21st Century Challenges Policy Forum: Cities, growth and rebalancing the UK economy: Policy Update

On Wednesday 21 October, the RGS-IBG Policy Forum holds its first panel discussion under the 21st Century Challenges Programme on the topic of ‘Cities, growth and rebalancing the UK economy’.

As the Government moves towards implementing plans for the ‘Northern Powerhouse’, our expert panel and audience may consider what will really lead to the resurgent ‘core cities’ and rebalanced economy that the Government sees as crucial to a more productive economy.

 Here we provide a brief overview of the ‘Northern Powerhouse’ policy and consider what Geography as a discipline in particular can bring to debates around city growth and rebalancing.

What is the ‘Northern Powerhouse?’

Rebalancing the national economy is a core part of the UK Government’s economic strategy.

The flagship policy for delivering this is the ‘Northern Powerhouse’, first introduced under the Conservative and Liberal Democrat coalition in Manchester in June 2014, by the Chancellor of the Exchequer, George Osborne:

“The cities of the north are individually strong, but collectively not strong enough. The whole is less than the sum of its parts. So the powerhouse of London dominates more and more. And that’s not healthy for our economy. It’s not good for our country. We need a Northern Powerhouse too.”

Geographically, the Northern Powerhouse is particularly concerned with ‘Core Cities’, Liverpool, Manchester, Sheffield and Leeds, as well as Hull and the North East.

According to the Centre for Cities, in 2013, the Northern Powerhouse region was:

  • Home to 10.7 million people;
  • Contained 4.5 million jobs, making up 16% of jobs in the UK;
  • Accounted for 13.3% of the UK’s Gross Value Added, performing below average (24.5% in London);
  • 20% of all businesses were classed as Knowledge Intensive Business Services (KIBS);
  • Contained 23 universities, six of which ranked in the top 20 for research excellence, nationally.

Two reports were extremely influential in informing first the Coalition and now the current government’s thinking:

  • An Independent Review by Lord Heseltine in 2012: No Stone Unturned: in pursuit of growth which called for £60 billion to be given to regions through a single pot, to encourage greater devolution and create more combined authorities with increased powers.
  • A 12 month enquiry beginning in October 2013, by the RSA[1] City Growth Commission, which made the case for the devolution of decision-making and fiscal powers for city-regions or ‘metros’, along with supply-side measures to enhance skills and connectivity.

What is happening now?

Since this, a number of initiatives have been launched including the Greater Manchester Devolution Deal in November 2014, which agreed on the devolution of new powers for local transport, housing, skills and healthcare and a new, directly elected Mayor. Formal elections are expected to take place in 2017. Following this, Transport for the North, a group of local and combined authorities, have driven the Northern Transport Strategy, published in March 2015.

The aim of the Northern Transport Strategy is to establish the North as a global powerhouse, which can compete with the best performing regions in Europe. Success is being measured by the creation of a single market for people, goods and ideas, including the knowledge economy, access to skills, easy travelling and the creation of talent clusters. Fostering interconnectivity of individual cities and towns through a world class transport system is seen as crucial to this, as George Osborne alluded to when answering the question ‘how do we build the Northern Powerhouse?’:

“By joining our northern cities together – not physically, or into some artificial political construct – but by providing the modern transport connections they need; by backing their science and universities; by backing their creative clusters; and giving them the local power and control that a powerhouse economy needs”. 23 June 2015

The Strategy also sets out how the Northern Powerhouse will be driven by a flourishing private sector, supported by local government, along with a full HS2 ‘Y’ network connecting key areas, as well as looking more broadly at a Northern-wide ‘TransNorth’ rail network known as HS3.

Following the change in government in May, the Cities and Local Government Devolution Bill 2015-2016 was introduced to provide greater powers for those areas, across the country and not just in the North, with a combined authority and which agree to have a directly elected mayor. The Bill passed its second reading in the House of Commons on 14 October 2015. Issued in the Summer Budget 2015 in July, the government requested submissions from combined authorities by 4 September 2015, to ensure deals can be agreed on the further devolution of powers to them in time for the autumn 2015 Spending Review on 25 November 2015. 38 bids were submitted to HM Treasury including many from the North.

What can Geography tell us about economic growth and ‘rebalancing the economy’?

As set out in the Regional Studies Association paper, ‘Spatially Rebalancing the UK Economy’, (April, 2015) leading geographers including Professor Ron Martin, University of Cambridge, who will speak at Wednesday evening’s event, and Professor Andy Pike, CURDS[2], Newcastle University, suggest that the idea of spatial rebalancing in the economy is nothing new and can be tracked as early as the twentieth century. That said, with almost ninety years of regional and urban policies intended to reduce spatial inequality, the issue still persists. Reasons put forward for the cause of this include: inadequate funding for policies; ‘counter-regional’ policies which favour London and the South East; and an incorrect diagnosis of the true origins of the problem.

Furthermore, the degree of imbalance in the UK has in fact increased over the last thirty years, with northern cities lagging behind the South-East. The result of this is a United Kingdom that is now home to the largest spatial disparities in Europe and is also one of the most centralised OECD[3] countries as found by the Centre for Cities.

What questions remain?

Concerns have been raised about whether the ‘Northern Powerhouse’ and associated policies will be effective in rebalancing the economy towards the northern cities, as the government claim. Graham Haughton, Professor of Urban and Environmental Planning at the University of Manchester, following an extensive review, raised concerns about the efficacy of a policy that supports major urban centres. He has called for politicians in the North East to build alliances which ensured medium-sized towns such as Ashington, Bishop Auckland and South Shields, are not ignored, suggesting a need to move beyond Manchester, Leeds and Sheffield when thinking about the Northern Powerhouse.

Questions remain too about whether policies to link major cities in the North to London via HS2 are the best use of public funds, rather than investing more in an integrated transport network between northern towns and cities. We expect to hear more on these and other questions from our eminent panel of speakers on Wednesday evening.

Cities, growth and rebalancing the UK economy’ will begin at 5.30pm (with refreshments and networking from 5.00pm)  on Wednesday 21st October at the headquarters of the RGS-IBG in South Kensington. Advance booking is essential via policy@rgs.org or +44(0)20 7591 3058.

[1] Royal Society for the encouragement of Arts, Manufacturers and Commerce.

[2] Centre for Urban and Regional Development Studies.

[3] Organisation for Economic, Co-operation and Development.

Further reading materials

Centre for Cities, A manifesto for a more prosperous urban Britain, September 2014.

City Growth Commission, Human Capitals, Connected Cities, Powers to Grow, Unleashing Metro Growth [four papers], RSA/Core Cities Group, 2014.

Key Cities, Charter for Devolution, September 2014.

Mark Morrin and Phillip Blond, Devo-Max, Devo Manc: Place-Based Public Services, September 2014.

Mark Sandford, Devolution to local government in England. House of Commons Library, Briefing Paper, Number 07029, 4 September 2015.

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