Spatial Economics Research Centre Proposal

Economic prosperity in the UK is very unevenly distributed across space. Tackling these persistent disparities is a key policy objective. Providing a rigorous understanding of the nature, extent, causes and consequences of these disparities, and identifying appropriate policy responses, is the primary objective of the Spatial Economics Research Centre (SERC). The impact of the recession and the government's fiscal position increase the importance of developing this rigorous understanding if we are to identify appropriate policy responses.

The Centre structures its research around five inter-linked programmes focused on the following central questions:
- What matters more - 'who' you are or 'where' you are? For example, do low skilled workers do badly wherever they locate? If so, is the spatial concentration of low skilled workers in particular places enough to understand the differences between places? Or is it that where someone lives or works has an additional effect on outcomes? In other words, to what extent are spatial disparities the result of the sorting of more productive sectors, firms or workers versus causal place-based effects on outcomes? Are these differences offset by the costs of living and producing (e.g. higher house prices and rents)? What other factors matter for the value of places and for wellbeing? Are the answers changing over time as a result of the recession? Programme 1 on the scale and nature of UK spatial disparities focuses on these issues.
- Even if place does not matter, what drives the spatial concentration of particular types of workers and firms in particular places? If place does matter over and above individual characteristics, then what causes these effects? In other words, through what channels do place-based effects arise, does sorting play a role, and are there feedbacks between the two? How do land and real estate markets function to determine the offsetting costs? What role do market failures and policy play? Individuals and the interaction between migration, labour and housing markets will be one focus of our research. Another will be firm innovation and enterprise and the commercial land market. These projects are necessarily overlapping, but we structure our research by analysing the causes of place-based effects and of sorting in Programme 2, while Programme 3 considers housing and land markets.
- What are the implications for the spatial structure and evolution of the economy and for the linkages between places? Why are the resulting spatial disparities important? How are the answers to these questions changing in response to globalisation, technological change and other factors? These questions are covered in Programme 4 on the structure and evolution of the spatial economy. Increasingly, our research in this area focus on the impact of specific policy interventions to both understand the impact of the policy itself and to use the intervention to better understand the workings of the spatial economy.
- What role does government play in shaping these inequalities? What policies and governance arrangements are most appropriate to tackle them? Will decentralisation ameliorate or accentuate disparities? Programme 5 on spatial economic policy and governance focuses on these issues.

Who will benefit

Since inception, SERC has inhabited a richly populated institutional landscape. This landscape is changing, with some organisations disappearing (e.g. Regional Development Agencies), others emerging (e.g. Local Enterprise Partnerships) and most operating with constrained resources.

SERC staff have extensive experience of engaging with many of these beneficiaries and users. In addition to the funders, SERC research benefits government, business associations, trades unions, and the voluntary and community sectors. We cannot directly engage with such a diverse group. Instead, we focus on intermediary groups to identify individuals and organisations who may be interested in engaging more directly.

Several types of organisations should benefit from our research:
- Organisation: e.g. government; the Core Cities Group; LEP network; the CBI and BCC; the TUC; think tanks such as Policy Exchange and the Centre for Cities.
- Temporary task-oriented groups: e.g., the Portas Review of the High Street
- Informal networks: e.g. the new, 'virtual' BURA network
- International organisations: e.g., European Union Directorates, OECD

We already have access to many of these organisation. LSE has close relationships with BIS, DCLG, DfT, HMT as well as local government in London and Manchester. CURDS has long-standing relationships with the Core Cities Group, and LAs across the North East, while Swansea has close links with WAG. We also have close links with key think tanks, e.g. SERC Affiliates have worked or are working in Centre for Cities and Centre Forum.

How they will benefit from our research

The relevance of SERC's research is stronger than ever. First, the UK's long term spatial disparities remain persistent. Second, in the short term, these gaps look likely to widen, as both the financial crisis and deficit reduction have had spatially uneven effects. Third, government is making substantive policy changes through its 'localism' agenda - these may profoundly change centre-local relationships, the planning system and framework for housing supply.

Specifically, SERC's research has potential for beneficial impact across:

- Central government - Will benefit from research on spatial disparities, and from the Centre's rigorous evaluation of policies designed to promote growth. For example, SERC work on RSA and LEGI has direct relevance for the Regional Growth Fund; SERC is also exploring the effect of relocating public sector jobs on local economies as well as undertaking research on spatial disparities in skills and innovation. SERC is also delivering a major programme of work on land development and planning informing efforts to reform the planning system. SERC's research on the effects of decentralisation are directly relevant to current debates and proposals for directly elected mayors.

- Local government - Will benefit from SERC's analysis of spatial economies and their dynamics, and on local policies to promote growth. SERC is already working directly with one of the Core Cities, Manchester. SERC staff have also conducted work on London's economy in the recession. SERC will seek similar collaborations with other cities. We will also work with the Core Cities Group and LSE London to host policy-focused conferences and seminars.

- Industry bodies, think tanks and international organisations - As 'policy intermediaries', industry bodies and think tanks have a clear benefit from access to high-quality, independent research that they can use to develop robust policy messages. In its first three years, SERC has developed close links with key industry bodies and think tanks across the political spectrum.

- Informal networks - Many of the UK's current spatial policy networks, such as BURA, are virtual and resource-constrained. They will benefit from open access to SERC's research findings, through the DP and PP imprints, free events and the widely-read SERC blog.