What does the General Election mean for UK Cities and Towns?

The outcome of the general election has big implications for policy affecting the UK’s towns and cities. There has been much comment about the success of the Conservatives in winning seats that were previously part of Labour’s red wall in the towns of the Midlands and North, and it is clear this is shifting the focus for UK urban policy.

Place Matters

Any policy response to the challenge of “left behind places” needs to start from an understanding of economic geography. Whereas in the past the economic roles and competitiveness of places derived from location and fixed physical assets, today intangibles such as knowledge, skills, and creativity matter. Economic competitiveness and success is becoming increasingly concentrated in London and its surrounding regions, and in a small number of centres of the core cities, with a hollowing out of the economy elsewhere. Smaller towns lack the critical mass of innovative firms and workers needed to continuously re-invent themselves. Some towns and communities have become trapped in vicious circle of low skills, low pay, and poor quality, insecure jobs. In many places wages are at below 2008 levels in real-terms. A decade of austerity and the shift from bricks to clicks in retail has hastened the decline of the high streets of these places. As Paul Krugman has argued, these are long-run structural trends which will be difficult to shift. That does not mean we should not try, but it is not going to be easy.

Economic Growth and Productivity

Accelerating weak economic growth and productivity growth (which has flatlined since 2008) should be a priority for the Government as David Smith has argued. Ultimately our ability to raise living standards and invest in public services will depend on increasing the output per worker. In an excellent recent paper, Stian Westlake and Sam Bowman have set out a case and framework for reviving economic thinking on the right (although many of their ideas are also relevant to a centre-left agenda). There is an opportunity for places to develop bold Local Industrial Strategies, and for Government to back these with a greater sense of ambition and more investment. The shape of the Shared Prosperity Fund, which will replace EU Structural Funds, will also be important. Expect to see more cities and towns developing practical initiatives around inclusive growth to seek to support people to benefit from and contribute to the economy to their full potential.

Levelling Up Devolution

The devolution agenda – which was kicked into the long grass under Theresa May – is now back on. The Government has set out an ambition to “level-up” powers for cities and city regions: all places that want devolution should be able to have it based on the existing powers of the metro-mayors, and places with metro mayors currently should gain additional powers (including some fiscal powers) in line with London. A Devolution White Paper provides the opportunity for cities and city regions to shape the agenda. As the recent City Leaders Survey (produced by Arup and Centre for Cities) showed, city leaders believe the lack of access to funding and resources is hampering the achievements of their major priorities, and many of them feel unsupported by national government.

Places without devolution deals currently need to think about how they get their governance, partnership and organisational structures devolution-ready, building capacity, and working differently across geographic boundaries. The public finances will remain constrained, and local authority budgets will remain under pressure. There is a case for greater fiscal powers to enable local councils raise their own investment, and as Andrew Carter of Centre for Cities has argued, to radically reshape Whitehall, devolving significant budgets and capacity to local areas.

Stronger Towns

Significant government investment will be channelled into towns through the Stronger Towns Fund, and the Future High Streets Fund. It remains to be seen whether the proposals that come forward are mere sticking plasters, or whether they can fundamentally change the competitive position of towns. Arup helped develop the proposals that led to the Grimsby Town Deal, and in Carlisle which formed part of the Borderlands Growth Deal, both of which are examples of bold proposals to reshape town centres and reposition places economically. To make a difference we will need to create more and better jobs in towns, help people access opportunities through better skills and transport links, change the role of town centres, and improve the residential offer of towns to attract and retain skilled people.

What about the major cities and London?

Whilst it may not be popular, it is city centres that are major drivers of economic growth. The centres of major cities provide the right mix and concentration of innovators, entrepreneurs, knowledge creators (across universities and large and small firms), access to skilled workers, and the supporting leisure and cultural offer to enable smart people and organisations to share and commercialise ideas. As Tom Forth has said, the problem is not that our city centres are too strong at the expense of surrounding towns, but in many cases they are not strong enough to support a successful economy in their surrounding areas (towns surrounding economically weaker cities generally have poorer job prospects). Our second tier cities outside the South East underperform compared to European competitors. Most of our city centres have acute shortages of available Grade A office space. One of the more thoughtful policy proposals in the election campaign was for a new City Centre Productivity Fund.

The focus on rebalancing the economy and investment across the UK poses risks for London, as set out by Ben Rogers of Centre for London. Clearly greater devolution, investment in infrastructure, skills, and housing are important issues for London too. London will need to make its case for investment based on its economic importance to the UK, including its role in an interconnected UK economy (not just in providing fiscal transfers), as well as the real issues of poverty and affordability in the capital.

Infrastructure

We are likely to see significant investment in infrastructure. Whilst we await the outcome of the Oakervee Review into HS2, the Government has committed to pushing forward with Northern Powerhouse Rail. In addition to these national projects, expect to see better links within city regions going up the agenda, particularly those connecting towns with nearby cities. The political challenge with infrastructure projects is the long timescales, hence the importance of the work of the National Infrastructure Commission. Expect to also see a focus on smaller projects with shorter term delivery horizons, such as tackling pinch-points on the road network, new stations, and park and rides. One way the Government could make a big short-to-medium term impact is by giving cities more control over the bus network.

The issues cities face around economic growth, electric vehicles, climate change and resilience will require them to develop more joined-up strategies for infrastructure and utilities, working across different infrastructure providers, investors and regulators. The Government is committed to rolling out 5G networks and full-fibre connectivity, and this will also require cities and city regions to have coherent strategies for digital infrastructure, and how they intend to use it to drive better outcomes for people and businesses. Greater Manchester are working on a coherent infrastructure and digital framework. There is also an opportunity for cities to use their infrastructure to create real-world testbeds for innovation.

Climate Change

The Government has committed to a target of the UK being zero carbon by 2050, and cities will have an important role to play in this transition. Climate change is going up the agenda for city leaders. Clean growth, and low carbon and renewable energy are important elements of the economic strategy set out by the NP11 Group of LEPs. Expect to see cities developing bold plans for decarbonising their energy and transport systems and building stock, as well as improving resilience to severe weather.

Research and Development

As has been advocated by Neil O’Brien MP, the CBI, and the University of Sheffield’s Prof Richard Jones, increasing R&D spend to the OECD average of 2.4%, spreading it more evenly across the UK, and targeting it more closely at translational activity focused on commercial pull-through of research has an important role to play. This can be best achieved through greater devolution of R&D spend to places as I have argued. There is a need to make R&D relevant to SME firms, particularly manufacturers, who need to drive up their productivity through continuous product and process improvement. 

Eds and Meds

There is likely to be a stronger focus on the role of universities in driving growth. Universities will be strengthening their civic roles, developing civic agreements. Their role in transferring knowledge will be measured under the Knowledge Exchange Framework (KEF). Lord Jim O’Neil spoke earlier this week about the concept of a MIT of the North, as advocated by the UK 2070 Commission, and previously Respublica. There is a case for getting behind Innovation Districts as growth projects in cities. In the US Higher Education has been the major factor in the revival of some small towns. With some major hospital building projects announced in UK cities, there is also potential to look more closely at the role of the health sector as a catalyst for growth and regeneration, as well as anchor institutions that can drive better local outcomes through their approach to recruitment, training and procurement.

Housing

With former Homes England Chair Sir Edward Lister now in Number Ten as the PM’s Chief Strategic Advisor, and with increasing awareness of the impact of constrained housing supply on social mobility, expect to see an increasing proactive role of Homes England in seeking to accelerate housing delivery. However, because of a focus on addressing areas with the greatest housing affordability pressures, the majority of recent Homes England investment has been in the South of England. There is an opportunity elsewhere to focus on interventions that improve the quality of the residential offer, helping regenerate town and parts of cities to provide a suitable range, quality, and price of housing in a wider context of quality of place. Local authorities will continue to campaign for removing the borrowing cap on the Housing Revenue Account to enable them to increase delivery of council housing.

Education and Skills

As well as a north-south divide in economic performance and infrastructure, the north also lags behind London and other regions in educational attainment and skills levels. It remains to be seen whether the Government take forward the recommendations of the Northern Powerhouse Partnerships very good Educating the North report. Fiona Spellman, of the excellent education innovation charity, Shine, has suggested a non-partisan, cross-sector initiative here. The impact of economic and technological change on existing workers is leading to an increased focus on adult education. Expect to see more calls for devolution of the adult education budget, and proposals to create a new Adult Education Service.

Getting Brexit Done

Finally, whilst we will leave the EU on 31st January 2020, it remains to be seen what the shape of our future trading relationship with the EU will look like. This is a big topic, which will have major implications for our towns and cities.

Conclusion

These are interesting and formative times for UK urban policy, and there is a real need for council and combined authority leaders, business and think-tanks to shape the agenda, to respond to the changing policy context, and to develop the projects and proposals to drive our urban areas forward in the post Brexit era.