04What needs to change

As a group, the FGCs entered the pandemic in a stronger position than many other cities in the UK. This is mainly due to their strong labour markets but is also a result of their individual and combined strengths in research and education, as well as their industrial structures. The challenge now is to weather the storm, offsetting the impact on longer-term growth prospects, while addressing other potential limitations on growth that existed before the pandemic.

The FGCs group contains some of the UK’s most successful cities, many of which have a significant impact beyond their administrative boundaries. So, it is important that policymakers support these cities to reach their potential and to ensure that they continue to function as regional employment hubs and innovation centres.

The immediate focus of the FGCs and of government support to them needs to be on the economic recovery. This could be in the form of supporting the high street to both deal with ongoing social distancing restrictions by allowing them to use outside space around their premises, as well as providing support and guidance to make the most of the financial support such as business support loans that are available.

In the long run, support must address more strategic challenges. While each city has requirements that will need individual interventions tailored to their local economies, including addressing shifts in commercial property and uses in city centres, this analysis has identified policy areas that are common and relevant for all in the group. These areas should be the focus when thinking about how best to support the FGCs in their commitment to future growth.

Skills and education – Since the previous report, most of the FGCs have been able to make progress when it comes to developing the skilled labour force in their cities. In particular, Milton Keynes and Norwich made large positive steps in improving the share of high-skilled people who live there.

The establishment of higher education institutes in Milton Keynes, Peterborough and Swindon will certainly help towards targeting and fostering the development of skilled labour that these cities need, with employer-led provision meeting the needs of business. However, these efforts are no guarantee that newly trained students, both residents and those who moved to the city for university will remain in the local labour market. Highly skilled people will only stay in the area if there are enough well-paid job opportunities. This highlights the need for authorities to continue making their cities attractive places for productive businesses to locate.

In addition to their focus on high-skilled people, cities must also support those with no or few qualifications as the share of people lacking basic education is still a challenge in several FGCs. A central challenge too will be re-training adults for new careers and ensuring schools provide up-to-date training and careers advice.

Despite not having many formal powers on skills, the FGCs should use their position to act as conveners. This could take the form of bringing together local education providers, employers and other local organisations in a ‘skills compact’ to help better coordinate the money and expertise in their cities to target the particular challenges they face in improving the skills of this cohort.¹³

The Department for Education should work more closely with the FGCs to assist them in creating these skills compacts, and give further support where required to help the cities address skills challenges they identify.

FGCs should also consider championing take-up of the Government’s new Life Skills Guarantee for their residents with few or no qualifications. While the scheme covers the costs of college courses for adults without A-level or equivalent qualifications, there are a number of other barriers the cities can help address, such as lack of awareness, building confidence around learning, and maximising the local support available to learners.

Productivity and innovation – The continued growth of the FGCs depends on the ability of their economies to develop and absorb new innovations that spur further productivity growth. Previous research by Centre for Cities has shown that a key factor of this is the presence of high-skilled ‘exporting’ businesses that determine how productive a place is.¹⁴

As well as having access to a large number of high-skilled workers, having a city centre or other central business area that facilitates sharing of ideas and information between employees and businesses appears to be important for services-exporting businesses in particular. The challenge for the group is that relative underperformance of their city centre economies – albeit for very different reasons – is a common theme among them.

To address this, as part of a broader focus to improve the performance of Britain’s city centres in the long run, the Government should create a City Centre Productivity Fund to provide capital investment that makes city centres more attractive places to locate and do business. This, in turn, will boost demand for cafés, bars and restaurants, benefiting the high street.

Individually, the FGCs should draw city centre plans tailored to the specific challenges that their city centre economies face. For Oxford and Cambridge, the historic nature of their city centres, dominated by their universities, may not make them best suited for a 21st Century central business district. Cambridge may look instead to the Government to help it build on the investments that have been made in the CB1 development around Cambridge station, Cambridge Bio-Medical Campus and North-East Cambridge.

Housing – Over recent years, the majority of the FGCs have been successful in building housing at a rate that far exceeds the national average. Building more homes to higher energy standards will help bring about a greener recovery as well as contributing to the UK’s targets of reducing carbon emissions. The creation of more homes has meant that more people were able to benefit from the fast growth of these cities and contribute towards helping these places grow further.

However, affordability in some of the FGCs fell much faster than the national average, which reflects the high demand to live in these places but is also likely to have an impact on the attractiveness of these places to live in the future. To limit the rising unaffordability in the FGCs, further increases in housing supply of a variety of affordable types and tenures must be a central part of future strategy.

Government should work with the FGCs to explore the particular challenges faced by the cities, ensuring planning and housing policy does not have a detrimental impact on delivery of affordable housing and that the planning system unlocks and supports sustainable, inclusive and green growth. One way to do so would be for the Government to give the cities greater flexibility over the use of Right-to-Buy receipts, which would create an income stream that local authorities can use to finance the construction of new, replacement council homes.

Devolution – A key governance challenge in England is the limited powers urban local government has despite the outsized contribution of cities to the wider economy. The devolution deals put in place in recent years do go some way to address this, but are still limited in their scope and coverage. Among the FGCs, this has benefited Cambridge and Peterborough, but so far not the other cities in the group. The Government’s has said it wants to extend devolution deals to other parts of England. Every FGC should be at the centre of constructive conversations to work with neighbouring district, county and unitary partners to work out how any future devolution deals could bring the greatest benefit to the people who live in and around them.

This would put the cities in a strong position to talk to the Government about its devolution plans, when the pandemic subsides. It is important that any future devolution deals ensure that urban areas have a strong voice in decisions that are made.

In general, the FGCs are likely to face significant costs associated with their further growth, both in terms of accommodating extra housing, utilities and amenities for new residents and transport and amenities for new commuters. Further devolution to the cities should include financial and strategic support that the cities in the group need to continue to grow quickly and sustainably. This should particularly focus on interventions with the potential to benefit people who live both in the cities and the wider regions in areas such as transport, housing and jobs, in line with the long-term vision of the group’s members.