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The twin topics of cities and devolution enjoyed something of a heyday on Monday. London Mayor Boris Johnson kicked things off with a spirited address at the Communities and Local Government Committee, coming out in favour of greater devolution to London and other major UK cities. The Silk Commission also published its second report on devolution to Wales. And finishing off the day with a slot on primetime TV, Today programme presenter Evan Davis examined London’s economy and its relationship with the rest of country, picking up on the theme of our Cities Outlook 2014 report.
Questioned by MPs as part of their inquiry into city devolution, Boris Johnson came out strongly in favour of the London Finance Commission’s recommendations to devolve the full suite of property taxes to the capital.
The Mayor’s references to businesses being “clobbered” by excessive business rates and Russian oligarchs getting away with paying low council tax rates compared to what they would pay in any other major European city may make the headlines, but crucially he also made a wider case that other major UK cities, beyond London, should receive the same powers in due course.
The Mayor’s endorsement for greater city devolution is to be welcomed. UK Cities need the incentives to support enterprise and the freedoms to calibrate policy to their local economies. But those watching Evan Davis’s BBC2 documentary Mind the Gapmight well have asked why London needs any new powers, given how successful it already is.
Davis portrayed a vibrant and powerful capital, pulling in people and businesses from across the country and the rest of the world. But it is a capital doing too well in the eyes of some, who would prefer to see a reduced but more geographically balanced pattern of growth, rather than the London-led national economy we observe today.
There is no evidence, however, that restricting growth in London would benefit the rest of the country, and a strong argument that investment that does not come to London is more likely to go to New York than to Newcastle. It also conflates where you get economic growth with what you do with the proceeds of growth. But the discussion, which will continue, quite rightly raises some of the thorny issues that came up in the first CLG evidence session (read my blog on the session here).
Both the CLG hearings and Mind the Gap raised many of the same themes: fairness and redistribution; power and accountability. Because while devolution has been steadily rising up the political agenda, and most parties are broadly positive about the idea of more powers and responsibilities being down passed to local areas, there remains a great deal of uncertainty and nervousness about the process and consequences of devolution in practice.
What Davis illustrated and explained brilliantly was the powerful impact of agglomeration economics and the exponential / circular way in which growth begets growth. And like London, our other successful city economies who host the most highly skilled jobs, attract the most new graduates and create the most new businesses, will continue to be the centres of growth.
Yet compared to other parts of the UK, our cities have comparatively few powers to drive their economies in the years ahead. Wales has already been given more freedoms to grow its economy and design and delivery services that meet the needs of its residents. And on Monday, the Silk Commission recommended going further still, advocating the devolution of additional public services such as policing and youth justice. All of this despite Wales boasting an economy smaller than either Leeds or Manchester.
In the year when the Scots will vote on independence, devolution is likely to remain at the top of the political agenda. With visible and coherent city-wide governance structures in place, and the existing political appetite to do so, London, as the Mayor stated, and cities like Manchester and Leeds, are the logical next steps for rolling out greater devolution in England.
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