INVESTING FOR GROWTH IN CORE CITIES


The Core Cities Group is a self-selected and self-funded network of England's major regional cities: Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. They form the economic and urban cores of wider surrounding territories, the city regions. The Core Cities work in partnership to enable each to enhance their economic performance and make real advances within a highly competitive international market.

The Core Cities share a common set of circumstances and ambitions.
They are big wealth producers at the centre of large conurbations the city regions.
The region relies on their performance and their assets.
They have experienced real economic turnaround, but still lag behind international competitors.
They have significant and persistent deprivation.

Our shared agenda is to create accelerated economic growth and to distribute it, increasing cohesion and benefits for local people.

These cities produce the lion's share of their regional economies, up to - and in some cases more than - 50% of the entire regional wealth. Together with their city regions, they produce 25.5% of England's economy - that's more than London. So it's not just that they are important to the national economy; we do not have a viable economy without them.

However, deprivation in many areas and low skills levels hold back growth. On average, each of these areas is home to 60% of their regions' Job Seekers Allowance claimants. Some 36% of England's social housing is based there.

Transport underpins performance

Transport infrastructure underpins the economic performance of cities, and has an important role to play in tackling deprivation, connecting local people to opportunity. It is a unifying theme.

96% of all light rapid transport journies in England not made in London are made within a core city and its surrounding conurbation. Our regional airports claim 26% of all passengers and 20% of air cargo.

This means a lot of carbon - almost 30% of England's emissions between us - but it also means big potential solutions to climate change. This is something we are working on through an historic 'shared commitment'. A sustainable prosperous future for all, signed by all our eight city leaders and government. High density and infrastructure levels mean that cities are in fact very sustainable places to live, something we forget all too often. Cities provide solutions to issues of the economy, sustainability, diversity and lifestyle choice. That change owes a debt to the work of the Core Cities Group over the last decade.

So we're doing well, but still not as well as our European competitors. Michael Parkinson's seminal State of the English cities report (ODPM 2006) showed that, out of the top performing cities in the EU, excluding London, England only had two in the top 50, whereas France had five, Italy six and Germany 15.

More devolution needed

Although we are catching up, the report made two important points. Firstly, the most successful places have more devolution and local control, particularly over finances, than we enjoy in England. Secondly, they are able to operate in a sophisticated way across administrative boundaries within functional economic areas - city regions.

The Sub National Review attempts to move in this direction, and we have been very active within it, producing a landmark joint response with all the RDAs and the Homes and Communities Agency.

However we face additional challenges during the so-called 'credit crunch' and our cities should be viewed as regional economic anchors. They have a role in minimizing damage to the economy and leading us out the other side.

There are early signs that we need to revisit housing growth targets for cities that already have significant constraints on development. The Green Belt looks like an attractive option - simpler land assembly, no remediation costs - but development there could threaten the urban consolidation we have achieved in recent years, and thereby economic growth. It could also mean bad connectivity, or spending a lot more on transport, and we are finding it hard to fund schemes already.

The struggle for funding

Infrastructure investment in cities is efficient and good value for money, but the core cities routinely struggle to fund the really major schemes. Nottingham has developed one tramline, and agreed a second, in the time it has taken its German twin - Karlsruhe - to build 14 lines. Funding streams, financing options, bidding and approval processes are too complex and time consuming.

We recently published a report with PricewaterhouseCoopers, Unlocking City Growth, which is available from our website. In it we look at a model based on tax increment financing Accelerated Development Zones and pair them with Regional Infrastructure Funds. The proposal is to borrow against future income to provide major infrastructure, for example from an uplift in business rates, retaining this temporarily to pay back borrowing.

Applying the model to four live case studies from the cities, the report demonstrates that by using this approach, increases of between 50% and 80% can be achieved in housing, jobs and economic output. It also allows cities to share in the growth dividend, to get a return on their own investments, something that may become increasingly important in a different economic future.

We are working with government and its agencies on taking forward these proposals. Ideally, the cities would like to see some pilot schemes in operation. The potential benefits for many kinds of infrastructure, including transport, are considerable. At a time of rising fuel prices and falling economic growth, the ability to fund these kinds of schemes takes on a new significance.

Opportunities

Yet it's not all about threats - there are opportunities too. A tightening of the economy and rising fuel prices mean that we should be looking locally to reduce the need to travel and our reliance on cars. This could support the broader urban development agenda, through provision of high quality integrated alternatives buses, trams, cycling and walking and more planning of houses, shops, schools and employment sites near one another or with good connectivity.

The current economic and environmental context should help us to build patronage for existing transport services and support the case for significant new public transport investment. The solutions to these dilemmas are in cities, our most sustainable form of living.

The Sub National Review offers an opportunity for greater local empowerment and coordination at the city-region spatial level. However I would argue that we need to continually push the boundaries of what is possible in terms of integration and partnership through our daily practice, from bottom up, as well as working for change from the top.

Cities can be good for us in almost every respect; they can be solutions to issues of the economy, sustainability, value for money and efficiency of scarce resources, skills, social inclusion and intercultural dialogue. However we have seen in only the recent past what can happen if we do not have a proper policy focus on cities.

This has only recently been realized in England, and we have some way to go to catch the leading competition.

Robust as they now are, our cities are not impervious to change. The turnaround we have seen in recent years has been remarkable, but it is not a done deal and this is not the time to take the foot off the accelerator. Transport is only one lever of economic growth, but it is a vital underpinning factor.

To allow transport models to fulfill their economic, social and environmental potential requires greater local control over the setting of investment priorities for transport and other infrastructure and the ability to access further financing. It also means increasing coordination across the city-region areas, through Integrated Transport Authorities and Multi Area Agreements as a beginning, and other mechanisms going further into the future. Our core cities are at the forefront of this agenda.

Chris Murray, Director of England's Core Cities Group.

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