ABERCROMBIE LECTURE 2015 Professor Michael Parkinson CBE Adviser to the Vice Chancellor UK CITY REGIONS: POLICIES, PERFORMANCE, PROSPECTS

7 Questions 1. What done city regions & urban policy? 2. Why do city regions matter? 3. What is challenge urban policy? 4. What messages performance in boom? 5.What messages performance in bust? 6.Where does Liverpool fit? 7.Where now, what next?

1. WHAT DONE CITY REGIONS & URBAN POLICY? Changing fortunes city regions & focus policy Economic decline – Liverpool 1980s Social results - area based intervention s Economic recovery s International comparisons – US & Europe 2000s Impact boom & bust Super North, city regions, devolution Liverpool - uneven renaissance. Bust to boom – and back again

Professor Michael Parkinson CBE

2. WHY DO CITY REGIONS MATTER?

Won intellectual battle last decade Winning political battle? City regions are back – again! Not drains on economy or basket cases Assets not liabilities Wealth of nations Drive national & European economy Agglomeration & urban assets crucial successful modern economies

10 2.WHY DO CITY REGIONS MATTER? Forces Globalisation – loss power national, local state Economic & technological restructuring – Porsche- hamburger economy Increasing competition places – winners & losers Institutional &welfare state restructuring – increased vulnerability Uneven development within and between Increased policy concern

3. WHAT CHALLENGE URBAN POLICY?

What should be aim? Not just urban regeneration, poor places, poor people Overall performance whole urban system Economic place making So Maximise performance individual city regions Balanced, sustainable national urban system Encourage drivers urban success : innovation, human capital, diversity, connectivity, place quality, governance capacity, decentralisation.

3. WHAT CHALLENGE URBAN POLICY? Constant dilemmas Inner city problems or wider urban system? Economic, social or physical? Social need or economic opportunity? Competition or partnership? Market, state or community? People or places? Institutional change or improved processes? Neighbourhood, city, city region, region? Explicit or implicit?

3. WHAT CHALLENGE URBAN POLICY? Policy has twisted Sometimes blame victim, sometimes not Sometimes economic, or social or physical Usually neighbourhoods, occasionally city, little city regions, less national urban system Occasionally mainstream, usually initiatives Sometimes need, sometimes opportunity All state or all market Sometimes partnership, sometimes competition Community in and out

3. WHAT CHALLENGE URBAN POLICY? Policy shifts 1968 Race, urban pathology – Powell, Jenkins 1970s Partnership ICP - Shore, Walker 1980s Urban entrepreneurialism UDCs, EZs - Hezza 1990s Partnerships, markets, regions - City Challenge, URCs, RDAs Northern Way – Hezza, Pressa Spurious localism, death regionalism - Pickles Genuine localism? Devo Manc, city regions, rebalancing, the North - Osborne, Hezza, Prezza

4. WHAT MESSAGES FROM BOOM?

18 4. WHAT MESSAGES FROM BOOM? City regions crucial economic success London global star Policy going right direction Sustain & expand renaissance Learn successful city regions abroad Trust city regions Let go

19 Picking Up, Catching Up, Staying Up? Picking up Population Jobs Liveability Cohesion Competitiveness

20 City Regions Contributing More Population Growth

21 Mets Closing Gap London

22 Growing Contribution Jobs

23 Social Cohesion Picking up! Employment up some poorest Health better Education up More degrees Vehicle crime, burglaries down

24 Social Cohesion Not catching up Deprivation worse Unemployment, worklessness worse Health worse Gap rich/poor neighbourhoods bigger School attainment lower Crime higher

25 Overall Deprivation by City Type 2004 South leads - North lags

26 Skills Working Age Population by City Type 2003 South leads - North lags

27 Balance sheet cohesion All city regions improved City regions south and east done better Best at start improved most Progress across country More needs doing close gap

28 Economic improvement – but uneven Many performing well But big differences - income, productivity, exports, skills, innovation, high value, accessibility, risk capital South & east better than north & west Not catching up – would they stay up?

29

30 Productivity uneven

31 Economic & social success All city regions low income Poverty worse if economy below average More jobs, less poverty Competitiveness compatible cohesion

32 Relation GVA per capita & low income households

33 Relationship income & employment deprivation

34 POLICY MESSAGES BOOM? City regions matter – departments support them Competitiveness, cohesion, liveability matter All places matter but start big city regions Think and act long-term Fewer, strategic interventions Greater spatial clarity Trust local government more – contracts not targets Place making Encourage local leadership

What Happened to Liverpool in Boom?

Professor Michael Parkinson CBE

38 Liverpool in 2009 – Back to the Future? Part national story City regions back government backing them Liverpool was lagging Now in mainstream Changed beyond recognition -physically, economically, politically, culturally

39 What Physical Changes?

40 Waterfront Then

41 Waterfront Now

42 Office District Then

43 Office District Now

44 Office District Now

45 Paradise Street / Shopping Then

46 Paradise Street / Shopping Now

47 What Economic Changes ?

48 ‘Only now can we admit how bad it was. It was like Poland. Markets had stopped working.’ Sir Terry Leahy, CE Tesco ‘As we entered the city centre, my wife was silently weeping.’ ‘ Alastair Machray, Editor, Liverpool Echo

49 Job Growth Liverpool

50 Job Growth City Centre

51 Increase Wealth

52 Wealth Liverpool & City Centre

53 Improvement GCSE Scores

54 Population Increase

55 Office Rents

56 Apartment Prices

57 What Liverpool Achieve ? Regeneration city centre World class waterfront Proper business district Raised retail game Place visit Began knowledge & cultural quarters

58 How Was It Done? A big plan and commitment Raised aspirations Attracted private sector Brought in money Brokering and networking Focused on city centre

59 Why Did It Work? Robust national economy Commitment partners Old and new developers URC Liverpool Vision Public engagement Right people, right place, right time

60 What Next for Liverpool Then? Optimism but realism Beyond regeneration to competitiveness Beyond city centre, especially to north Skills crucial Place making Sustainability Scale – city region Leadership, governance Winning hearts & minds

BUT EVEN IN BOOM UK LAGGED INTERNATIONALLY

63

Where Did We Stand? Not all European city regions flourish But We lag best European on key drivers GDP, innovation, skills, population, connectivity 64

65 GDP capita PPS 2007

66 Patent Applications 2006/7

67 Population Degrees 2008

68 Population Change

69 Accessibility by Air 2006

70 Accessibility by Rail 2006

71 Policy Messages Government Many continental drag nation up Some UK city regions drag down London drives national economy More than one cylinder national engine Need city-regions North punch weight City regions can achieve more themselves Government policy can help or hinder

BALANCED NATIONAL URBAN SYSTEM WHAT COULD UK LEARN EUROPE?

What Found? Balance capital, second tier and decentralisation matters Capitals dominate - but gap varies & can close Many second tiers growing contribution, some outperform capital Capitals dominate economy more east than west – link to under-development? Germany unique but instructive

Gap capitals & second tiers big But varies

Exceptions - Top Secondary Outperforms Capital: Germany, Austria, Italy, Belgium, Ireland

Top Secondary Lags Capital by 5-20%: Spain, UK, Netherlands, France

Greater decentralisation decision- making Greater productivity second tiers

Decentralisation & Second Tier Average Productivity 2007

Capitals grow, regional inequality grows Second tiers grow, regional inequality falls

Capital more nation: regional inequality grows

Policy Messages Territorial governance & place matter more not less global economy Relationship capital second tiers not zero-sum, but win-win Little demand limit capitals – not anti London Diseconomies scale - governments encourage second tier to complement capital Increase national economic pie - not kill golden goose

Policy Messages Decentralise responsibilities & resources Deconcentrate investment Territorial economic governance at scale Systematic national policies second tier city regions Greater transparency territorial investment Mainstream money & policies matter most Invest second tiers when (i) gap capital big, growing; (ii) weak business infrastructure because underinvestment (iii) negative externalities capital

5. WHAT MESSAGES FROM BUST? REGENERATION & ECONOMIC PERFORMANCE

Key Messages Regeneration? Past and future different countries Great ten years – some people, places Built buoyant economy, public spend Not in future Capitalism poorly but will recover But development model broken – debt, consumption, residential, retail Different roles city regions – knowledge & green production? 87

Which Places Affected? Nowhere immune - not homogenous Marginal places, projects, people worse Sooner, deeper, longer London & SE development better protected North and Midlands tougher Core city regions –more robust economy One horse towns – most vulnerable Hidden social consequences growing 88

Northern Ask Government 2010? Not throw baby out bath water Principles in good times right in bad times Government commit to regeneration Government commit to North Not disproportionate hit & cuts North 89

Government Response Northern regeneration hardest hit Argument investment lost Cuts disproportionate - ABG, HMRP, RSG, New Homes Bonus, welfare Architecture gone - RDAs, URCs, HMRP, MAAs, city regions Scale gone – regions, Northern Way, city regions Localism - lowest common denominator? LEPs –powers, resources, capacity, commitment? 90

Messages from Bust - Economic Performance Crisis undermine achievements second tiers Competition public & private investment widen gap between second tiers & capitals Competition public & private investment widen gaps within second tiers Greater regional inequality Decreased economic performance

Growth Years Growth across Europe, range of performance Strong growth Baltics, Central & South East Europe Steady growth in Western Europe Southern Europe: some falling back (Italy) UK: relatively strong performance Impact Boom European City Regions 95

Recession Falls across Europe Reversal in Baltics Continuing strong performance in Poland & South East Western Europe – declines except Germany Southern Europe – decline UK: Falls nationwide, London, Bristol, Belfast, slightly better Impact Bust European City Regions 96

Impact Bust UK City Regions Hierarchy marginally challenged in boom - but reasserted recession Northern city regions slipping back from London Smaller southern & some Celtic performed strongly - new urban hierarchy? London, Scots, Welsh, N. Irish policy advantages.

Impact boom UK city regions GVA pc % change

Impact bust UK city regions GVA p.c. % change

UK city-regions, Leading, Intermediate, Lagging, GVA per capita 2012

7. WHERE NOW, WHAT NEXT?

Super North, Devolution, City Regions- Fact or Fantasy?

How Get To Here? Moment maximum opportunity – but also risk LCR Moving from most centralised state Europe Localism, rebalancing economy, LEPs, elected City Mayors, City Deals, Combined Authorities, RGF, Local Growth Deals Many want more devo – CLG Select Committee, RSA, Second Tier City regions, Heseltine, Adonis, Centre City, IPPR North Scotland – & UKIP - Genie out bottle PM, Chancellor, DPM, Minister City support agenda - Northern Powerhouse, HS2&3, Northern Futures Summit Now devolution powers & elected metro mayors But so far decentralisation not fiscal devolution.

What Does Government Want? Mixed motives & messages, moving target Willing decentralise key powers, resources But places must make offer - Government decides It wants changes governance – more leadership, accountability, capacity, delivery Chancellor wants elected city regional Mayors Alleged to deliver better leadership, visibility, accountability, economic performance Condition of maximum devolution

Who’s Ahead? Greater Manchester of course! PowerAskYesPowerAskYes Fiscal Devolution  - Infrastructure  Innovation, R&D -- Transport  Housing  Public land - - Skills  Business Support  Employability  Governance: CA some powers now Appointed Mayor ( model) more powers Elected Mayor after legislation, ‘Devo-Manc’ 2017 Mayor extra housing, transport, planning, police Lots checks & balances (CA can veto Mayor) NOW HEALTH

Why Manchester?

Successful City Regions – What Barriers? Politics turf most difficult Lack of vision Institutional fragmentation Historic tensions Personal rivalries Place rivalries Party rivalries Economic rivalries Complacency Overlapping strategies

Successful City Regions – What Works? It’s the politics stupid! Leadership style Political maturity – big not bully Trust – smaller not exploited Time Common projects Right machinery National encouragement & incentives

London matters - not expense everywhere else. Start with big 9 City regions in systems – win-win, not zero-sum Competitiveness, cohesion, liveability matter – hard redistribute poverty Stick at it not quick fix Learn from Europe - UK 3 top 40 inc London, Germany 8 top 50 but not Berlin Recognise the global challenge What Next for Government?

UK City Regions Europe’s Top GDP PPS per cap, 2010

GDP per capita, PPPs, 2012 range & average

What Next for Government? Governance matters to economic performance UK 19c government, 20c boundaries for 21 st economy Need Decentralise decisions, deconcentrate investment Economic not administrative boundaries Territorial governance at scale Powerful city regions: responsibilities, powers, resources

Promote drivers urban success Economic diversity Innovation in firms and organisations Human capital & skilled workforce Connectivity - internal and external Place quality - social, cultural, environmental Governance, leadership, strategic capacity at scale Decentralised responsibilities and resources, deconcentrated investment. What Next for Government?

Take seriously - will means as well as ends Serious rebalancing - Ghandi & western civilisation Strategic not spurious localism Unfinished revolution Devo Manc – who, what, where next? Beyond decentralisation to fiscal devolution Economic place making Need longer term story But will there be a happy ending? What Next for Government?

THANKS