Centre for Cities

Hazel's Big Lunch

Just in case the recession is getting you down, here's some cheery news from CLG...

Hazel Blears is encouraging everyone to get involved in the BIG LUNCH on Sunday 19th July. She's written to loads of MPs, and John Healey has written to council chief execs, asking them all to support this national event.

BIG LUNCH is an Eden Project idea, endorsed by big names like Jamie Oliver, Esther Rantzen and Boris Johnson. I don't want to knock it, or sound miserable, and I'm sure Hazel means well....but I'm just not sure that government ministers are the best people to promote something like this.

Hazel is hoping that millions of people across Britain will "get together with their neighbours to share food, drink and conversation". Don't worry if you're a bit shy - Hazel says: "Some of us might be a bit on the shy side. Even if we want to, we might not have got round to introducing ourselves to our neighbours. What better way to change that than by having a street party?"

I can only imagine that Hazel is trying to drum up some kind of Blitz spirit to help us get through the recession. Which is all very well. I just doubt whether loads of unemployed people fancy the idea of sitting down with Hazel, Jamie or Esther and a big bowl of pasta. 

There are currently no lunches on my street. To find out if there's one near you, enter your postcode here.

Spending crunch for UK cities

Budgets always look different a couple of days later - and this one is no exception. That's why we held our Post-Budget Breakfast with Treasury minister Stephen Timms this morning at the City of London. Thanks to everyone who came along, including our friends from Manchester, Brighton and Birmingham.

The Chancellor's fiscal outlook two days ago was bad enough, with public sector borrowing hitting £175 billion this year and £173-140-118 billion over the next 3 years. Check out this scary powerpoint from the Institute for Fiscal Studies - and this IFS chart on the borrowing numbers. Remember that in Budget 2008 this year's deficit was only supposed to be £38bn... 

Also remember that these latest borrowing numbers are based on a trampoline recovery with GDP shrinking by 3.5% this year and bouncing back to +1.25% next year and +3.50% in 2011. 

Today's GDP numbers raise a big and quick question mark over the Treasury's growth forecasts. The economy shrank by a further -1.9% in the first quarter - the sharpest quarterly contraction in 30 years. Manufacturing output fell by just over 6%, while business services and finance dropped by almost 2%. The IMF forecast of a 4.1% decline this year now looks more likely.

     

Back to the Treasury's fiscal outlook...The Budget book (Table 2, page 33) shows that the recession has had a "profound effect" on the public finances. From 2011, total spending growth (in real terms) has been cut from 1.1% to 0.7% pa. Between 1997-2007, public spending grew by 3.6% pa. After paying off debt repayments and rising social security costs, most departmental budgets will be in for real terms cuts from 2011 onwards. Eye-watering indeed.  

To make matters even worse, public capital investment is going to be hit massively - falling from £44bn this year to £22bn in 2013-14. That means much less cash for new transport and housing, from 2011 onwards.

What does all this mean for UK cities? Their revival over the last decade relied heavily on public spending and employment growth. That source of growth is now coming to an end. And other sectors - like financial services - will provide less of a boost in the years to come.

If they are to return to growth, our cities will need to hold onto their existing assets and find alternative sources of new employment and investment. Every city will need to be  realistic about the prospects for green technologies, creative industries, etc. And all cities will have to start exploring new ways of financing new infrastructure - like the Accelerated Development Zone approach being pioneered by Birmingham City Council.

Youth unemployment & FE

As expected, the Budget included a big focus on jobs - after today's job numbers showed that the JSA claimant rate now stands at 4.5%, and the wider unemployment rate has increased to 6.7%.

Youth unemployment has been a problem for ages - well over half a million young people were out of work a year ago. But it's now getting worse. Of the total 2.1 million people out of work, 819k (39%) are aged between 16-17 (188k) and 18-24 (631k) - that's an increase of 143k young people in the last year.

Swindon has now seen the highest increase in overall JSA claimant count in the past year, rising from about 2,000 (1.7%) to 6,300 (5.3%) by March. Hull has the highest youth claimant count, at 10% - but youth unemployment has risen most sharply in the South East, by almost 200% in Swindon.

Quite sensibly, the Chancellor today conceded that he can't prevent all job losses - but he does want to tackle long-term youth unemployment. From January, all young people under 25 who have been out of work for 12 months will be offered a job or training.

Right now, about 17k of 16-17 year olds and 111k of 18-24s have been out of work for 12 months or more. Darling's "guarantee to young people" includes a lot of new numbers - creating or supporting 250k jobs, £260m of new money for training, and 54k additional places in sixth forms and FE colleges this autumn. Let's see how all that gets implemented, and keep our eyes on that long-term youth unemployed total of 128k. 

We think FE colleges - like Hull College and Birmingham's Matthew Boulton College - have a vital role to play in their city's economies. For too long, FE has been rather overlooked. Let's hope that today's announcement marks a shift in the Government's thinking, and a renewed focus on the need for more vocational skills training.

Budget 09: new powers for Greater Manchester and Leeds

Today's Budget formally recognises the importance of city-regions, with the announcement of new powers for two new city-region pilots in Greater Manchester and Leeds. Here's what the Budget book says (para 4.48):

"The pilots will be overseen at ministerial level and will draw on recent work from the Manchester Independent Economic Review and on innovation in the Leeds city-region in order to agree joint priorities with Government that will support economic growth. Government will work with the pilots to develop proposals for new strategy-setting powers over adult skills funding, expected to be in place within three to six months; new joint investment boards with RDAs, the Homes and Communities Agency and other partners to co-ordinate and align investment; and piloting new employment programmes."

We've been pushing for more powerful city-regions for ages, and recommended Greater Manchester and Leeds for pilot status in our letter to the Chancellor last month. Today's announcement is a real step forward for Greater Manchester and Leeds - and formal recognition that they are the axis of the Northern economy.

We now want to see real powers flow from Whitehall to these two leading city-regions. After years of slow progress, it's time that Greater Manchester and Leeds had the powers they need over employment and skills, housing and transport.

We also recommended Birmingham for pilot city-region status, but they didn't make it. Deputy Leader, Paul Tilsley has called the decision "appalling" and "a real kick in the teeth". Tees Valley was also in the running, and didn't make it either. Today's news is obviously disappointing for them and Birmingham, but hopefully they can get extra powers once the new arrangements for Greater Manchester and Leeds are in place.

Budget preview

Just a few reminders, before the big Budget speech tomorrow:

• Last November, in the Pre-Budget Report, the Chancellor was predicting a sharp but relatively short recession - with growth returning in the second half of this year....

• In his PBR forecast, Alistair Darling forecast that the UK economy would shrink by minus 0.75-1.25% this year. As we said in Cities Outlook, it's going to be a lot worse than that. Tomorrow, the Chancellor will admit the real scale of the recession and say that UK plc will shrink by around minus 3.5% this year, with the recovery pushed back to 2010.

• Unemployment has increased sharply since the PBR, to 6.5% for the 3 months to January - that's 2.03 million people. Youth unemployment (18-24 year olds) accounts for about 621k of that - up from about 500k a year ago. So tomorrow there's going to be a big push to skill up and train young people, rather than add more of them to the dole queue. Big problem - with a massive fiscal deficit, the Government's scope to reduce unemployment will be limited.

• The Treasury has already leaked the outline of a £1 billion housing package, including an extended stamp duty holiday for homes worth up to £175k. We're also hoping for an announcement on private-rented housing, but that's not certain yet.   

• The Chancellor will also confirm "forerunner" status for at least two city-regions, giving them the green light for enhanced powers and funding flexibilities. In our letter to Alistair Darling last month, we recommended  Greater Manchester, Birmingham and Leeds - and we reckon at least two of those will get the nod.

Drop congestion charging for now

Two years ago, when the world looked a bit different, the Government invited cities to come up with local schemes to tackle congestion - with the offer of £1.4bn from the Transport Innovation Fund.

But the Government's plans to encourage city-level congestion-charging haven't worked. About 2 million people signed that Downing Street petition in 2007, then Greater Manchester voted "no" last December, and now the recession is making the whole idea of congestion-charging look totally unrealistic. Cities like Cambridge and Bristol are now unlikely to go for the congestion element of TIF - which probably won't be spent, and could be clawed back by the Treasury in next year's Spending Review. 

We support congestion-charging in principle, and the Central London scheme in particular. But the Government's strategy for more congestion charging in other cities just isn't working, and the timing is awful.

When I gave evidence to the Transport Committee on the TIF in May 2007, we doubted whether the congestion bit of TIF would be big enough to persuade Greater Manchester and Cambridge. Ministers looked like they were forcing cities to do congestion-charging via the back door, and weren't championing the case for congestion-charging strongly enough. They ended up leaving it to cities, and cities have ended up saying "no thanks".

We now think the Government should drop the congestion bit of the TIF, by the end of this year, and use the available £1 billion to kickstart a new Urban Transport Investment Fund next year. Our latest report sets out more details - and the Guardian covered it this morning.

This new Fund would be able to lend to stalled transport schemes, like the extension of the Midland Metro tramline from Birmingham city centre to the Black Country and Birmingham International Airport. It would also be able to support Birmingham's plans for a transport-based Accelerated Development Zone.

Longer-term, we will need to return to the thorny issue of congestion charging. Over 70% of commuters in England's six largest cities outside London still travel to work by car. That's not sustainable, so some form of demand management will need to be introduced.

But now, in a recession, it doesn't make sense to require congestion charging. Better to free up that £1 billion and invest in good-to-go transport schemes that will help us on the road to recovery.

North-South divide?

In January, our Cities Outlook report warned that the recession would hit some cities worse than others - in particular, smaller Northern cities like Hull. And our Into Recession report forecast that core cities like Bristol and Leeds would be hit hard as well. Contrary to some loose talk last autumn, this was never just going to be a south-east recession.

The most recent unemployment numbers are starting to show the real impact of the recession. See this table showing the cities with the highest and lowest increases in Jobseeker's Allowance claimants - and this table, showing the JSA increases in every UK city. The Work Foundation also reported on the latest unemployment stats, following its February report The Geography of Unemployment.

Between Feb 08 and Feb 09:

• Hull has seen the sharpest increase in JSA claimants, followed by Barnsley, Sunderland and Stoke - and southern cities like Swindon and Northampton
• Cambridge has seen the smallest increase in JSA claimants, with Oxford, Aldershot and Reading also showing relatively small increases - as well as Aberdeen, Edinburgh and York
• The biggest numerical increases in JSA claimants have been across the Birmingham city-region (30k) - including 12k in Birmingham city - and across London (67k).  

The BBC picked up on all this last week, with The North-South Divide - presented by John Harris. He reinforced our findings, saying that the West Midlands, North East and North West have registered increases in unemployment at least three times greater than the South East. Harris visited Cambridge and Hull in the programme, and found that Cambridge was "weathering the storm amazingly well".

Harris pushes the North-South divide argument very hard: "Give or take its pockets of affluence, the north remains stuck in the shadow of its industrial past...By contrast, the closer you are to London, the better things get." That's a bit harsh on the North, I think, and it overlooks the massive disparities within our biggest cities (including London). But our big point from Cities Outlook is proving to be correct - some cities are getting hit worse than others, especially smaller Northern cities, and it definitely isn't just "grim down South".

Daytrip to Dubai

I couldn't resist a daytrip to Dubai last week, before leaving the United Arab Emirates and Global City Forum.

Dubai is a city of extremes, the Manhattan to Abu Dhabi's Washington DC - flash, glitzy and very tall. It's got the tallest building in the world (Burj Dubai), and one of the tallest hotels too (Burj Al Arab). And it's been one of the fastest-growing global cities, expanding from 180k in 1975 to 1.5m today.

But Dubai has now been massively hit by the global recession - this is one city that  definitely wasn't "well-placed to weather the storm". As the FT reported last week, "traffic is thinner, housing prices are in freefall, and hotels are more affordable". You can say that again. When I was there, parts of the city were deserted. The Starbucks at the foot of Burj Dubai was totally empty at 3pm - and when I asked the staff how many customers they get per day, they said "15".

It's a totally bizarre city. I was struck not just by the huge number of skyscrapers (lots of them empty and unfinished), but the newness of the place - most of what I saw just didn't exist about 10 years ago. There's been far too much development in recent years, dwarfing our own city-centre apartment boom. And with widespread job losses, the population looks set to shrink by about one-fifth in the next year or two. Longer term, though, the FT reports that Dubai should make a comeback as the main business hub of the Middle East.

Less than 10% of Dubai's 1.5m population are UAE nationals - all the others are expats and migrant workers. Towards the end of my visit, at around 6pm, I spotted lots of construction workers queuing up for buses to take them home. "Where do they all live?" I wondered. Last week's Panorama gave a few answers.

Most of Dubai's 1 million construction workers (who mainly come from the Indian sub-continent) live in camps well outside the city. Panorama highlighted the very poor conditions in two of those camps. The programme reported that Dubai's migrant workers pay about £2k each for a visa, and then spend 2-3 years paying that off - working for about £120 per month on 12-hour shifts, 6 days a week.

Panorama also featured developments such as The Diamond at Dubai Sports City - check out this promo video, with footballer Michael Owen flying a helicopter. Oh, and tonight's Doctor Who was filmed in Dubai.

Global City Forum, Abu Dhabi

Am just back from the Global City Forum in Abu Dhabi. An unforgettable few days, for lots of reasons - not least the venue. I thought Malmaisons were posh, but the 7-star Emirates Palace Hotel was definitely more palace than hotel - so massive, I nearly got lost in my own room. Here's just one of the outside pools...

I've already told you about Richard Florida. He was a hard act to follow, but several UK speakers did their best - Jenny Dawe (Leader, Edinburgh City Council), Clive Dutton (Director of Planning & Regeneration, Birmingham City Council) and Marie-Therese McGivern (Director of Development, Belfast City Council). It was quite odd seeing them speak in such palatial surroundings, rather than at the NEC or suchlike...

• Jenny impressed the audience with her upbeat account of Edinburgh - the UK's biggest financial centre, after London. Despite the recession, Jenny said investors were "still bullish". Later that day, though, Royal Bank of Scotland announced 9,000 job losses - half of them in the UK.

• Clive did a good job promoting Birmingham - one of the UK's youngest cities (37% of the population is under 25) and due to become the UK's first majority-minority city within the next 10 years. Clive also plugged the Big City Plan - Birmingham city centre's masterplan, launched in Feb 08. 

• Marie Therese also promoted the youth of her city - 22% of Belfast's population is under 16. She was quite honest in describing Belfast as a "city of contrasts" - with surprising growth sectors like tourism (18k jobs), but a "bloated" public sector (33% of total jobs). Belfast's skills profile is also one of extremes, with 25% holding a degree-level qualification and 27% with no formal qualification at all.

There was then a great session on "city branding", led by Thomas Sevcik (Arthesia) - who challenged the whole notion of city PR. Most "distinctive" features of cities aren't that distinctive at all, he said. All big cities are "diverse" these days, they all have a "vibrant culture" and "rich history", and they all claim to be a "leader in sustainability". These taglines aren't unique, but they end up being used all the time.

Most city branding looks the same, according to Sevcik - which is very true in the case of Belfast, Barrow and Blackburn - all of which have a rather similar-looking heart-shaped "B" in their logo.

Carol Coletta (CEOs for Cities) - who's a double for Annie Lennox - agreed that most city branding campaigns do not work. City leaders spend far too much time focusing on superficial logos and taglines, and usually come up with excessively aspirational plans that are just not credible - things like "most liveable city by 2020". Unlike products, cities "talk back" - in other words, city residents have views on their own branding campaigns, and will trash them if they're not realistic.

All of which is very relevant for UK cities. One of the trickiest challenges facing our city leaders in this recession is how to tell their city's story in a realistic way. As we said in Cities Outlook 2009, UK cities are not all "well-placed to weather the storm". And as Sevcik and Coletta say, they can't all end up being the most liveable, sustainable, knowledge-intensive city either. Edinburgh, Birmingham, Belfast and other cities need to sell their own unique story - rather than engage in slightly meaningless marketing jargon. 

Richard Florida

I never thought I'd say this, but here goes...I saw Richard Florida speak today in Abu Dhabi, at the Global City Forum. There, I've said it.

In case you don't know him, Florida is the professor of "business and creativity" at the Rotman School of Management, University of Toronto. He's a bit of a rockstar in urban policy circles, and is a master at delivering off-the-cuff keynotes. (He would knock the socks off most of the speakers we see at regeneration conferences back home. But I think he costs quite a few grand.)

Here are some snaps of Richard at today's conference.

Florida is best known for his 2002 book The Rise of the Creative Class - where he argues that every successful city needs a critical mass of creative types. His Creativity Ranking back then put San Francisco, Boston and Seattle in the top 10 most creative US cities. Our first ever report The Wrong Stuff, by Max Nathan, (2005) challenged Florida's creative class theory, and found that it was a poor predictor of UK cities' performance. 

Who's Your City? is Florida's most recent book - see this review. In it, Florida says that "where to live" is the biggest decision we will make in our lifetime. He looks at different demographic groups, like the Young and Restless (18-30s) - and analyses how they choose where to live. The book includes some fantastic maps, like the Singles Map - which shows there are way more single men than single women, on the West Coast of the USA; and more single women than single men, on the East Coast. 

His Global Population Map is good, too. This highlights the main point that Florida made today, that the world is "spiky" - with 40 massive mega-cities like Mumbai and Shanghai. His "spiky" analogy has echoes of the Global Cities exhibition from 2007, which included rather large spiky models of cities like Cairo and Johannesburg. This one is Mexico City, at the Tate Modern...

I've heard most of that creative and spiky stuff before. But Florida made a couple of new points today.

First, he focused on the transformative impact of the current global recession, describing it as a "time of reset". Picking up Schumpeter's creative destruction stuff from the 1940s, he says that this recession will trigger a fundamental break from the past - and usher in a completely different global economy. The creative sector will play an even bigger part in the future economy, says Florida. It's no accident, he says, that unemployment in the creative sector is just 4% right now - compared to 23% in construction and 8% nationally.

Second, he talked a lot about the need for "a more equitable, inclusive economy". That's the first time I've heard Florida venture onto that kind of ground. Up until now, his work has tended to focus on a rather exclusive elite of latte-sipping, laptop-tapping trendy types. It's interesting that he's now starting to focus on the wider picture.