Three months after taking office, the new Government’s emerging economic vision for the country has been best encapsulated by its promise to build “an economy that works for everyone” – a mantra repeated ad infinitum by ministers in recent months. This rhetoric reflects concerns about the so-called “left behind” places which drove the vote for Brexit, and has informed the launch of the Government’s new economic and industrial commission, tasked with driving growth “up and down the country, from rural areas to our great cities”.
It also echoes a perspective I often hear at meetings and in public events – that the previous Government’s economic policy and devolution agenda was too focused on major cities – and that the new administration should instead focus on boosting growth in places like Burnley and Blackpool, and moving firms and jobs from Birmingham and Leeds to Dudley and Wakefield.
However, as the following points illustrate, it would be a mistake for policy-makers to view the economic turnaround in places like Manchester and Birmingham as a fait accompli, or to adopt a “something for everywhere” approach when it comes to investment and political capital:
- The UK economy is not flat – and policy needs to focus on making the most of the continuing growth in major cities. British cities are home to 54 per cent of all jobs, and these job spikes in the economy are most significant in major urban areas – with Manchester, Liverpool, Birmingham and Leeds combined making up 10 per cent of all jobs despite only occupying around 1 per cent of land. These cities also make a crucial contribution to the national coffers, with Manchester generating almost as much tax revenue in the last decade as the ten fastest growing small and medium sized cities combined.
- But the economic turnaround of major UK cities is not complete, and must be sustained. It has taken a long time for cities like Manchester, Leeds and Birmingham to begin to overcome their post-industrial hangover and reinvent their economies. Up until the mid-1990s, all of these cities – and even London too – were still facing declining populations and stagnating job bases (this is still the case in Liverpool and Sheffield). But the economic recovery of these places is nowhere near finished, and adopting a ‘jam spreading’ approach to scarce resources means the hard won gains in these places could be lost.
- Businesses chose to locate and create jobs in big cities for good reasons – and attempts to shift them to less vibrant places are unlikely to succeed. Firms are increasingly choosing to locate and create jobs in the centre of major urban areas because of the strong transport links, access to skilled workers and customers, and proximity to ideas that they offer. Policies that ignore the locational choices made by firms and workers and tries to move them to less economically vibrant places – for example, as the so-called ‘Brown Ban’ did in the 1960s – did not succeed in the past, and won’t work today.
- Major cities are not islands – when they prosper, so do people and places living in surrounding areas. City economies only thrive if they have strong links with their suburbs, hinterlands and rural areas, where so many of their workers, customers and suppliers are based. Indeed, a fifth of all people who work in British cities live in nearby rural areas. Manchester’s travel to work area extends 45 kilometres into its hinterlands and people who work in Leeds city centre travel more than 30 kilometres to do so. Investing in improving skills to give people more reasons to travel, and in transport links across cities and their surrounding areas, to make it easier for people to make those journeys, will therefore be vital in increasing opportunities for people across the country.
No-one would deny the economic, social and moral importance of ensuring that more people and places benefit from the global and technology changes that have buffeted the country over the last 25 years, and which will continue to do so over the next 25. But that should not be at the expense of our big cities, which will become ever more important as the primary hubs for the national and global economy over the course of this century.
The previous Government made great strides forward in recognising the diverse roles that different places – and cities in particular – play in generating prosperity and contributing to the national economy. As the new administration prepares for its first Autumn Statement in four weeks’ time, it is crucial that it builds on this progress, by resisting the temptation to spread limited monies and political focus equally across the country. Only by working with the grain of the economy and exploiting the continued growth in major cities can the Government hope to deliver on its vision of raising prosperity and opportunities for people across the country.