IT is our best bet for urban renewal

New Labour's enthusiasm for supercasinos betrays a lack of faith in the transformative power of IT

I had a row about gambling the other day, when appearing as a "witness" on BBC Radio 4's The Moral Maze. I suggested that a new wafer fabrication plant and a more enlightened national policy for science and technology would do Manchester more good than a supercasino.

New Labour doesn't love casinos because of the tax revenues they bring. It favours casinos because it doesn't know or care about how to integrate IT into ambitious programmes for city growth.

On the radio, somebody hinted that a casino might spin money longer than, say, the LG Philips Display plant that closed in 2003 in Newport, Wales, with the loss of 870 jobs. Then Michael Portillo accused me of wanting to subsidise the IT industry.

Had I become, I wondered, an Old Labour nostalgic? In fact I'd be happy if Manchester, or Newport for that matter, became strong in software. I don't feel nostalgic for manufacturing, whether it's chips or any other IT hardware. Nor do I especially want to see more government intervention around IT.

Yet I can't help feeling that Manchester's victory is a hollow one. Moreover, Innovation in UK Cities, a recent briefing from the policy and research unit at the National Endowment for Science, Technology and the Arts (Nesta), confirms that view.

Of course, Nesta gives us the usual guff about the global internet being complemented by the fact that innovation is a contact sport – that it now depends on place, and on community groups, too. Chance interactions in densely populated cities, it's revealed, "create the conditions for a hot-bed of innovation". On a Brownian note, Nesta holds skills as vital to urban progress, and speaks up for cities having the proper "ecology" of institutionally supported innovation. Nesta is right to stress the significance of infrastructure and labour markets to cities.

To its additional credit, Nesta also notes that Britain's regional and urban strategies are very samey. The organisation is right to say that too many cities focus on the same old things: biotech, creative industries, technology parks and university-industry collaboration.

Now New Labour would have casinos join this desultory list. And if you mutter that making chips and developing new technologies might help Manchester more than installing roulette wheels and slot machines, you're portrayed as a Wilsonian subsidiser.

Well, I'm no killjoy: let the newly licensed casino experiments commence. It is all frightfully innovative. And if the free play of market forces allows Manchester's no doubt commendable existing efforts in IT just to wither and die – well, too bad.