1. Government
March 26, 2018

England should look to the United States to revive its local economies

By Jack Airey

In his inauguration address, the recently-elected mayor of Pittsburgh pledged to bring “the best times of this city”. With an Attlee-esque vision, he pledged to eradicate hunger, to provide clean water, and to end homelessness.

In Denver, after the recession of the 1980s, the mayoralty had the tools to rework the city’s image and relentlessly focus on attracting young people. This included wider state reforms legalising weed and tighter regulation on air quality issues. Today the city’s population is one-third millennial.

And in Cincinnati, the mayor abolished the local planning department. Using seed funding – firstly from the local business committee, second from individual companies struggling to employ high-skilled people, and third from federal grant programmes – regenerated an entire neighbourhood.

To bring government’s industrial strategy to life, England’s mayors and county leaders need ideas and ambitions on a level with their American counterparts. Potholes and library closures are an important fixture of local politics, but the local state needs to be much more active on the issues that impact the local economy and people’s living standards.

One part of this is having more powers to get stuff done. Too often central and local inertia is a brake on growth and prosperity. To that end, city mayors and county leaders should have more say on where and when commercial and residential developments are built. They should be able to plan the transport system around economic demand. And government should allow places to raise taxation more freely to fund new infrastructure.

Devolution also needs to happen on a level playing field. It is unacceptable that government has provided six city-regions (seven, including London) with powerful mayoralties, while the rest of England has been left without. With so much energy devoted to negotiating the country’s future relationship with the EU, there is a danger ‘left behind’ places in non-metropolitan areas will remain neglected by the state.

Most immediately, though, places need to begin using their legislative capacity more fully. The unspoken truth of devolution debates is that the local state often has a lot of room to manoeuvre: it just chooses not to use it. For instance, since 2016, local authorities have had the power to establish development corporations, which enable a single focus on regenerating an area. Only a few have done so. Over half of local authorities don’t even have a local planning framework in place.

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The local state can only do so much. A strategy here and intervention there may be dwarfed by the impact of Brexit – in November, the Chartered Institute of Procurement & Supply (CIPS) warned that 63 percent of EU companies planned to move parts of their supply chain out of the UK.

It can also do more harm than good. Amazon’s search for a second headquarters has resulted in an unedifying race to the bottom, with what Richard Florida has described as “a big, well-capitalised company taking advantage of cities and their taxpayers”.

Yet if England’s regional leaders don’t step up, or aren’t given at least a fighting chance of making things better, the industrial strategy risks becoming another well-intentioned policy fizzling to disappointment. The lesson of recent crises in the steel industry and, more distantly, the mining industry, is that places cannot rely on the intervention of government for their long-term economic sustainability.

In the early days of her premiership, the Prime Minister promised a different kind of state and a different kind of capitalism. The industrial strategy is its vehicle. Learning from the experience of American cities – a federal government in legislative deadlock, the votes and issues of the ‘left behind’ increasingly decisive – it is up to England’s regional leaders to take her vision forward.

Jack Airey is head of research at Localis. You can read the full report here.

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