Dermot Finch: Our cities need more than shiny city centres

Dermot Finch, Director of the Centre for Cities, calls for more financial powers to be devolved to cities.

If David Cameron and George Osborne want to succeed in making the Conservative Party credible on the economy – and appealing to urban voters outside the South of England – they must produce a credible policy on cities.

Early next year, the Centre for Cities will host the launch of Michael Heseltine’s Cities Taskforce – commissioned by David Cameron to address this very issue. For many, Heseltine is a totemic figure, whose government-backed public-private partnership schemes jump-started the regeneration of many of our city centres in the 1980s.

Many of Heseltine’s ideas survived under New Labour. A decade of sustained economic growth has further improved the fortunes of our city centres. But the party that forms the next government – Conservative or Labour – still has many big urban challenges to answer.

Out cities’ performance is still too uneven – across the country, and within cities themselves. And with the national economy looking more uncertain, cities will need to work even harder to succeed in the years ahead.

We’ve still got a “North-South divide” – but it’s an over-simplification, and it’s changing shape. Ten years ago, there was a clear-cut difference between our Northern and Southern cities. Liverpool, Newcastle and Manchester were all losing population and jobs. Cambridge, Milton Keynes and Reading were on the up.

Now, the picture is a bit different – for two reasons. First, some Northern cities are catching up, for example on employment growth – but there are still big differences between cities in the South-East and those in the North. And second, all of our biggest cities face massive internal disparities, with big differences between neighbourhoods on employment, income levels and deprivation. 

Our latest research shows that half of the UK’s most improved cities on employment growth are in the North – including smaller cities like Derby, Doncaster and Warrington. These cities have seen tens of thousands of new jobs every year for the past 10 years but it’s from a low base. 

Although this growth is positive, it’s coming from a very low base. Employment rates in Sunderland and Sheffield (around 69%) are still well below the national average (74%). Despite all of Michael Heseltine’s efforts as Minister for Merseyside, Liverpool and many other cities still face major skills gaps. In Liverpool, one in every five working-age residents does not have a single qualification. 

So, Northern cities are doing better – but they have a long way to go if they are to catch up with the likes of Bristol and Milton Keynes.

Here’s the second reason why we need to reappraise the “North-South divide”. All of our biggest cities like Birmingham, Manchester and London have deep inequalities within them. They are polarised within their own boundaries. 

David Cameron pitched up in Manchester recently to talk about the big gap between affluent south Manchester and the most deprived northern fringe. And across the Greater Manchester area, one-third of Manchester’s adults are not in employment – compared to just one-fifth in Stockport.

These internal inequalities are also found in London, where nearly half of working-age adults in Tower Hamlets are not in employment – compared to one-fifth in Sutton. London is a global city, with extremes of wealth and poverty, and almost one-third of all Londoners not in employment. 

By contrast, smaller and medium-sized cities like Oxford and York display more equal performance within their own boundaries. 

So what needs to happen? 

We need to move the urban debate on from the recent focus on shiny new city centres. Michael Heseltine is justifiably proud of the Albert Dock development in Liverpool and Canary Wharf, and local leaders up and down the country are right to showcase their revived town centres. But the next wave of urban regeneration needs to deal with the more difficult problems facing residents in underperforming areas – and that means better transport, skills, housing and more jobs.

Our cities need more financial powers so they can sort out their own problems more effectively. The Government has now started to offer more funding flexibility, devolved budgets and modest local revenue-raising. Cities now need to take up these new powers, and finance and deliver their own strategies for revival. Gordon Brown has promised “more powerful city-regions” for places like Greater Manchester and Greater Birmingham. It’s now time to deliver. Whitehall needs to give up some powers, but cities need to take them, which means a more entrepreneurial attitude from city leaders – more risk taking and less box ticking!

So there are two clear messages for David Cameron and the Conservative Party. First, make Michael Heseltine’s recommendations into policy priorities, especially his proposals on stronger, elected city leaders. And second, make detailed proposals for devolution – so that our cities can take their futures into their own hands.