations, which not only offered a limited range of employment opportunities, but were especially vulnerable to closure during the 1970’s and 1980’s in times of recession.
