It’s time for an evolution in our policies for City growth and prosperity and to recognise and build on some hard truths – that’s my reaction to the latest edition of Cities Outlook. The Centre for Cities has much to commend it, yet again, for its outstanding incisive and through provoking report Cities Outlook 2015. The big message I take away from it is that Whitehall’s role, over various governments, in attempting to redress the North-South divide has failed time and again. The disparities in performance just keep getting wider. It calls into question the notion that Central Government policy has any relevance at all to addressing regional imbalances – reflected in commentary such as ‘UK’s regions cannot thrive with Whitehall in charge’.
I’m all for examining what can be sensibly devolved and for this to be led by the cities and regions themselves. However, personally I think that Central government and national initiatives still have a role to play, and I will outline some of these thoughts further on in this article. Let’s try to avoid a ‘slash and burn’ of central government initiatives, resources and roles where they may underpin the prosperity and success of our urban communities.
Could UK Cities one day enjoy the powers that the Mayor and city government of Chicago (pictured above ) have?
Key highlights from Cities Outlook 2015
Firstly, lets look at some of the key highlights from the report.
The north-south gap has increased, not diminished. For every additional 12 jobs the Southern cities have generated over recent years, the Northern Cities have generated 1.
The north-south gap is even starker in terms of ‘rebalancing’. For every additional 10 private sector jobs created in southern cities in recent years, northern cities have lost 1 private sector job.
Entrepreneurial growth in the southern cities runs at almost double that of northern cities. In southern cities, the total number of businesses grew by 26.8 per cent between 2004 and 2013, whereas it only grew by 13.7 per cent in northern cities.
The Centre for Cities characterises Whitehall’s past policy responses into two phases:
1) that of the Labour Government, and previous Conservative government (1992-2010) supporting regional planning, urban regeneration, physical – led regeneration and regional administration tiers of central government (via government offices and latterly Regional Development Agencies); and
2) the local, place-based approach with its deals and discrete (sometimes competitive) funding pots that characterises the Coalition Government’s approach since 2010
The hard truths. The fundamental conclusion from the Centre for Cities is that neither have worked in addressing the disparities in economic performance of UK cities. I commend the Centre for its forthright views and would tend to agree, although, as I am sure the Centre alludes to through its points on undertaking wasteful policy decisions such as closing down 90 per cent of small business support (Business Link) only to recreate it through Growth Hubs, we must take the lessons from each policy era and apply them – rather than have a scorched earth policy.
A similar story to Business Link is that of inward investment. Inward Investment to English regions nosedived after the abolition of RDAs. There was no-one to pick up the selling activities and to handle enquiries. Its taken a few years to get back up to speed. Meanwhile – how many opportunities went abroad that could have landed in England?
There are several other potentially wasteful closures or abolitions of capacity which, with some adaptation and evolution, might have aided the successful delivery of localism and devolved responsibility to cities – such as audit and performance assurance capacity (Audit Commission); Communities of Practice (the Association for Sustainable Communities); and research and intelligence (Regional Observatories). These have not been reinvented yet but will probably need to be.
The Centre for Cities is right to call for more comprehensive devolution to cities
So it seems that the UK’s regions cannot thrive with Whitehall in charge. Centrally derived policies have not made any progress on addressing the north-south divide. What’s clear is that so far, there has been a limited devolution of local transport funding which was for local schemes, to local control (as opposed to DfT control as previously).
There is a much wider range of policy portfolios that are ripe for devolution to cities: and not just skills, enterprise growth, and transport – but welfare, R&D, technology, inward investment and trade too. In terms of welfare – some of the most innovative approaches to dealing with education, careers, workforce skills and unemployment are dealt with authorities who have control over all of these portfolios and can manage them in integrated ways, that can tailor support to individuals throughout their lives (e.g. US states such as Oregon, or Scandinavian cities/regions such as Copenhagen).
Some powers and resources will still need to be centralised – but we need to ask how they can work better for local economies
There are, of course, some policy areas which will remain under national administration, such as defence, research funding and foreign relations. However, we have seen some definite progress in using our embassies and consular staff for the strengthening of advice and networks to support exporting, as well as the integration of local chambers of commerce into an international trade network initiative.
However, we need to think about how we deploy central resources – such as in our public R&D investments. Is it an accident that the bulk of science R&D expenditure from research councils and the like goes to the greater south east? if we think about life sciences, most of the major labs and centres are in London (e.g. the new Crick Institute) and the greater south east (e.g. MRC research centres in Cambridge and London, Rothamstead in Hertfordshire, Health and Safety Executive Research Labs, Civil Nuclear research, Cyber-security).
Diminished local government capacity and financial resources: the elephant in the room
The goal of devolution and increased local decision making and capacity to institute change may be severely hamstrung by the cuts to local budgets. We can’t get through a day now without a report about the parlous state of local government finance and the impacts they are having on local residents. Is it realistic to expect a revolution in the role of local government whilst resources and capacities are cut significantly?
Are MAAs and ‘total place’ the best examples of devolution we can give?
To me, MAAs (Multi-Area-Agreements) were a very complicated way of driving local collaboration that came too late. Total Place was never really implemented, but emerged in 2009 as the government considered how it might effectively make efficiency savings by a more holistic approach to combining and managing public resources in local areas. They both held promise, but were not followed through with delivery.
We really need to look no further than Scotland for an example of devolution at work, or look at Scandinavian Cities such as Copenhagen, which operate a substantial range of devolved powers themselves. German city-states such as Berlin and Hamburg also have substantial powers – e.g. they run and fund their own Fraunhofer Institutes; they have established special purpose vehicles for property investment and regeneration as well as inward investment promotion.
London is obviously a good example, but unfortunately the GLA and Mayor have limited powers and resources for delivery, apart from in Transport. So far, there has been a lot of movement on the strategic influence on centrally funded delivery, such as through Adult Skills Boards. However, to be truly innovate and transformational, cities need to deliver as well as set priorities and strategies.
Making local devolution work
So Whitehall’s role in attempting to redress the North-South balance might be rightly criticised as a failure. Is it time for a new approach? I would like to think so, but this will involve reorienting powers that will remain at the national level, as well as devolving more powers locally.
Devolution will only work if:
1) There are the resources available to deliver investment and change
2) There are the true freedoms to prioritise and deliver to local needs and opportunities
3) It is a long term, permanent settlement
Meanwhile, central government needs to:
4) Establish the statutory framework and community of practice to deliver locally
5) Look at how national public investments can drive long-term economic prosperity (such as public R&D expenditure and defence expenditure)
The next government – things to get right?
Which brings to mind things to get right for whoever holds the keys to No. 10 in May 2015:
- Set out the powers and resources to be devolved that are of a decent scale and involve the functions that make the most sense to let cities administer themselves. As is clear from the Single Local Growth Fund, there wasn’t much on offer except for local transport funding, and some unspent budgets from the Regional Growth Fund. Any devolution settlement to cities and localities needs to be driven by the senior ministers and the cabinet.
- Establish the statutory framework for a menu of governance structures – OK many want to push the City Region Mayor route, but some city regions are just not comfortable with that yet. Why not define a range of governance structures which will help to improve leadership, accountability and devolution?
- A coherent settlement for urban policy and devolution. Avoid setting out hundreds of small funding pots with their own peculiarities and rules – as this would not be devolution, it wold be micro-management from the centre.
- Develop an approach to devolution which also brings in those localities who need more support to understand and implement it. Whilst some localities will respond well, others will respond better if there are definite powers and structures on offer.
Asking the right questions in the run up to the election
Its worth ensuring that there is clear information from each manifesto or set of election pledges:
- What are the main aspirations, aims and objectives of subnational economic policy and public services – and how will the proposed policies meet these?
- Are the resources available to meet these aspirations? We are kidding ourselves if we think that there is a bottomless well of money from resource efficiencies to fund infrastructure and services for economic growth. We need realistic financial planning, where the means will meet the ends required.
- Why are we still continuing with the same local government boundaries, powers and structures? the city deals and the combined authorities could be interpreted as saying – there is no appropriate form of local government to deal with strategic issues (whether they be economic growth, transport, infrastructure, skills or the efficiency/effectiveness of public expenditure). Are these improvised structures a tacit admission that subnational government has inadequate structures, boundaries and powers?
- How will we measure success and share best practice? Currently there is no framework or resources to assess how successful the devolution experiment has been so far. There is no community of practice or method of sharing best practice or experiences. Surely this is something that needs to be put in place? It could be an objective, impartial service answerable to the LGA and parliament.
