The city is setting an example that others should followby Jonathan Derbyshire / June 19, 2014 / Leave a comment
Published in July 2014 issue of Prospect Magazine
Manchester was the only UK economy to grow at a rate comparable to London in the decade before the recession. © Sakhan Photography Collection
How do you make a city work? We all know that London is an economic powerhouse and that other cities are too. Between them, eight urban areas—Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield—generate a significant proportion of the UK’s GDP. But these “second tier” cities could be doing even better. One of them, Manchester, is leading the way in showing how.
One solution to urban underperformance often touted in the years since the financial crisis is improved infrastructure—schemes like HS2, the proposed high-speed rail network linking London with Birmingham, Manchester and Leeds.
An altogether more radical answer is to set our cities free. Jim O’Neill, the former Goldman Sachs economist who now chairs the independent City Growth Commission, says: “If you look at some of the most successful economies in the world, where many cities play a critical role, they enjoy some degree of independence over their finances and policy choices.” Launching the Commission in October, O’Neill declared that “great cities such as Manchester, my home town, should surely be encouraged to stand on their own feet.” He should have acknowledged that Manchester has already begun to do just that.
In promising to look at the “pros and cons of giving core cities [more] powers to determine and activate their own funding needs for growth,” O’Neill and his fellow commissioners are following an example set by the City Finance Commission, an inquiry established by several local authorities, including Manchester City Council. In a report published in June 2011, that commission concluded that the role played by cities, especially those other than London, in stimulating economic growth has been seriously underestimated by policymakers. It recommended giving cities responsibility for local growth spending, and proposed “devolution pilot” schemes, in which central government would formally recognise the ability of certain urban local authorities to develop economic strategies tailored to their own needs. It also suggested a business rate retention scheme that would allow cities (or “city regions”) to keep a share of the proceeds of local growth.