Title

Chris Webber says that despite years of regional policy to boost underperforming local economies, some cities continue to create new private sector jobs while others languish. George Osborne's ‘unavoidable' emergency Budget underlined the new government's desire to rebalance the economy – sectorally and regionally – with the chancellor claiming that ‘between 1998 and 2008, for every private sector job generated in the North and the Midlands, 10 were created in London and the South.' Brighton has been identified as one of the UK's most promising cities for growth This was, in fact, the key finding in Centre for Cities' recent study Private sector cities which identified the scale of the challenge facing the Government. Our report, published in June, identified startling differences in the economic performance of England's cities. Employment rates in many centres around the country still lag far behind the national average. Even before the recession began, it would have taken extra 620,000 jobs to lift lagging city economies up to the national level. That's more than 20,000 jobs in Middlesbrough or the equivalent of eight Corus steelmaking plants. And that is not just an isolated example. Luton's jobs deficit in 2008 was at least 7,000, while Coventry's was 12,000. After 10 years of high spending on regional policy, it is clear that this still hasn't counteracted wider shifts in prosperity across England. The Labour Government tried hard to stimulate private sector growth in underperforming areas, and it had far more money to throw at the problem than the present government. Even with this extra spending, private sector performance was weak in many areas. Barnsley saw positive jobs growth of 1,200 positions overall, but a net decline of 2,300 private sector jobs. It was the 3,500 public sector positions which cushioned the fall. Clearly, that will no longer be the case. The chancellor and his colleagues are right to signal a new approach. The reason why government policies haven't been effective in stimulating private sector growth is that they're working against much stronger forces of change in our economy. Over the past century, the forces of globalisation and technological advance have been gradually redrawing the geography of private sector opportunity. Some places have become better at generating private sector jobs. Others have become worse. This is not the result of poor policy choices. It's the product of a complex process of change that any government would find impossible to counteract. The result has been that London and places such as Milton Keynes, Preston and Brighton have become the new centres of private sector growth in our economy. London alone accounted for 38% of the net additional private sector jobs created in England between 1998 and 2008. The National Insurance tax break for start-ups in the North and Midlands might provide a short-term boost for regional enterprise, but it won't be enough to bridge the jobs gap. This is partly because the vast majority of businesses which benefit from it would have started up anyway, but also because it seeks to buck a much more powerful trend. The Budget announced plans for a new White Paper on sub-national growth to be published this summer, and we would like to see the Government working with the tide of change in our economy, rather than against it. First, this means a much stronger focus on physically expanding buoyant cities – including Brighton, Reading and Cambridge – which have the biggest potential for private sector growth. That will require a simpler planning regime and much stronger financial incentives for local authorities to bring forward land for housing. The Budget suggested the Government wants to make progress in this area by highlighting the need to use Local Development Orders. That's good, but the Government's wider rhetoric about localism in planning will need to be accompanied by adequate incentives to develop. Otherwise, it will hold back the economic growth of England's cities. The White Paper will need to try to tie these themes together, coherently. Second, there needs to be a radical new approach to struggling city economies. Regeneration goals for these cities must be realistic. Policy-makers should focus on how they can improve quality of life and, crucially, skills levels of residents, while still recognising that for many, job opportunities may be found further afield as residents in urban areas increasingly find they need to travel further to work. A new government means a major shift in the business of economic development. The planned transfer from regional development agencies to local enterprise partnerships (LEPs) signals an end to months of uncertainty for cities, which we welcome. We think the introduction of LEPs is positive, because it will move decision-making in line with real economic areas, and be more accountable to local communities. We would like to see LEPs have key strategic powers over transport, skills, housing, and planning and regeneration. Cities which already have cross-boundary partnerships in place – such as Manchester – are well placed to go through the LEP set–up process more quickly than others. The changes to the architecture of economic development policy present opportunities for the future empowerment and development of England's cities. At a time of reform and innovation, we would like to see a radical new approach to encouraging private sector employment – one that works with the grain of the economy rather than against it. Chris Webber is a senior analyst at the Centre for Cities

Title

WHITEHALL

Time to work with the grain of the economy

SUBSCRIBE TO CONTINUE READING