Cities Outlook 2011 marks the fourth year we’ve tracked the economic fortunes of the UK’s 64 major cities. This year, what we’ve found is that while some cities are well placed to drive the national economic recovery, others will be more vulnerable to bumps along the road like public spending cuts.
The good news is that cities overall are well placed to lead the economic recovery, with our major cities being particularly important: 37% of the UK’s private sector jobs are in 11 of our major cities.
And some cities that were hit hardest during the recession are bouncing back more quickly; Hull, Doncaster and Northampton saw a 1.2% reduction in unemployment claimant count between March and November 2010, more than twice the UK average (0.5%).
But the pace of recovery across UK cities is uneven. So despite Hull seeing this reduction in claimant count, for example, it still faces significant challenges around its skills levels and its dependence on the public sector. While in the longer term, cities such as Bristol and Milton Keynes are well placed to support national growth – building on high skills levels and a diverse industrial base – cities like Liverpool, Newport and Swansea are vulnerable to what is bound to be a bumpy economic recovery.
Public spending cuts are one of the major bumps that all cities will face – and all cities will feel the pinch. But it is in these more vulnerable cities, already feeling the challenge of adapting to an economy in which manufacturing jobs continued to reduce, where public spending cuts will feel particularly real.
Centre for Cities’ analysis has shown that public sector job cuts and welfare cuts will be felt very differently in different places, because public spending matters much more to some local economies. So while London will see the biggest job cuts in absolute terms, its economy is sufficiently large and private sector based for the city’s economy as a whole to be relatively unaffected compared to Sunderland or Hastings.
We’re arguing that the best way for the government to make the most of cities’ potential is to give them more financial and political freedoms – Tax Increment Financing, a return of the business rate to local control and elected mayors with London-style powers over wider city regions. This would help cities with the most potential to create jobs and drive a national recovery. In those cities that are more vulnerable, even though we recognize how limited government spending is at the moment, we think the government should set up a permanent ‘Transformation Fund’: £500m a year for which cities suffering from industrial and population decline can bid. The Regional Growth Fund – which is aiming to create new jobs and help the places hardest hit by public spending cuts – should also provide some help in the short term, but £1.4bn (with a lot of objectives) can only go so far.
Over the next two weeks we’ll be blogging further details about the report – watch out for these, and please download it here in the meantime and let us know what you think.