Centre for Cities

Honestly, Davids

David Miliband was pretty honest tonight about the Government's record. Delivering the annual John Smith Memorial Lecture, he highlighted the successes - e.g. massive investment in health and education - but admitted that Labour needs to go a lot further in other areas.

He admitted that transport policy has not changed enough, the low carbon revolution has not yet happened - and devolution has been too modest: "Funding has been raised and some powers devolved (to local government), but the shift in the balance of power from Whitehall to Town Hall has not yet happened." And he conceded: "Inequality is still higher than it should be. The housing supply is not yet adequate."

Miliband also set out his plans for renewing the Labour Party, based on his view that "the traditional political structures of mainstream political parties are dying".

Meanwhile, the other David (Cameron) today returned to his control shift agenda, promising once again "a sweeping and radical redistribution of power" and this time delivering a diatribe against quangos.

I was quite surprised not to see RDAs in Cameron's speech - but they got a mention in his speech to the LGA last week: "Housing and planning powers are going to be stripped from regional government and given to local government...and what's more you'll have the power to form local enterprise partnerships so that you can abolish the regional development agencies."

Cameron also did his bit for honesty: "What Britain needs is leadership that is honest about the fact that public spending needs to be reduced." He then encouraged local councils to save money and continue to deliver high-quality services at the same time: "By working closely with other councils, you can cut budgets without cutting services."

PS Audit Commission chief Steve Bundred wins this week's honesty prize. His Observer article yesterday took several swipes at the current rather vacuous debate on public spending. After years of public sector expansion, he says "cuts are inevitable, and perfectly manageable". And based on his experience at Camden Council, he says spending cuts can actually lead to improved services - echoing Cameron's view.

Youth unemployment is "a national crisis"

Our recent report on youth unemployment seems to have hit a nerve. In case you missed it, we predicted last month that the number of under-25s out of work for a year will almost treble from 130k to 350k by end-2011. That's more than double the 150k that will be helped by the £1bn Future Jobs Fund.

The Today Programme had three stories on this last Thursday - from Swindon, where youth unemployment has increased most sharply; an interview with former MPC member David ("Danny") Blanchflower; and another interview with NUS President Wes Streeting.

Yesterday, a leading article in The Times warned that the Future Jobs Fund could be a "dismal flop" unless business fully engages with the government's plans. The Times mentioned the latest OECD survey of the UK, which found that youth unemployment was already high in 2007 - and recent stats from the Higher Education Statistics Agency, which show that almost 17k graduates from last summer are currently unemployed. Many more of this summer's graduates will find themselves unemployed, too. 

Blanchflower has the most radical ideas on what should be done about this - see this speech he gave last February. He's now calling youth unemployment a "national crisis". He says that the Future Jobs Fund does not go far enough, because it helps only those young people that have been out of work for a year or more.

More radical action is needed, to help all unemployed young people. He's calling on the Government to encourage employers to take on more young people, by e.g. cutting employers' national insurance contributions.

Yes, this will cost more - but the costs of not doing more to tackle youth unemployment are a lot higher.

Wake up, Caroline

Caroline Spelman must be wishing she hadn't asked this Parliamentary Question on city-regions earlier this week...

"City Regions

Mrs. Spelman: To ask the Secretary of State for Communities and Local Government when he expects to announce the first pilot city regions. [282392]

29 Jun 2009 : Column 25W

Ms Rosie Winterton: The Chancellor of the Exchequer announced in Budget 2009 Greater Manchester and Leeds city region as city-region pilots."

Shame it was only a Written Question & Answer. An Oral Q&A in the House would have been v funny.

Speaking as a big fan of city-regions, I do realise they aren't the most exciting thing. But Caroline really should have spotted that Budget announcement about Greater Manchester and Leeds city-region. Or maybe Caroline has done us all a favour, by publicising a little-known fact.

Thanks to David Ottewell for spotting this.

Managing decline

Interesting comment piece from Jonathan Guthrie in today's FT, picking up on last year's infamous Policy Exchange report Cities Unlimited - the one that said Scousers should move to Cambridge.

Report author Tim Leunig last year concluded that big, well-connected, high-skilled cities in the South East are always going to have an edge over smaller, more peripheral towns and cities in the North. One year on, the impact of the recession is bearing that out - unemployment has increased most sharply in smaller cities like Hull and Barnsley, while London has been less badly hit than expected. But the North-South split in Leunig's report hasn't fully materialised - cities like Milton Keynes and Swindon have both been hit hard by rising unemployment.

Leunig also questioned the impact of regeneration over the last decade, saying that it had failed to narrow the inequality between Northern and South-East cities. He said: "We need to accept that we cannot guarantee to regenerate every town and every city that has fallen behind."

Most controversially, Leunig called for more internal migration from declining cities like Liverpool to more prosperous cities like Cambridge: "If we really want to give people in Liverpool, Sunderland and so on the opportunities that people in most parts of the south-east take for granted, we need to let many of them move to the south-east." Ouch.

My colleague Adam Marshall gave our response to the Policy Exchange report last August. We agreed with a lot of it, like devolving regeneration funds, but we took issue with the bit about moving from Liverpool to Cambridge.

Today, Jonathan Guthrie has some sympathy for Leunig - who was pilloried in Liverpool last year. Guthrie agrees there should be more internal migration. He says that our welfare and housing system restricts labour mobility (true), and suggests that some regeneration funding should be turned into relocation grants for those that want to move cities (unlikely).

This is all very difficult for elected city leaders. As I say in Jonathan's piece: "Local representatives have difficulty finding the realism to tell the story of places in managed decline." Cities with declining populations and underperforming economies - like Stoke - find it hard to accept they may never rediscover strong growth.

We can't give up on these places, but we should encourage them to be totally honest about their prospects. Cities like Barnsley and Wigan also need to work much more collaboratively with their neighbouring larger cities - Leeds and Sheffield, Manchester and Liverpool. And as I said yesterday, we need to focus increasingly scarce regeneration funds on the Stokes and Barnsleys much more effectively than we have in the past.

Regeneration is unfinished business

The Centre for Cities was quite busy today. We co-produced two reports on regeneration, launched together this morning in London:

(1) We wrote Regeneration and the Recession - the latest report from the All Party Urban Development Group;
and
(2) My colleague, Catherine Glossop, wrote a chapter for Regeneration in a Downturn - a collection of articles published by The Smith Institute.

Bob Kerslake was the main speaker at the launch event. Other speakers included Michael Parkinson, who penned an independent report for CLG in January - The Credit Crunch and Regeneration.

The slightly tiresome Chatham House Rule was enforced throughout - so I can't tell you who said what. But here are the main points...

• Regeneration is unfinished business. The last decade has seen a lot of new development, but there's still a massive job to do - especially in smaller, less trendy cities like Grimsby.

• The economic climate for regeneration is now very difficult. Developers are facing a liquidity crisis, high-density residential schemes are no longer happening, Section 106 receipts have dried up, and the returns on investment in deprived areas have disappeared.

• If we're not careful, the next decade could see very little regeneration activity at all. Big retail-led regeneration is unlikely in the near future. Access to development finance has been severely curtailed. New regeneration activity will probably focus on areas that offer high returns and low risk.

• The public sector will have to play a bigger up-front role in the near future, and take on more risk from the private sector. The Homes & Communities Agency will face some very tough choices on where to spend its cash. And new sources of finance will have to be found - e.g. from institutional investors, new models like Accelerated Development Zones, and private equity.

Here's the dilemma for regeneration. The recession is hitting smaller cities like Barnsley much harder than the likes of Leeds and Sheffield. So the need for regeneration is greatest in those smaller cities. But it looks like developers will head for those bigger cities first, where returns are higher and the risks lower. In the next decade, the big challenge for Bob and the HCA will be to invest the very limited public sector cash where the private sector is unwilling to go.

Not easy.

Spending Reviews - every 2 (or 3) years

Peter Mandelson yesterday confirmed what many of us had concluded already - there won't be a Spending Review before the next general election. I would have preferred a Spending Review this year - that would have provided some much-needed clarity on public spending. But then I'm not a politician.

This morning, Ed Balls explained the spending review delay by pointing out that the last two spending reviews were three years apart, in 2004 and 2007. He was sort of implying that spending reviews every three years are the norm. That's not quite true. Between 1998 and 2004, spending reviews took place every two years. (You can stop reading now, if you're not a Treasury geek like me...)   

Gordon Brown started 3-year expenditure reviews with the Comprehensive Spending Review in July 1998 - that one covered the years 1999-2000, 2000-01 and 2001-02.

After that, the Treasury held Spending Reviews every two years in 2000, 2002 and 2004. In each case, the third year of the previous spending review became the first year of the new one - so the first year of the 2000 Review was 2001-02. This gave the Treasury the chance to amend the third year of each spending review. Holding the spending review every two years also gave departments almost a year to plan before their new budgets kicked in.

All that changed in 2006, when Chancellor Brown extended the expected 2006 Spending Review into a Comprehensive Spending Review and pushed it back to Oct 2007. There was a big political reason for doing that - Gordon wanted to delay the CSR until he had taken over from Tony Blair at Number 10 in summer 07, and use the CSR to define his premiership. That was the idea, anyway.

This time, the Spending Review is being delayed for a combination of political and economic reasons. Delaying until after the general election means the Government can avoid conceding the full extent of the fiscal crisis - although Ministers are already coming under intense pressure to explain how they are going to cut spending. And yes, it is particularly hard to do a spending review right in the middle of such an uncertain and unpredictable time.

The big downside for all of us, is that the spending debate will lack the clarity it needs over the coming months. Instead of having a Spending Review this year, mapping out all the departmental budgets, we're in for a protracted political debate based on the political parties' own numbers. This won't be as helpful.

Which has got me thinking. As part of his big constitutional reform plans, why doesn't Gordon give real power to the Treasury Committee in the House of Commons? In the US, the Congressional Budget Office performs a vital role, checking and challenging the President's budget numbers.

I reckon we need the same sort of thing here, with the Treasury Committee - properly staffed and resourced - producing its own cross-party budget forecasts twice a year. These would be different from the Treasury's own forecasts, but - as in the US - would be seen as independent of government, and therefore more reliable. At the moment, the excellent Institute for Fiscal Studies acts as the only check on the Government's fiscal numbers. It's time that Parliament played a bigger role, like Congress does in the US.

Will Gordon go for mayors?

This time last year, I predicted that if Gordon didn't go for big city mayors, David Cameron would. And that's exactly what has happened.

In the Tories' Control Shift green paper in Feb, Cameron went for elected mayors big time. If the Tories form the next government, they will hold a referendum to allow 12 big cities to have their own elected mayor - including Tory Birmingham, Labour Manchester and LibDem Newcastle.

Since then, Labour has continued to prevaricate on mayors. A succession of CLG Ministers - Miliband, Kelly, Blears - have championed mayors. And Blair was keen, too. But Gordon has never really been interested.

In reality, all three main parties are divided on mayors. Most incumbent councillors hate the idea. But with the Tories now officially embracing mayors, Labour now looks behind the curve. Eight years on from the introduction of the London mayoralty, Labour has failed to install a mayor in any other big city. Instead, we've got an underwhelming batch of small-scale mayors with no real powers.

Earlier this month, I restated our call for elected mayors. Our biggest cities need directly elected mayors, with real tax and spend powers. Big city mayors would be highly visible, directly accountable, and responsible for taking tough decisions on issues like transport and housing.

The political case for elected mayors is stronger than ever, following the expenses crisis. Electoral reform cannot just be limited to Parliament. Elected city mayors would help to re-engage local voters with the political process. Mayors tend to attract higher turnouts - 45% of Londoners voted in the mayoral election last year, compared to just 25% in Knowsley and Moss Side council elections.

The economic case for mayors is also pretty strong. The recession is having a different impact in different cities. Each city needs its own powerful leader - armed with financial powers - to tackle the recession locally. City mayors would help unlock the financial powers that cities need.

So if mayors are such a good idea, why hasn't Labour gone for them already? Three reasons are usually trotted out - but these are now looking rather tired:

• "Mayors would add another unwelcome layer of governance" - not true. Mayors would add a democratic, strategic layer - unlike the unelected layers of governance that have proliferated in recent years.
• "Mayors would be maverick personalities, rather than proper politicians" - I don't buy this either. London has been run by two different maverick personalities since 2000, and most people agree the London mayoralty is a good idea.
• "Mayors have a bad reputation for corruption and financial irregularities" - so do MPs.   

I made these points at a Progress event last week. The RSA's Matthew Taylor was there too, plus Stephen were you up for Portillo? Twigg.

Today, Taylor - former head of Blair's policy unit - calls on Labour to embrace elected mayors. He says: "If government is serious about giving local leaders the scope to make tough choices, it should commit to create mayors in all England's largest cities. As Ken and Boris have shown, the personal mandate of a mayor makes a step change to local leaders' visibility, legitimacy and capacity to stand up to the centre."

I agree. The question is, does Gordon? If he wants to re-connect with the voters, he should go for elected mayors and give them some real financial powers over housing, transport and skills budgets.

Youth unemployment - from bad to worse

Long-term youth unemployment will almost treble, between now and the end of 2011 - that's just one of the key findings in our latest report published today. See today's BBC and Guardian coverage.

In May, 130k under-25s had been unemployed for +12 months. As total unemployment heads towards 3 million, the number of long-term unemployed youth is likely to rise to 350k by Dec 2011.

The £1 billion Future Jobs Fund - announced in the Budget in April - aims to create 150k jobs over the next two years, for 18-24 year olds who have been out of work for a year. Those jobs will start coming through this autumn.

The Government is right to introduce the Future Jobs Fund asap - but it will not be big enough to help every long-term unemployed young person. That's why we're calling the Fund a "sticking plaster" - it will need to be targeted on the cities that have seen the biggest recent rises in unemployment due to the recession.

Our report identifies those cities that have been hit hardest by rising youth unemployment, since Feb 08. "Work-ready" young people in these cities should be front of the queue for the Future Jobs Fund:

• Swindon has seen the biggest increase in youth unemployment - its youth claimant count has gone up by 5 percentage points, from a relatively low rate of just over 2% last year
• Doncaster, Wigan and Milton Keynes have all seen sharp increases - so have Gloucester, Telford, Northampton and Warrington
• Hull, Sunderland and Barnsley still have the highest rate of youth unemployment - almost 1 in 10 of their young people are now claiming Jobseeker's Allowance - but Swindon and others are catching up

Interesting pattern here. Youth unemployment has been rising most sharply in smaller cities, North and South. The increases in the Core Cities, although serious, have been less pronounced.

Could have been worse

Today's jobless numbers were bad, but could have been worse. Here's why, plus the latest on how specific cities are doing...

First, the really bad news:

• Look at this graph
• In the 3 months to April, total unemployment hit 2.26 million - the highest under this Labour Govt
• That's a lot of people - just over 7 out of every 100 working-age adults
• 302k people were made redundant in Feb-April - the highest quarterly job loss increase in over a decade  

It's even worse if you're under 25. Young people are definitely bearing the brunt of the recession. Nearly 17% of 18-24 year olds are now out of work. And that figure will get worse by the autumn, as school-leavers and graduates start looking for work. Vacancies are now down to 424k - 36% lower than a year ago.

We've got a report coming out next week, on youth unemployment - part of our Surviving Recession programme - so look out for that.

There are now 1.54 million on Jobseeker's Allowance - nearly 5% of the workforce. But on a slightly less gloomy note:

• The increase in May's claimant count unemployment rate was less than expected - up 39k versus expectations of 60k.
• That's a lot less than the massive 136k increase in February
• Which suggests that the pace of decline in the labour market seems to be slowing

So how are specific sectors doing? Redundancies have recently been highest in distribution, hotels and restaurants, and manufacturing. Not financial services.

And cities? Regionally, the traditional manufacturing bits of the West Midlands, Yorkshire & Humber, and South Wales have been the worst-hit. Cities with the highest increase in JSA include the usual suspects. Since Feb 08 (when the labour market hit its peak):

• Hull's JSA claimant count rate has increased from 4.8% to 8.2%
• Nearly 4k new people in Barnsley have signed on for JSA - which partly explains the BNP support there
• In Birmingham, over 35k extra have signed on - total JSA claimants there are almost 100k

But some unusual suspects have been hit, too - including in the Greater South East. Swindon has seen the sharpest increase in JSA claimants since Feb 08 - largely due to its heavy focus on autos and distribution. Milton Keynes is having a bad time as well - and Northampton. And recent sharp rises have happened in cities like Luton and Reading.

As we said in Cities Outlook 2009, not every city has been "well-placed to weather the storm". Only cities like Cambridge and York can genuinely claim to have escaped the worst effects of the recession so far.

The picture is kind of the same in the US. Check out the MetroMonitor from our friends at the Brookings Institute - they say that the pain of the recession there has been unevenly distributed, and is having highly varied impacts on different metropolitan areas. Ditto here. 

Elections Question Time

I chaired our Question Time event tonight in London, on the eve of the Euro and Local elections on 4 June - and just after the Speaker announced his intention to stand down.

The three main parties' local government reps were on the panel - John Healey (Lab), Caroline Spelman (Con) and Julia Goldsworthy (LD).

Inevitably, the MPs' expenses row dominated the debate. I asked what local government could do to help rebuild trust between voters and politicians. We discussed how far local councillors would be affected by the current debacle. And we squeezed in a question on regeneration funding - but only just.

Such is the febrile atmosphere around Westminster these days, we didn't get anywhere close to talking about LAAs or MAAs.

First, here are the scores on the doors (euro and local). Euro election vote shares in 2004 were: Con 27%, Lab 23%, UKIP 16%, LibDem 15%, Green 15% and BNP 5%. And right now, the share of total councillors are: Con 44%, Lab 24%, LibDem 20%. Those numbers are going to change a lot next month.

Meanwhile, the PM today described Hazel Blears' expenses claim as "totally unacceptable behaviour". Her cheque-writing performance on telly last week has not gone down well. It looks like she won't be Communities Secretary this time next month. Possible successors include Healey himself - or Yvette Cooper, Margaret Beckett.

Here are the main headlines from tonight's debate:

• Healey presented a very gloomy outlook for the Labour Party. His local party campaigners had been "overwhelmed" by the expenses row in the last two weeks. He predicted that UKIP - and BNP - would both do well in next month's elections. Sounds like Labour are going to do very badly in the Euro Elections - my guess is 20% (or less) vote share.

• Healey said that the unfolding "political crash" and "crisis of confidence" in Parliament offered a big opportunity for local government to re-cast itself as a driver of devolution. But the debate tonight highlighted that councillors' expenses could become the next issue - and councillors could get tarnished by the Parliamentary brush.

• Spelman pushed the Tories' recent Control Shift green paper. She called for more transparency and accountability at the national and local levels, and made a rather belated call for particpatory budgeting (which Hazel likes). Healey hit back, calling Control Shift a "let down".

• Goldsworthy didn't much like the Tories' plans for 12 big city mayors - and hit out at part-time quango chiefs. She called for a bigger push for neighbourhood-level empowerment and police accountability - but didn't set out how the LibDems would grapple with the fall-off in capital investment over the next few years. Between now and 2014, Govt capital investment is set to fall from £44bn p.a. to £22 bn p.a..

Finally, Healey clarified that decisions on the £1bn Future Jobs Fund would be taken by "early August" - and new jobs would start to be created 3 months later. So set your alarms for early November...