This is according to a new report published today by the think tank Centre for Cities and supported by the independent Joseph Rowntree Foundation (JRF), which looks at how cities can unlock more investment for policies to increase inclusive growth.
In particular, it focuses on how local government can boost employment and wages, and support more people to access opportunities.
The report argues that all cities should set up a local Inclusive Growth Investment Commission, comprising of relevant public and private sector agencies, to tackle three main objectives:
- Identify inclusive growth priorities in their areas
- Develop financial mechanisms to fund efforts to address these issues
- Coordinate inclusive growth spending and policies across the local area.
The report also sets out four specific policy ideas to help cities generate more funding and long-term investment for inclusive growth policies, based on the powers, resources and assets at their disposal:
- Raise more tax revenue through Workplace Parking Levies (WPLs). UK cities have very limited tax-raising powers, but can generate more revenue for inclusive growth by introducing fees on road transport. In particular, implementing a Workplace Parking Levy would enable cities to generate more funding for public transport, therefore better connecting people to jobs and opportunities, as well as tackling congestion and pollution. Nottingham City Council, for example, generates £9m per years through a WPL, which is used to improve public transport in the city.
- Help businesses in deprived areas by stepping up support for Responsible Finance providers. Small businesses often find it difficult to access credit. Responsible Finance providers (RFPs) play an important role in addressing that problem, providing 47,500 loans to small firms and individuals last year (including many in deprived areas). But with better access to capital, RFPs could support more businesses. Cities can help by providing RFPs with grant funding to cover initial losses and catalyse further investment, and capital lending to secure a return on investment. For example, Birmingham City Council has helped ART Business Loans – a local not-for-profit lender helping firms in marginalised communities – to expand their lending activities, by providing investment to cover ‘first losses’.
- Secure more private sector investment for inclusive growth through Local Asset Backed Vehicles. Every city has land and assets that can be used to finance inclusive growth. One way of doing so is through a Local Asset Backed Vehicle (LABV) – a partnership between local authorities and the private sector to drive an economic development project. In cities with vibrant economies, this can be used to speed up development and to raise more inclusive growth investment from the private sector. It can also help places with weaker economies to secure investment which they would otherwise struggle to attract. For example, in Sunderland, the city council delivered a £100m regeneration project through a LABV in partnership with Carillion Developments and Igloo Regeneration, as part of wider strategy to attract more high-paying jobs to the city.
- Coordinating spending and attracting additional investment – for example, through setting up a city fund. City leaders are increasingly using their convening powers to coordinate investment and attract further funding from a range of sources. One way to do so is through establishing a city fund – an institution to convene investors, manage funds and invest in projects for specific aims such as increasing inclusivity of growth. For example, Bristol Mayor Marvin Rees formed city fund with Bristol and Bath Regional Capital and other partners, to direct local investment into areas such as housing and employment as part of the Council’s inclusive growth strategy.
Andrew Carter, Chief Executive of the think tank Centre for Cites, said:
“Concerns about poverty and exclusion are among the key political issues of our age. But local authorities do not have the finance or scope to tackle these issues alone, and nor should they be expected to. Instead, city leaders should bring together public, private and community actors to collaborate on efforts to extend growth and prosperity to more people across their areas.
“Setting up an Inclusive Growth Investment Commission would offer city leaders and local partners a platform to make the most of existing funding and assets, and to find new ways to raise finance and long-term investment. This could take different forms in different places, but the crucial point is that a concerted approach to tackle these issues is needed in all cities.
“National government should also support local leaders by giving them greater tax-raising powers, and more tools to make the most of their assets and attract private sector investment. That won’t compensate for cuts to central government funding, but it will give places more of the autonomy they need to ensure that as many people as possible can enjoy the benefits of growth across the country.”
Dave Innes, Economist at JRF said:
“Fourteen million people are living in poverty in the UK, so it has never been more important that we deliver economic growth that benefits everyone. The UK’s cities are where the greatest challenges are, but also where there are the greatest opportunities for delivering inclusive growth. City leaders should take the lead by making inclusive growth the organising principle of their city.
“Inclusive growth requires investment in people and places. Despite the backdrop of funding cuts and limited local tax raising powers, there is plenty cities can do to unlock new funding, and channel public and private investment to solve UK Poverty.”