Executive summary

Cities across the country are considering their offer to consumers. Many with weak economies are exploring how an improved consumption offer can kick-start economic growth and prevent further high street decline. Both cities and national government are proposing solutions, ranging from increasing support for retailers and reconfiguring high streets to building new museums and theatres to draw in customers.

This report sets out the role cities play as places of consumption. It finds that:

  • Cities are vibrant places where people go to spend time and money. Despite sometimes being characterised as dull job machines or simply playgrounds of the rich, this is not the reality.
  • Cities offer a more diverse set of amenities than other parts of the country. A trip to the theatre or a celebratory meal out is most likely to take place in a city, as nearly two-thirds of specialist amenities are in cities.
  • The density and scale of cities means they can sustain a richer set of amenities. This is most true of city centres. Their central location makes them accessible to enough customers to cater for more niche markets. On average, a quarter of city centre amenities are of a specialist nature.
  • But not all cities offer this variety. There is a clear relationship between the economic strength of a city and the diversity of its amenity offer.

Cities with stronger economies house a richer set of amenities, with many specialist and premium options for consumers. In contrast, cities with weaker economies struggle to provide more than the necessities. The limited spending power of those living and working in these cities mean it is difficult to sustain much more than the day-to-day, such as supermarkets and cafés, and their city centres suffer from high vacancy rates.

Policy implications

If policy is to change this, and enable all cities to be vibrant places, it is vital interventions are based on an understanding of the role cities play as places of consumption and how this relates to their economic performance.

Currently, many economic policies focus on offering consumers more, or better, options. High street regeneration aims to support retailers by lowering their tax burden or investing in new shopping centres. Culture-led regeneration uses the development of theatres, museums and initiatives such as UK City of Culture, to generate economic development.

Attempts to improve the performance of urban economies by prioritising the consumption offer are unlikely to succeed. They do not address the fundamental reasons these economies are struggling or reflect the direction of the relationship between the economic performance of a place and its amenity offer.

Policy must focus on making cities more attractive to businesses, especially those providing well-paid jobs. This will provide those living and working in cities with the income they need to enjoy a greater range of amenities and keep
them open.

To do this, cities with underperforming economies should:

  • Improve the skills of the workforce. Cities should set up skills compacts that bring together all stakeholders involved in education and training and commits them to coordinate their work in order to achieve better outcomes. A more qualified workforce will attract businesses that provide high-skilled job opportunities and boost the economy.
  • Invest in the consumer offering, but not as the primary tool for economic growth. Investments in amenities and culture have many public benefits and should be a part of each city’s development policies, but should not be the lead tool to attract businesses. A strong amenity offering is not enough on its own — without improvements to skills — to attract businesses.
  • Remodel city centres away from a reliance on retail. Alongside other policies to attract more high-skilled jobs, cities should adapt their high streets to better suit customer preferences. This means providing offices for new jobs and reshaping the high street away from retail and towards more food, drink and leisure.

Cities with stronger economies need to prevent the costs of growth limiting their vibrancy:

  • Build up and out to meet demand for housing. A restrictive planning system has prevented the supply of workspace and housing from increasing with demand, resulting in rapidly rising prices especially in the strongest city centres. This must be tackled or unaffordability will prevent these cities being vibrant places of consumption.

Government has a role to play in supporting cities:

  • Ensure funding is open to investments which look beyond the high street. The priority for struggling high streets is to attract jobs, rather than improve the retail offer. This means that funds, and specifically the extended Future High Streets Fund in England, must accommodate a range of investments, including the provision of quality office space in city centres.
  • Put less weight on direct economic outcomes in decisions about cultural investment. Requiring that investments in culture and amenities aim for objectives such as job creation or local growth can distract from more feasible objectives.