2015 was a tumultuous year for cities, with significant new powers for major city regions alongside a challenging financial settlement. So what might 2016 bring for them? Here are my predictions:
1. Global upheaval will make this a tough year for city economies – and, increasingly, city finances.
With the IMF predicting disappointing global growth and continuing uncertainty about membership of the EU predicted to affect international investment, firms and cities across the country face a challenging year. Cities heavily dependent on trade in manufacturing will be particularly affected if the slowdown in China continues, while low oil prices are hitting demand for goods and services (and not just in Aberdeen).
But this won’t just affect city economies; as a result of the reforms to local government finance announced last year making cities more dependent on business rates over the next five years, these global trends could start to limit the money councils can raise, at a time when they are already needing to reduce outgoings and reform services.
In the very short term, this should increase the imperative on cities to take up Greg Clark’s offer of a four year financial settlement and encourage greater work across city regions. In the medium term, cities need to be pushing for further fiscal devolution to be on the agenda, as well as a debate about how to ensure city leaders have the skills needed to help their city be resilient in the face of so much change.
2. Housing will be one of the hottest political issues and it will create an opportunity for cities.
Five days into 2016 the Prime Minister has already announced measures on house-building, while the London mayoral election will be dominated by discussions about who can afford to live and work in such an expensive city. Throughout 2016 there will be growing pressure to demonstrate the results of the various housing policies the Government has put in place.
With too many of these policies further stoking demand rather than increasing supply of houses, national government needs to do much more to strengthen the incentives for places – especially the least affordable – to build more homes. Including housing in more Devolution Deals, allowing places to retain stamp duty and ensuring the planned reform of the New Homes Bonus is effective should all be considered as part of the government’s policy response – and cities should be pushing hard to gain additional powers that will help the government deliver its manifesto commitment.
3. In devolution there will be a strong focus on implementation, but the smart city regions will be pushing hard on policy change too.
So much has happened on devolution that there will be a great deal of pressure on cities, once the Cities Bill has passed, to get on with implementing their devolution deals. This clearly needs to happen – ideally with those cities putting in place evaluation strategies so they can work out what’s changed – but we are only in the foothills of changing public policy on UK cities. Greater fiscal devolution, strengthened powers over employment and skills, more powers over housing; there’s a great deal for city regions to play for and they should be doing just that – Greater Manchester has demonstrated over the last 18 months that places able to make a strong case for greater powers can succeed.
4. Devolved and local politics will make national headline news, and not just at election time.
It’s true that May 2016 will bring a bumper crop of nationally significant elections: from the prediction of a landslide SNP win in the Holyrood elections, to UK-wide council elections that will affect the stability of Jeremy Corbyn’s leadership, to Zac Goldsmith and Sadiq Khan battling it out for the London mayoralty in a Labour-leaning city which just elected a Conservative, twice.
But as cuts take effect and the devolution deals are implemented, expect much more scrutiny of local issues, from progress on the Northern Powerhouse and Greater Manchester’s health and social care devolution to pieces on the impact of funding cuts. With the UK set to have at least five major city region mayors with potential to wield national influence by May 2017, this is a welcome trend set to continue and cities should be seeking to make the most of it and raise the profile of what they are doing.
5. This time next year local government will look quite different.
Manchester, the West Midlands, the North East, Merseyside, Sheffield and the Tees Valley will all be preparing for metro mayoral elections – with Leeds likely to be in that list too. There may well be district councils moving away from counties and into combined authorities. There will certainly be more joint working, co-commissioning and other ways of working to deliver better services and reduce costs.
And with funding being crunched and social care costs continuing to rise, expect big debates about the role of local government and what level of services it should provide. For cities, this must be an opportunity to move debates about urban policy on from important but technocratic conversations about infrastructure and borrowing – which all too often put people off devolution – and onto more accessible and visionary conversations about the future of places and what that means for homes, jobs and transport in different communities.
The Comprehensive Spending Review at the end of 2015 in many ways marked the end of the beginning, confirming the government’s commitment to devolution to city regions and taking small steps towards fiscal devolution in the form of business rates. 2016 looks set to bring significant economic and financial challenges for all UK cities. But for those cities and city regions willing to seize the initiative, deploy their new powers to promote growth, and keep the pressure on government to devolve and invest more in city economies, there are genuine opportunities too. For all of us who want to see more prosperous and successful cities across the UK, the focus over the next 12 months must be on ensuring these opportunities are grasped and 2016 is remembered as another landmark year for urban policy and prosperity.