I am not here referring to the economy, though the poverty of that surely lies behind the crisis for the Welsh nation made manifest in the 2011 Census details released at the end of last year. Two facts speak eloquently of the crisis.

One is that less than 20 per cent of the Welsh now claim to be able to speak Welsh, a decline of over one per cent from 2001 which – though I argued against this interpretation at the time – had been widely depicted as a positive turning point in the recovery of the language. The Welsh Government’s official target was to oversee a rise in the proportion of Welsh speakers of five per cent since 2001. Think again. Of 22 council areas in Wales, only three have over 50 per cent of their population able to speak Welsh.

Fewer than six per cent of Wales’s children come from homes where both parents speak Welsh. Bilingualism may be the official Welsh objective but as of now it looks like Wales will have a monolingual future. Arguably, it is returning to the natural state of national communities which is to speak one language. It’s just that instead of Welsh, the language of my grandfather’s near monoglot community in west Wales, that language will be English.

The second fact is almost as big. Only two-thirds of the Welsh describe themselves as Welsh which is not surprising given that almost a third of Wales’s current inhabitants were born outside Wales, mostly England. In some districts in ‘Welsh speaking Wales’ English born migrants make up 40 per cent of the community. In Powys today a bare majority are Welsh born. If we go back further and dig a bit deeper, we may find that perhaps 40 per cent of today’s total Welsh population were either born in England or have one parent born in England.

Funnily enough, the highest proportion of those claiming to be Welsh can be found in the monolingually English Valleys of south Wales where I come from. A century ago they were the great magnet of migrants from the West of England. In my own street in a mining village 80 per cent of the surnames are English. No-one speaks Welsh apart from a minority of kids whose parents sent them to the Welsh-medium school – and they tend to forget it after they leave either because they live their lives entirely in English or because they leave for England. Some 50,000 Welsh people leave every year for university or jobs in England, to be ‘replaced’ by usually (much) older English people seeking a better lifestyle or, indeed, retirement in Wales.

By the way, of those Welsh born graduates who stay in Wales half get jobs in the public sector. Without a bloated, English funded public sector, Wales wouldn’t have the economy to retain even those few talented youngsters it does retain. This all explains why the population of Wales has slowly moved from 2.5 to 3 million in the last 100 years, while the population of England has doubled.

Welsh speakers are amongst those leaving Wales for education and work. But they also leave the Welsh speaking areas for education and work in Wales itself, usually to the southern coastal towns. There seems to have been an assumption in Welsh Government and education circles that by some magic a mixture of official bilingualism, S4C and the provision of Welsh-medium education would do two things at once: maintain Welsh in the traditional heartlands for the language, and strengthen it in the towns and cities to which Welsh speakers were moving, supplemented by new recruits to the language from kids from English speaking homes going to the Welsh-medium schools. Neither of these two things has happened in any significant way.

I derive no satisfaction from the twin facts that the Welsh language is bleeding to death along with the absence of any real force behind Welsh nationhood – apart from a devolution settlement a bare majority voted for. I am reminded that Saunders Lewis, the founder of the Welsh Nationalist Party, was opposed to bilingualism as the objective of a Welsh Government. He knew there were no examples of a nation anywhere which spoke two languages other than as a path to the triumph of one over the other. He also warned that if self-government was attained before a future for Welsh was secured then it wouldn’t have one. He was right on both counts.

Where next? First a personal observation: I want the Welsh language to flourish and the Welsh nation to have more than 65 per cent of its inhabitants claim they belong to it. I also want the population of Wales to take off and grow to perhaps 4.5 million by the end of the 21^st Century rather than stagnate and age as it has done. While all these things will be difficult to achieve, let alone balance, I’m not sure what a Welsh Government worth of the name thinks it’s doing if it doesn’t go for and attain these goals. However, as I write this I’m reminded that for whatever reason Wales has become less Welsh and less wealthy under a Welsh Government of its own than it had when under the Saxon heel.

Going back is not an option. I resisted devolution in the 1990s and fought against the delusions of those who thought the battle for the language could be won in the Welsh-medium schools of English speaking Wales. My Ph.D thesis was about the anglicisation of Pontypridd. I am also a qualified teacher so my concerns about the educational use and abuse of Welsh for the purposes of futile language preservation (rather than educational objectives) were founded on some understanding of linguistic history and pedagogy. Those who attacked me (sometimes physically by the way) have been refuted by subsequent history.

I repeat. It is not with delight I say this. I knew that lying to ourselves and foisting an educationally unjustifiable learning environment on English-speaking kids in Welsh-medium schools – a re-run of the Welsh Not with just a different national adjective in front – was not going to work and was wrong in principle.

Two things might have made a difference, though ‘might’ is right – since saving a minority language is a rarely achieved objective in any circumstances. Both have been missing from post devolution Wales.

One is national passion around the future of Welsh. I guess partly because Wales acquired devolution by a slim majority in a relatively low turnout, rather than fought a battle for national liberation, there wasn’t any real drive to ‘nationalise’ Wales through things like the language. I had expected there would be and feared actually that this cultural force would swamp the identity of my Wales of the English speaking former industrial heartland. I was wrong. Nothing dramatic or radical happened on the cultural front.

But then not a lot happened on any front – oh, except outcomes have eroded in comparison with England in areas such as health, education and wealth. Nothing serious then except that Wales has grown poorer, less healthy and less well educated comparatively since we went our own way.

There has been a geography to this process with unceasing out-migration from the Valleys, west and north Wales by younger aspirational people seeking a better future. These areas, where either the Welsh language or a Welsh identity have been historically at their strongest, have become economically and demographically enfeebled. And this has been all on the watch of a Welsh Government.

I am not sure the decline of these communities was avoidable. I am sure that no serious attempt to avoid this decline has been made. No concerted interventionist policy of either an economic or a cultural form has been attempted. The Welsh Government has shown itself to be timid in its use of the state and unimaginative in its use of its resources. Despite the blather about a Welsh Labour government establishing ‘clear red water’ between itself and Westminster, we have seen only a statism of consumption and welfare rather than of production.

The Welsh Government has distributed funds from the UK rather than used public investment to produce a new economy or revive embattled communities. It seems that a total of £6 billion in combined Euro, UK and Welsh Government funding has gone into the Objective 1 area of the Valleys and West Wales since 2001, but you’d be hard pressed to spot it on the ground or in the numbers.

This brings me to the second thing which might have made a difference. The continued decline in the language is in part attributable to complete absence of an economic policy in Wales since devolution. There has been a passive acceptance of UK policy and no innovation at the Welsh level. That policy has been the one which saw the south-east of England and London take off and the rest of the UK get left behind with a residual economy and few globally competitive sectors. In England this is the policy which left mass unemployment on the edge of town council estates in the North and Midlands and city centres, with shopping malls, night-clubs and empty flats. In Wales the same process has sapped the vitality of the language and those very communities whose sense of Welsh nationhood is strongest.

In responding to this twin crisis the Welsh Government should take the state by the scruff of the neck. This starts with a determination to transform Wales, a rigorous process of identifying the interventions required and a relentless drive to implement change. Our whole mindset needs to change. We are in an urgent situation and the Welsh Government needs to understand and act like it. Outside of the education department of the Welsh Government which is led pretty dynamically by Leighton Andrews who is a real reformer and patriot – I’ve worked for him, I know this and it’s obvious anyway – I see little energy or purpose. He has broken free of the suffocating consensus and complacency on education which had dragged Wales down from the peaks of the post-war period to the troughs of the noughties. We need more like him. Where are they?

Finally a word on us. I include me in us though I am now a Cymro Oddicartref, an exile. Where has the Welsh Language Society gone when it is needed most? Disappeared with the last of the native speakers into the BBC and the state bureaucracy probably. I used to have a badge with the word ‘Eithafwr’ on it, derived from when the Language Society was denounced as ‘extremist’. We need some of that disruptive, dissatisfied and bold spirit today.

Where is the trade union movement? Where is the Labour Party? Where is Welsh civil society? Broken, passive, lost with a governing class and bureaucracy out of touch, deluding itself, and irrelevant to the formidable challenges facing Wales. And I haven’t even mentioned youth unemployment – or worse, youth ‘invalidity’ – now reaching higher levels than the ‘Thatcherite’ era in Valley communities. Cry, the beloved country.

Don’t get me wrong. The area is not bucking the national economic trend and the long term structural issues remain. Essentially, it went through post-industrial dislocation from a high value engineering economy at the peak of the mining boom in the 19th through de-population and depression in which many of the more talented and entrepreneurial left for more ebullient economies in Australia and beyond. South Wales and the North of England have been through similar cycles. The differences between West Cornwall’s experience and those of Wales and the North are however as interesting as the similarities.

On the one hand, Cornwall, being even further away from London and having no city of its own, didn’t really see much new private sector investment during the boom years. Also, not having a big urban population, it wasn’t really a prime candidate for big public sector bucks. The Regional Development Agency for the region , to be fair, had a massive area to cover and its investment was inevitably  targeted more outside Cornwall than in and also had to respond to a lot of competing pressures for investment in many areas of Cornwall itself. English Partnerships took a leadership role in the area and pro rata put more investment into the area than many other areas in its jurisdiction: they were passionate about the opportunities and needs of the area, actually, despite getting some flak from local nationalist opinion because of the ‘English’ in their title.

On the other hand, Cornwall was a recipient of European structural funds and being a beautiful county did attract the attentions and money of second home buyers and what became known as the Rock Crowd who largely filled Rick Stein’s restaurants. My area didn’t see as much of the Euro-funding as we would have liked but I do think that the Euro-investment in the new Combined Universities for Cornwall project (at Falmouth) was a strategic game changer for all of Cornwall as it had had no university. I would also say that the investment in high speed broadband in the county has helped bring entrepreneurs to Cornwall. In that regard the Euro-money has been better spent in Cornwall than in Wales, which has seen no game-changing strategic investment of which I am aware.

What was missing in the Camborne Pool Redruth area for decades was much new private investment in housing, some new higher value jobs and an imaginative, iconic, project, perhaps respecting the area’s history whilst looking forward. The area is not on the coast and has a lot of the leftovers of its industrial past –including a deal of social housing in need of repair and renewal – and thus did not immediately appeal to second home buyers or residential developers. The community like many in the UK had also got into a bit of a rut in relation to change from without and tended to say no to development whilst wanting to see renewal and new jobs.

Whilst none of these fundamentals was going to be changed easily or overnight and the economy remains fragile, I was encouraged by a few things I saw on my visit after Christmas. One was new housing at Dolcoath in Camborne. The second was some new economic and housing developments in Pool and the third, most impressively, was the great new venue /mining museum/leisure attraction at Robinson’s Shaft in Pool , called Heartlands. The last astonished my by the professionalism of its implementation and the excellence of its design. Largely funded by the National Lottery it bears the imprint of many local exemplars and heroes who I will embarrass by naming in this piece. I will go there first and come back to the housing developments.

The core inspiration for Heartlands I guess was to ensure the preservation and re-presentation of one of Cornwall’s key historical mining assets in Robinson’s Shaft. And those who run and oversee Heartlands have done a great job in securing that objective. But they are doing so much more in what I think is now one of Cornwall’s finest public spaces with an innovative park for kids, a performance venue, retail outlets, some incubator units, a café and a commemoration of Cornish emigration. And all done with great attention to design, architecture and materials. I cannot recommend it highly enough. Go there – as regeneration professionals or as visitors seeking a good family day out.

And the exemplars and heroes? Sorry guys but here goes. If memory serves, it was Scott James and David Sillifant of Kerrier Council (now absorbed into a unitary Cornwall, something I supported when working for David Miliband on local government reorganisation) who kicked the idea off and did so with a combination of Cornish patriotism and public sector nous – and some elan.  Although not a formal URC project it was quickly supported by the URC and its partners and some of our officers played supportive roles. We were the only URC to have a dedicated urban design capacity in-house and I noted when I went to Heartlands that our superb urban designer Tim Kellett was involved in its design. I’m not surprised.

Finally – though there I am sure there were other local heroes in involved including the URC board, CEO and team , leading County Council staff and politicians, EP (then the HCA) and RDA – I would name the local Pool Councillor and community leader, Malcolm Moyle who has been at the heart of most initiatives in the vicinity for decades and chairs the board which oversaw the Heartlands project. Well done all. It looks great and shows what a combination of local leadership, brains and cash can do even in challenging circumstances. I confess to shedding a tear when I saw it but then I’m a known girl’s blouse!

English Partnerships and then the HCA have played a key role in the development of new quality housing in both Pool and Camborne. I was really impressed by the design quality of the new housing right in Camborne town centre which has been brought forward in a partnership between Linden Homes (Galliford Try), Devon and Cornwall Housing Association , the HCA and indeed the URC. Although the global financial crisis intervened to slow down the development and limit it to the current 90 homes as contrasted with the planned 400, a beach-head for housing led regeneration has been established. Again, have a look at it. I would say it’s the same sort of quality as EP’s award winning development at Upton and hugely better than the market normally delivered in this area. And at a density which will when fully built out support local services, employment and a more vibrant town centre. Again, Mr Kellett played a fine part in this process as did the EP team led by David Warburton and his Exeter colleagues who really put their heart and soul and cash into this residential component of the regeneration program. A lot of cash – and time and skill. They seemed to have found the right partners also in what was Midas Homes. A long way to go but a great step forward in the supply of quality affordable and much needed middle income homes locally. Both were required for urban regeneration.

EP/HCA took a long term view of the opportunities in the area and also not a narrow view. They helped buy land for some road investment and re-design needed to enable the new housing developments and Heartlands to take place. The County Council backed the roads package as part of their contribution to the URC and the regeneration program, as did the RDA,  and some new manufacturing, retail and  office jobs in key sites around Redruth and Pool near the A30, have resulted.

Again, do not be mistaken. Camborne and Redruth town centres remain in peril as do many such town centres. It is also not clear what impact unresolved and as yet undelivered plans to bring tin mining back to Pool (at South Crofty) will have on wider regeneration and residential activity. I note only that 9 years after I was sceptical about the capacity of tin mining to return to Crofty and 8 years after I left not an ounce of marketable tin has been produced. More jobs have been created by Heartlands and the other projects in the area than by Crofty. I do not think that the tin price will ever rise to levels that will bring a serious number of high value jobs to the area; and even if it were to, most of those jobs would have to be open to workers from all over the EU not just local Cornish lads .

More importantly one mine will not recreate what was most important about 19th century Cornwall: its broad and innovative engineering sector. I also cannot see how commodities mining can co-exist with the creation of new residential development in what is a very urban space. This isn’t Western Australia we are talking about .Someone having the right to mine 40 yards below any house in the area will destroy the housing potential of the district which many have spent a decade trying to create.  I think the area needs to move forward not back. And it has been doing so in really challenging circumstances and times.

Congratulations to all and good luck to some very fine community leaders and regeneration professionals. Your experience is more indicative of the challenges facing much of the UK than East London has been, with its unique Olympic impetus and benefit from being so close to the economic action. Your successes are thus all the more impressive. I doff my cap.

Perhaps the most important aspect of it this year is its evidence that Australian cities, despite physically continuing to expand outwards – Perth for example will be 120k long in a generation from now – are actually in value terms beginning to contract. That is to say that as ‘ most of the industry sectors that are experiencing rapid growth are located in city centres and rely on increasing job densities to drive their productivity’, cities, measured in terms of the value of economic activity ‘may be beginning to shrink in on themselves, reversing the dispersing forces that have been dominant since e the end of World War II’.

This process is directly linked to two contradictory economic trends in Sydney in the last 15 years: the doubling of the proportion employed by the financial and professional services and the halving of employment in manufacturing. This sectoral shift is also a geographical shift as ‘knowledge jobs’ have clustered in Sydney’s CBD whereas manufacturing jobs were more dispersed with Western Sydney playing a leading role. The increasing weight of the CBD for desirable, high valued added knowledge jobs has led to a massive premium on homes nearest the CBD, transport congestion and a socially and economically unbalanced city.

Although NSW planning policy on paper favours the compact city formula and higher density housing, a combination of poor leadership /governance and nimbyism plus tax incentives for low density homes, has weakened that policy in reality. Yes the large majority of homes currently built are flats in existing areas but the total number of homes being built is half what is was at the turn of the century and maybe a third of what is needed. Hence the home-price explosion which has meant that it now takes 9 times average salary to buy a home in Sydney but also that whereas homes furthest from the CBD have risen by 200% in real terms in the last generation, homes closest to it have risen 500%. And a rising proportion of people in the latter homes are renting.

This is partly changing taste and demography. There is both less capacity to access homeownership today in districts close to the CBD and possibly less appetite. Young people are living with parents longer which also means they form their own families later. When they do leave the nest they no longer wish to drive 60 minutes to work and indeed fewer of them than ever own their own cars and drive. This is a significant new trend leading to greater housing demand on CBD-centric districts or districts close to public transport linked to the CBD.

This is where the tax incentives and nimbyism kick in to ensure that what extra demand there is to live in these CBD linked areas finds its way into higher home prices, insufficient supply of new homes and a radical shift towards renting. Negative gearing, capital gains tax benefits, stamp duty and development levies on new homes have resulted in existing homeowners being able to leverage their own homes to acquire a second and a third homes, squeezing out those wanting to become owners from doing so, compelling them to be renters. Australians believe themselves to be uniquely egalitarian and their country to be where the concept of the ‘fair go for all’ applies more than any other. In housing and the very shape of Australian cities, they are deluding themselves.

Essentially, home-ownership and particularly house-ownership, is no longer something even the reasonably well off can contemplate within 30 minutes travelling time of the CBD- without the bank of mum and dad. Inheritance has become the major route to home ownership in Sydney, which doesn’t sound very Australian to me.

The fact that affordable homes are only available in low density places far away from the CBD indicates that the price that is being paid for this unbalanced city is not just in house prices. The State of Australian Cities shows and work by SGS Consultants for COAG shows that those living in denser places near CBDs enjoy economic, community, education, health , social mobility and well-being benefits in advance of those who live in dispersed low density settlements . Indeed so strong is the evidence for the advantages of denser, more compact city development arising far from being closer to the economic action, that it raises the question as to why low density development on greenfield sites in the middle of nowhere is allowed let alone encouraged.

In Sydney the answer to this is a failure of leadership and governance, as well as imagination. Rejecting brownfield development under pressure from self-interested nimbyists and enabling greenfield development is the option of least resistance though as the Grattan Institute has shown there is less and less desire to live in such places and the dream of a quarter acre block is in reality so last century when compared with the desire to live near clusters of economic and social activity. The governance problem at the heart of Sydney’s housing malaise is the absence of big city government at a metropolitan scale to take the bold strategic decisions required to make the city work for all.

Ken Livingston and Boris Johnson in London and the Chicago experience over decades show you what metropolitan big city governance can do. In London, the eastward thrust of policy and public investment for 15 years has been the result with the Olympics being the icing on the cake of effective strategic governance for Greater London. Even Brisbane with its single council has been doing better than Sydney with its 43.

This is why the NSW government’s proposed reforms to local government and the planning system are so vital. Sydney simply cannot sort its problems or deliver on its economic potential without fewer but bigger more strategic councils or without getting rid of a Planning Act which has just become a Nimby’s Charter. Not only are such reforms vital for progress we also now know that the unreformed local government and planning systems have been holding Sydney – the engine of NSW and national prosperity – back .

More , they have been creating dispersed low density edge communities in Sydney which will be the sink estates or low value precincts of the future as the economy falls back towards the CBDs.  Such places are also where new migrants are clustering far from jobs, social support services and access to the kind of social mobility and cultural immersion in Australia which previous generations were afforded by living in denser inner Sydney locations.

I think the NSW government has begun to get this. The question is whether they have the political will to face down the nimby forces in their own culture. They are not alone in this. The Green Left is deeply hypocritical on the subject of growth – favouring high density development in the abstract or preferably Western Sydney but not where they themselves live, in the inner West for example. Both these forces will collaborate to prevent local government reorganisation (which they will caricature as ‘centralisation’ when nothing disempowers a community more than being trapped inside a council of 15,000 people with no capacity or resources to shape the market or be an equal partner with State government) and to roll-back the proposed planning reforms ( which they will depict as ‘pro-developer’ when they are merely pro growth). This nexus of self-interest and inertia in Sydney has to be broken for the city to fully realise its potential and to manage growth successfully. Will it? Can it?

I find it interesting that almost all of the above content can be easily applied to the apparently quite different London or other big UK city scenario. This fits another thing I’ve begun to notice and which the study of globalisation is showing us: global cities have a lot more in common with each-other than they do with the individual countries in which they find themselves. That’s for next time.

For this time, I conclude by suggesting you have a look at Enrico Moretti’s impressive book called ‘The New Geography of Jobs’. This is about not just the agglomeration effect of cities but about the way in which certain cities are racing ahead because they are becoming agglomerations of talent and concentrations of graduates. Really worth reading.

It also reinforces what I’ve said for some time about whether GDP or disposable income are the best measure of wealth of a society. Regular readers will recall that I have disagreed with the Welsh Government economists who are selling the line that Wales is better off than the GDP levels indicate because property being cheap makes disposable income higher.

Moretti understands this but points out crucially that by contrast with Wales where labour markets are weak and home–price inflation far lower than in the South of England, ‘Homeowners in strengthening labour markets gain twice, both because of higher wages  and because of higher property values . For them, the effect on well-being is larger than the increase in purchasing power because of the capital gains on their property’. He concludes: ‘a significant part of the wealth created by America’s dynamic innovation sector accrues not just through the labour markets but through the housing market’. What’s true of America is true for Old South Wales as much as New South Wales.

Its main focus is however urban policy since the 1997 Labour government and what governments, policy-makers, and practitioners should learn from that considerable body of experience when framing future regeneration policy. I say ‘future’ because this government has clearly learned nothing useful from the 1997-2010 period . In essence they ripped off the bandage that had been UK urban policy for decades and replaced it with a sticking plaster and wonder why the patient lies bleeding before them. Then they kicked him when down through a macro-economic policy which is breeding depression and long term multi-generational worklessness just like we saw in the 80s – and in exactly the same places.

It was said of the Bourbons when they returned to power after Napoleon that ‘they had learned nothing and forgotten nothing’. David Cameron , whose sense of British history is shaky as we know from the Letterman show , shows an unerring power of recollection in this aspect of governance. He runs the country from and for the south-east as has been the norm – apart from the odd Labour government or Heseltinian attempt to regenerate the regions – since at least the collapse of manufacturing in the UK in the 1920s.

The government I used to work for didn’t get it right either….

Don’t get me wrong. I was a critic of the inadequacy of the UK’s regional , urban and regeneration policy between 1997 and 2010 even when I was working for the government which created and delivered it. When I advised them on urban regeneration, housing and planning, one of my jobs was to review the impact of things like the New Deal for Communities, Urban Development Corporations, City Regions, programs like Decent Homes  and indeed agencies such as English Partnerships and the Housing Corporation. The evidence was mixed and many of these initiatives produced useful if isolated victories but it was clear that there was no great turnaround in the economic fortunes of the regions outside London and the southeast. All had benefited from national economic growth from the early 90s through to 2007 – largely founded we know know on funny money from China or even Ireland , an out of control financial services sector promiscuously supported by successive governments and a fantastically complacent and indeed compliant set of regulators – and many town centres had seen significant new investment and refurbishment . But the gap with London was not closing and indeed was growing.

And while jobs grew in retail and the public sector , manufacturing slumped further and with its continued decline worklessness amongst the low skilled grew inexorably and multi-generationally. In certain neighbourhoods, often the ones we targeted for the New Deal for Communities, poverty and deprivation clustered and indeed grew. Council estates, particularly those on the edge of the former industrial towns, grew to be bastions and indeed generators of social exclusion and concentrated poverty. ‘Broken Britain’, of which we hear even less now when it’s getting more broken as an act of policy , was formed in such places at the moment Brown was grandiloquently announcing the end of boom and bust.

The Work Foundation report is a good  analysis

Although I now live and work in Sydney as the CEO of the Committee for Sydney and part-time Principal for Arup , I was a special advisor to a number of  UK local government , housing , planning and urban regeneration ministers off and on between 2005 and 2010. The Homes and Communities Agency wouldn’t have existed without my contribution to its creation, working with Baroness Ford and a very few others. For those who don’t know me I also tried my hand at running urban regeneration vehicles and partnerships, most notably the Thames Gateway London Partnership from 1998-2003 and an urban regeneration company in West Cornwall. I also have advised the CEO of Lend Lease on building the Olympic Athletes Village and all the host boroughs on exploiting the legacy of the games. I negotiated for the government with Ken Livingston on new planning and housing powers for the London Mayor and helped write Boris’s housing design guide for London. I’ve been around. I think the Work Foundation report is really important and should be read by all at work in the field, whether in the UK or internationally. That doesn’t mean it’s either original or right about everything. It isn’t. It just means it’s good and essentially correct in its analysis.

Economic convergence between regions not achieved but RDAs better than remembered…

And what that means is that despite all the effort made by the government I worked for and despite the global boom of the noughties, if the core objective of urban regeneration was to close the gap in wealth between London , the southeast and the rest of the country, we failed. Many things were done and some achievements were made – and  ‘People or Place?’ recognises those achievements. But fundamentally the job of bringing greater economic convergence between the regions and London was not done. Even more fundamentally, however,  the task of bringing economic  sustainability to vast swathes of the UK , was simply not achieved. The dependence on public spending in such places grew and grew in the period of ‘boom’. Hence their fragility now.

People or Place?  Reviews the policies and the evidence and poses a key question about all this. Is the purpose of our policy to make people or places wealthier ? There is a an ancillary question which turns out to be the most important one. If we need to do both , how?  Disappointingly, the authors’ great clarity of analysis and boldness in setting out the key questions are not matched by the range or reach of their solutions which to be of the ‘necessary but not sufficient’ kind. Or is the problem that there are only incremental things we can do in reality in the UK to alleviate or perhaps moderate but not reverse the long term economic decline in the regions?  That there is in fact no great breakthrough possible and we have to, as Policy Exchange stressed a few years back and Edward Glaser echoed in his recent Triumph of the City, which is to manage decline and organise the retreat from Sunderland, Detroit or Merthyr?

Blair’s mad vision of Neighbourhood Renewal

First things first. The authors quote without comment Tony Blair’s famous ‘vision’ in the 2001 Social Exclusion Unit report, ‘A New Commitment to Neighbourhood Renewal’   of a nation ‘where no-one is seriously disadvantaged by where they live’. I’m commenting: Blair meant ‘seriously’  nothing by this typically inflated piece of uplifting yet ultimately deflating rhetoric. The let out clause is of course that if you take the word ‘seriously’ out of the sentence it still allows for people to be disadvantaged by where they live.  Which at least is realistic . It just means that from the beginning we were unclear as to what success looked like with Neighbourhood Renewal. Which might explain why we didn’t succeed.

Perhaps the one good thing to come out of the whole Neighbourhood Renewal approach is given on p 25 of People or Place?   This is the graphic explaining the ‘drivers of neighbourhood decline’ done originally for the Prime Minister’s Strategy Unit in 2005 (see below).

Drivers of neighbourhood decline

This is a real addition to our understanding . The challenge then as now is to create the interventions and agencies which will intervene in the cycle of decline to create a new growth cycle.

People or Place essentially argues that in trying to do that New Labour policy didn’t get thre balance right between people and place interventions or agencies. I agree. It also argues that even where the emphasis was put on place interventions – for example the New Deal for Communities experiments – there was insufficient understanding of what kinds of places we were dealing with and what kinds of change they were actually capable of. It would indeed have been useful to have done the kind of analysis we saw in 2009 with the Centre for Urban Policy Studies report into the typology of the function and roles of deprived neighbourhoods.

Places with jobs and no homes or homes and no jobs

They could of course have read my column in R+R from 2000 and discovered the same sort of thing which I used to sum up (pithily and correctly I thought) by saying that there were two kinds of places in the UK: ‘those with jobs and no houses and those with houses and no jobs’. A failure to understand the differences between places meant that when places without jobs kept on losing people to other places which did have jobs because we were successfully upskilling people it looked as though our policies for people were failing because the poverty and worklessness indices of the people in the failed place remained stubbornly the same. In fact, what was going on was spatial mobility hiding individual social mobility and population churn which saw more socially mobile people leave failed places which then sucked in more poor people to replace them .

This also meant that in addition to not understanding places,people and population churn we didn’t understand the structural forces at a national or global level which were creating failed regional economies and remaindered communities. This also means we did not operate at the right scale and were attempting to get places which had not failed because of their own choices or actions to cure themselves. In essence we assumed that Neighbourhood failure was caused by neighbourhoods themselves and so could be turned around by local action when in fact failed places are where poor people congregate and concentrate due to economic and policy decisions at the regional or national government level.

‘Sorting effects’  versus ‘areas effects’

Don’t get me wrong. There are adverse area effects and concentrations of poor people without skills or prospects or bridging capital will reinforce failure in the next generation in that area. But as or more important is what academics call ‘sorting effects’: the consequences of people with shared characteristics ending up in the same places. While some personal choices determine such sorting ,such areas exist also because of structural forces operating outside and beyond those choices and because of  policy decisions made my others. These are places where poor people now end up but how did they get poor in the first place? The answer is in modern Britain is that they were badly educated or not trained , came from places where jobs for unskilled people had long since dried up , usually  grew up in single parent or multi-fathered families, got trapped in social lettings on long term benefits and are victims of multi-generational worklessness.   I add:though I said earlier in this paragraph that we didn’t understand this, I’m not so sure that was true. We may have understood that bigger interventions were  required but lacked the capacity or energy or buy-in from our political masters to do big things. I’m not sure. So we did what people often do in such circumstances: something.

One thing that comes out of the Work Foundation report quite positively is RDAs, now abolished. The evidence is that they had some impact. Yet another vote for John Prescott who made the RDAs happen in the face of Blair indifference and Brownian scorn. However, in the context of other much bigger public spending budgets and the challenge at hand, the RDAs were smaller players , able to do too little, too late.

Sensible but deal conclusions:more red meat required

And the Work Foundation’s conclusions?  These are sensible and balanced asking for nterventions in both people and place. However, in pursuit of balance it’s not clear that its recommendations will make any difference in outcomes. It raises the key issue but then does little with it. This is indeed the Policy Exchange notion that as it is expensive and difficult to achieve area effects in the depressed regions and failed places we should enable migration so that more people can go to places where they will be better off. My own view is that this must be the focus of national policy as anything else will trap further generations in failed places destroying their future as well as damaging the nation’s.

There are clearly barriers in the way of this and the Work Foundation points them out. The biggest barrier is the protectionist nimbyist nature of the housing market in precisely those successful parts of the UK economy. They all have full up signs erected by local councils intimidated by existing home-owners. Social housing also restricts mobility and again is shortest in supply already in those successful areas. People or Places? Calls for these barriers to be reduced though is not frankly confident that this can happen. It points out by the way that the Coalition’s current policy reducing housing benefit will drive social tenants out of the successful high cost parts of the UK to the margins away from employment centres. It also worries about the further residualisation or remaindering of vulnerable groups left behind if policies of active support of migration are adopted.

This leads to their drifting back somewhat in the final analysis to seeing some  virtues in more area based interventions at the local level albeit supported by worklessness interventions and economic planning at a city region level taking into account wider economic and labour market issues.

Hence it’s rather disappointing conclusion after all this that ‘there are no panaceas for economic development’, adding that ‘migration within the UK remains low,with considerable cultural and institutional barriers before a ‘bringing people to the jobs ‘ approach can work.  They talk as though some of these failed places are ancient with long established populations when most of them are the product of more or less overnight migrations in boom periods. My own Welsh mining village had a dozen homes in 1895 and a 1000 by 1900 and most of the inhabitants came from the West of England as migrants. Migration may be low now within the UK but that wasn’t the case when our industrial economy was first built – so why accept inertia now as ‘normal’?

I don’t disagree that ‘we fundamentally need an approach which is aimed at both supporting people and places’    They mean that we should support individual social mobility and that in the places leave behind ‘there need to be measures ..to ensure that vital local public goods continue to be provided and that continual low level regeneration limits the worst of physical decline’. These are weasel words really. What does this really mean? Managed decline? What about the outcomes for people in the places we keep alive (barely, expensively ) by ‘continual’(how long?) ‘low level’ (how much?) ‘regeneration’ (defined as?)?

If ‘localism’s the answer, I want to know the question

Given that as the report points out that  for the first time in forty years there is now no national program of regeneration, one wonders where the authors imagine ‘regeneration’ is to come from. Depressingly, the sham that is ‘localism’ is their barely alive  rabbit from a shoddy hat. Apparently this offers opportunities to join up budgets at a local level and apparently this will have some effect. Yes and I believe in the healing power of crystals and fairies at the bottom of the garden.

So their recommendations are slight where right and usually beside the point. They call for LEPs to be strengthened in ways which sound like they should restore the RDAs. Just call for that then. It backs Manchester style City Deals but the funding of 130 million is about the size of the RDA budget in the North West for a year or so. They call for community budgeting and links between LEPs and neighbourhood initiatives. Great . And? Also, poor places without jobs need to better connected with places with jobs and accordingly ‘local policy makers should ensure sufficient and cheap public transport infrastructure is in place’. As though they don’t know this. The key questions are how and where will funding come from? Finally, the policy of the absolutely intellectually bankrupt , they call for more community asset transfer. I have always supported this but as the answer to welfare dependency not regional economic decline. It is not the answer to that.

And migration policy? After all the palaver the mouse produced from the mountain is pretty tiny. More people need more skills. We need to support those that want to move to access employment and apparently– though I doubt this matters much as against the housing benefit changes taking the nation in the opposite direction – ‘government policy is already seeking to make it easier for people in social housing to move to other areas to access work’. ‘However’ – you betcha – ‘more needs to be done to increase the supply of affordable housing in or near economically successful areas’. Local authorities in growth will need more incentives , they say, to encourage  them to pass more planning applications for homes and to densify existing housing stock. Good luck with that.

Read People or Place? for its analysis and historical over-view. Absorb its recommendations but remember that you will need to consume something a lot meatier soon after. Public spending on infrastructure (nationally) and housing (in growth areas)has to be ramped up and the money currently being printed to pay the banks used for something less stupid: this will create jobs in the regions but also connect them better to the jobs. We could do with a network of regional banks such as in Germany where they have funded much local economic development . Spending cuts need to be scaled back not up. Education policy needs to copy the success of Korea or China or Finland for that matter and produce more young people with nationally and internationally marketable skills.

Plan for growth – and migration

But we also need to plan not just for growth but also the decline of hundreds of failed places. The most obvious priorities are the edge of town social housing estates where 70% of current tenants are ,and 100% of future tenants will be, out of work. Just like the monasteries they must be dissolved and their populations decanted. An active program of migration needs to be creasted. This will not happen in a year or ten tears. It will take decades. Personally , I’d give the homes to their existing tenants , withdraw housing benefit progressively and stop all new tenants going in to edge of town social housing estates where they will fail , never work again, get ill and under educated and all the evidence suggests, die younger than they should. I grew up in a place which is closer to jobs than such places and even there 50% of the tenants are long term workless. We need a major national program . Not ‘Decent Homes’ which expensively fixed homes in the wrong places. We need to fix people through public policy and set them up for a successful life . That’s what I call regeneration. People or Place? It’s people in the right place.

The good news?  I get to celebrate Sydney’s extraordinary contribution to both the 2012 Games and the Olympic legacy for East London as the Chief Executive of the Committee for Sydney without actually having to suffer intrusive body searches by over-eager squaddies more used to Kabul than Stratford or being quarantined in Heathrow for the duration. That’s both an honour and a profound relief.

I’m not sure that Australia has made enough of its global city’s role in London 2012. Let me do it as a newly fervent Sydneysider with a Cockney passport. Sydneysiders built the Olympic venues and Park. They built the Athletes Village. They built the massive retail cathedral at the entrance to the Games that is providing thousands of jobs for some of the most disadvantaged communities in the UK. David Higgins , former CEO of Lend Lease ran the Olympic Delivery Authority which built the stadiums and the setting for the Games. Dan Labbad and Rob Johnson also of Lend Lease – the former now returning to Sydney as the company’s latest Chief Operating Officer – built the Village. John Burton, formerly of Sydney Airport, led the development of the biggest Westfield in Christendom, now the only man-made landmark outside China which can be seen from the moon. Further un-named Sydneysiders brought the expertise gained in 2000 to bear on London 2012.

I met most of these whilst working to transform East London. I met my future de facto and sponsor of my resident status in Australia while we both lobbied for investment to come Eastwards – to places like Stratford, Barking , Hackney and Greenwich which had seen better days and are now the locations for the Games. We played our part in the process which brought London 2012.

Our aim and the aim of the councils which I represented at the time  was not to secure a few weeks of elite sport and have Zil lanes open only to Olympic officials bringing traffic chaos to an already congested city.  It was to harness 75% of the $15b that is not being spent on the sporting spectacle but on land reclamation, infrastructure, connectivity , housing and urban design as a long term legacy . When the Games caravan moves on East London will have thousands of quality new homes and new jobs, the best sporting facilities in the UK and the biggest new Park created in Western Europe since the War.    The fact that it will also be the first new Royal Park created in over a century pleases me not because I am a monarchist but because of the re-branding and market profile this Royal badging , more associated with the prosperous West of the capital , gives to East London. It’s telling that the marketing for the homes in the Olympic Park after the Games refers to this part of the city as not being East London but East Village. It symbolises an end to the division in London between East and West, which helped stigmatise people for their origins. This is now just London: a superb legacy from 2012 .And also I hope food for thought for key decision-makers about the importance of re-balancing East and West within Sydney, my new home-city, too.

I think a lot in my current role about the spirit I know was here in 2000 . You could feel it just watching television on the other side of the world. I also think of the divisions overcome in Sydney then between West and East , the various tiers of government , media and the community. Everyone pulled together, sorted out big-city problems with big city thinking, turned things around and delivered a united city with a civic pride and a civic achievement that delighted both your fans around the world and indeed Sydneysiders themselves. Perhaps the celebration went on a tad long into the subsequent decade – but then parties have a habit of going on too long and revellers often overstay their welcome. The morning after the night before cannot unfortunately be deferred for ever.

Maybe that’s the best way of understanding what I’m told by Sydneysiders was a decade of ‘coming down’ after the Games. The spirit of 2000 got lost somewhere. While I worry a bit that Australians seem unaware that their ‘down’ is so much more successful than most countries ‘up’ , I see some force in this self-analysis. But renewal is never far away in Sydney and the spirit which made this place the must-come to city has not been extinguished. You,we, have just concealed it for a while. What it needs to reveal itself again is what caused it to explode at the turn of the century. It needs a big challenge for a big city and it needs leadership of the scale to match the ambitions and needs of its feisty inhabitants. I have an idea.

The One Sydney I saw from afar in 2000 needs to get back up on the winner’s podium. One piece of advice from a former advisor to both the elected Mayors for the whole of Greater London – Red Ken and Blue Boris :it’s difficult for 43 councils to share a medal whatever the colour.  The achievement of Sydney in 2000 was to create a virtual and unified Greater Sydney which now needs to take concrete form in a revolution in governance that would be the best ,if deferred, legacy of the Sydney Games.

This great city would be greater still if we could come together for more than a few weeks. Other cities in Australia, and internationally, are unifying their cities and strengthening their capacity and performance through creating more metropolitan scale government structures. Brisbane has a single council for a million people. Perth is consolidating. Auckland has amalgamated 7 councils into one representing a quarter of the national population. London now has a single metropolitan government to plan the strategic direction of a city of 8 million. Sydney has 43 councils , no metropolitan expression or governance and no unified strategy.  In sporting terms it’s under-performing – under delivering the homes and infrastructure our communities and economy need. It‘s like a thoroughbred that’s handicapped by carrying too much weight.

This is why I urge the ongoing NSW government review into local government finance and organisation to be radical. Don’t miss this opportunity to unleash the dynamism of this city through reducing the myriad of small councils and giving this spiritually big city the big city government it needs to face up to its big challenges. Go for gold.

Dr Tim Williams

CEO Committee for Sydney

This is a version of a speech delivered on Thursday 26 July  at 5pm at Beyond the Games: an event hosted by Arup and Sustainable Business Australia.

But just have a look at this. It embodies the best of the McKinsey tradition of encapsulating in powerful graphics the main points of their analyses. They call them ‘exhibits’. I used to try and emulate the approach when I worked for the Audit Commission in England and ran their publications business. My boss then was (now) Sir Howard Davies who had been a McKinsey alumnus before. Howard went on to be number 2 in the Bank of England, head of the Financial Services Authority and vice-chancellor of the LSE before taking a bullet over that university’s links with the Libyan regime. Before this episode in my view his only flaw was that he’d been a life-long Man City supporter. He certainly like all McKinseyites knew how to illustrate a point though I suspect he liked a laugh more than the average. He once came past my desk after the Danes had voted initially to reject the Maastricht Treaty singing ‘Wonderful, Wonderful Copenhagen’.

Anyway, the graphic tells us everything we need to know about how what Australians may be alone (ironically) in terming the ‘Global Financial Crisis’ turns out to be not that global. Or perhaps it just shows how the backdrop to the GFC is actually a long term shift back towards the economic primacy of the east for which process the GFC has acted as an accelerator.

Just look not just at how far back towards the east the Earth’s economic centre of gravity has gone. Look at the increasing pace of this process. It picked up pace before the GFC , with wealth shifting towards China even as casino capitalism in the West reached its zenith in 2007. Of course we now understand the massive extent to which the gamblers of the West – us- were being bankrolled by transfers of cash from China. Scarily for Europe and North America, the growth in Asian wealth and its journey to creating a significant middle class of its own, has really only just begun. I say ‘Asia’ because whilst we tend to fixate on China India and Indonesia are also well down the track to being Premiership status , economically speaking , indeed Champions League. In 20 years’ time the centre of world economic gravity will not be located on the above map.

Coming from Old South Wales I despair as the world’s economic centre moves further and further away from it. As an inhabitant of New South Wales it’s clear to me that Australia is getting ever closer to that centre. This will be the Asian century and Australia is well placed to take advantage of it.

Victorian and Federation housing was the mainstay of Sydney suburbs until World War II. It is characterised by small lots, attached housing, and street frontage. Because it was designed before the advent of the car, it was pedestrian focused and close to transport. It is less land hungry than later housing models, but provides a form of higher density living far more desirable than badly designed apartments.

Real estate agents know it – Sydneysiders love terraces. So why do they appear reserved for the inner city? Why is it that most of greater Sydney misses out?

We examined this very question as part of the McKell Institute’s “Homes For All” report. If terraces are so valued and prized, why aren’t developers building more of them?

The answer turned out to be simple: Current council restrictions make terraces all but unviable. If a developer wishes to build terraces, they will typically require a rezoning and a sub-division application, which often take years to process. Some councils even require terraces to have underground or off-street parking, making them either prohibitively expensive or simply not terraces at all. The result of this baffling approach is that developers end up building either McMansions in sprawling suburbs or high-rise apartments. The former isn’t sustainable and the latter isn’t popular.

Council restrictions also mean that when a family on a quarter acre block wants to improve the value of their home there is really only one option – a knock-down rebuild. One in six new homes in Sydney is one of these but they are simply new houses replacing old ones, not providing any new accommodation.

But what if we allowed people to build a terrace or a semi on their block, especially in suburbs near a train station? Each quarter acre block could hold two or three houses, instead of just one. An owner could, for example, rent out one, have a family member in the other and sell the third. This city has many train stations which are surrounded by low density, quarter acre blocks.

The state government should hold a design competition to update the terrace in line with modern family needs. Once a pattern book is developed, the government should encourage small lot, terrace or semi-detached housing within a 600-metre radius of every train station. It could do this by exempting such housing from planning approval for a sub-division or development application, so long as it complied with the standard in the pattern book. That would get the ball rolling nicely.

Recently Planning Minister Brad Hazzard announced he would like to see a move toward terrace living, noting how terraces are more environmentally efficient and provide “communities with heart”

Here is a final innovation the minister should consider to make his vision a reality. Developers will require advice and guidance to break a long-held habit.

This is a role that can be filled by the government. Like cities all over the globe, Sydney should introduce a housing and urban renewal authority to help the private sector deliver the homes we urgently need. Such an authority can support not just big developers, but small developers too, who currently provide a sixth of Sydney’s homes.

The terrace should not be an option available only to those in Surry Hills or Glebe. It is an idea whose time has come once again.

Tim Williams is CEO of the Committee for Sydney and Sean Macken is director of Macken Strategic Planning Solutions.

I’ve argued that whether or not this is true, a high disposable income can be found in areas with low housing costs and asset values which is indeed the case in Wales. On the other hand, Londoners can have lower disposable incomes than South Walians because their housing costs and asset values are so high, the latter being a proxy for the relative dynamism of the economy and the attractions of living there. The question which arises from this is: which is wealthier – the cash poor /asset rich Londoner or the ‘cashed-up’ Pontypriddian whose home is worth perhaps 15% of the Londoner’s?

As the gap in asset wealth between the two grew wider during the housing boom of the first decade of this century so too did the capacity of the asset rich to leverage their increased housing wealth to add to their consumption or their assets. While the prices of homes rose in both Caerffili and Chelsea, they rose faster in the latter and their owners ‘ share of national wealth increased. In 1990 a home in Chelsea might have bought 15 homes in a south Wales town. Now it would buy 25 or more. Daniel Dorling has written about this increasing asset based terries which orial inequity in the UK. All the evidence is that rising house prices between 1997 and 2007 disproportionately benefited wealthier cohorts and indeed areas in terms of both growth in asset values and leverage to support consumption.

I’m simple. I think that for the Welsh Government and Friends to wish to downplay this asset question and GDP in favour of an emphasis on disposable income is fundamentally to confuse income with wealth. Income is merely a flow of money during a given year. Wealth is the accumulation of money – and assets valued in money – over a number of years.

Confusing the two is also to miss the contribution that wealth and not just income makes to consumption. Consumption levels rely on both wealth and disposable income. How can this not be important given the era which we have just been through where borrowing on the back of housing assets became a key means to support consumption and indeed investment in the UK? Disposable income plus leverage equals consumption – which GDP captures better than disposable income alone.

I recall that Adam Smith’s classic text was called ‘The Wealth of Nations’ not ‘The Disposable Income of Nations’. Wales needs to be wealthier whether or not its people have more or less disposable income.

I add: much of what enables Wales’s disposable income is pan UK public sector wage rates now under threat from the Conservative government seeking to promote more regionalised wage rates. If and when that happens I assume that this will reduce the disposable income available to Welsh households. Unless of course lower wages rates will drive down asset values and housing costs in Wales so as to restore Welsh levels of disposable income while the country’s wealth spirals downward. That’s my point really.

Two other issues people have raised. One is that there are wealthy parts of Wales and that the bit of Wales whose GDP is going down in relation to the UK average is an artificial construct chosen to highlight its poverty for the purposes of eliciting EU structural funds. True but that construct is getting poorer despite receiving massive public subsidy and EU funds. And the wealth gap with the rest of Wales is growing, let alone with the rest of the UK and indeed the EU. Let not phoney uplift on disposable income hide this fact of declining share of wealth in the former industrial boom towns of the Valleys.

The other issue raised is more interesting. Wales can never bridge the GDP gap because so much of UK GDP is generated from London and the southeast which are never going to lose their locational and sectoral advantages. GDP comparisons are in this sense a game Wales cannot win and thus shouldn’t be part of. I understand this but reject it. Wales has 3 million and England 50 million but we still manage to beat them at Rugby and win the Gram Slam. We compete and haven’t asked anyone to move the goal-posts. We can win the battle for GDP .

Be that as it may , Wales’s increase in gross domestic household income in 2010 remains consistent with the research finding that Wales in 2010 was the poorest part of the UK with a Gross Value Added per head equivalent to only 74% of the UK average. This is a poor place – with the odd well-off town or enclave -whatever indices you use. Not so, say the Welsh Government.

Wales Online says this: ‘There has long been a debate as to which is the best measure of the wealth of Wales. The Welsh Government has previously said that it prefers GDHI because it is a better aggregate measure of living standards than GVA, which doesn’t include some components of income.’ No wonder then that the Welsh Government welcomed the latest GDHI figures.

As a spokesperson from the Welsh Government said:’Despite the challenging economic circumstances, and the real impacts felt by people and businesses across Wales, the regional GDHI figures released yesterday show that relative living standards in Wales have improved and signal that some of the longer-term challenges are also being addressed,”

“Since devolution, Wales has seen the third largest percentage increase in GDHI per head out of the UK countries and English regions. However much still needs to be done as there is room for considerable improvement and the Welsh Government will continue to use all the economic levers at its disposal to try to ensure these figures continue to improve’.

This is the stuff that makes me angry. It combines disingenuousness with complacency. It borders on lying and helps no-one in Wales apart from a few deluded people in Cardiff Bay.

There is a serious debate about how to measure wealth and it boils down to the relative importance of financial as contrasted with asset wealth. Economists disagree on the merits of the different approaches and even on the facts. For example, some economists think that asset wealth in housing has had only a small impact on personal consumption by house-holders. The majority think differently. I’m with the latter crowd.

What this means in terms of GDHI in Wales is actually that rising disposable income can be consistent with falling asset wealth. Indeed, Wales’s  GDHI is as it is probably because house prices and costs are so low in UK terms while a high proportion of public sector workers in Wales have salaries , linked to UK wide public sector pay levels, which are closer to the UK average. Having a higher disposable income might just mean that housing costs are lower in Wales. To put it in context for a UK or international reader, a nurse renting my father’s house in the lower part of the Valleys only 12 miles from Cardiff would be earning roughly the same as a nurse in any other part of the National Health Service but can occupy the three bed-roomed house for about 450 sterling a month. In the south-east of England they would pay three times this.

Moreover, the gap between Welsh housing costs and English costs widened in the decade in which Welsh HDHI rose by comparison with the UK average (2000 to 2010). They both rose but overall the gap widened while Wales got closer to UK average GDHI levels. There is a link.

Another part of the debate is whether rising house prices is really associated with a knock on wealth effect. The majority academic position is ‘yes’ with some estimating that house price inflation and the leverage associated with it raised income thus consumption amongst householders in the UK in the first decade of the century by around 5%. The wealth effect was more obvious amongst those with higher house-price values. Essentially this leverage added unofficial wealth to the formal GDHI figures. This means that the ‘wealth index’ preferred by the Welsh Government doesn’t count in the extra consumption available from leveraging housing wealth. That is to miss the big economic story of the 2000-2010 period and to favour an inadequate measure of the wealth (or lack of it )of the Welsh.

That measure also misses the point about primary Welsh incomes being so dependent on public sector ,thus UK level, salaries. These rose significantly higher than private incomes between 1997 and 2010 and obviously contributed to Welsh GDHI. These salaries held up well in the first stage of the recession but are now experiencing downward pressures and few believe we will see the public sector boom years return. At the same time house prices in Wales have not risen as much as UK prices have since 2008 and indeed they declined in 2011. Both these factors impact GDHI in contradictory ways though neither is good for the Welsh economy.

Conclusion? GDHI is not actually an accurate measure of household consumption let alone wealth. Its rising in Wales probably shows how low property values are and those values are a better measure of the nation’s wealth or poverty than GDHI. If they drop further,if public sector employment and wage levels were to hold up, Wales’s GDHI would rise while the nation actually got relatively poorer in reality. GDHI is a fig leaf to cover the Welsh Government’s embarrassment. Using it rather than GVA is an attempt to move the goal posts. It is a version of the old joke that the patient’s operation went perfectly well and they had the best of care by international standards. But they died. The Welsh Government needs to move away from self-serving flexibility around the facts to a real recognition of the poverty trap we are in – and of how much worse it is going to get unless we base our policies on reality not phoney indices.

It was for a think-tank called the McKell Foundation named after a well-respected and pragmatic Labor Leader in NSW who was premier during the war years. It’s a non-political report and has been commended on all sides of politics. It expresses views on planning I have outlined before in work I am doing for the Committee for Sydney where I am strategic advisor. We ended up doing about 20 media interviews on Homes for All. The full report is available here.

Two things seemed to catch the imagination. One was that current planning policy has almost made impossible one of the most affordable, sustainable, well designed and popular style of homes:the Sydney Terrace. We called for a reinvention of the terrace for the 21^st century.

The second thing which attracted attention was two stats. Currently 70% of 35 year olds and below in Sydney cannot access home-ownership.  At the same time, 22% of all Australians now own 55% of the nation’s  housing stock. This strange result has been caused by a combination of Nimbyism and over generous tax allowances to home-owners and the middle class which have fuelled home-price inflation and strangled supply. Essentially, renters are subsidising owners of 2,3,4 and 5 homes. This got a lot of attention.

Have a look at the introduction I wrote for the report below then have a look at the full report. British readers will have a sense of déjà vu and find that despite the differences of policy and scale Australia’s housing distortions are quite similar to the UK . And just like bad public policy caused supply and affordability problems in the UK as in Australia so too can good public policy sort the problem out.

Twenty years ago it took three times the median salary to buy a house in Sydney. Now it takes nine times, a higher ratio than London or New York at the peak of the market. It puts Sydney at the top of the wrong league table.

At the same time, home ownership is becoming something older people do. Housing stress, whether it’s the cost of a mortgage or rent, is now afflicting over half the population, with interest rates set to rise further. Many cannot get a home to buy or rent affordably or have to go to Sydney’s edges to do so. First time buyers now typically pay half of their income on mortgage costs.

But while two thirds of 35 year olds in Sydney cannot access home ownership a fifth of the population now owns half the homes – because the perverse demand incentives and shortage of supply are making multiple ownership available to the few, but sustainable home ownership is open to a declining proportion and increasingly at an older age.

The whole system is under acute stress

The knock on consequences affect the whole system. Rents in Sydney are rising four times faster than inflation. The squeezed middle which used to be able to afford to buy now has to rent, pushing lower income renters to find the fewer remaining

cheaper lettings – and again further out of Sydney to places with the fewest jobs. The pressure on public housing waiting lists grows unsustainably as there is not enough money to house those already in public housing let alone build enough new stock.

This is a housing system in acute stress. It is broken.

A comprehensive action plan to fix it is vital, Homes for All is it. The good news? Bad public policy caused these system failures. So, good public policy can fix them. But it needs to cover 6 areas at the same time:

1. the battle for more housing must be won – with politicians and the public;

2. new policies to increase supply constrained by anti-development planning rules and NIMBYism: we are at crisis levels in Sydney with less than half the supply needed;

3. new and better quality affordable housing supply is also vital but that requires new sources of private finance to be attracted to the sector – which can only come from a radical stock transfer policy, the growth of the community housing sector and a new regulatory framework;

4. new policies to reshape demand which has become distorted through incentives which give massive benefits to existing home owners, turned housing into a speculative investment and away from its prime role as shelter and actually increased home price inflation;

5. new housing and urban renewal agencies or special purpose delivery vehicles and a new active role for government: to work with the private sector to bring complex and large sites to market; and

6. strategic long term investment in the economic development and connectedness of Greater Western Sydney not just to take pressure off home prices near the CBD but also to enable the sustainable growth of what will be the biggest population centre in a Sydney of 7 million. We see this as requiring a special purpose delivery vehicle for Western Sydney. This would help plan and deliver town centres and large sites. It could also help promote the key game changing infrastructure investments that will open up denser, more and better housing capacity, and infrastructure such as a fast train to Parramatta from the CBD.

Politicians need to lift their game; so do we, the people

Our housing market is in crisis because successive governments, at every level, have choked off the supply of new homes while at the same time stimulating demand with the most generous of tax concessions, grants and exemptions. We pile burdens on developers and costs to first time buyers and wonder why Sydney’s population and economic growth has fallen behind other Australian cities which have pro-growth leadership.

The planning system in New South Wales, whose role it is to deliver new housing, has broken down. We are now building just over 43 new homes for every 10,000 people – and at around 15,000 homes a year we are building less than half what we need to catch up on earlier population growth projections which themselves were conservative.

A campaign for more and better homes

This has coincided with a growing NIMBYism which has exploited the lack of informed debate about the need for new housing – and leads to the position where people who own homes are effectively inhibiting the possibility of home ownership and shelter for others. We also need to rethink the type of housing we provide and revisit and reinvent some old models such as terraces and semidetached housing which served us so well in the past.

Inheritance is becoming the major way into home ownership in Sydney – which is neither right nor very Australian. We have to do better than this. Our recommendations start with us: we the people and our leaders need to understand our own dismal role in this crisis. We need a new civic dialogue on the needs and benefits of growth. A campaign for more and better homes. It starts here.’