Private sector cities: A new geography of opportunity

In order to unlock the potential of cities and increase private sector growth, the Government will need to adopt a radical new approach to economic development.

Report published on 6 June 2010 by Paul Swinney

England urgently needs to grow its private sector economy and create more private sector jobs. Cities and their hinterlands are home to more than 75 percent of England’s private sector workforce and they will be the key centres for future growth. But in order to unlock the potential of our cities and increase private sector growth, the coalition Government will need to adopt a radical new approach to economic development.

Globalisation and technological change have reshaped the geography of private sector growth in our economy so that some cities are now much better placed than others to generate private sector jobs. Through no fault of their own, many struggling city economies – including places like Stoke and Burnley – are no longer capable of generating enough private sector jobs for the number of people living in them.

Meanwhile, more buoyant cities – such as Reading and Brighton – have been creating thousands of new jobs in the private sector, but need to be expanded further to help businesses and workers take advantage of the opportunities being generated. Past governments have tried to counteract shifts in the pattern of economic growth in England, but the impact of their efforts has been disappointing.

The new Government has said that it also wants to focus on ‘rebalancing the economy’. Instead, we think it needs to start working with the tide of change rather than against it, and it needs to ensure that local leaders have the power and the incentives to do that too by following through on its commitment to decentralise.

Together, national and local leaders should adopt a new approach to economic development across the country that focuses on helping cities and their residents adjust to long-term economic change. This shift in thinking will have wide ranging implications, including significant expansion of buoyant cities that are experiencing strong private sector growth and more realistic development of struggling cities that are not creating enough jobs for their workforces.