Metro Growth: The UK’s economic opportunity

The newly created City Growth Commission (CGC), led by ‘BRICS’ founder Jim O Neill and supported by leading international economists including Diane Coyle, Greg Clark and Bruce Katz, begins its independent inquiry into shaping city-led growth, with an open hearing at Manchester Town Hall on Tuesday 11th February 2014.   

To coincide with the meeting the City Growth Commission today released its first report, Metro Growth: The UK’s economic opportunity which concluded that most large urban areas remain in fiscal deficit, with public expenditure exceeding tax take.

The report found that Greater Manchester has a shortfall of an estimated £4–5bn per year, equal to roughly £2,000 per person.  Yet metros have little power to change this; over 90% of all tax is collected by central government.

“Metros – city centres and their wider economic areas – are driving growth globally. The UK has the 7th largest economy in the world but we face huge international competition.  The City Growth Commission will hear from a range of people within Greater Manchester – and other cities thereafter – about the mix of powers, incentives and responsibilities needed to compete in the global economy.”

Focussing on skills, infrastructure and devolution of fiscal and policy-making powers the Commission makes an early exploration into some of the factors currently limiting UK cities’ growth. The Commission’s first report found that:

• Skills are consistently identified by businesses as a big barrier to growth. Whilst universities play an important role in developing skills and clustering talented people, graduate retention and attraction strategies are relatively unexplored aspect of economic development.
• Although many UK cities are close in distance, weak infrastructure links between regions mean that potential economic relationships are under-developed. Despite the 22,000 commuters that cross the Pennines every day between the largest metros of Yorkshire and the North West, the economic relationships between Manchester and Leeds are less strong than might be expected for cities of their size.
• There remain large differences between metros in qualifications. South Sussex Metro (Brighton, Hove, Worthing, Littlehampton and Shoreham – combined population of half a million residents) was found to have 23 residents who are university graduates for every 10 who have no qualifications. By contrast, the Potteries Metro is home to 22 residents with no qualifications for every 10 university graduates.
• Planning and housing will need to be at the heart of many metros and regions strategies. They will need greater flexibility to plan where they develop and how they link to other cities and regions to maximise their growth potential, while protecting their exceptional countryside and heritage.
• UK policy and strategy must shift. Rather than ‘rebalancing’ the economy between cities and regions, a successful UK economy is likely to involve a network of mutually reinforcing complementary and connected metro regions. A complementary system of cities would allow labour and capital to flow more efficiently, helping investors, businesses and households to manage risks and make the most of opportunities.

Commenting on the report launch, Principal Partner of RSA 2020 Public Services Ben Lucas said:

“It is increasingly clear that our centralised political economy is no longer fit for purpose. Unless we change our approach, we’ll be running to catch up with the long term costs of our ageing population.  Metro Growth shows that UK cities will need to maximise their skills base and other assets if they are to drive up productivity and growth.  Public service reform is a critical part of this.”

The City Growth Commission runs for only 12 months.  Having launched in October 2013 with an open call for evidence, the Commission will seek to influence all political parties in the run up to the next General Election, and make the case for cities to take on new political powers.  

Notes to editors

1. www.citygrowthcommission.com

2. For more information contact RSA Head of Media Luke Robinson on 020 7451 6893 or 07799 737 970 or luke.robinson@rsa.org.uk The Commission can be contacted via Charlotte Alldritt, charlotte.alldritt@rsa.org.uk or 0207 451 6848

3. The Commission launched in October 2013. The Commission’s final report will be published in autumn of 2014.

4. Funding for the City Growth Commission comes from the Core Cities group, London Councils, the Mayor of London, and the Local Government Association. New Economy and Joseph Rowntree Foundation are also research partners.

5. A video of the Commission launch is available here: http://bit.ly/citygrowthlaunch

6. Members of the City Growth Commission include:

• Jim O’Neill – Chair, retiring Chair of Goldman Sachs asset management (Chair of the Commission)

• Diane Coyle OBE – Economist and BBC Trustee

• Greg Clark – Chairman of the OECD Forum of Development Agencies and Investment Strategies  

• Bridget Rosewell OBE – Chair Volterra Economics, former Chief Economist to GLA

• Professor Tony Travers – Leading British Government academic and Chair of London Finance Commission  

• Bruce Katz – vice president at the Brookings Institution and founding director of the Brookings Metropolitan Policy Program

• Peter Vernon MRICS –  Chief Executive of Grosvenor Britain & Ireland and previously Partner at IBM Business Consulting Services and PricewaterhouseCoopers

• Rohan Silva – Entrepreneur in Residence at Index Ventures and previously Senior Policy Adviser to the Prime Minister

• John Van Reenen – Professor in the Department of Economics and Director of the Centre for Economic Performance at the London School of Economics

• Ben Lucas – Principal Partner, RSA 2020 Public Services