Economic Leadership for CitiesDecember 11, 2014
My Lords, I, too, thank the noble Lord, Lord Shipley, for taking a lead and introducing this debate. I congratulate the noble Lords, Lord Goddard and Lord Scriven, and the noble Baroness, Lady Janke, and on their fine maiden speeches. I declare an interest as a non-executive director of the Manchester-China Forum.
In the limited time we all have, I want to echo other speakers today in setting out and agreeing with the historic case for city regions to have greater leadership and responsibility in running their own economic affairs. Indeed, in my view, Britain became great largely because of the rise of its modern industrial towns and cities and their ability to project and trade in and with the world. After a century or more of centralisation, events at home and abroad are giving rise to the rebirth of the city cluster as the premier organising force and source of growth in the world today.
I have witnessed this at home in and around Shoreditch, one of the fastest growing and most creative places now in the world. I have witnessed this first hand in my travels to places like China, which have been built on strong cities with a degree of fiscal devolution and talented city governance. I have also witnessed this over the last few years in the Greater Manchester area, where I produced a report on the potential of the city region, and others like it, to do more together to attract and support two-way trade and engage with international investors. There is no doubt in my mind, in light of the success of the model built in Manchester, London, and elsewhere, that providing greater autonomy to city regions to oversee their own economic development and inward investment can enable us as a country to engage more with the world and grow our economy overall.
Of course, there is always more we can do to spread this model of strong, internationally engaged cities and to encourage co-operation between our many metros to attract firms and investment. We could do a lot more to harness local diasporas, which could provide great connectivity with the world, including many international students who now study in most of our great cities and should be encouraged to help us connect even more with other cities around the world to help our businesses find new markets and create local jobs.
Beyond this direct model of enabling economic autonomy within city regions for trade, and other ideas such as granting tax-raising powers—already mentioned by others in this debate—there would be a positive impact on the social economy as well from greater fiscal and political devolution to city leaders, which would spur enhanced levels of social innovation and ultimately social venturing.
In our media-dominated age, it has become increasingly difficult to get new, big ideas birthed at the centre—I know that, having been involved in one or two—and then tested and piloted from within the Whitehall industrial complex. City regions, which by necessity will have to do more with less, need to innovate and pool their own resources, and try out new ideas and solutions that fit local needs and have the potential to improve the state of the nation as a whole. In this light, I welcome the use of city deals, most notably that recently agreed with Greater Manchester, which seek to reward a city region’s ability to deliver matched investment, growth and efficiency through joined-up and innovative approaches, such as the earn-back scheme.
In the model of cities competing and at times collaborating to develop new social economy solutions to thorny social problems, Whitehall ideally ceases to be the monopoly provider and commissioner of policy and practice. Instead, it will curate and learn, highlight and spread best practice, rather than seek to dictate its practices dogmatically. It should focus more on foreign policy, more nuanced immigration control, defence and the reduction of monopolies and oligarchies so that consumers and workers alike can get a better deal.
Devolving greater powers to cities economically is not a total panacea and there will be risks. Over the years, voters have shown a wariness of local kingpins who might go AWOL if given too much power, so the centre and others will need to play a role in fostering broad-based local leadership and utilising emergency powers if corruption or incompetence threaten to undermine a city region—as we have seen perhaps in Tower Hamlets. An independent process that would trigger such interventions will be needed to avoid undue central interference.
Alongside this there is a risk that having different tax levels and other policies across the country might make doing business more complex and costly, although both the Americans and Chinese seem to have found ways of coping with this. These risks, though, are worth running, because unless we do something, the current unsustainable economic inequalities and the political instability that they engender will continue. It is time to incentivise city regions to have greater powers. Finally, I would be interested to learn from the Minister what the centre is thinking of doing and how it will reshape itself as more powers are transferred to city regions over the years.