1. Governance
July 21, 2017

What can UK cities do to boost their economies, even without further devolution?

By Rita Beden

With a hung parliament, a notably thin Queen’s Speech and ongoing Brexit negotiations, the likelihood of seeing anything like the kind of transformational policymaking cities have enjoyed over the last few years is slim.

However, even if central government’s focus on the urban policy agenda dwindles in the coming years, it is worth reflecting on what cities can actually do now to drive growth in their local economies, without needing to bother the government for more powers or strike any major devolution deals.

Back in 2011, the coalition government passed the Localism Act. This was a significant move towards allowing local authorities the same “power of general competence” given to an individual: it means that, within the law, they can do whatever they want. It was not to be sniffed at, and over the last six years many cities have made the most of the powers it allowed.

Unfortunately, while additional control was handed over, funding from central government was handed back. Budgets were cut and the Localism Act offered no relief on local governments’ ability to raise council tax without referenda. This meant that, to plug funding gaps and raise additional revenue for growth, cities had to be a little more creative about how they made their money.

But while the imperative to find ways to raise cash may have been driven by austerity, seeking ways to raise revenue is a good thing to do regardless. City leaders, as the custodians of place, naturally want to make their city as good as possible for the people who live, work and do business there. Rather than just rely on public funding, one way they can do so is to take on commercial ventures to build attractive commercial space, or develop digital networks, reinvesting any revenue into the city.

And that’s where their assets come in – disused land, long-forgotten buildings, plots near to train stations – all publicly owned and highly valuable to any city seeking to boost their economies and raise some cash.

The Centre for Cities’ recent report, ‘Delivering change: how city partnerships make the most of public assets’, advises cities on best practice when it comes to sweating their assets, and provides some great illustrations of the types of things cities are already doing, all without big devolution deals and without additional fiscal powers or funding.

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This includes Science Central in Newcastle, a new urban quarter developed by the local council in partnership with the university and aimed at encouraging innovative business to locate in the city centre. A great example of a policy programme that is built on an understanding of how and where economic growth happens, Science Central was to some extent borne out of failed nationally-led regional policy, having started out as one of the Science Cities (an initiative launched in 2005 by the then Labour government to develop deeper links between businesses and the science base).

The partnership originally included the Regional Development Agency (RDA), One North East. But following the abolition of the RDAs in 2010, and the financial crash which led to a collapse in Newcastle’s commercial development, Science Central became a strategic way to boost business growth of all kinds in the city centre, particularly where the market was not willing to take the risk.

As a result, Newcastle – which is but one example of this kind of approach – was able to change the direction of, and drive through, a project which has now led to significant investment from Legal & General, as well as a commitment to host two National Innovation Centres at the site.

None of this negates the fact that the UK is the most centralised country in Europe, and if nothing else cities should be pushing for much greater control over their local property taxes. And  nor should we underestimate the significant hurdles Newcastle and other cities will have had to overcome to get to a stage where they can take steps to use their assets, such as letting out office buildings that belong to them.

But that said, the Newcastle example and others in the report go to show that the freedom to make money and drive growth is there – local leaders just have to find it.

If cities are willing to take a few risks, and channel their inner entrepreneur – working with the kinds of organisations and people that have the commercial expertise to support this – then a lot can be achieved to support economic growth, increase the tax base, and encourage businesses to locate in the kinds of dense, buzzing urban environments they like best – even if national government isn’t around to help.

Rita Beden is the external affairs manager at the Centre for Cities, on whose blog this article originally appeared. 

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