A newly-published review of Cambridge’s economic impact by London Economics is (not surprisingly London-centric, and underplays some of the serious economic issues in and around our city – ones with significant social and environmental externalities that economists should be more than familiar with by now.
You can read the Economic Impact Report (EIR) here
TL/DR: Can Cambridge University commission a report on its local economic, social, political, and environmental impact on the City of Cambridge and our economic sub-region? One paying particular attention to the negative impacts, those who are often left out of University-related activities, and one that has serious public policy recommendations for central governance on how to overhaul our systems and structures of local government so that our institutions and local councils can work together to solve our shared problems without going cap-in-hand to Whitehall?
“Oh dear – what’s dragon dude complaining about again?” I hear them cry
See the issues raised in Joe Cook’s video of 2018.
The headline and the quotation that epitomise how broken our city is in terms of governance is this:
“£587 million – from the impact of tourism associated with the University” [EIR] vs “Please note, the Visitor Information Centre is permanently closed” [Visit Cambridge]
So the University of Cambridge boasts about how it generates £587million from the impact of tourism, yet the consultants have omitted the impact of an under-funded city council that cannot afford to fund a permanent tourist information centre because ministers continue to impose harsh restrictions on the city council’s ability to raise revenue through taxation from the wealth being generated in the city.
If you are a Cambridge University member, you can write to your MP requesting they write to ministers to do something about this – and also include why the government is content with such a situation in the face of no change in policy. See https://www.writetothem.com/ University members (I’m not one) can also petition Regent House – see the guidance here.
Checking the assumptions of the Economic Impact Report (EIR)
It was over 20 years ago that I was awarded my degree in economics – and several years later I found more than a few of the big names and core textbook authors had ‘issues’ when it came to the banking crisis of 2008. If you haven’t seen the film/documentary Inside Job, it’s worth watching – not least because of the current issues in the banking world.
One of the things I always ask with anything economics-related is: “What are your assumptions?”. Let’s see what the EIR says about tourism.
Excluding day trippers from their analysis is a very significant assumption – and one that cannot pass without comment. The Visit East of England Destination Plan 2021 tells us why:
“Despite its international draw Cambridge is perceived as a day trip destination. 88% of the city’s annual visitors stay for a few hours and at best a day.”Visit East of England Destination Development Plan, p16
So London Economics *has chosen* to exclude 88% of Cambridge’s annual visitors from their analysis. Yes, they give reasons for it, but the problem remains that by excluding that 88% of visitors means their ability to analyse problems associated with large numbers of annual day-visitors crammed into such a small historical area will be limited. This will have a knock-on impact on any proposed policy solutions.
Local taxation not explored sufficiently
The only mention of council tax is on p70 of the PDF (p57 of the printed version)
What the above does not mention is that households with full time students occupying an entire property are exempt from council tax (See https://www.gov.uk/council-tax/discounts-for-full-time-students). The University of Cambridge alone had 13.645 undergraduate students in 2021/22 according to the HESA here. Add the several thousand Anglia Ruskin undergraduate students, and the eligible postgraduate students at Cambridge University (presumably a sizeable proportion of the 8,960 postgraduates counted by the HESA) and that’s a significant sum foregone by Cambridge City Council when you look at the council tax bands here.
“What about business rates? Doesn’t the University of Cambridge’s tourist impact make a big difference here?”
No. This is because business rate revenues are pooled nationally and redistributed. Hence why over 90% of the business rate revenue raised by Cambridge City Council does not stay within our city. The policy area of overhauling local government funding is still in the ‘too difficult to deal with’ pile. This is despite the Commons Select Committee responsible for local government saying the present financial system is unsustainable.
“What did ministers say regarding proposals to overhaul council tax?”
See Recommendation 3 in their response. Basically: “No!”
Which is why Cambridge University members with connections into Westminster and Whitehall need to make the case for our city, not just their college or university. Because at the moment the mindset of ministers is to play the ‘Lady Bountiful’ stereotype where they hand out funds to local councils on things that a properly-funded local government tier would be providing anyway – like decent road maintenance. See the latest version of the ministerial pot-hole fund.
What public policy options are the report’s writers missing out on in their analysis?
First of all, look at the report’s concluding statement where they look at the counterfactual.
“Fig 44 plots the benefit-cost ratio [BCR] and total benefit (in millions) for each of 579 impact assessments, alongside the equivalent metrics for the University of Cambridge (11.7 and £29.8 billion, respectively). Relative to other government interventions, the University of Cambridge clearly sits in the top right-hand quadrant of the chart…there is no intervention in the sample that brings higher economic benefit than the University, at a higher benefit-cost ratio”EIR p110/p93
What the total benefit does not deal with are things like:
- equality of distribution; ie what are the economic distributional impacts of so much investment going into the University of Cambridge and not into universities located in other parts of the UK? (Esp in economically deprived areas)
- negative social externalities; i.e. our chronic housing crisis which has priced many people in jobs, professions, and vocations that are essential to the sound functioning of a city but who cannot afford to live here because the expansion of the University of Cambridge and its allied industries has not been accompanied by either the housing and transport provision to match it, or the public policies from central government to alleviate that impact
- negative environmental externalities; We have multiple environmental crises in and around Cambridge – whether the release of untreated sewage into the River Cam by Anglian Water (which Cambridge University as an institution seems to have been fairly quiet about even though the River Cam is an essential component to where the University gets its name from), to the water supply crisis that Cambridge City Council has warned repeatedly about regarding the future of house building. Ironically the EIR covers an interesting case study of Dr Francesca O’Hanlon’s work with Blue Tap (see this article about her work here which also goes after the traditional model of UK charity) but does not cover the impact of Cambridge University’s expansion on our natural resources.
- Land use and the need to create more publicly accessible open green spaces – such as the Cambridge Great Park for South East Cambridge proposal here, to the lack of a large green open space in north Cambridge.
Above – the call for a new park for the housing estates of North Cambridge date back to the 1960s & 1970s. Yet when provided with the opportunity to create new parks, Cambridge University and its colleges chose to build new housing with limited open green spaces rather than serving the wider needs of the most economically-deprived in our city. They could have made a stronger case for building out elsewhere, and allocating much larger green spaces for open parkland for the people of Arbury, as I wrote in the second half of this blogpost on my blog that covers the history of Cambridge the town.
Cambridge Land Justice going after the data and the evidence
I wrote about meeting this group of students late last year. One thing noticeable with this generation of students compared to previous generations is they are not taking injustices local to global lying down. Cambridge Land Justice are also on FB here. The work that they have already done on data mapping is in a different league to what I’ve seen in previous campaigns. (My role is mainly to provide links to what their historical predecessors did – such as the women of Cambridge being featured in this free celebration event at Cambridge Corn Exchange on 28 March 2023). I hope a new generation of students will be inspired by the records of women like Florence Ada Keynes (Newnham) Clara Rackham (Newnham), Eva Hartree (Girton), and Dame Leah Manning (Homerton).
Back to governance of our city – where should Cambridge University fit into things?
Many of you will be familiar with my repeated calls for a Unitary Council for Cambridge – not least one that can oversee the construction of a light rail that goes under our city for a short part of its network as proposed by Cambridge Connect. Cambridge University could and should be putting its significant resources behind this – if only to ensure the essential feasibility studies can be done. For whatever reason, the Greater Cambridge Partnership’s senior officers chose repeatedly to ignore pleas to do this, and were supported by a succession of local government councillor board members. The result? Knife-edge votes coming up at Cambridgeshire County Council over proposals by the GCP over both congestion-charging and the controversial Cambourne-Cambridge busway that has had longstanding community opposition since first proposed in 2015. In my view all three political parties share the blame for where we are now. The question for Labour and the Liberal Democrats is whether they are prepared to squander the political power they unexpectedly gained in 2021 at Shire Hall, and take the blame from voters over a policy and a partnership that was created under the auspices of their Conservative opponents?
One thing that has not been clear with Cambridge University’s seat on the Greater Cambridge Partnership is where the University gets its own mandate from. How does it consult its members when deciding what its corporate policies should be? How much consultation did the University undertake before giving qualified support for the GCP’s proposals?
£587million generated a year in tourism but nothing to spend on The Big Weekend 2023
Although some of us are trying to bring some potential commercial backers & philanthropists to help cover the £113,000 shortfall, the event founded in 1995 as ‘pop in the park’ as things stand, has been cancelled permanently. (Grab me if you think you can help).
What does it tell us about our city if out of that £half-a-billion we cannot find a fraction of a fraction to cover the essentials of an event, one of the very few that brings people from across our city and beyond, for a festival of entertainment for free? And one that provides local town community groups with a platform to showcase their performing arts talents as well as Cambridge University outreach teams to engage with residents who – like I did growing up in the 1980s & 1990s in Cambridge, assumed that the University and its colleges were not for people like me?
Food for thought?
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