Five Predictions for 2017

Changing global politics, an industrial strategy, a continued mistrust of the elite, metro mayors and robots are all in store for 2017

2016 was a year that confounded predictions and wrong-footed experts in everything from politics to football. But I buy Nesta’s argument that accuracy isn’t everything when it comes to predictions. Thinking about possible futures in 2017 – set to be another momentous year – informs plans for the future, even if they have to change in light of unexpected events. With that in mind, here are my predictions about five big issues that will shape the year ahead for city regions.

First, the rules of global politics and economics will change, with a move towards increased protectionism from some and growing concerns about immigration everywhere. 

Last year’s backlash against globalisation is set to continue with the inauguration of President Trump, committed to reintroducing tariffs, revitalising America’s manufacturing industries and working on a bilateral rather than multilateral basis. The French and German elections, whatever their outcome, are set to have wide-ranging implications for the EU and its constitution and, of course, for Brexit negotiations. All of these changes will affect trade not just internationally but also at the city region level, with different implications depending on the industrial and workforce make-up of each area.

The combination of Brexit with such significant changes in political leaders in the US and EU, means that international politics  will dominate the national policy agenda this year. It will colour almost every other policy debate and absorb a substantial proportion of Ministerial and civil service time, to the exclusion of many other issues – potentially including devolution, which requires considerable policy untangling in such a centralised country. However, amid international economic upheaval, it is even more important that the UK government does all it can to support city regions “up and down the country” to thrive. That means, paradoxically, there’s a chance (it may be a slim one but here’s hoping) that the government ends up engaging in more wholesale devolution to city regions to free itself to deal with these international challenges.

Second, as government seeks to support domestic growth, the tension between economics and politics will continue to grow, exemplified by the Government’s forthcoming industrial strategy’s recommendations. 

Government needs to support economic growth and boost productivity as quickly as possible in order to raise wages and improve living standards. Economic evidence suggests the way to deliver results quickly is to concentrate investment and resources on the areas that are already successful. This will deliver the fastest, and generate higher levels, of growth and taxes for the UK as a whole. Yet we already know that the way the UK has supported economic growth in the past has not delivered enough benefit for enough people. This is further bolstered by the fact that many who voted for Brexit and Trump did so in part because they felt their living standards had not improved in recent years.

Politicians need to deliver an economy that “works for all” that has high productivity and helps the people and places that have been left behind. Yet there is no easy way to do this and the risk is that, as economic and political pressure grows, the government ends up investing in policies that history shows neither help growth nor help the more disadvantaged areas – for example, building innovation campuses in deprived communities that lack the skills, business demand or infrastructure to support them to grow rapidly, or for locals to benefit from any jobs created. The industrial strategy will need to grapple with this. Greg Clark’s commitment to a place-based approach is encouraging but expectations are high, probably too high. To be regarded as successful, the industrial strategy will need to set the tone and pave the way for the UK’s sustainable future growth, make the most of limited funds to invest in innovation and support economic growth, and respond to demands that something happens now for those who are left-behind. The industrial strategy will shape domestic economic policy for the foreseeable future, and city regions will need to be at the heart of its development and implementation.

My third prediction is that distrust in politicians and the ‘elite’ will continue to grow, with metro mayors and local politics offering new opportunities for national parties to connect with the electorate.

National politicians face stupendous difficulties in delivering on the high expectations of a divided electorate. Take Brexit – the Conservatives need to agree a deal that delivers on all the campaign promises, while holding together its small majority. Labour needs to work out what deal will work best for the 70% of its constituencies who voted Leave and who UKIP is looking to poach at the same time as not antagonising its Remain supporters, who the Liberal Democrats are courting.  This task will be made more difficult by the lack of trust among the electorate of national politicians and the elite in particular.

Local politics, and the incoming metro mayors in particular, offers new opportunities for national parties to reconnect with a sceptical, divided electorate.  The election of city region mayors in May creates a new opportunity for all of the national parties to reinvent themselves and reconnect with the electorate – one recognised by big names like Andy Burnham and Andy Street. For Labour, there’s an opportunity for mayors to show that Labour can deliver demonstrable change grounded in local priorities rather than political ideology, For the Conservatives, there’s a chance to demonstrate their relevance and value to urban voters, such as in the West Midlands, that have otherwise largely ignored them.

This is not to suggest it will be easy for mayors to build trust. It is a new role and will take time to make a difference. One of the big challenges the new metro mayors will face – as our work on lessons for metro mayors highlights – is setting the tone for the future of the role, as well as for their term. Communicating their aspirations early on, and ensuring they make a start on delivery, will be vital, even if substantial change takes time.

Fourth, 2017 will be a year in which UK city regions and metro mayors rethink their national and international roles.

Across the world, there is a global shift towards mayors being regarded as the pragmatic responses to ideological impasses at national level – the people who not only ensure that services run and potholes are filled, but also those who can take tangible action to tackle big issues like climate change. Global networks such as Benjamin Barber’s Global Parliament of Mayors and C40’s Climate Change Leadership Group will become increasingly important to city leaders keen to make the most of international links and learn from each other about tackling global problems. Cities will also be looking to pioneer new ways of doing things, with big data and ‘smart cities’ likely to become of increasing interest as cities consider how best to support economic growth and respond better to the needs of their residents and visitors.

Finally, throughout 2017  the nature of work will continue to change, which will impact people and places in different ways. 

Since the recession, the UK has seen strong jobs growth, tepid GDP growth and zero productivity growth. Policy needs to sustain the first and tackle the second and third issues.  As the UK continues to specialise in knowledge intensive jobs and industries, skills are becoming more important to individuals’ opportunities and are likely to become a growing policy priority as the government seeks to make it a country that works for everyone. At the same time, technological advances continue to alter the nature of work, creating the opportunities and challenges of automation, remote working and the gig economy. Job security and in-work poverty will continue to be big challenges facing national and local government.  ‘Fixing’ the skills deficit in the UK will not be easy or quick.

We already know that there are big policy changes on their way this year that will affect the UK labour market in different ways across the country. The National Living Wage will have the biggest impact on low paid cities such as Sheffield, where 28 per cent of people will get a pay rise in April. Questions remain about the long-term impact this will have on future growth – firms replacing people with robots, firms cutting or adding jobs, firms increasing their productivity – particularly in low waged cities.

If 2016 was the year of big decisions about Brexit and Trump, 2017 will be the year these are acted upon. While we know that the fundamentals of what makes city economies thrive have not changed – skills, infrastructure, innovation – how these fundamentals will be affected over the coming year is less clear.  City regions will be vital to the UK making the most of its new role in the world – we need to do all we can in the months ahead to ensure they are well positioned to do so.

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