Urban Economics and Urban Policy

Urban Economics and Urban Policy

Challenging Conventional Policy Wisdom

Paul C. Cheshire, Max Nathan and Henry G. Overman

In this bold, exciting and readable volume, Paul Cheshire, Max Nathan and Henry Overman illustrate the insights that recent economic research brings to our understanding of cities, and the lessons for urban policy-making. The authors present new evidence on the fundamental importance of cities to economic wellbeing and to the enrichment of our lives. They also argue that many policies have been trying to push water uphill and have done little to achieve their stated aims; or, worse, have had unintended and counterproductive consequences.

Chapter 8: Urban policies

Paul C. Cheshire, Max Nathan and Henry G. Overman

Subjects: economics and finance, urban economics, urban and regional studies, urban economics


All governments are concerned with tackling the problems of areas that experience sustained economic decline and/or underperformance. In Britain, as elsewhere, several factors have combined to raise profound questions about future government policy in this area. First, as discussed in Chapter 2, it is clear that the most recent recession has impacted on different places in different ways and, unfortunately that most of the places that have suffered most were already struggling and are likely to be the least well placed to recover. Second, the recession has had a negative impact on government finances. Coupled with the credit crunch this has had serious implications for the viability of traditional funding models for local development and regeneration policy. Specifically, in Britain, this model relied on high levels of government expenditure leveraged with 'Section 106 agreements' extracted from private developers who were benefiting from relatively buoyant commercial and residential property markets (and as was explained in Chapter 6, such agreements are mostly reached for the biggest development applications so disproportionately benefiting richer and growing areas). Both national government cutbacks and a stagnated construction industry make the situation post-2007 far less favourable for local government finances (Parkinson 2009). The third significant factor is, as explained in Chapter 7, the change in government. The post-2010 coalition places greater emphasis on decentralised decision making across a range of policy areas, including those of regeneration and local economic development.

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