Include SME growth in devolution drive, says Centre for Cities

19 Oct 15

Helping small businesses grow should be a priority for the government’s devolution agenda, Centre for Cities has concluded.

Areas with high numbers of small and medium-sized firms in sectors like professional services and the creative industries have better productivity and pay levels, according to a report published by the think-tank today.

The annual Small Business Outlook report, published with insurance firm Zurich, found highly skilled, innovative firms in sectors such as the creative, digital and professional industries were critical to growth in local areas.

The top ten UK cities with the highest concentrations of these ‘new work’ SMEs were also among the most successful places in terms of overall productivity, jobs growth and wages. According to the report, these areas include Aberdeen, Reading and Cambridge, as well as London, which scored highly on productivity and average earnings.

Overall, seven of the top ten cities for ‘new work’ SMEs were in the top ten places in terms of productivity and average earnings, while five of these cities are in the top ten for highest jobs growth.

Helping these firms to grow should be a priority, Centre for Cities chief executive Alexandra Jones said, and should be embraced through government’s Northern Powerhouse plans.

“Most importantly, the government needs to give cities greater control over skills, infrastructure and spending, to help them become more responsive to the needs of local businesses,” she stated.

“The plan to let local governments keep business rates is a welcome step towards giving cities more of the tools and flexibility they need to support local businesses. Local leaders should use these powers to create a better environment for innovative firms to thrive in, especially in places which have seen slow growth.”

In particular, Jones called for cities to use the forthcoming business rate devolution – which will be in place by 2020 – to improve digital infrastructure, tackle skill gaps and boost exports.

“By doing so, cities can ensure they are in the strongest position to support the kinds of businesses which offer the best route to long-term growth and prosperity.”

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