Rachel Smith: Strong mayors can speak for cities and build for the future

CITIES are important to the UK economy. They cover just nine per cent of the UK’s land mass yet they’re where over half of us live and they generate around 60 per cent of the UK’s economic output.

As the country emerges from recession, making the most of the potential of our cities is essential. They will be key to replacing the 880,000 jobs lost during the downturn and minimising the impact of forthcoming public sector job losses.

This is why the Centre for Cities thinks the current debate around the introduction of directly- elected mayors in 11 English local authorities, including Leeds, Bradford, Sheffield and Wakefield, is so important.

Our latest research shows that directly-elected mayors have the potential to strengthen local governance. And this puts them in a good position to support local economic growth – but they can only realise this potential if they have the right powers.

Take transport. Former Mayor of London Ken Livingstone, for example, was able to introduce a controversial, yet traffic busting, congestion charge. In Greater Manchester, however, and despite the strength of joint working between councils there, a referendum was needed because councils could not agree on whether to introduce a similar congestion charge. Despite the predicted economic benefits being strong, the referendum was ultimately rejected.

Directly-elected mayors can also act as a clearer figurehead in dealing with business and central government.

A mayor of Leeds would be in a strong position to put forward the local authority’s case to the Department for Transport for funding to take forward large projects. Investing in transport links into Leeds city centre could bring economic benefits of around £65m – but currently that’s not a decision the city is able to take on its own.

Mayors also have the potential to bring greater coherence to the actions of the public sector. In London, Boris Johnson can influence skills, transport and housing policies because he chairs the London Skills and Employment Board, Transport for London and the Homes and Communities Agency London Board.

Mayors can also build greater collaboration with local authorities, business and other players. This is important because, in reality, the economic footprint of cities stretches beyond local authority boundaries, and, to be effective, policy needs to cover this geography.

Yet, because mayors will only cover a single local authority, their ability to drive cross- boundary working will be limited. In Yorkshire the picture could be further complicated by the potential existence of three mayors in Leeds, Bradford and Wakefield in just one functional economic area.

The prospect of elected mayors governing our local authorities certainly divides opinion. When local authorities were first given the chance to introduce a directly elected mayor back in 2000, the response was not overwhelming. Just 12 places introduced a mayor.

While most of these mayors have delivered benefits for their local areas, in Doncaster and Stoke experiences were less than positive.

In both cases, however, a mayor was ultimately introduced as a response to previous local government failings. Although these mayors may not have been able to solve all the problems in their areas, they were not the cause of them either.

So what do we recommend? Our review of evidence shows that mayors have potential to bring clear benefits. But, to make the most of this potential, mayors need additional formal powers and positions to give them the muscle to shape policy that has an economic impact.

Our recommendations are that mayors should play a strategic role with regards to developing a spatial plan and taking planning decisions, chair the Integrated Transport Authority and co-chair the Local Enterprise Partnership.

Our review of the evidence also suggests that the Government’s proposals should go further. The option to introduce a Metro Mayor – covering the same area as the city economy and furnished with the best aspects and powers of the London mayoral model – should also be made available to England’s largest cities.

The key point here is that cities should have the option to decide which model has the greatest potential for them. If government gives cities this choice, mayors would have far greater potential to affect the economic fortunes of these great locations.

Rachel Smith is an analyst at the Centre for Cities think-tank.

Karel Williams: Regions should put an end to their capital punishment

GEORGE Osborne can no longer argue that we are all in this together. Our calculations show that the UK as a whole lost nearly 750,000 jobs between 2007 and 2010. But London saw a one per cent increase in employment while Yorkshire and Humber lost eight per cent of jobs.

Why? Under successive Conservative and Labour governments, London has become a city state that is economically and socially detached from the rest of the UK while London finance has an arm lock on how our national political elites, both in government and opposition, formulate economic policy.

London finance is now running an entrepôt trade in money at the intersection of the international time zones, like early modern Italian city states such as Genoa or Venice at the intersection of the trade routes. The main beneficiaries are a couple of football stadiums full of the working rich from finance.

We are told we should be proud of this national success but there is little benefit here for British firms or British-born citizens. Foreign firms dominated the new City after the Big Bang of the 1980s, so the City is a success in much the same way as the Wimbledon tennis championship without a British champion.

More generally, the entrepôt trade in money has created something rather like an offshore financial centre which is not on a sandy Caribbean island but on the banks of the muddy Thames.

London imports non-UK migrant labour to fill low-pay, low-skill jobs as well as well-paid expats for executive positions in and around finance.

Between 1997 and 2006, around 317,000 new jobs were created in London workplaces but only 2,000 were filled by UK-born residents.

As a result, the success of London finance is associated with great inequalities because poverty co-exists with great wealth inside the city state.

As for London finance’s contribution to the regions, that is exaggerated. The direct benefits of finance are limited. When so much employment is clustered in London, finance accounts for no more than 2.5 per cent of employment in the North East and 3.5 per cent in Yorkshire and Humberside.

Our national political elites bought the PR story that the London-based finance sector paid the taxes that funded national public services like health and education. But, on CRESC calculations, finance provided only about seven per cent of Government’s total tax receipts between 2002 and 2008 while manufacturing provided 13 per cent.

Worse still, London-based finance produced the crisis which (according to all three national parties) now requires swingeing public sector expenditure cuts which are, in effect, an anti-regional policy.

So what to do politically and economically? The national politicians of all parties live in a metropolitan bubble so they are either in denial or actively making things worse.

It is time to press the reset button on regional politics as the Scots have already done and connect English regional government (which New Labour didn’t deliver) with a new economic policy agenda (which the North urgently needs).

What is the point of Sheffield returning an MP like Nick Clegg to Westminster to press generic low tax, pro-enterprise policies which have failed his city and his region?

Since the national political elite are captured by the interests of the city state in London, the English regions need to think about new economic policies that are driven by a social agenda for growth. Some of this depends on national policies for the private sector, like corporation tax geared to output and employment growth.

But job creation in the North requires empowerment of regional government to raise new taxes in order to invest in clever co-operation with private sector and mutual enterprises.

Why not social housing, universal care for the elderly, better transport infrastructure with moderate fares and low-carbon retro-fitting, recycling and maintenance? If not now, when?

Professor Karel Williams works for the Centre for Research on Socio Cultural Change at the University of Manchester (cresc.ac.uk). He is the co-author of a report on the City State.