A weak and wobbly centre creates opportunity for enterprising cities


By Patrick White, Director


This week’s Queen’s Speech was notable for its absences. Many of the least popular election pledges – widely blamed for the Conservatives’ disaster at the polls – were summarily junked.

Denounced by Labour as “threadbare”, Theresa May’s programme for the next two years certainly seemed to come from a government with few new policy clothes. Coming the same week as the start of the fractious Brexit negotiations, it’s becoming clear that serious structural reform for local government will now be put firmly on the backburner. Any legislation that might attract even a murmur from backbench dissenters is unlikely to be contemplated.

Even formerly big-ticket items have been left in limbo. Not a peep, for example, on the proposed Local Government Finance Bill, which would have seen councils keep 100% of their business rates. It is true that the proposal had rightly become less than universally popular among local authorities. But while some commentators have judged recent comments by Chancellor Philip Hammond to spell 'the end of austerity', in reality revenue funding is still going to be in short supply for the foreseeable future.  And whatever money Government does magic up for councils will presumably all go towards the now certain to be continued finger-in-the-dyke approach to social care funding.  It is hard to see how any of this is a cause for celebration.

But central inertia, combined with growing concern about the economy and vocal pressure from business, presents real opportunities for city leaders to show their fundamental importance. With a centre that knows it lacks levers, place-based growth gets even more important.

In the context of a loosely-defined Industrial Strategy, places that can demonstrate a joined-up vision based around specific projects and impact have a chance to shine.  If you can get the support of your businesses, and are prepared to invest the time and effort in projects that will actually benefit all parts of your population, then now is a good time to get things done.

Maximising success means doing two things. Firstly, quantifying the payoff in terms of inclusive local growth in new, more sophisticated ways. So rather than just measuring expected GVA or numbers of jobs created and assuming that everyone will benefit, places need to look at more precise, socially-focused indicators such as increasing median wage levels, improving rates of skills progression in firms, or lowering the cost of transport from deprived areas to employment centres. Recent work by the RSA and others can help places be more confident about showing how necessary infrastructure investment, for example, could make more of an impact on groups most at risk from stagnant wages, rising inflation and poor productivity.

Secondly, working with businesses – from SMEs to top tier firms - to make the case for action and investment will be important. This Government will need to feel that it is doing the things that win back the confidence of businesses, currently in despair at the instability and lack of grip.  And where national regulation is going to be hard to tackle, local investment and action is much more likely. 

But leaders should expect business to play its part too. Taking a long-term view, investing more in skills and engaging with schools and communities ought to be compulsory for business leaders seeking to reflect the national mood. Mounting fears about the availability of skilled workers post-Brexit will provide the stick for this, if carrots don’t suffice. And local leaders will be emboldened by confirmation in the Queen’s Speech that new T-Levels for technical education survived the policy cull – providing a framework for private sector collaborations.

This context is particularly acute for new metro mayors starting their terms. Given all the uncertainties, the temptation will be to wait and see how things pan out - but for our biggest cities that can't be true. They must be proactive and show government what they need and why, articulating themselves in ways that carve out a new, less siloed approach to city economics. This will need to reflect more accurately the importance of the human end of capital and accept the political and ‘social logic’ of a place as being of equal importance to the outcome of some quasi-scientific, economic modelling based appraisal.  One that explicitly moves away from the approach that has left so many of our urban population feeling disconnected from the growth and investment around them.