04Conclusions and policy implications

In recent years there has been a welcome shift from policymakers in recognising that the national economy is made up of a multitude of local economies across the country. This led to City Deals and later Devolution Deals.

But this, combined with the geography of the EU Referendum vote, has reignited the debate between cities and towns, with calls from some to move away from the urban focus that parts of policy have adopted in recent years.

These calls do not take full account of the links between cities and towns and the differing roles that they play. Not only do cities play a large role in the national economy, but they also have an influence on the success of the towns around them. It is right to design policy that improves the employment outcomes of people who live beyond cities. But these employment outcomes are influenced by the performance of the nearest city, and this approach cannot be taken without understanding the relationships between the two. A continued focus on cities, and particularly on those that underperform, will be an important part of improving the outcomes for people who live in towns.

This research is aimed at progressing the debate rather than resolving it, by providing a solid base of evidence to better understand the interdependencies between cities and towns. Given this, the following policy principles should be followed to improve the outcomes of residents in both towns and cities across the country:

1. Improve skills levels across the country

This report has shown that, as with cities, the skills levels of residents in towns is a strong predictor of their economic outcomes. The central focus of any approach to the economy needs a coherent strategy to address the skills deficiencies
at its heart. Equipping people with the right skills then gives them the tools to participate in the economy, and increases the pool of skills and workers available to businesses.

Addressing skills should be broken down into three areas – early years, school age and working age, with specific policies for each. Centre for Cities will make specific recommendations in each area in a forthcoming report.

2. Work with the changing economic geography of the country to deliver better outcomes for people

Place has an important role in explaining the economic outcomes of different parts of the country. This is likely to become even more important as the UK continues to specialise in more knowledge-based service activities that prefer a city location.

But this sounds a warning too. Having so many cities below the national average is a big problem. It is not just a problem for cities and the national economy but it is also a problem for residents in nearby towns as it limits their access to
economic opportunity.

For those towns that are located close to cities, the success of their larger neighbours and the links between them will become more important. This will require two broad approaches for policy depending on the performance of neighbouring cities.

In successful cities and nearby towns, policy will need to deal with the costs of growth. This will mean increasing the number of houses and commercial space to track increases in demand, and dealing with congestion.

In weaker cities, the focus needs to be on kick-starting growth for the benefit of their own residents, residents in their surrounding areas and the national economy as a whole. Skills will form a large part of this, as well as improving the
attractiveness of city centres to higher-skilled exporting businesses. In both, improvements in transport links between cities and towns should be made where necessary to make sure people are adequately connected to as many job opportunities as possible.

3. Proceed with devolution to tailor policy responses to different areas

Effectively implementing these approaches will be difficult from Whitehall because of the sheer number of places involved and their varying needs. This is why devolution is important, as it allows policy to be tailored to the needs of local areas by those who know those areas best.

Substantial progress was made with the devolution agenda before the previous election but has stalled somewhat since. To address this:

• The metro mayors currently in place (who have responsibilities for cities and towns as part of their combined authority) should have their powers extended, particularly over transport and planning. Any powers and funding repatriated as a result of Brexit should also be assessed to see whether they would more appropriately sit at a city region level.
• The remaining large city regions in England and Wales that are not covered by a Devolution Deal should strike one with the Government, but this will require work on both sides. For the Government, this will mean pushing the agenda once again, and city regions will need to be clear about what powers they need.
• The devolution framework promised in the Conservative manifesto should set out the suite of powers are available for all other areas, and on what terms they will be devolved. Centre for Cities will be setting out its position
  on this later in 2018.
• A position should be set out as to what devolution to Scottish cities looks like. This no doubt will be shaped by the discussions that the cities are having both individually and through the Scottish Cities Alliance with the Scottish Government around the Local Governance Review.