Industrial Communities Alliance Conference: Growth Beyond the Big Cities 19 th March 2015, Durham County Hall Session 1: Are cities the engines of economic growth? Rebalancing the UK economy: a city or a regional problem? Donald Houston Scottish Cities Knowledge Centre University of Glasgow

What’s all the fuss about cities? Rise of ‘world’ cities Global mobility Turnaround of British conurbations City-led growth in Germany and USA Rapid urbanisation in developing countries Emergence of a cities lobby in England/UK Increasing belief in ‘agglomeration economies’

What are cities good for? R&D Innovation Providing regional facilities Attracting mobile investment and labour Specialised industries ‘Networked’ industries Labour-intensive industries Large employers Consumption-based activity

What are ‘non-cities’ good for? Land/space-intensive industries Cost-sensitive industries Industries with ‘negative externalities’ Logistics and distribution hubs Environmental quality Attraction of footloose freelance workers? Providing labour and consumers for cities Accommodating overspill growth from cities

Are cities the engines of economic growth? What does the UK evidence say? –City size has negative impact on growth –City size has little impact on productivity –Regional location influences city growth and productivity –Cities are highly interdependent with their regions

City size and growth Source: Martin et al (2014)

City size and productivity: USA Source: Centre for Cities, based on OECD data.

City size and productivity: Germany Source: Centre for Cities, based on OECD data.

City size and productivity: UK Source: Centre for Cities, based on OECD data.

Regional effects strong… Net jobs growth in UK cities, –Southern cities = 12.4% –Northern cities = 0.9% Source: Centre for Cities (2015), using Annual Business Inquiry/ Register of Employment Survey data supplied by the Office for National Statistics.

…but at a cost House price : earnings ratio in UK cities, 2014 –Southern cities = 13.2 –Northern cities = 6.7 Source: Centre for Cities (2015), using Land Registry and Annual Survey of Hours and Earnings data.

City-region interdependencies Source: 2011 Census of Population Special Workplace Statistics (own calculations) % of jobs held by in- commuters from outside local authority % of employed residents who commute out of local authority Core Cities Group44.6%28.2% Metropolitan counties17.3%10.9% ICA members35.3%43.6%

ICA to Core City commuting 468,308 people 18.6% of jobs in the Core Cities are held by ICA residents 10.8% of employed ICA residents work in Core Cities Source: 2011 Census of Population Special Workplace Statistics (own calculations)

Core-Periphery Model ‘Disequilibrium’ interpretation Cumulative causation interpretation Political-economy interpretation

Regional divergence in productivity Source: Gardiner et al (2014), based on HM Treasury expenditure data

Divergence from English mean in public spending per head, Source: derived from Gardiner et al (2014), based on HM Treasury expenditure data

Conclusions Rebalancing the UK economy is a regional rather than a city problem and requires a regional solution Cities and ‘non-cities’ are dependent on each other Cities and ‘non-cities’ are good at different things

Policy implications Decentralisation Devolution Promote regional civic society and capacity Spatial co-ordination of policy and investment Connect to the cities

Referenced sources Centre for Cities (2015) Cities Outlook Gardiner, B., Martin, R., Pike, A., Tyler, P. (2014) A case for a more balanced approach to spatial economic growth and development policy in the United Kingdom. Policy Intervention report to the Regional Studies Association (draft). Martin, R., Gardiner, B., Tyler, P. (2014) The evolving performance of cities in the UK, Future of cities Foresight working paper, Government Office for Science.