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Too smart for its own good?

Is Britain the 'design workshop of the world', or is the creative economy only creative in its accounting?

The home of the Tate Modern collection at Bankside in London performed as a power station for just a few years. Built to electrify the City of London, Bankside was put out of action by the hike in oil prices in the 1970s before lending its great turbine hall to the arts. With a spate of new artistic commissions raising the profile of architecture in Britain, it is important to step back and examine how real the creative economy is, which sustains them.

In Birmingham and Manchester, canal districts that served the first industrial revolution have become the scenic walkways of cafe society. Glasgow is rebranded as a city of culture; industry transformed into 'heritage'. London's new Hampstead is the City fringe, or 'Eastminster'.

Despite the efforts of the London boroughs of Hackney and Tower Hamlets, surplus office space in the City fringes is being turned into luxury apartments, not workshops.

The councillors' nightmare is that without the promotion of employment in new service sectors in the fringe, there will be no buffer between the yuppies in the south and the underclass in the north. Similar prejudices are driving many of the urban masterplans in different locations throughout the country.

These are the hallmarks of the new economy: the industrial centres of the nineteenth century are to be made the cultural spaces of the twenty-first. Docklands' emergence as home of the arts began with Bridget Riley's occupation of a disused warehouse vacated by the relocation of the docks to Tilbury in 1967. Rachel Whiteread's house literally occupied the space left behind after slum clearance.

Around Shoreditch and Clerkenwell, it is hoped, a virtuous circle of information technology, web design and e-commerce is emerging. Loft life and telecottaging are genuinely promoted as the model for inner urban areas from Newcastle to Northampton.

Writers Charles Leadbeater and Kate Oakley go as far as to suggest that 'cultural entrepreneurs can play a critical role in promoting social cohesion and a sense of belonging'. Why? 'Because art, culture and sport create meeting places for people in an increasingly diversified, fragmented and unequal society' - meeting places that once were 'provided by work, religion or trade unions.' (The Independents, Demos,1999, p17. ) Service sector rules, OK?

Gently blowing on the embers, the local authorities have sponsored Metro New Media - an 'incubation' centre at the southern, Shoreditch end of Kingsland Road. MNM is part of the Guildhall University where information technology companies are given £25,000 of free online time and pay a peppercorn rent.

'Working here is just like being at boarding school, ' coo the new media types. 'Working for larger companies we used to be exploited, but here we're a team.' Conversely, on the wrong side of the tracks - the northern, Dalston end of Kingsland Road - the Metropolitan Business Centre, a throwback to an earlier period of Keynesian pump-priming, is closing down its furniture workshops.

This is the new economy. It is not about goods, but services. 'For the first time in history, ' insist Demos writers Kimberly Seltzer and Tom Bentley, 'knowledge is the primary source of economic productivity.' (The Creative Age, Demos, 1999, p9. ) DTI adviser Charles Leadbeater agrees: 'We are all in the thin-air business these days . . . most people in advanced economies produce nothing that can be weighed: communications, software, advertising, financial services.

They trade, write, design, talk, spin, and create; rarely do they make anything.' (Charles Leadbeater, Living on Thin Air: The New Economy, Penguin 2000, p18. ) How do architects fit into this - creators of the built environment, or service providers? Of course, it is very flattering to them, as well as accountants, estate agents and bankers, to count themselves in the same bracket as designers and artists. But the argument that Britain can make a living on its wits depends upon a certain sleight of hand.

Creative figures

Britain's 'service sector' is huge - 72.5 per cent of all those in work - but it is not all creatives as we have been led to believe. If you add all the cultural and creative workers together, on the very loosest definition, they make around one and a half million. That is put into the shade by the fastestgrowing service sector: domestic services, estimated at four million nannies, gardeners, and dog-walkers. Understandably, the Foreign Office prefers to promote Britain as the 'design workshop of the world' than its downstairs parlour.

Let's look at the figures. First, architects appear to have survived well, increasing by four per cent from 35,600 to 37,000. On the other hand, the greatest decrease is architectural and other technicians, down by 39 per cent from 21,300 to 12,900. Does this suggest that architects' practices have been deskilled? The rise of the generic CAD technician over the apprenticed HNC technician seems to suggest so.

Second, the big increase in 'creative' workers is in information technology and advertising.

The growth of advertising over the past few years contrasts with faltering investment in something more useful - research and development.

Since 1992, the number of people working in advertising has doubled from around 45,000 to 90,000. Throughout the same period the numbers working in research and development stayed static at 90,000 - indicating the priorities of British business.

Promoting your business has almost taken the place of building it.

Businesses are understandably fixated on market share, and defensively put their efforts into promotion. Architects' practices, desperate to maintain any advantage over fee-cutting opposition, are jumping on the bandwagon of web-design and brochure selfpromotion. The perception that brand recognition represents an intrinsic value has taken hold. The new breed of 'landmark' buildings falls into this branding context.

Design historian Stephen Bayley rightly put the question into perspective: 'Accountants have always acknowledged the existence of brand value, but they called it 'goodwill' - that intangible but valuable mixture of associations and expectations that all successful products carry. But the product has to be successful first. Starting out to create a 'brand' is philosophically wrong' (Stephen Bayley, 'Brand new testament?', Blueprint, February 2000).

Hiding behind design

Design is important to business, according to Consensus Research's poll of businesses in June 1999.

Sixty-seven per cent of large firms and 47 per cent of small ones say that design plays a 'significant' role in their businesses - 24 per cent of companies say that it is 'integral' to the way they are run - and 84 per cent employ design staff or consultants (up from 75 per cent in 1998). In other words, businesses spending more on branding and packaging can often be in trouble.

Many architectural practices are investing massively in the latest computer graphics technology, advertising and publication promotions to maximise their design credentials, many without even a full understanding of what they are trying to achieve.

Andrew Sentance and James Clarke at the London Business School's Centre for Economic Forecasting analysed the impact of design on economic performance (The Contribution of Design to the UK Economy, February 1997). Their results were surprising.

'The effects were not generally statistically significant, ' they concluded. More disturbingly, 'the effects of bought-in services on performance were much more mixed', and 'in the engineering industries, there was a statistically significant negative effect on turnover.

'The most positive effects were found in the material and process industries group, though even here expenditure on bought-in services had a significant negative impact on export orientation'.

Repackaging failure

That design should have a negative impact upon performance seems bizarre. Sentance and Walters explain one reason why increased spending on design appeared to be associated with negative results:

'There is some evidence that firms are responding to poor business performance by increasing their expenditure on design'. (Design, Competitiveness and UK Manufacturing Performance, Centre for Economic Forecasting, London Business School, 1997, p18).

But the question is, what kind of design is being undertaken? Developing new products can lead to new markets, but throwing good money into packaging failing products just makes the problem worse. Maybe we should all be wary of the design-based hype that suggests that we are more buoyant than we actually are.

The greatly reduced employment in traditional industries is not a sign of the failure of the old economy, so much as its success. Productivity increases have reduced the numbers employed in manufacturing to a little over four million. Services, by contrast, are much less productive, and employ many more people.

Companies may be advised to resist the social pressure to change what they do well for the sake of 'inventiveness' or 'shaking up' their working practices.

Understandably, the booming sectors of e-commerce and new media capture the imagination. But they are a small part of the economy, much talked up and many of their products will never take off. Much of what is lauded as productive, like the advertising boom, is actually dependent on specific weaknesses in the British economy.

Britain's hollowed-out industrial centres like the Bankside power station make impressive venues, replete with meaning and interest for cultural spaces. Regeneration of these sites with bars and cafes gives the appearance of a new dynamism centred on leisure services rather than smokestack industries. But this may show itself to be a chimera.

We must not be carried away by appearances and sales pitch. Let's not confuse increased consumption with increased production and don't forget that without the latter, we cannot have the former. A consumer society cannot survive on its own wits. The economic rules have not changed that much.

James Heartfield is author of Great Expectations: Creatives in the New Economy, published by Design Agenda, tel: 020 7263 8117. A conference to discuss these issues is to be held at the RIBAJarvis Foyer on 4 July at 19.30.

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