Cities fail to meet growth potential

The City Growth Commission will hold its first evidence session today at the start of a 12-month inquiry seeking to answer why “too many urban areas outside London are failing to achieve their growth potential”.

The commission is being funded by the Core Cities group of England’s eight largest local authorities – including Leeds and Sheffield – and will be chaired by Jim O’Neill, the former chairman of Goldman Sachs Asset Management and an economics graduate of Sheffield University. Other notable members include Prof Tony Travers, a leading academic on local government finance; Rohan Silva, David Cameron’s former Downing Street adviser, and Diane Coyle, a former Treasury official.

Its focus will be on three areas widely agreed to be central to economic growth in Yorkshire’s largest urban areas – investment in skills, infrastructure and the devolution of fiscal and policy-making powers.

“Metros – city centres and their wider economic areas – are driving growth globally,” Mr O’Neill said. “The UK has the seventh largest economy in the world, but we face huge international competition. The City Growth Commission will hear from a range of people about the mix of powers, incentives and responsibilities needed to compete in the global economy.”

The commission published its first report yesterday to coincide with the launch, focusing on “the rise of cities” as global economic powerhouses of the 21st century.

“The UK is home to one of the world’s truly global cities,” the report begins, with reference to the capital. “But too many of its urban areas outside London are failing to achieve their growth potential.

“Globally, growth is increasingly driven by cities. But very few in the UK are at the forefront of the nation’s economy – and many are overly dependent on public sector funding. It is clear that our centralised political economy is not fit for purpose.”

The report highlights how poor transport links between cities such as Leeds, Sheffield, Manchester and Birmingham appear to be holding each of them back from realising their potential.

“The population density of the Midlands and the north of England is comparable to the Rhine-Ruhr in north-west Germany, and the Randstad in Holland – two of Europe’s most productive and commercially active regions,” the commission found.

“Yet despite the 13,000 commuters who cross west across the Pennines, and the 9,000 who commute east daily, the economic relationships between Manchester and Leeds are less strong than might be expected for cities of their size and economic stature. This suggests that with the right transport infrastructure, UK cities have a real opportunity to forge stronger cross-regional links.”

The report claims the further devolution of powers to local areas – a cause now being championed by all three main political parties ahead of the next election – could offer a partial solution.

“Greater devolution of powers that shape economic development would allow ‘metros’ to coordinate efforts and forge stronger links within traditional counties and regions – between West Yorkshire and South Yorkshire, for instance,” the report states.

Commission member Ben Lucas, of think-tank RSA 2020 Public Services, said: “It is increasingly clear that our centralised political economy is no longer fit for purpose. UK cities will need to maximise their skills base and other assets if they are to drive up productivity and growth.”