While large cities have struggled to create jobs over the last decade, the types of jobs they host have become much more high skilled. This has not come about because of Government policy bias towards cities, but instead because these cities have been able to benefit from changes in both the global economy and national policies. To achieve its levelling up goals the Government should embrace these changes.
Our largest cities have become more economically complex in recent decades.
Centre for Cities’ recently published paper, What levelling up really means: changing the geography of knowledge, analyses how urban economies have changed since 1981. This is based on the concept of economic complexity, which attempts to understand how knowledge is created and spread.
Large UK cities, on average, have become more complex than other cities since 1981 (as Figure 1 illustrates). They have been able to move their economies away from uncomplex activities, such as shipbuilding and coal mining, to more complex, high-paying knowledge-intensive industries such as telecommunications and computer programming.
Figure 1: Most of the largest cities have become substantially more complex in the last four decades
Source: ONS; Census, 1981. Centre for Cities’ calculations. Urban ECI computed at the Local Authority level including all local authorities. City’s ECI computed at the PUA level, including urban areas only. Largest cities measured by total employment and ECI scores are a weighted average considering each PUA’s size. Note: The cities considered as largest are the following: Birmingham; Bristol; Glasgow; Liverpool; Leeds; Manchester; Newcastle; Nottingham; Sheffield.
These trends are not explained by geographically-targeted policies
Some argue that the changing economies of many big UK cities is a result of Government policy explicitly favouring them at the expense of smaller places. They claim that this has sucked jobs into cities at the cost of their surrounding areas. However, there is little evidence to support this view.
As Table 1 illustrates, despite some pro-city Government initiatives, such as Michael Heseltine’s City Challenge or David Cameron’s City Deals, the UK Government has not implemented a consistent stream of pro-urban policies in the last four decades.
Note: Policies directly targeting cities highlighted in green.
The re-emergence of the big cities is not yet finished and the Government should promote it
Instead, most of the UK’s largest cities have benefited from both changes in global economic trends, and from non-geographic national economic policies.
In recent years cities have benefited from the global shift from manufacturing towards knowledge-intensive industries due to their capacity to host large numbers of workers and businesses. Meanwhile, they have also benefited from non-geography-specific Government policies such as the expansion of higher education.
That said, the increasing economic complexity of UK cities has not translated into higher productivity levels. This is because their more complex, high-skilled, high-paying sectors are not yet big enough to increase national productivity.
If the Government is to meet its ambition of having an internationally competitive city in every region, big cities are the most promising places for achieving this as complex high-tech, high-paying businesses have been organically locating in them for decades. Policies trying to increase the size of their more complex sectors, as recently recommended by the Centre for Cities, would therefore further benefit cities and the level up the wider UK economy.