03Conclusions and policy recommendations

4City centres have become increasingly prominent within the national economy. In particular, they are now playing a more dominant role as places of work. As the UK continues to specialise in industries that benefit from the face-to-face interactions that dense city centres offer, they are likely to play an ever larger role in the national economy.

This economic growth has resulted in city centres also playing a greater role as places to live, learn and play. There has been a return to city centre living in our most successful urban areas led by the movements of both young professionals and students. The high streets of these successful city centres continue to perform strongly, attracting in residents, workers and visitors, but their focus is gradually shifting away from retail to a greater emphasis on food and leisure services.

The challenge for policy in these successful city centres is to manage competing demands for space so that the primary driver of their success – their role as places of work – is sustained.

But not all city centres are thriving and experiencing this growth. Some have not attracted in high-skilled jobs, and as a result, their high streets are suffering. In these weaker city centres, the challenge is to get their economies going. By improving their role as places of work they will become more attractive places to live, learn and play. Crucially, this requires focusing primarily on the economy, rather than the performance of the high street, which can be done by:

1. Using the National Productivity Infrastructure Fund and Future High Streets Fund to help remodel struggling city centres

In his 2018 Budget Chancellor Philip Hammond announced a £675 million Future High Streets Fund – for which places are currently preparing proposals – and once again increased the size of the National Productivity Investment Fund to £38 billion. The Chancellor should recognise the fundamental importance of thriving city centres to the national economy, and the vital role they will play in boosting productivity, by designating them as strategic economic infrastructure like motorways and rail links. Cities should be given access to the National Productivity Investment Fund to invest in becoming more attractive locations for both firms and workers.

The Future High Streets Fund should sit alongside this larger Fund, and focus on adapting the built environment of city centres to the changing nature of the high street. This will complement the wider economic improvements made through the larger National Productivity Investment Fund. Crucially, this will require knocking derelict buildings down as much as it will mean building new ones, and may mean that the overall square footage of commercial space is lower after remodelling. Importantly, the commercial stock available will then be of higher quality.

2. Offering exemptions from commercial to residential PDR to all city centres

Given the vital role city centres play within both city and national economies, all 55 of England’s largest cities should be offered an exemption from PDR for their city centre. Offering protection would mean that city planners will again have control over how land is allocated to each property use and be able to prioritise commercial space where needed.

The exact definition of each city centre, or equivalent commercial district, should be determined by the cities themselves. The current system offers much-needed protection to a small number of city centres, but most must go through the difficult process of requesting an Article 4 direction if they require exemption. These exclusions must be subject to periodic review to ensure the geography of the city centres remain relevant and that the most commercially important areas continue to be protected.

Giving cities greater control also requires them to continue to increase the supply of commercial and residential space where it is demanded. Our fastest growing city centres have responded well to this challenge since the turn of the century, and this approach will need to continue if future rent increases are to be managed.

3. Improving the skills of residents to attract higher quality business investment

While much focus in regeneration is on buildings, the key element for attracting high-skilled businesses into a city centre is a high-skilled workforce for those firms to access. Alongside policies to remodel city centres, priority should also be given to improving the skills of residents in the city centre and the city more widely. As well as improving attractiveness to business, this will enable them to access the new job opportunities the city centre provides. All city centre strategies need to set out what they will do about skills at early years, school age and working-age levels.⁹

Combined, these policies will improve and protect the attractiveness of city centres as business locations and strengthen their role as places of work. In turn, better job opportunities will generate more footfall and spending power to sustain vibrant high streets and make city centres even more desirable as places to live, learn and play.