Greg Clark MP: The power to prosper. Strengthening our cities.

Rt Hon Greg Clark MP is Minister for Decentralisation and Cities. Follow Greg on Twitter.

Today’s Cities Outlook report provides a timely reminder that the battle for Britain’s economic future must be won in our cities.

London today – in its energy, beauty, diversity, and as a cradle of opportunity and excellence – is one of the most admired cities the world has ever known.

Many of our great cities outside London have been household names all over the world.  After decades of decline in the second half of the last century, the last 25 years have seen a real sense of renaissance – city centres reversing the flight of population, and creating more jobs.

But for all that, I believe our cities can do much better.

Take, for example, the eight largest English cities outside of London:

Manchester, Liverpool, Leeds, Sheffield, Newcastle, Nottingham, Bristol and Birmingham.

Known collectively as the ‘core cities’, together they contain:

• sixteen million people, almost a third of the population of England;
• more than a quarter of our highly skilled workers;
• and half of the country’s leading research universities.

Unsurprisingly, they generate a huge part of England’s wealth – 27% – which is more than London.  And yet, there is strong evidence that, compared to the national average, most of our core cities are doing worse than the equivalent cities in Germany, France and Italy:

In Germany, all eight of the biggest cities outside Berlin outperform the country in terms of GDP per capita. The same goes for all but two of the Italian core cities. In France, three of the eight outperform the national average and none fall significantly below it. But for England, seven of the eight core cities underperform – with Bristol as the only exception.

Much the same pattern applies when it comes to the percentage of the workforce educated to tertiary level and to per capita rates of innovation. Despite the regeneration we’ve undoubtedly seen in our cities over the last 25 years, there is room for improvement.

So, what do our cities need to compete globally?

The case for enterprise

Let me start with what they don’t need, which is over-reliance on the public sector.  Perpetual debt-funded job creation is simply not sustainable. And not just because it is unaffordable.
Compared to their European counterparts, the core cities hold their own when it comes to the proportion of highly qualified workers that they have – but they do much worse when it comes to innovation as measured by patent applications per capita.

The causes of this gap are complex. But if the brightest and the best people all work for the state, then they are obviously not available to drive the commercial innovation that is the only way of creating jobs that pay for themselves.

The need to rebalance the economy away from government and finance is something that applies to the whole country, of course – but no more so than in our cities. Policy makers are not job creators – at least, not directly. Rather, our task is to provide the best possible conditions for those who are – the entrepreneurs who create jobs on the basis of productivity not subsidy.
For cities, the highest priority must be to attract these innovators.

To become the place where the most mobile and dynamic people in the world choose to live and work.

The case for mayors

In doing so, the challenges facing our cities is to combine their two great advantages: complexity and proximity.

Doing this successfully surely requires an in-depth knowledge of the people and places each city brings together.  That is why urban policy has to involve vesting more powers in cities themselves – rather than seeking to run them as franchises of Whitehall. 

Cities themselves must take the lead.

And leadership counts. Nations, corporations, teams, schools, cities – all can be well-led or poorly-led. In each case it makes a big difference whether they are or not. In helping our cities to flourish, it seems to me we should do what we can to widen the opportunity for strong leadership. I believe that it is no coincidence that the world’s leading cities usually have a visible leader with a clear executive authority – just as nations and corporations do.

A look at nations and companies makes it clear that having a clear leader does not guarantee success. But it helps. Few people in London – whoever they plan to vote for in May – think London is better off without having a mayor to stand up for them – and stand up he does.
Our second city – Birmingham – is twinned with Frankfurt, Milan, Lyon and Chicago, all of whom are led by an executive mayor.

I believe that an elected major is not a substitute for the multi-layered co-operation that is what cities are all about, but as the embodiment of this ideal:

• as the human face of a responsive local democracy;
• the honest broker of an active civil society;
• the chief ambassador of a thriving urban economy.

I believe that the restoration of mayors to our great cities has the potential to be a major factor in bringing a new assertiveness and confidence to government outside London.

We have made this choice possible through the Localism Act, which received Royal Assent at the end of last year.

In May we will give the people of eleven of the largest cities in England the opportunity to decide whether or not to have an elected mayor. Another, Leicester, chose last year to become a mayoral authority.

And if enough local people ask for one, the Localism Act also allows other cities to hold a mayoral referendum too.

Local initiative

The Localism Act provides many other freedoms to local communities – as do our housing and planning reforms.

However, we regard these measures as the foundation, not the capstone of our commitment to localism.

Having inherited the legacy of decades of decentralisation, this Government has had to drive the process of decentralisation from the centre.

By definition, only those that have power can give it away.

But with the progressive empowerment of our communities, we need to think about decentralisation in a very different way.

In particular, cities should have an ever bigger part to play in shaping the ongoing process of reform.

The Localism Act gives cities a right of initiative.

This means that instead of ministers deciding what new powers should be given away, city leaders should be able to put forward their own proposals – to make the case for taking control of specific resources and responsibilities currently held by central government.

We believe that a bespoke process of decentralisation is the best way of giving cities what they need to unlock economic growth and social progress in their communities.

Clearly, each case will be different. It will require a specific deal to be struck between the city and the various departments and agencies of central government.

That is why we have created the Cities Unit at the heart of the government; not to tell cities what to do, but to facilitate city-led initiatives – working with the full authority of Downing Street to hammer out agreements across Whitehall.

In many ways, this turns the established order on its head. But this is as it should be.

To attract entrepreneurs to our cities, city leaders must themselves be entrepreneurial, acting proactively to constantly improve the liveability and workability of their communities.

To do so, they must come to Whitehall not as supplicants, as in the past, but as equal participants in an open and constructive deal making process.

We are already negotiating with the eight core cities. 

But this is only just start, the first wave of deal making process that will be expanded in the coming months.

Indeed, I’ve been greatly encouraged by the desire that other cities have shown to be part of the City Deals initiative.

That’s just as well – because as today’s report makes clear, the rebalancing and revival depends on all of Britain’s cities, not a favoured few.

So I would encourage the leaders of every city to consider the vision that they have for their community – and the deal that they need to make it happen.

As today’s report concludes, “For cities, the introduction of new legislation and policy...has ushered in the potential for a new age of autonomy.  There is a real opportunity for cities fully to realise their own vision for their future and, working closely with Government, to set out the steps and support they need to get there.”