UK’s urban areas must perform for the nation, says Centre for Cities

THE Northern Powerhouse agenda and devolution deals across the country demonstrate a recognition by Government that it is cities that drive growth for the nation, not the other way around.

That’s according to Chris Murray, director of the Core Cities Group, which represents the councils of England’s eight largest city economies outside of London along with Glasgow and Cardiff. He adds this recent and significant shift in Government thinking is about rebalancing the economy.
“It’s actually linked flows between big urban areas internationally. That’s where economies are. If we accept that then the job of Government is to get behind cities and give them the tools they need to perform on behalf of the nation,” he said.
“It is normal in other developed countries for the top five to ten big cities to add to the national economy and here that doesn’t happen.”
 
 
The productivity of all the core cities’ wider urban areas put together, which is 25% of the UK economy and 19 million people, shows that each year they are generating £66bn less than the national UK average.
“That means that only Bristol and London regularly outperform the national economy. We think that is a waste of potential,” said Murray.
 
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Bruce Tether, professor of innovation management and strategy at Alliance Manchester Business School, added: “It matters because our GDP per capita is lower than it should be. We lack one [a second city] and by combining together these northern cities in some way we can hopefully redress that.”
To understand the relationship between competitiveness and finances, it is a case of following the money and the tax base. Here cities control about 5% of the total tax raised within them – essentially that is council tax.
“That will change with business rate retention, of which the devil is in the detail. If we fully retain all business rates that will still only be about 8% or 9% of the tax base,” said Murray, adding that in North America it is closer to 50% of the tax base, while in Germany about 35% retained locally or regionally. Across the OECD on average around 25% of the tax base is retained locally or regionally.
“The amount of control that we have over the destiny of our cities here in local hands is very, very limited indeed,” underlined Murray.
The comments were made at the first of a series of seminars to be hosted by law firm DWF and the Business Services Association across the north throughout 2016 to discuss the transport and infrastructure issues that lie at the heart of the Northern Powerhouse.

 

 

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