Second cities often exist in the shadow of their capitals – underpowered, underfunded and too often underestimated. But places such as Birmingham in England and Osaka in Japan demonstrate that second cities can play a central role in driving inclusive growth when given the right tools, autonomy and institutional support.
CIPFA, together with researchers at City-REDI at the University of Birmingham, recently published Enabling Regional Growth: Institutional and Fiscal Lessons from England and Japan.
The report provides practical lessons for policymakers and practitioners to create positive local outcomes, looking particularly at devolution frameworks, funding mechanisms and evaluation practices. So, how can second cities step out of the shadows and really make an impact?
Stable institutions for long-term impact
A standout theme from the report is the importance of stable institutions. Japan’s use of National Special Strategic Zones provides a clear and structured mechanism for piloting devolved powers, which can then be scaled up nationally if successful.
In contrast, England’s frequent institutional churn and piecemeal devolution deals often stall momentum. Giving mayoral combined authorities more autonomy to shape and test new functions would create clarity, reduce friction and empower long-term planning.
Governance beyond borders
Birmingham and Osaka both demonstrate the benefits of regional coordination that transcends local authority borders. Economic relationships don’t stop at council borders, and governance arrangements shouldn’t either.
In Japan, regional partnerships are often designed around real-world economic flows. The UK could benefit from more flexible, cross-border collaborations that better reflect labour markets, supply chains and public service needs.
Evaluation strengthens performance – and accountability
Another clear lesson is the role of evaluation in delivering results. Osaka uses structured performance assessments to track the effectiveness of devolved policies.
In the UK, more consistent and independent performance review mechanisms would help build credibility in devolution efforts, ensuring better outcomes.
Surety of funding for long-term growth
A final, crucial takeaway is the importance of predictable and equitable funding mechanisms. Japan’s local allocation tax is one example of how financial equalisation can work. The system redistributes central tax revenues to ensure that all local governments can deliver key services.
The UK, by contrast, remains reliant on fragmented, competitive pots of funding. Moving towards multi-year, flexible settlements would give local and regional authorities the financial certainty they need to plan, invest and deliver lasting change.
To the future: enabling real growth
Real regional growth isn’t a policy slogan. It’s a long-term project that demands commitment, coordination and trust. With the right tools in place, second cities can deliver first-class results.
