NEWCASTLE BROWN STUDY

Dominic Lawson visits the

guinea-pig for Mrs Thatcher's — and T. Dan Smith's — inner city policy

IF Newcastle fails to become Britain's miracle city in the 1990s, then a lot of people are going to be very embarrassed, from the Prime Minister downwards. She it was who famously, on the steps of Con- servative Central Office, after the results had come in of her third election victory, said that 'something' had to be done about the inner cities. Then she gave Mr Kenneth Clarke — before his switch to Health the job of doing whatever it was that had to be done, and he made a bee-line for Newcastle, where he held the first of £500,000 worth of breakfasts to persuade business to involve itself in the regenera- tion of the inner cities.

But it is not just the Government which has a vested interest in Newcastle's econo- mic recovery. Over the past two years a plethora of agencies have sprung up in the area, such as the Urban Development Corporation — the Tyne & Wear Develop- ment Corporation — and the Northern Development Company. And if that were not enough, the Confederation of British Industry has chosen Newcastle to be the experimental guinea-pig for its Task Force for inner-city regeneration. They in turn have set up another body, the Newcastle Initiative, which has produced a corporate plan for the revival of the city, courtesy of the world's leading management consul- tants, McKinsey & Co, who have donated their normally expensive services to the cause. One thing is sure: whatever happens to the 20 per cent of Tyneside's males who are out of work, there is no shortage of jobs for those in the business of working out their deliverance.

The men and women they are attemp- ting to help could be forgiven for wonder- ing if there are simply too many agencies on the same patch, some with conflicting ambitions or methods. The CBI, for exam- ple, has at all times been anxious to involve the Newcastle City Council, led by Hat- tersleyite Jeremy Beecham, in its plans, especially those to persuade Japanese com- panies into the area. (McKinsey is particu- larly useful in this respect. Almost all of Japan's top companies are clients, and they are now telling these corporate colossi that Newcastle is the place to be and that there will soon be sushi bars and a Japanese school in Newcastle.) The Government however is anxious to exclude the City Council from the regen- eration process. When Mrs Thatcher said, `We must get right back in there [the Inner Cities] because we want them too next time,' it was a clear signal that the Labour authorities in the inner cities were on no account to be allowed to take any political credit for any successes that the campaign might achieve.

But what the CBI's plans, McKinsey's and those of the Government have in common is a complete faith in the ability of the private sector, unaided by any special subsidies, to effect the transformation of a sick urban environment into a healthy one. As I sailed up the Tyne on a boat hired by those involved in the Newcastle Initiative to mark their arrival on the scene, several thoughts occurred to me. First and most important, how I could wipe off the shit splattered on me by the birds wheeling above us. Secondly, it was odd that the junket should be held on a boat — The Shieldsman — which was not built on Tyneside. And thirdly, that there had been, over a generation ago, a successful attempt to change the image of Newcastle, masterminded by a man some in Newcastle would like to forget, Mr T. Dan Smith. I thought of T. Dan Smith, not just because he is to this day the most famous, if notorious, politician ever to represent the city, but also because in one respect his methods are similar to those now engaged in doing Mrs Thatcher's bidding in New- castle. We are talking of hype, or, if you prefer, public relations. Kenneth Clarke before he was transferred to Health liked to hold his breakfasts on location. T. Dan Smith held his 'power breakfasts' at the Carlton Towers Hotel in London. The Government attempted — before the Speaker of the House of Commons ob- jected — to announce its Action for Cities Programme, not by the traditional manner of a statement in the House, but solely through the dazzle of a press conference at the Queen Elizabeth II Conference Cen- tre. T. Dan Smith got Willi Brandt to be photographed on Hadrian's wall (the other wall, see). At her press conference Mrs Thatcher disarmingly admitted: 'I don't think there is a single new policy here.'

As we sailed on I found on the boat Mr Norman Blackwell, formerly Mrs Thatch- er's adviser on employment and the inner cities in the No. 10 Policy Unit, and now the architect of McKinsey's plans to re- vitalise Newcastle.

I had been studying the corporate brochure of the Newcastle Initiative and it reminded me a little of one of those theatres which have not had very good notices, and so are forced to put up rather unconvincing review extracts outside. In the case of the Newcastle Initiative the list of accolades, in quotes of course, includes such gems as 'distinctive regional image', east-facing docks and major river', and intense local awareness of cult fashions among the young'. `Yes, of course there is hype,' conceded Mr Blackwell, 'but it is based on a genuine strategy, which could transform the face of urban Britain.' The point is that McKinsey & Co see their plans for Newcastle as a model — they call it a 'template' — which can be applied to any of Britain's inner cities. As the former No. 10 man saw it, all previous attempts to deal with urban blight had been based on the civil service concept of `gearing' and 'delivery mechanisms'. Delivery mechanisms are ways in which civil servants direct public funds into pro- jects of their own choosing. And the gearing is measured by how much private investment is created by each pound of state aid — a kind of Keynesian multiplier, in effect.

The Blackwell theory, now to be tested on Newcastle, is that '98 per cent of economic transactions have nothing to do with government. To influence the free economy through public expenditure is the tail wagging the dog.'

The only guaranteed projects — 'flag- ship projects' in McKinsey's argot — which have yet to come out of the Newcastle Initiative are both property developments: the so-called Theatre Village, which will be a redevelopment of the West City area, and the rebuilding of the commercial heart from Grey Street to the quayside. While the sight of cranes on the skyline above the Victorian splendours of Grey Street might stir up accusations of lacadism' from the architectural purists, there should be no scruples about redeveloping the West City. Much of it, particularly around the West- gate Road, is nothing but a collection of second-hand car dealership, pawn shops and porn shops. And most of them are boarded up.

The idea, as in the Albert Docks de- velopment on the Mersey, is that once the Mexican restaurants, tapas bars, and raffia shops are in place, companies will decide that the area is now desirable enough to be home for its workers, and more particular- ly its executives.

The problem for the proponents of this sort of speculative-property-led urban re- generation is that failure will become very quickly evident. Success can only be judged on a timescale measured in genera- tions. Jeremy Beecham's fear is that the property boom would form another tier in the local service economy, but would not create a resource base of skilled labour of the sort that 'made Newcastle great'.

It is perhaps a sign of the changed times in Newcastle that its most successful businessman is a property developer, John Hall. Mr Hall is a director of the Newcastle Initiative. (I'm on most things around here,' Mr Hall told me). According to the Investors Chronicle the company he cre- ated and owns, Cameron Hall, is worth about £200 million, although Hall himself describes this estimate of his wealth as `over the top'. He it was who developed what has rapidly become the North-East's biggest tourist attraction, the Metro Cen- tre, across the Tyne from Newcastle, in Gateshead. At two million square feet, it is Europe's biggest shopping centre, and, according to John Hall, has created 6,000 jobs in its two-year existence. That is about 40 per cent more than are employed at the Swan Hunter yard, traditionally the area's biggest single source of labour outside of public sector.

With its indoor funfair — children on monorails yell out above one's head kitsch restaurants with water wheels, and trees bought in Florida by Mr Hall and his wife, the Metro Centre seems like America transported to Tyneside. To that extent it is very much in tune with both the CBI and the Government's approach. McKinsey, was brought into the Newcastle Initiative by Mr John Banham, who apart from being director general of the CBI, is a partner in McKinsey, which cut its teeth in the field of urban financial planning in New York, Atlanta and Cleveland. Meanwhile Ken- neth Clarke has said that the only model for British inner-city regeneration should be the United States, and he took the trouble to observe McKinsey's Atlanta at first hand.

There is a paradox here, in that the US model is characterised by a strong local political figure, namely the mayor (in the case of Atlanta, Mr Andrew Young), who is the key figure in the co-ordination of the campaign and the bullying of recalcitrant businesses. But in Newcastle, Mr Clarke pointedly excluded the leader of the coun- cil from his pump-priming breakfast with the eminents of the City. 'I didn't mind not getting my croissants,' Mr Beecham told me, 'but we do have something to offer in the way of local knowledge.'

The nearest Newcastle ever came to a US-style mayor, or indeed the nearest any British City came to the phenomenon of the US Mr Fixit, finger in every pie, local politician was Mr T. Dan Smith. The memory of his corruption, for which he was sentenced to six years in prison, seems to have faded in Newcastle. Indeed, though he still calls himself a Trotskyite 'my views have not changed since I was a member of the Fourth International,' he told me — he has in the last few months been re-admitted to the local Labour Par- ty.

Jeremy Beecham argued to me that Dan Smith's policies — the clearing of the Scotswood slums, the £200 million splurge to make Newcastle the 'Brazilia of the North' (but he didn't mean the bribery) were 'radical and necessary to preserve Newcastle as an educational and commer- cial centre' although he conceded that there 'were a few unfortunate planning decisions and designs'. More surprisingly John Hall (who has appreciative letters from Mrs Thatcher in his office, and who calls the lift in the Metro Centre the `Thatcher lift', because She Went Up and Down In It) describes T. Dan Smith as 'a visionary ahead of his time. I have a lot of admiration for him and what he did for Newcastle.'

It is difficult to avoid the impression that what today's Tynesiders — of all political persuasions —'find attractive about T. Dan Smith is that he at least made Newcastle an international talking point and temporari- ly, deserving of the title 'regional capital'.

However, when I saw T. Dan Smith now a rather glorid 71-year-old — in Newcastle he was dismissive of his new- found admirers. 'Do you know, on my way to see you I was stopped by five people who wanted to talk to me. Me, who left local politics in the 1960s. It's pathetic that people should be talking about those who are dead. It's a measure of how little Newcastle has achieved since then.'

Smith, who had rather controversial entrepreneurial skills of his own — 'Poul- son and I made a great deal of money, you know' — is dismissive of the attempts to encourage Newcastle's regeneration through the private sector: 'Anyone who thinks the North-East of England is going to be the business end of the Channel Tunnel has a very vivid imagination in- deed. Before I was ruined I put money in property in Aberdeen, because that was where the oil was going to come in. Would you put your money in the North-East,

really?'

A visionary he may be called, but I felt that talking to Dan Smith was more like receiving a valuable history lesson, about the dangers of politicians who are prepared to gamble the public's money on projects which they know private industry would shun.

Waving his arms and pointing, as if speaking once again to a crowded chamber (although admittedly his raised voice could be heard across the bar restaurant of Newcastle's Royal Station Hotel), Smith told me that 'we need major public invest- ment. The dilemma of the day is how to do it without giving the money to the de Loreans.' Thankfully, that was yesterday's dilemma, and not just for Newcastle.