The Government is due to conclude its City Deals negotiations with the Core Cities in the next week or so. As part of the sign-off ceremony there’s likely to be an announcement about the next wave of City Deals.
In preparation for City Deals Round Two on Tuesday we launched our work on mid-sized cities. The work identifies that there are several medium sized cities – including Derby, Coventry, Sunderland and Preston – that have similar economic characteristics and challenges.
Because of these similarities we argue that there are advantages to be gained by Government by dealing with them as a group in the first instance. The research deliberately does not strictly define which cities should or shouldn’t be in this group. Our only criterion for the group is that it’s a group of the willing – it should provide the platform for other cities that feel that they identify with these issues to come forward to join the group.
Using Sunderland as the main focus, the research shows that the recent underperformance of its city centre has undermined its overall economic performance. The city was one of the stronger performing cities in terms of private sector jobs growth before the recession. But at a time when its economy overall was exceeding expectations, its city centre actually lost private sector jobs.
The report shows that very similar patterns have also been seen in Preston. And it identifies other cities such as Derby, Wakefield and Coventry that are displaying similar symptoms that are characteristic of a city with an underperforming city centre.
For this group of cities the report calls on the Government to create a £500 million mid-sized cities investment fund as part of the City Deals process. Commercially-run the fund would change the way that European Regional Development Fund (ERDF) money is allocated, moving from the allocation by regions, as currently occurs, to allocation according to economic issue. It would then be matched by central Government monies such as the Growing Places Fund, local authority assets and private sector money. There are a couple of different ways that this fund could be set up, but I’ll do a post at a later date looking at this issue.
The fund should be used to reconfigure the city centres of our mid-sized cities. It’s important to stress here that the operative word is reconfigure – these cities should look to reshape their city centres so that they better operate as environments to do business. So while it may mean building some new office space, it will also mean removing office stock, either through demolition or conversion. It may also mean encouraging more residential.
The fund will not provide a free lunch for cities either. The Government has been very clear that the City Deals process is just that – a deal. This means that cities also have to bear some of the risk and cost of the reconfiguration. See the report - Hidden Potential - for more detail on this.
But given the knock on impacts that underperforming city centres have on wider economic performance and the growing economic importance that city centres are likely to have in the future, the weak urban cores that some cities suffer from is a pressing issue. City Deals provide an opportunity for these places to tackle this fundamental problem head on.