Powering growth by empowering cities

On Tuesday the Office for National Statistics gave the Chancellor some good news, confirming the economy grew by 1.9% in 2013 – the strongest rate of growth since 2007.  While the main parties could agree this was a welcome return to near trend rate of annual growth, the Shadow Chancellor was forced to defend he wasn’t a ‘glass half empty man’ after warning it was “not yet the recovery we need” without business investment and export led growth.  The Deputy Prime Minister was pleased to see the economy moving in the “right direction” as the Business Secretary, Vince Cable, echoed concerns about the fragility of recovery.  Both the Coalition and the economic indicators paint a mixed picture.

One thing seems to be clear and consistent; London got off lightly during the recession and has been leading the recovery. As the latest Cities’ Outlook showed on Monday, London created 79% of private sector jobs between 2010 and 2012. Centre for Cities’ report shows that the capital attracts one in three young people relocating between the ages of 22 and 30. Talented graduates flock from other cities to London’s bright lights and career opportunities, and don’t go back.  Even when some move out of the city in their 30s, most leave for the wider South East. London’s labour market thus extends beyond the confines of Greater London and the M25, reinforcing the capital’s draw on home-grown and international business investment. Speaking on the BBC Today Programme the same Monday morning, the Prime Minister admitted greater attention needed to be paid to balanced economic recovery outside of London and the South East.

The DCLG Select Committee is currently seeking to understand the role of fiscal devolution in helping cities to become more productive and economically self-sufficient. This falls squarely within the remit of the RSA’s City Growth Commission and giving evidence this week alongside our chair, Jim O’Neill, were two associates of the Commission, Alex Jones (Chief Executive of the Centre for Cities) and Professor Tony Travers (Chair of the London Finance Commission). It was clear from the discussion that broader decentralisation is needed to enable cities to respond to and shape their local economies effectively, as well as for their leaders to be accountable.   London has been granted more powers than other cities and Greater Manchester has built its capacity for greater autonomy from a local led coalition of authorities. Others are starting to follow suit (e.g. Leeds, Sheffield and the North East), but central government and Whitehall need to do more than tightly constrained City Deals and the (small) Single Growth Fund.

The RSA City Growth Commission is working to answer many of the questions raised by the Select Committee, and more. Our call to evidence launched at the end of October 2013 asks how UK cities can start to punch at or above their weight, enhancing their productivity and – over time – help to raise the overall trend rate of economic growth from 2 to, say, 2.5% per year. The power of cities to create, to reform their public services and improve the quality of life for their populations is vast. The good news this week about the returning strength of our economy should not be overlooked, but we should strive to raise our ambitions for all our cities – our capital and beyond.