Cities have patiently and persuasively made the case for rebalancing growth and power, and for devolution to combined authorities with Metro Mayors. They also now face some big challenges – on EU funding, trade, investment, universities and the progress of their devolution deals – which we set out in Adieu: The impact of Brexit on British Cities.
But the underlying forces driving devolution to cities have never been stronger. If unbalanced growth was a critical issue before the referendum, it is now the biggest domestic economic and policy challenge. Moreover, the anger directed toward Brussels was no less strongly felt about Westminster. The message of ‘taking back control’ rings true for our towns and cities as much as it does for Britain.
We now have a new government and the outlines of a new approach to social and economic policy, all of which give cities a big opportunity. Theresa May has said that she wants a plan to help all our cities and has signalled a willingness to look at bond financing for major infrastructure projects. She has appointed Greg Clark, the architect and champion of city deals, to head up a new department of economic reform, that will cover business, energy and industry strategy. And she has put Sajid Javid, who recently proposed a £100bn investment fund for schools and housing, in charge of the Department of Communities and Local Government.
So what do we know now and what does this mean for cities?
1. Austerity is no longer the mainframe for policy – while austerity will continue to be a reality, not least because of the cuts still in train, the 2020 deficit reduction targets have been removed. Theresa May has signalled that she wants to move away from a single-minded focus on austerity and chancellor Phillip Hammond has said that we are moving into a new phase in which the fiscal and economic parameters are not yet clear.
2. The need for economic stimulus is strong – dealing with the economic shock of Brexit and seeking to mitigate any economic downturn are now the macro-economic priorities for the chancellor and the Bank of England. The indications are that further stimulus measures particularly on infrastructure are top of the agenda and the new government will be looking for quick announcements that can generate jobs and keep the economy moving.
3. Inclusive growth that delivers for working class communities is the new political imperative – Theresa May in both her main campaign speech and her prime ministerial address has said that the test for her government will be whether it delivers a better deal for working class people, with an economy that “works for everyone”. She has set the bar high and established the tone for her government's domestic policy priorities.
4. No emergency Budget and a new economic strategy for the autumn statement – Philip Hammond has said that he will develop a new economic strategy for the UK over the next few months and this will be set out in the Autumn Statement.
5. Brexit negotiating agenda to take shape over the next couple of months – David Davis, the new secretary of state for exiting the European Union, has said he wants to consult all affected parties, including businesses, universities and cities before determining his Brexit negotiating agenda.
6. Chamberlain is the new lodestar – Joseph Chamberlain has been cited as the inspiration for the social and economic policies of May's government, because of his record in improving the lives of working people. His most notable achievements were as Mayor of Birmingham in the late 19th century where he was credited with pioneering what was later dubbed ‘municipal socialism’ including establishing a municipal gas company, providing clean water, free education, and good quality mass public housing.
These developments are all potentially very positive for British cities. But they need to be set against the inevitable uncertainty created by ministerial and departmental changes, which have raised questions about what will happen next on devolution and whether the model and process will remain the same. All this suggests that cities can't just wait to see what happens, they need to seize the initiative and show how they can be central to driving social and economic reform. To do this they need to channel the spirit of Chamberlain. That means developing bigger, bolder and more imaginative ideas on growth and social reform.
There are four priorities for cities collectively over the next few weeks:
1. Restating the case that our main city regions are best-placed to drive balanced growth across the UK, and that continuing to generate agglomeration benefits through better connectivity and improved skill levels will be key to this. As part of this it will be critical to articulate the role of smaller growth hubs and the economic benefits that need to spill over into non-metropolitan areas
2. Showing that cities have the big ideas about projects that can generate jobs and inclusive growth, and that these will spread economic benefits across the urban conurbations of city regions to the areas that are most economically and socially disadvantaged
3. Demonstrating that the city region structures that have been developed over the past few years – LEPS, Combined Authorities and Metro Mayors – have the capability and capacity to deliver both their existing growth strategies and major new projects across their functional economic areas
4. Determining what good Brexit looks like for cities. The opportunity is there to work with the government both on the process and priorities for Brexit. Cities need to develop a combined strategy for this so that their collective voice is heard loud and clear.
At the same time each city will need to work on its own immediate strategy. Many cities have already held meetings with local businesses, universities and public sector agencies to assess their risk exposure on Brexit. What’s now needed is confident and imaginative leadership to quickly develop the big ideas that can be at the heart of discussions with government and investors about growth projects and the next phase of devolution.
These will need to include:
· Shovel-ready projects and schemes that can start now and will rapidly generate investment opportunities for the private sector, along with jobs for local people. These should include housing schemes that can be quickly delivered
· More imaginative propositions for local bond financing for major projects, that are currently stuck on the grid because they can’t be financed
· Practical ideas about how capital and infrastructure projects can be linked with local employment and training opportunities. For example, cities that will benefit from HS2 and other big projects should be developing plans for establishing construction skills colleges, and looking at how procurement can be used as a lever to ensure contractors provide employment for local apprentices
· Scalable ideas for investment in social infrastructure, with big initiatives on early years education, family support, and wider early intervention and preventative measures designed to reduce the health and economic inequalities highlighted by Theresa May.
The approach that cities now need can be summed up in two words: Carpe diem.
This article was first posted on Metro Dynamics blog
