George Osborne’s last Autumn Statement before the General Election next year painted a picture of an economy on the up, buoyed by positive growth projections and borrowing and deficit figures revised downwards by the OBR (largely due to changes in statistical methods).
But just how positive was the news for UK cities?
First, let’s look at the good. Although heavily trailed in the news this week, the Chancellor’s support for improved road and rail connections – to the tune of £15bn – was nevertheless welcome. Improving the quality of existing connections and rolling stock within and between cities in the UK is critical to linking city labour market, and to driving investment and growth in more places across the country.
The Chancellor also announced more support for small and medium-sized businesses – a key driver of city economies. Specific pledges included an expansion of the British Business Bank, and the extension of funding for lending for a further year. Tax credits for research and development were increased to 230 per cent for SMEs, and the business rate relief for small firms was also extended for a further 12 months.
In addition, there were a raft of other, smaller measures to support culture and creative industries across UK cities, including a new theatre in Manchester, and specific announcements to fund a new science and innovation centre – ‘Crick of the North’ – in Manchester with branches in Leeds
These are all sound investments that, to varying degrees, could pave the way for cities in the North of England to play a stronger role in contributing to economic growth.
But there was also much to be cautious about. For one, the scale of public spending cuts required in the next Parliament was once again emphasised, and this will inevitably place a heavy burden on local government to find yet more savings. These will be in addition to the 37 per cent budget reduction that local governments have experienced in this Parliament.
That’s why it was disappointing that there were no specific announcements to build upon the devolution deal agreed in recent weeks with Greater Manchester by including any fiscal powers. Although the deal as it stands is a significant step in the right direction, there remains concern that without the ability to raise and retain more of their own income, Greater Manchester will not be able to maximise the growth of their local economy, and thus deliver higher standards of living for its residents and surrounding areas over the long-term.
And although the Chancellor issued an open invitation for more cities to come forward to discuss similar arrangements, we would have liked to see further devolution deals with the likes of Sheffield and Leeds included in the Chancellor’s Statement. We may yet hear more on these arrangements later this week, although it is likely that they will be on a smaller scale than those agreed with Greater Manchester.
But perhaps the biggest omission from the Chancellor’s statement was the lack of definitive proposals to tackle the UK’s escalating housing crisis, on a scale that will deliver the number of new homes we need, where they are needed. The lack of affordable housing is one of the major threats to the future prosperity of some of our fastest growing cities. And yet the ‘big ticket’ announcement on stamp duty once again focuses on boosting the demand for new housing, when we know that in high-demand cities like Cambridge, London, Oxford and Brighton, it is the supply of new housing that needs most urgent attention.
Given the continued ducking and weaving from all parties on the housing issue, we should perhaps not be surprised that the Statement failed to deliver the radical approach we need to a crisis on this scale; coming as it does on the eve of an Election year, it was always likely to be driven as much by the political landscape as it was the state of the economy.
All in all, the Statement was one of mixed blessings for cities. Although increased infrastructure investment and SME support are to be welcomed, the scale of public sector cuts facing local government in the years ahead, the lack of progress on fiscal devolution to provide places with the tools to boost growth, and the lack of measures to boost housing supply means that there remains much to be done to enable our cities to fulfil their potential, and drive the nation’s economic growth in the years ahead. It’s time now for all political parties to match their good intentions for rebalancing the economy and growing the North with some much more concrete, ambitious and far-reaching plans for action.