A Local Economic Strategy for Thanet

thriving thanetOn Friday 23rd Neil McInroy will be giving a talk on ‘Building a Thriving Thanet’. Neil is the chief executive of the Centre for Local Economic Strategies, which has been at the forefront of an approach to economic planning called ‘community wealth building’.

‘Community wealth building’ sets out to use public and third sector cashflows to create positive feedback loops in local economies. Procurement policies favour local companies over large contractors, an activist council helps build capacity in the private sector where it is lacking, and promotes the co-operative sector where appropriate. There’s much more to be said about it, and Neil will be able to explain much better than I can the difference it has made.

Here I just want to make a few preliminary remarks about what a local economic strategy for Thanet might look like.

Local, Really Local

I am going to concentrate for now on Margate, because it is where I live and where I have thought most about the relevance of community wealth building. Getting Margate’s model right will have important spill-over effects for the rest of the district. But this is one piece of a puzzle that includes Ramsgate, Broadstairs and a mixed hinterland that includes high grade agricultural land and large scale retail at Westwood Cross.

It is important to remember that when we talk about Thanet we are talking about a built-up area and periphery that is home to more than 140,000 people, as large as many English cities. Given its distance, and difference from, Kent’s other main population centres, it is worth asking whether Thanet is best served by its current system of local government, or whether it would make more sense if it became a unitary authority.

The Curse of Beauty

Like many other seaside resort towns in England, Margate suffers from a particular variant on the ‘resource curse’. This was first proposed by economists who wondered why countries with massive oil and gas reserves were so often poor. The easy money from natural resources, the so-called resource rent, promotes economic inequality as revenues are captured by a relative handful of public and private elites. Behind a facade of respectability, rewards are distributed through corrupt patronage networks and their ability to move money offshore starves domestic sectors of investment and talent.

No one is suggesting that local government in Thanet is corrupt, of course. But in other respects Thanet is a bit like, say, Saudi Arabia. In its heyday as a resort, a small number of landlords captured the massive revenues generated by seasonal tourism and, rather than using the money to develop the rest of the economy in the region, they moved the money out of area. Their revenues were not dependent on the patient building of a productive base. People came for the sun, sea and sand. If the beer was expensive and the ice cream was made of pig fat, that was life. Or was until Benidorm beckoned.

As Margate’s fortunes as a resort recover, thanks in part to public investments via the Heritage Lottery Fund, it is important to grasp the extent to which the tourist sector is underpinned by the massive, unearned resource that is the town’s coastline and its capacity to generate heart-stopping skies. This should be understood as a public, commonly held asset, and the rents derived from it should be treated as source of public revenue, not as a windfall for private landlords. To put it another way, the value created by the location – the beauty resource – should be taxed and used for the purposes of general enrichment. (The value created by the ingenuity and effort of people is another matter.)

Sun, Sea, and the Socialisation of Resource Rents

The fortunes of the town depend on the distribution of revenues derived from its locational advantage. Both direct public ownership of land and taxation policy have a role to play in ensuring that the resource rent supports the local economy, instead of being lost ‘offshore’.

The public authority has an equally vital role to play in ensuring that resource rents are spent back into the local economy in ways that promote democratically agreed objectives.

Money kept in the area could be used to improve the town’s viability as a year-round resort, and to enhance the public realm. In sectors like public health it is possible to imagine a ‘sea-bathing spa’ approach to investment that both enhances its appeal as a destination and improves the quality of life of Thanet’s permanent residents. (The proximity of some of the best beaches in the South East to some of its most deprived communities is thought-provoking to say the least in this respect.) It could also be used as a source of start-up funding for local co-operatives, to strengthen local supply chains, and so on.

A spirited district council, backed by a public who understand what is at stake, could do some of this. To do more, it might be necessary to change both the structure of local government in Thanet in particular, and the tax-raising powers of coastal communities more generally. Coastal resorts are a particular kind of place and there is something to be said for an approach that takes this particularity seriously and develops a shared agenda from Margate and Great Yarmouth in the East to Blackpool and Weston-Super-Mare in the West.

Thanet, Jewel of the Thames Riviera

Margate ought to be a source of sustainable revenues for the rest of Thanet. Its needs as a visitor resort ought to be brought into harmony with the people who live in the area. Co-operative businesses created and sustained by the visitor economy ought to be able to expand and diversify from the visitor economy into other sectors as their collective capacities develop. But none of that will happen without a political fight, that will peel the small businesses away from rentiers and build a new coalition around a reformed and much more fully democratic public sector.

I’ll leave it there for now.

 

 

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