(9 years, 11 months ago)
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Lord Shipley
That this House takes note of the case for enabling economic leadership for cities.
Lord Shipley (LD)
My Lords, I am grateful to have this opportunity to debate the case for enabling economic leadership for cities in the UK. I am grateful, too, to those noble Lords who will contribute today from all parts of this House. In particular, we look forward to hearing the maiden speeches of three Members on these Benches, each of whom has had personal experience as a council leader in driving economic growth and whose contribution to our debate will be very valuable.
My purpose today is twofold. First, it is reflective; that is, I want to look back at what the Government have done and what our cities have achieved since 2010. Secondly, it is about looking forward. We are experiencing a sea-change in our understanding of the economic importance of our cities; and by “cities” I mean the conurbation cities belong to—in essence, their travel-to-work areas. We are experiencing a rising self-confidence in our cities as local leaderships grasp the opportunity to do more to generate wealth and jobs and thus to reduce their reliance on London and the south-east. I am much encouraged by this, and, for the avoidance of any doubt, I do not mean for this debate to be exclusive: we should acknowledge the crucial role of shire counties and rural areas in wealth generation and the crucial role of London as a world city whose success means that it represents one-fifth of the UK economy. We may note that London has suffered less in the recession, but our aim should be to raise growth levels in other cities, whose tax revenues are very important to the rest of the UK, as well as London. It is, of course, now hugely expensive to live in London, with the result that there are many reports of young people moving out to other cities in the UK as employment clusters grow there, where the cost of living is cheaper and the quality of life is excellent.
I welcome the interim report by the Independent Commission on Economic Growth and the Future of Public Services in Non-Metropolitan England. It says that a handful of shires are now ready for devolved decision-making about public services and tax. It makes this debate on the economic leadership of cities even more important, because cities depend on rural areas and rural areas depend on cities. They complement each other, and they need to work closely together.
This is not about creating lots of independent city-states; it is about empowerment of our cities within a national framework so that they can grow faster and generate and retain higher tax revenues. It is about bringing local government closer together across boundaries so that it does not operate as geographical silos. Transport, skills and jobs, for example, all transcend an individual council’s boundaries in urban areas. This in turn means that governance structures are needed to which central government can effectively devolve. Such governance structures must have popular support. They need a direct link with voters, they must be inclusive of other political parties, and they must be able to demonstrate a clear capacity to share risk and investment and to deliver better outcomes. Simply dividing up the available cash in Whitehall and posting out cheques will not be enough.
We have learnt a lot since 2010 about what works and what does not. For example, we have learnt that devolution is a process, not an event, and that it is a two-way process. We have learnt that we must learn from doing things and that we cannot wait to move at the speed of the slowest. We have learnt that achieving growth in our cities is so very important because they have been underperforming for far too long and because it is through the tax generated by growth that they will be able to afford the public services that they aspire to. By any method of comparison that we might choose with similar cities across Europe, UK cities underperform. Seven out of our eight core cities in England outside London are below the national average in GDP per capita. Bristol is above, but Birmingham, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield are below. UK cities represent 60% of jobs and output but, interestingly, they account for 73% of highly skilled jobs; they could, however, do much more. Similar second -tier cities in other countries are economically much stronger than ours. One of the problems is that, unlike those European counterparts, powers have been stripped away from local government outside London over recent decades. This has impacted on growth, so it is no surprise that cities outside London have been performing comparatively poorly. For example, in 2010, Manchester had a GDP per head half that of Munich and a fifth lower than that of Marseilles.
Having identified the problem, I want to pay tribute to the leadership on this issue shown by the Deputy Prime Minister and his ministerial colleagues, who in 2011 took the first initiative to strengthen our cities through city deals and who have led those city deals and local growth deals since. The initiative was a vital step because it put cities centre stage. It said that cities were important and it put the onus on them to come up with deliverable proposals that they wanted to implement. It was a subtle but vital change in approach. Defining those cities’ increasing responsibilities has unleashed a rising confidence which can only get stronger.
Cities were prepared for it, of course, because English core cities have been pressing the case for investment and further devolved powers for at least a decade, and had done a lot of the necessary preparatory work. So the Government are committed to devolving power. They appointed a Minister for Cities, introduced city deals and growth deals for local enterprise partnerships, and now devolution deals, of which Greater Manchester is the first, I hope, of many. There were 28 city deals; 95% of the first wave actions are on track or have been completed, while 82% of wave two actions are on track or have been completed. Examples of action taken include growth hubs, innovation centres, earn-back programmes, gainshare schemes for the additional national tax raised, freedoms to borrow against future business rate income and localised youth contracts and apprenticeship schemes. In governance, several combined authorities have been established, with others on the way. Three joint committees have been established and two more are to come shortly. The Glasgow and Clyde Valley cabinet has been established. I turn to the growth deals. The Government have committed £12 billion over six years from 2015-16 to 2020-21 for local growth. In the Autumn Statement, the Chancellor announced £1 billion of funding from that allocation for local enterprise partnerships to be allocated in January.
I conclude from all this that the pace of devolution within England is quickening. The speed and unity behind the announcement about Greater Manchester has been particularly impressive. The context is now one in which there seems to be general agreement that there is a relationship between growth and devolved powers. One has only to read all the reports published by organisations such as Centre for Cities, IPPR North, ResPublica, the City Growth Commission, the Local Government Association and the interim report of the Independent Commission on Economic Growth and the Future of Public Services in Non-Metropolitan England to realise this. But these were all preceded by the visionary report, No Stone Unturned: In Pursuit of Growth by my noble friend Lord Heseltine and by the work of the noble Lord, Lord Adonis, who led the North East Independent Economic Review, which made the case for devolved powers to drive growth and skills and for a combined authority, and talked about the importance of clusters.
There is now a public appetite for devolution within England; opinion polls show that. There may not be any more money for devolution unless it is raised locally, but there can be more effective joined-up delivery of public services, which would save money locally across Whitehall’s 50 spending lines and enable savings to be redirected into investment and growth. Devolution starts with a desire to take on the greater responsibilities that come from having more powers. Just expressing a wish for more powers is not enough. As Jim O’Neill, the chairman of the City Growth Commission, said recently, local leaders aspiring to take on greater responsibilities need to demonstrate that their councils and joint structures have the capacity to take control from Whitehall. That capacity-building is important.
May I make a plea here over words? I hear lots of demands for devolution of powers and freedoms, but it is not just about that; it is also about responsibilities. That is because you can have all the freedoms and powers you like; the real question is what you plan to do with them and how you will measure your success.
We have moved on a long way from the passing of the Localism Act 2011, which gave a power of general competence and helped to create the framework in which city deals, growth deals and devolution deals have been able to take place. It is clear that this is indeed a cross-party initiative at Westminster, as each of the main parties commits itself to the implementation of greater devolution. The crucial point now is this. Cities are thinking about their “functional economic geography” when making economic decisions. They are working across local authority boundaries for the benefit of their area as a whole, and they see growth as a central task of local government rather than just thinking in terms of local government being about provision of services.
One of the consequences of the Scottish referendum is that demands for further devolution within England have increased. We should note, however, that devolution within England is not dependent on what happens over devolution to Scotland; it would be happening anyway, but it may well be speeded up. I would make this further point: there is a huge difference between Scotland, which already had a Parliament, significant devolved powers and debated independence for two years, and English regions and sub-regions, which have no directly elected structures other than through their councils, many fewer devolved powers, and with a few honourable exceptions have not been thinking much about the detail of devolution at the sub-regional level. Defining what is wanted in detail, with clarity in governance and resourcing, is an essential prerequisite to successful devolution, whether it is urban or rural.
One of the indirect benefits of city deals is that they can have the effect of raising the aspirations of an area as a whole. I want to give an example briefly from my own part of the country. In October, some 300 north-east business leaders met in Newcastle to acknowledge the role of those who have helped to build the IT sector in the area into the thriving sector that it has now become, supporting some 32,000 jobs, with a further 2,000, I understand, expected to be added to the sector very shortly. Tech-based entrepreneurship is thriving in the area, fed by active early-stage investment and incubators, dynamic universities and a thriving corporate technology sector. Of course, one of the world’s largest business software firms, Sage, was founded and remains head -quartered in the city. Crucial to this success are the growing indigenous independents now coming together as a cluster to drive the local agenda for skills, collaboration and innovation in IT.
The north-east IT network, Dynamo, has established that the north-east’s current problem in IT is filling vacancies. Some 2,000 jobs were filled this year; for instance, Accenture hired 150 staff and the Government Digital Service expanded to 450 desks locally. Many local firms are now growing beyond 100 staff, some opening offices in other cities to tap new labour markets. Some of the growth is being absorbed by the boomerang Geordies, experienced locals who sought work away but are returning home as globalised markets offer career challenges on their doorstep. It is most encouraging. Indeed, to IT in the north-east we can add clusters in the automotive industry, pharmaceuticals, the process industries and the offshore, subsea and renewables industries. In a recent edition of the Observer, I read an article about Bristol, about its creative edge and about young people moving out of London to Bristol to share in its creative buzz. Clusters seem to be growing in our cities, and that is a very good thing. I conclude that Whitehall must now look increasingly to cities for innovation and growth.
In conclusion, what of the future? The Autumn Statement was very helpful, in particular, in outlining the things that are planned to put the north of England at the centre of growth. What we need now are cities that know what they want. That includes comprehensive city region strategies in transport, housing, skills and land use. They should understand how they will generate more resources locally. Secondly, the Government need to devolve fiscal powers. There is a danger that we will achieve devolution of functions only when we need greater fiscal devolution and three to five years’ funding of central government grant. We should accept and plan for differential devolution and ensure that city regions integrate with each other, particularly in transport.
In their 2011 report, Unlocking Growth in Cities, the Government stated:
“Cities are the engines of economic growth and they will be critical to our economic recovery”.
I hope we can agree. Recently, the City Growth Commission rightly said that sustainable growth and deficit reduction cannot be delivered from the centre. I hope we can agree. The House of Commons Communities and Local Government Committee said this July that cities such as London and the core cities were ready to take greater control over their financing and borrowing powers. Areas to which any fiscal powers were devolved should, it said,
“demonstrably function as an economic unit”.
I hope we can agree.
I conclude that cities need greater control of their funding streams and clear powers and responsibilities. They need fiscal powers and the powers to build up their own resources, and devolving powers to cities should be the start of a much more ambitious process of devolution for the whole of England. I beg to move.
Lord Lyell (Con)
My Lords, I begin by thanking my noble friend for setting the seal and the pattern for a great debate today, with numerous maiden speakers, on matters of enormous importance. Your Lordships’ House also has somebody like me, an amateur.
Now, 11 November 1967 was quite an interesting day for me. I happened to be in London at the weekend and I went down to Buckingham Palace to the Guard Mounting. There was a horde of young gentlemen there in blue outfits. It was clear from the way they spoke that they came from elsewhere. They were from Liverpool. They were attending an afternoon event. I joined them. We had a tremendous day out. They said I must go up to Liverpool so in 1968 I went to Liverpool. I had been there only once, in 1957 when I was a young soldier. I went in April 1968 and I walked for three and a half miles from another afternoon event back to the station. I was interested in huge areas of what I would call inner Liverpool—not Kirkdale or Kirkby or Huyton—that were being renewed and were capable of being redeveloped.
Every schoolboy in Scotland, England or elsewhere will know the history of Liverpool, with its huge port centre. It was and still is a great centre for commerce and ideas. I read a great deal to try to prepare. But I knew of one thing in Liverpool: the enormous docks. The pattern of trade has changed noticeably, certainly in my lifetime and especially over the past 20 or 30 years. Now we have enormous containers and other methods of transporting goods, all kinds of apparatus, but they arrive and they come from all over the world. Liverpool is not sleeping at all. I understand that there is a £350 million project to improve the deep-water quay so that the world’s largest container ships can come to Liverpool, to Merseyside, to carry on the great tradition of the Port of Liverpool.
What is the geography? Liverpool, with a new port of that nature, is far nearer to the manufacturing centre of the Midlands than other ports around the coast elsewhere. Time is money, so save it. The city of Liverpool has carried out economic leadership off its own bat. I understand from a Financial Times survey that between 2010 and 2012, when it was difficult throughout the United Kingdom, the city of Liverpool created 12,800 private sector jobs. There was a loss of about 5,000 jobs in the public sector because of cuts in various government departments. That shows the wonderful capacity of the city of Liverpool, and cities like it, of two words: “can do”.
As I an amateur, I know of one thing. The main industry that comes to my mind and is splattered throughout the newspapers, not just the financial press but other sectors, is the enormous motor works at Halewood. There must be something in the spirit of the people who work there—and of the city—and their attitude. I understand that it is very nearly a three-shift system, producing Jaguars, Range Rover Evoques and other enormously high-quality vehicles that go all over the world, revitalising industry in Liverpool. That is enormously encouraging.
I spent a happy evening in Liverpool in May this year. Since April 1968, the waterfront, down at the docks—Albert Dock and Kings Dock—has changed unbelievably. Why? It is the people of Liverpool. I have a great close tie with the city. I was taken ill in 2006 and I received telegrams and good wishes from people I had not necessarily met in the course of my job. My great affection does not always clash with the noble Lord, Lord Alton, but never mind. It is a great institution that has looked after me. Those men in blue in November 1967 encouraged me to go and take a look at what this great city does in the north of England, what it can do and what it will do in the future. I very much look forward to hearing what my noble friend the Minister will say about this part of the north of England, which I will be passing through today on my way home. I thank my noble friend for introducing the debate.
Lord McKenzie of Luton (Lab)
My Lords, we should congratulate the noble Lord, Lord Shipley, on securing this debate for us this morning, and the noble Lord, Lord Lyell, on his clear attachment to and love of Liverpool—although I am advised that he is an Everton supporter. I also look forward to the three maiden speeches we will hear today. The notion that local councils—particularly cities; and I am happy to accept the definition of the noble Lord, Lord Shipley, for that term—with strong local leadership can be a force for economic progress is, of course, not new. But moving forward on this agenda has been given impetus by what my noble friend Lord Adonis has set out in his report, Mending the Fractured Economy: the link between economic growth and the living standards of ordinary people has been broken, and this dictates a fundamental reform in order to secure more balanced growth. This converges with the recognition that the scale of spending cuts facing local authorities will most effectively be delivered by the chance to join up, reconfigure and innovate at local level.
As the noble Lord, Lord Heseltine, concluded in his report No Stone Unturned: In Pursuit of Growth, too many decisions are taken in London without a full understanding of their local impact. I certainly agree with that. But he asserted that local authorities have been relegated to service providers—increasingly, commissioners of services—and that local economic leadership has all but disappeared. This is too sweeping an assertion, doubtless many noble Lords here today will know of the engagement of their local council in regeneration activities and a partnership working with the local business community—driven in many instances by the support of RDAs. It belies the leadership role of the Core Cities Group over some 15 years, I believe, and in particular its work which culminated in amendments to the Localism Bill—as it then was—agreed by an all-party consensus, which allowed Ministers to transfer local public functions from central government to local and combined authorities.
As we know, a range of city deals followed, not homogeneous arrangements, underlining the diverse needs of cities—and there are more to come. Important as they are, however, it is difficult to maintain that such arrangements are transformational; step change is required if the true potential of our towns and cities is to be realised. We should remember that the Secretary of State still holds the whip hand in these deals, being required to determine whether any transfer of functions would promote economic development or wealth creation or increase local accountability.
What should change entail? It raises issues of funding, powers and coverage. Again, as my noble friend Lord Adonis has proposed, we should devolve funding of £30 billion over the next five years to combined authorities, local authorities and LEPs to cover key economic levers—housing, transport, skills and business support. Of course, how funding is devolved is important and we must not replicate the past with endless bidding processes and bureaucracy, nor allow the Treasury to strangle such initiatives.
This agenda brings with it the thirst for more taxes to be devolved to English cities. City Centred campaigns for council tax, stamp duty land tax, business rates, annual tax on enveloped buildings and capital gains property disposal tax to be devolved. It properly asserts that this would be Exchequer-neutral because central grants to cities would be cut.
We would go some way along this path by giving control over the full revenue from business rates, which we would in any event reform, to powerful new city and county regions which come together in combined authorities. It would be an incentive to do so, but we would not insist on their needing to have an elected mayor.
It is important that there is scope within the system to address the differing needs and resources of local authorities and scope for a safety net for local economic shocks. This will be especially important in the near term, given the current local authority funding arrangements, which have hit the poorest areas the most. Of course one way to devolve economic power and funding would be to relocate more civil service posts outside London.
So far as combined authorities are concerned, we can look to Greater Manchester as a beacon. It in particular has been leading the way, and we should congratulate it and indeed the Government on its new deal with the Treasury. The opportunity to promote a northern powerhouse is obviously to be welcomed. It will build on some of the existing strengths of these regions, including in science and technology, and it chimes with my noble friend Lord Adonis’s proposals for a long-term innovation strategy.
However, these opportunities are not just about big cities, however important, nor just about the north. We need to mend the link between growth and living standards across the UK, so we will propose that local authorities covering any part of the country—Norwich or Luton included—will be able to become combined authorities, again with devolution of powers and funding. We would devolve funding to all local areas that reform their LEPs and create formal governance structures across local authorities at regional level, so that every part of the country would have the chance to make its decisions over how to invest in skills, infrastructure and business.
Lord McKenzie of Luton
I am sorry, I shall wind up now. All the evidence shows that the economic benefits of devolving powers to local areas are too great to ignore. Devolving powers to cities is a start but not the end.
Lord Goddard of Stockport (LD) (Maiden Speech)
My Lords, listening to other Peers’ maiden speeches has been quite a revelation for me; some have been amusing, some quite touching. Anyone who had the privilege of hearing the maiden speech of the noble Lord, Lord Farmer, must have been moved by his highly personal story. On the other hand, I now know that there are seven Smiths in the House—a quite useless fact but one that I cannot get out of my head. I thank everyone who has made my introduction and my stay here so welcoming: my long-suffering supporters, my noble friends Lord Lee of Trafford and Lord McNally, and my mentor, my noble friend the one and only Lord Addington.
I also thank the officers, the staff and of course the legendary doorkeepers. On my second day in the House, I decided to come in early—be my own man. I took my place on the third row, in prime position. The House began to fill up. To my surprise, a doorkeeper came across to me. “Lord Goddard?” he politely asked. “Yes, I am.” “Lord Goddard of Stockport?” “Yes, yes.” He actually knows who I am after one day in the House. “Lord Goddard of Stockport, the Liberal Democrat Peer?” By now, I am the emperor penguin, chest out and proud as punch: “Yes, I am that Member”. The doorkeeper leans in and whispers in my ear: “Perhaps the noble Lord will wish to follow me across the Floor to the Liberal Democrat Benches. You are actually sat in the Labour Benches”.
As the realisation of my predicament dawns on me, I slowly follow him down the steps and across the Floor of the Chamber. I can see the Members politely smiling at my mishap right around the Chamber. I go from emperor penguin to Donald Duck in 30 seconds. At the bottom of the stairs he mercifully administers the coup de grace: “My Lord, I’m sure you will be safer sitting here”. Many new Members are confused by the geography of the Palace of Westminster, but I managed to get confused over the geography of this Chamber. Noble Lords will be pleased to know that I will not be putting my name forward for overseas visits in the foreseeable future; I fear that I could be lost to the House for ever.
I turn to the Motion being debated today, which I am grateful to my noble friend Lord Shipley for tabling. I want to spend a short time reflecting on Greater Manchester’s journey towards achieving greater control over the decisions that affect us all locally. It is a journey that has been made in partnership with government, recognising not only the economic potential of English city regions but their leaders’ capacity to make the right decisions for those places. Greater Manchester’s 10 leaders have an unrivalled history of collaboration, characterised by consistent leadership and hard work over many years, first through the Association of Greater Manchester Authorities, established in 1986, and then through the Greater Manchester Combined Authority, the first in the country, marking a new phase in our collective ambitions. The combined authority provides us with strong and effective governance and has statutory responsibilities for transport, economic development and regeneration. As a Liberal Democrat vice chair of the Association of Greater Manchester Authorities, I was uniquely placed to help frame and deliver those unique opportunities.
Our leadership has evolved from a “bottom up” approach—it is vital that Members understand that—to meet the Greater Manchester agenda and ensure the ownership and commitment of the 10 leaders. We have worked out which functions are best delivered at the Greater Manchester level and which are best delivered at local level. We also have been able to develop a highly effective partnership with business leaders, helping to shape the strategic direction and oversee the delivery of key growth functions. There is no equivalent comprehensive partnership anywhere else in the country.
In March 2012 I was one of the four leaders from Greater Manchester who pitched for, and were successful in securing, the first city deal in the country. That city deal secured a broad-ranging set of arrangements to deliver jobs and growth to Greater Manchester. Three aspects of that merit particular attention.
The earn-back model is a ground-breaking tax-increment financing scheme which means that £1.2 billion of investment made by our councils can be earned back as real economic growth is delivered, to then be reinvested in further schemes.
The Greater Manchester Investment Framework combines different government funding streams into a single pot, making it easier for investors to access the finance they need. Because the fund is a loan, not a grant, it can be recycled to make better use of scarce resources. New skills pilots will deliver an extra 6,000 apprenticeships via small and medium-size businesses.
The devolution agreement, signed in November, is quite simply an agreement designed to drive growth and reform public services in the quickest possible way.
I recognise that the full devolution of Greater Manchester’s public spending will take many years to deliver. Our road map proposes that the functions and resources for public services be devolved in a staged manner to enable the city region to be financially sustainable and economically successful, providing early wins for both Greater Manchester and the Government.
Finally, I thank Sir Howard Bernstein, chief executive of Manchester City Council, and Eamonn Boylan, chief executive of Stockport Council, for their support over many years. Today Sir Howard and I share a wider smile, following our beloved Manchester City’s win in Rome last night against all the odds. As my mother used to say to me, “Do good things for others and sometimes good things will happen to you”. Thank you.
Baroness Eaton (Con)
My Lords, it is my great pleasure to congratulate my noble friend Lord Goddard of Stockport on his excellent maiden speech. He will be a very welcome addition to the Liberal Benches and also to the whole House. His work in local government and his wide experience of partnership working, particularly in the Greater Manchester Combined Authority, will be of great value to us, especially in deliberations such as this one. He is most welcome.
I declare an interest as a former chairman of the Local Government Association, a current LGA vice-president and a previous leader of Bradford Metropolitan Council, where I am still a councillor. I know that all councillors here today, and those who have been councillors, fully appreciate the importance of today’s debate, and I thank the noble Lord, Lord Shipley, for initiating it.
Bradford, as most noble Lords probably do not know, is the fourth-largest metropolitan district in England, after Birmingham, Leeds and Sheffield. It has the eighth-largest economy in the United Kingdom, creating more than £8 billion of added value. And Bradford is not alone. The potential of the United Kingdom’s cities is enormous. The City Growth Commission has already reported that, if the UK’s top 15 metro areas realised their full potential, they could add almost £80 billion to our economy by 2030. Of course, this is not just about individual cities but about networks of cities, in the north and in the south, coming together to drive economic growth. Already we are seeing more powers for Greater Manchester, and the Chancellor, in his speech on the Autumn Statement, said that his,
“door is open to other cities who want to follow its cross-party lead”.—[Official Report, Commons, 3/12/14; col. 314.]
Throughout debates on cities, Core Cities is mentioned as if it indisputably represented the largest economically. While in no way trying to undermine the efficiency and effectiveness of Core Cities, I point out that, at the time, it was formed as an interest group of one political persuasion. Economic reality is a little more complex. As an example of complexity, Leeds city region, an area of a combined authority, is polycentric: Bradford, which is within that combined authority, has a population of over 500,000 people. The role of Bradford and other cities such as Wakefield and Huddersfield, which are not members of Core Cities, should not be underestimated.
However, today’s debate goes beyond cities. Two-thirds of Bradford district is rural. The commission on the future of public services in non-metropolitan England has already noted that these areas account for half of our country’s population and economic growth. The fact is that all people can benefit from decisions being made closer to them, whether they are from a big city or a rural community.
When it comes to economic leadership, certain powers are ripe for devolution—such as skills. That will be crucial for low-wage, low-skilled economies such as Bradford. Getting people the right skills should help keep employment levels stable as the area’s populations grow. The evidence for a local approach to skills is convincing. Pilot schemes that are run in my part of the world help nearly three in five young people who take part to go into education, training or employment. That is more than twice the success rate of the national scheme. In just 18 months, a council-led youth job scheme created 105,000 jobs, instead of 7,500 from the national equivalent.
Beyond skills, research by Ernst & Young shows that applying lessons from community budget pilots could save up to £20 billion in five years. However, local areas, including cities, do not just need more local decision -making; they also need more financial freedom. That is what “economic leadership” means—giving local areas the freedom to raise and spend money at a local level. Last week, the Chancellor announced a business rates review, which is something that the Local Government Association and the business community have called for. We must ensure that councils are properly involved in the consultation. The Local Government Association has proposed devolving the setting of business rates and discounts to local authorities. It also proposes that 100% of business rates income—including business rates growth —be retained by local government. The reforms proposed by the Local Government Association would set councils on the path to greater self-sufficiency and would give councils greater financial certainty in their future.
The cities agree that, while policies such as city deals, the regional growth fund and the Localism Act 2011 have made important moves towards localism, they still do not deliver the economic leadership and security needed for cities to control their own destinies. There is now a real opportunity to push this agenda forward, and this is the perfect time for all political parties to push forward with this important reform.
Lord McFall of Alcluith (Lab)
My Lords, I welcome the introduction by the noble Lord, Lord Shipley, of this important debate, and the maiden speech of the noble Lord, Lord Goddard of Stockport, which was very thoughtful and amusing. I am sure that he will make a great contribution to the House.
My reflections will be on the issue of the Scottish referendum and from my experience as a Member of Parliament in the other place for 23 years. In Scotland, the most important question was that of the currency. The SNP proposals were described by Jim Sillars of that party as “stupidity on stilts”, and Paul Krugman commented:
“If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled”.
We can see that today, with oil at $65 a barrel—the White Paper had Scotland breaking even at $115 a barrel.
Yet almost 45% of people in Scotland voted yes, and there were many reasons for that. In my campaigning, I found a few: first, people wanted a fairer, more socially just Scotland; they thought, “We couldn’t do any worse, so why shouldn’t we vote yes?”; and they had lost faith in the ability to bring change through the ballot box. The fundamental issue is that there is an increasing distance between the political process and the people, but the referendum demonstrated that people are interested in politics—we saw tremendous turnouts of 85% to 90%. So there is a clear desire for increased devolution and a recognition of the special characteristics of other nations and regions in the UK.
However, there is a remoteness to our politics, whether in Westminster, Holyrood, Cardiff or Stormont. What I have witnessed, with Holyrood, is devolution to Scotland but not devolution within Scotland. Let me give my own experience of how difficult devolution within Scotland is. As MP for West Dunbartonshire, I witnessed the closure of the J&B bottling plant in 1997. Instead of letting Diageo depart simply with warm words of regret and a cheque for the local community, I held its feet to the fire and established a task force, which I chaired, comprising local enterprise companies, local authorities, trade unions, local companies and the community, as well as Diageo.
Tying down that local public/private partnership was not without its difficulties, but in 2011 I departed, after 14 years as chair, of what has become known in the local area as Lomondgate. What is the audit of that? Four hundred and thirty jobs were lost by the J&B closure; at the end of 2013, the audited accounts showed that we now have 702 full-time equivalent jobs on that 40-acre site—that is 2% of West Dunbartonshire’s resident workforce. We have contributed £182 million gross value added regionally and £65 million nationally. The major achievements include: attracting the BBC to us as a production location for “River City”, which is Scotland’s equivalent of “EastEnders”; attracting Aggreko, a company that started almost in a back room in Dumbarton in the 1980s but is now a FTSE 100 company, with 400 jobs; and bringing in housing and leisure investment of more than £40 million, accompanied by capital investment of £62 million.
Independent economic forecasts estimate that, by 2019, there will be 1,971 gross full-time equivalent jobs accommodated on that site. That is a net cumulative regional gross value added of £510 million, plus £192 million contributed nationally. What does that mean in terms of public funding? Public funding for that project was less than £500,000, so the net return on investment is more than £1,000 for every £1 of public money. That is a tremendous outcome.
And what are the lessons? This would never have been achieved if it had been left at national level. The public/private partnership had to be locally devised and driven, and Diageo had to fulfil its community responsibility. If Westminster or Holyrood—or even the local authority—had been running it, they would have been too remote and that would not have happened. To end up with this successful outcome, day-to-day project management was needed to drive it. This is not just about satisfying local needs; it is about powering those with the ambition for their areas, and the skill sets to realise their potential. I conclude by saying that if we take the concept of subsidiarity to its natural conclusion, we will not end just with devolution to cities alone.
Lord Scriven (LD) (Maiden Speech)
My Lords, I rise before you today with a sense of pride—pride in the fact that I come from a very humble background: born in a council estate in Huddersfield, the son of a refuse collector and a hospital cleaner—but also with a sense of nervousness. As I look round the House at all the experience, the wisdom and the knowledge, I understand that in my five minutes I have to share some of my experience as leader of Sheffield City Council.
I thank noble Lords for the warm, generous and open welcome they have given me, for the advice they have given me, and for playing to my male vanity: never in the past 25 years have I been called “young man” so often as in the past two months. I thank them, too, for their advice on giving this, my maiden speech. I have been given two recurring themes: keep it short and sharp and keep it non-controversial. Those who know me know that I will struggle in the next four minutes, but I will do my best. I also want to thank all the staff who work diligently, quietly but effectively to make your Lordships’ House work so well, and I give my personal thanks to the doorkeepers.
I thank my noble friend Lord Shipley for introducing the debate. Why have I chosen this debate in which to make my maiden speech? I am steeped in localism and local government and I love my adopted home city of Sheffield, where I have lived for 18 years—a city that is green, open, welcoming, industrious and nonconformist. I suppose that is why I chose that city as my adopted home. As a former leader of Sheffield City Council, I understood that, in a global world, city areas are key to growth. The Royal Society of Arts points out that 62% of all economic growth across the world in the next 10 years will come from city areas. There are examples from across the world of cities such as Boston, Hamburg and Bilbao, which have been given powers and autonomy, reinventing themselves and growing. They all have greater powers, autonomy and financial control than city areas in the UK.
In the UK, our journey has just started, but there is further to go. I shall explain how Sheffield’s journey started and some of the things that we have done in the past couple of years. The debate on city area versus rural area or town area can become sterile. The real issue is not one of lines on maps or administrative boundaries but of where real businesses are located and of where real people travel to and from work: that is the economic area. Sheffield city region comprises areas as diverse as the Derbyshire Dales and the city of Sheffield, and political leaders drawn from the Liberal Democrat, Labour and Conservative Parties—even, initially, an English Democrat mayor—who understood that for our people and businesses to succeed we needed a certain skill set, infrastructure and plan to enable businesses to grow.
The area contains 1.8 million people, with an output of £28 billion per year. There are 700,000 jobs in the area and 47,000 businesses. It is our real economic area, not designed by a bureaucrat or by a line drawn on a map but by people who live, work and invest in that area. In the past four years, we have achieved a number of things. Thanks to my right honourable friend the Deputy Prime Minister, who happens to be the MP for Sheffield Hallam, through the city deal and the Local Growth Fund more than £500 million of public money has been handed back to the area to enable us to have autonomy and control. The key areas that have come up are skills, skills and skills, infrastructure, access to finance, transport and housing. We have used that money to make sure that local control, local decisions and local knowledge were used to design schemes such as the Sheffield city infrastructure fund, where more than £221 million of public money was put in one pot, leveraging in an extra £500 million to enable investment in 15 infrastructure schemes. A £130 million skills bank has been created to enable local employers to create a demand-led skills scheme, so that people are skilled up for existing jobs and jobs that will exist in the area in the future.
As time is short, I end by saying that, as I sit down, I do so with the sense of pride I felt as I stood up, but with fewer nerves, thanks to the gracious way that noble Lords have listened to my speech. I hope to play a full and active role in your Lordships’ House and promise to keep my future interventions short and sharp. However, I cannot promise that I will always be non-controversial or conformist. As the saying goes, “You can take the boy out of Sheffield, but you can’t take Sheffield out of the boy”.
The Lord Bishop of Sheffield
My Lords, I take this opportunity of formally welcoming the noble Lord, Lord Scriven, of Hunters Bar, to your Lordships’ House and I congratulate him on such an excellent maiden speech. It was my privilege to work with him in his time as leader of Sheffield City Council. He was and is held in great respect by the faith communities and many across the city and region. As he said, he is a native of West Yorkshire and, like me, was called to live in South Yorkshire. It will be apparent to many already that he brings significant experience of leadership of one of our major cities. I know that he will be an excellent advocate in this House for Sheffield and its region, and for the north of England in the years to come. I thank him for his short, sharp, non-controversial maiden speech and, in particular, for his emphasis on the reality of the city region and on collaboration across different perspectives. It was a speech so deeply steeped in local experience, yet with a truly international perspective.
I warmly welcome the debate. The economic flourishing of our cities and regions is key to the economic prosperity of our country, as so many have said. The city I know best, Sheffield, as you have already heard, is poised and well placed to take advantage of the new deal for cities. It has a long history of manufacturing and craft, particularly in the steel industry. There is a flourishing partnership between manufacturing, local government, the universities and the voluntary and faith sectors. The quality of life for many is high. The city has the highest retention rate of graduates of the two universities of any city in the country. Recently Sheffield City Council committed to the aspiration of becoming the fairest city in Britain—a reference not to its natural or physical beauty, as some would say it is that already, but to greater equality of wealth and opportunity into the future.
The question of economic leadership for cities is complex. The proposals made by the Government and others have, perhaps naturally, reflected a focus on the creation of unitary authorities and new kinds of city mayors. There is a paradox, it is thought, that most of the larger cities are seeking greater economic devolution but have turned down by referenda the possibility of mayoral systems. I believe that there is wisdom in the cities which declined to have a mayor, according to their local circumstance. Local democracy is a vital part of economic leadership. That leadership needs to be broadly based, using the gifts of all. That broad base is often better served in a medium-sized city through a council leader and cabinet model of leadership than through the creation of the new office of an elected mayor. New structures of government should not be a condition of greater investment or devolution of powers.
The strengthening of economic leadership for the future will rest in the long term on the widest ownership of the democratic process locally, which encourages local people to guide and lead their own communities. This in turn will stimulate the vital integration of skilled migrant and ethnic-minority communities in the life of the city. A new forum for engagement between civil society and the Muslim community began recently in South Yorkshire and is an excellent example of this.
Investment in transport and infrastructure is vital across the region. There needs to be excellent leadership in manufacturing, finance and chambers of commerce. The city region needs to be able to compete in global markets. Its ability to project a vibrant and positive image is enhanced through sporting connections, tourism and developing a global brand. We saw a brilliant illustration of this in Yorkshire earlier this year in Le Grand Départ, which has had a significant effect on the local economy and morale.
Sheffield Cathedral has recently celebrated its centenary, together with the centenary of the diocese I serve. This has been marked by a £3 million reordering of the medieval church to make it truly a place for all people and contributing to building confidence across the whole region.
Economic leadership for the long term depends to a high degree on investment in education and skills locally. Earlier this year, I made a visit to the Sheffield College, a fine example of a further education college which has reshaped its curriculum by listening to the needs of local industry. There is a specific focus on the needs of local manufacturing, the digital industry, tourism and sport. I hope that the present Government and the next Government and all parties will have the courage to continue to develop an ever stronger and more coherent vision for local democracy leading to the economic growth of the cities, working through parish, district and city councils, which can enable even more citizens to give of their time and skills for the flourishing of our great cities.
Lord Popat
My Lords, this is a time-limited debate, so when the clock shows five minutes, please sit down. That will give the Minister a chance to respond to this very important debate.
Lord True (Con)
My Lords, I declare an interest as leader of a London borough. I guess I am a sort of city dweller. I thank my noble friend Lord Shipley for introducing this important debate. We have heard two remarkable maiden speeches already from my noble friends and I am looking forward with confidence to a third one.
It is true that the road to the city across the centuries has been the road to the hope of a better and fuller life. We see that in waves of demographic movement even today in many a megalopolis in the developing world. Cities must be centres of new enterprise and we must encourage and cherish successful businesses and business leaders who we need to keep our cities great.
However, no city is immune from change. The greatest cities of England before 1700 were, after London, Norwich, Bristol, Newcastle, Exeter, York and Great Yarmouth, in that order. Of course we can regret past decline in places such as Lowestoft or Nottingham, which shaped my childhood. But for Lowestoft or Yarmouth you cannot put the herring or the gas back in the North Sea. In Nottingham you cannot reverse the war on tobacco, the fall of lace from fashion, the sourcing of textiles from the developing world, or the environmental movement’s successful felling of “king coal”.
History shows that cities cannot stand still in resentful nostalgia. Today they must diversify, embrace new technologies and invest in education and skills, as other noble Lords have said, working with employers, such as in the new enterprise and education campus we plan in our own authority. I welcome so much what the Government have done in assisting that through city deals, partnerships, educational reform, support for small business, infrastructure investment and much else. It is quite a long time since the Government took such a committed interest in our cities.
While I agree with much that other noble Lords, including my noble friend Lord Goddard, have said, I have some concerns. I share the views of the noble and right reverend Prelate on this. I do not share the rather faddish obsession with new statutory political structures in what seems, at times, a rather hasty response to the referendum in Scotland. I do not think the answer to city decline is more law about local government structures. Waste, churn, conflict and cost have followed almost every past statutory interference in local government structures.
I agree with my noble friend Lord Shipley that we need more joint working, co-operation and bottom-up partnership, but there are mechanisms already for that. We also need local flexibility and freedoms and not single institutional models pedalled in clever professorial lectures and imposed by statute. Each city must choose for itself, but it is ridiculous, for example, in my own city of Nottingham to say that it cannot solve its economic problems unless the suburb of West Bridgford is put under the same authority. If the fad for constitutional change leads to the submergence of the concerns of those who work in cities but live in small communities around them—and to governance without consent—then I would not board that band -wagon. I say yes to partnership and yes indeed to devolution, but with super-authorities I am not so sure. I hope that my noble friend on the Front Bench, who understands suburban communities very well, will make it clear that these will not be imposed—by our side, at least—whether by statute or by the effective blackmail of conditional resourcing.
I underline this issue for London. We already have a regional super-authority in London. The most slow-moving, bureaucratic and least accountable parts of London government are the Molochs of the GLA’s transport and planning departments. Co-operation and partnership work well across London and are developing further from boroughs upwards. It would be folly if, in a constitutional spasm, we were to identify more devolution with more central powers for a mayor, or sanction new governance that enables the piling of ever more taxation on already heavily taxed suburban communities.
In conclusion, I agree with the right reverend Prelate. There is a spiritual element, in the largest sense, to the conundrum of city revival. After all, cities were once identified by their cathedrals and enhanced by local philanthropy. People today are crying out for a sense of being rooted, with some idea of permanence and security. The spirit of place matters enormously in that. It is a great motivating force and a binding element. Whatever change we may contemplate in our cities and their surrounds, do not let us stifle that spirit of place, wherever it is found, or fail to hear the diverse voice of smaller communities.
Baroness Armstrong of Hill Top (Lab)
My Lords, this is a very timely debate. I welcome it enormously. I particularly welcome the fact that it comes from someone else from the north-east. The case for more economic opportunity for our cities is irrefutable. The intellectual case is there and has been made in different ways by people from different sides of the House already. I want to come at this in a very different way.
As many will know, I never represented a city in the other place. In fact, I live in a part of County Durham, which I think is an amazing place. I am very privileged to live there. I was born in Sunderland. We were always really proud that it was a bigger city than Newcastle. I say all of that because there are rivalries and issues around what we mean when we talk about cities here. We have to be very flexible around that. I want to talk about why we have not before now done what we have done and what that balance between the centre and the locality has to take account of in our country.
This debate is very important in the context of other important areas of debate in this country. One is the size and role of the state. There is a real argument to be had about that. The Chancellor has raised it; he is trying to tell us that he has not really raised it, but it is absolutely there: what sort of state do we want, where we do want power to lie and how are we going to develop that? We cannot sort that out today. I am a bit worried that the Government want to sort it out on the back of a fag packet before January, but there is a lot to think about and a lot to do about that.
The other issue is the one that we are being told will be sorted out on the back of a fag packet before January, which is devolution. Devolution is a huge challenge to us. It is a particularly huge challenge because we live in a very small country, where we see daily on our televisions and read in our newspapers what the world of the media thinks about what is going on in different places and comparing them. One of the great challenges for those of us who are committed to effective local government with new fundraising powers is what is described all the time as the postcode lottery rather than as an issue of democratic decision-making. I can tell noble Lords that that is what Governments run away from. When I was Local Government Minister between 1997 and 2001 we would agree to do a particular thing. For example, we agreed that the police would be given autonomy over how they spent their grant. The headlines after nine months were all about how many police were being taken off the beat. At the end of the year the Home Secretary said, “I’m going to ring-fence the money around numbers of policemen and not let them decide—they’re not going to spend it on policemen, they’re going to spend it on back-office stuff”. So we have the huge challenge of how we are seen as doing things. I do not see that as easy.
We live in a global world where the public have less and less confidence in what that global world means and how it affects their individual position and their community. They used to trust Governments and politicians to sort out for them what they needed, if you like, in order to live in their community in the way that they wanted to live. That trust has gone. We have to recreate the trust in different ways; we do, and local government does. Because we are a small country, we have problems in terms of the way in which the press and media report it. All the maiden speeches today, which I welcome, are from Liberal Democrat leaders who lost their seats after the election. That is the other thing that happens. When you get into Government, your local government base slowly starts to erode, and therefore the confidence of Government to give more powers to local government disappears as local government is then going to be running what they did.
I have lots more to say, but my time is up. We have to think of the broader things. Of course we want more economic power for local government, but how are we going to do it and how are we going to hold our nerve, particularly in devolving more financial powers?
Baroness Janke (LD) (Maiden Speech)
My Lords, it is a great privilege and honour to join your Lordships’ House. I stand today as a former leader of Bristol City Council, not as one who has lost her seat. I am still a councillor in Bristol and I stand here in the hope of sharing some of the ambitions and hopes for that great city with your Lordships in the debate today.
First, let me thank your Lordships for the warm welcome that I have received here. I include my supporters, the noble Baroness, Lady Maddock and the noble Lord, Lord Tope, who are not only parliamentarians but have long experience in local government. Secondly, I add my thanks for the advice, professionalism, kindness and good humour of the staff in this place. The doorkeepers have already been mentioned, but I, too, would like to add my thanks for the many times that they have rescued me from the labyrinthine corridors and staircases of this magnificent building. Who knows, I might not even be here today if it were not for their good advice on finding some of the best routes.
On my own background, I was born in Liverpool, which is a great and proud city. We have already heard in the debate about Liverpool and its achievements. I am a teacher and have taught in a variety of settings: primary, secondary and adult. I have taught modern languages, including English as a second language, and economics. I have also taught in a number of different locations, in London, Paris, the west coast of Scotland and Bristol. In addition, I have served as a councillor in the London borough of Kingston upon Thames and of course Bristol. It is a great privilege, in a debate on cities in this House, to be able to talk about Bristol in the week of the 150th anniversary of the Clifton Suspension Bridge.
Bristol is a city of innovation and technical excellence: whether we talk about the suspension bridge, Concorde, Airbus or Wallace and Gromit, it is testimony to the high concentration of technical expertise, which is underpinned by two world-class universities. Bristol is the most economically successful city in England, with the exception of London. Bristol is also the European Green Capital and a place where many of the new green industries and organisations choose to have their base and headquarters; it is a very green city.
So it is with great pride that I wish to speak in this debate. Yet, coming even from a successful city like Bristol, the question is constantly being asked: why cannot cities take their own decisions, invest in infrastructure, invest in housing, and invest in the growth that is really going to address the needs of their people? As my noble friend Lord Shipley has said, the IPPR report really outlines the case for economic improvement in performance in English cities. They have lagged behind the average GDP per capita. Only Bristol has bucked the trends. This, of course, is in stark contrast to other cities in Germany, Italy, Sweden and France, which are at the forefront of economic growth and have outperformed even capital cities.
The report of the City Growth Commission recommends a range of powers that could be devolved to what are called “metro areas”; and I agree with what has been said today: there should be no tight imposition on what those boundaries should be. However, there is a recommendation about financial flexibility and this, as other speakers have said, is the key to giving powers, whether it is to our regions, county regions, city regions or whatever configurations emerge. The London Finance Commission and the Communities and Local Government Select Committee have outlined ways in which revenue and taxes could be raised at local level and add to the rates of economic performance of our cities or city regions.
In conclusion, the many reports of such groups as Core Cities, the Centre for Cities and the City Growth Commission and others that have been mentioned provide ample evidence to support major change. As I have said already, it is important that new configurations, whether they are federations of existing local authorities, county regions or city regions, should be voluntary and locally inspired. One size will not fit all. The ambitious and visionary proposals that are coming forward from all parts of the country are a huge encouragement and are opportunities that we must seize. I hope that the constitutional debate will give us the opportunity to move forward on these major issues. I thank my noble friend Lord Shipley for raising the debate, and I thank noble Lords for their attention.
Lord Monks (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Janke. She has just made an excellent start to her House of Lords career, as indeed have our other two debutants today—if one can refer to the noble Lords, Lord Goddard and Lord Scriven, as debutants on these occasions. As part of her background, the noble Baroness described her great wealth of local government experience that she brings from just about every corner of the country. That will make an enriching contribution to the work of this House as we proceed on this important issue of devolution within England. She remains a member of Bristol City Council, and first-line experience will therefore be brought to our deliberations. We look forward to many more well informed contributions from her in the years to come.
Our great cities, which boomed in the 19th century, had a lousy 20th century. There were two world wars, a prolonged depression in the 1920s and 1930s, and even in the post-war recovery, much of the rebuilding was shabby and ugly—and industrial decline set in. Very few new industries emerged in that period. Then there was the collapse—in some cases the partial collapse —of many of the cities’ staple industries in the 1980s. The result was some of the worst city centres in Europe outside the Soviet bloc. One had only to go to, say, Rotterdam or Hamburg—industrial cites both—to see the graphic differences.
In the 1990s, the cities began to improve—quickly in some places, more slowly in others. As has been said by the noble Lord, Lord Shipley, and my noble friend Lord McKenzie, the noble Lord, Lord Heseltine, deserves a mention in despatches for his contribution on Docklands, Liverpool, Manchester after the bomb, and now Hull. What a record that is. A new spirit began to emerge; remember Glasgow’s “Miles Better”, and Manchester’s impressive but perhaps improbable bid to host the Olympic Games? At least it stirred London into action.
In the more benign economic conditions that followed after 1993, big improvements became evident. Substantial public expenditure was a significant factor, enabling public/private deals on property; a retail and entertainment boom; expanding universities; and inward migration flows for the first time in a long time began to play a big part. Since the financial crisis of 2008-09, the cities have shown significant resilience in the face of the pressures: perhaps the pressure was greater in the smaller towns surrounding the newer city centres.
However, as the noble Lord, Lord Shipley said, the core cities underperformed the national average on GDP per head. There are still large areas of deprivation where poverty is all too evident and there is a shortage of solid private sector activity aside from discount stores, fast food outlets and betting shops. All the main parties are persuaded that devolution will help, spurred on by Scotland and perhaps by what has happened in London. City deals offer new opportunities for these cities to make further progress, with the Manchester city region setting the pace. I welcome these moves: they are overdue and I hope they can be widened. For example, Exeter is a city that I know, and it is beginning to do quite well. It needs to get help, encouragement and recognition for its contribution.
However, the condition of a lot of these cities remains fragile. The core cities are still heavily dependent on public expenditure, not just the local authority but the hospitals and universities as well. After the Autumn Statement, if we are going back to a state that is the same size as it was in the 1930s, what kind of guarantees and assurances can the Government provide that devolution will not be a devolution of responsibility with a big shortage of resources?
Lord Wei (Con)
My Lords, I, too, thank the noble Lord, Lord Shipley, for taking a lead and introducing this debate. I congratulate the noble Lords, Lord Goddard and Lord Scriven, and the noble Baroness, Lady Janke, and on their fine maiden speeches. I declare an interest as a non-executive director of the Manchester-China Forum.
In the limited time we all have, I want to echo other speakers today in setting out and agreeing with the historic case for city regions to have greater leadership and responsibility in running their own economic affairs. Indeed, in my view, Britain became great largely because of the rise of its modern industrial towns and cities and their ability to project and trade in and with the world. After a century or more of centralisation, events at home and abroad are giving rise to the rebirth of the city cluster as the premier organising force and source of growth in the world today.
I have witnessed this at home in and around Shoreditch, one of the fastest growing and most creative places now in the world. I have witnessed this first hand in my travels to places like China, which have been built on strong cities with a degree of fiscal devolution and talented city governance. I have also witnessed this over the last few years in the Greater Manchester area, where I produced a report on the potential of the city region, and others like it, to do more together to attract and support two-way trade and engage with international investors. There is no doubt in my mind, in light of the success of the model built in Manchester, London, and elsewhere, that providing greater autonomy to city regions to oversee their own economic development and inward investment can enable us as a country to engage more with the world and grow our economy overall.
Of course, there is always more we can do to spread this model of strong, internationally engaged cities and to encourage co-operation between our many metros to attract firms and investment. We could do a lot more to harness local diasporas, which could provide great connectivity with the world, including many international students who now study in most of our great cities and should be encouraged to help us connect even more with other cities around the world to help our businesses find new markets and create local jobs.
Beyond this direct model of enabling economic autonomy within city regions for trade, and other ideas such as granting tax-raising powers—already mentioned by others in this debate—there would be a positive impact on the social economy as well from greater fiscal and political devolution to city leaders, which would spur enhanced levels of social innovation and ultimately social venturing.
In our media-dominated age, it has become increasingly difficult to get new, big ideas birthed at the centre—I know that, having been involved in one or two—and then tested and piloted from within the Whitehall industrial complex. City regions, which by necessity will have to do more with less, need to innovate and pool their own resources, and try out new ideas and solutions that fit local needs and have the potential to improve the state of the nation as a whole. In this light, I welcome the use of city deals, most notably that recently agreed with Greater Manchester, which seek to reward a city region’s ability to deliver matched investment, growth and efficiency through joined-up and innovative approaches, such as the earn-back scheme.
In the model of cities competing and at times collaborating to develop new social economy solutions to thorny social problems, Whitehall ideally ceases to be the monopoly provider and commissioner of policy and practice. Instead, it will curate and learn, highlight and spread best practice, rather than seek to dictate its practices dogmatically. It should focus more on foreign policy, more nuanced immigration control, defence and the reduction of monopolies and oligarchies so that consumers and workers alike can get a better deal.
Devolving greater powers to cities economically is not a total panacea and there will be risks. Over the years, voters have shown a wariness of local kingpins who might go AWOL if given too much power, so the centre and others will need to play a role in fostering broad-based local leadership and utilising emergency powers if corruption or incompetence threaten to undermine a city region—as we have seen perhaps in Tower Hamlets. An independent process that would trigger such interventions will be needed to avoid undue central interference.
Alongside this there is a risk that having different tax levels and other policies across the country might make doing business more complex and costly, although both the Americans and Chinese seem to have found ways of coping with this. These risks, though, are worth running, because unless we do something, the current unsustainable economic inequalities and the political instability that they engender will continue. It is time to incentivise city regions to have greater powers. Finally, I would be interested to learn from the Minister what the centre is thinking of doing and how it will reshape itself as more powers are transferred to city regions over the years.
Lord Wallace of Saltaire (LD)
My Lords, this is a timed debate. I note the wealth of experience and expertise on this fascinating subject. However, we are now almost five minutes behind where we should be. If noble Lords make sure that they finish when four minutes is still being shown on the Clock, that will allow the Minister time to speak at the end.
Baroness Hollis of Heigham (Lab)
My Lords, as a councillor in the late 1960s, I helped woo a major company to Norwich with a package of site, planning consent, key worker housing, roads and training. Sedgwick became the second largest reinsurance company in the world. Some 15 years later, another major financial company wished to relocate in order to expand. I tried hard. I offered a site, housing and TLC, but highways and planning consent were for the county. The company did not want the hassle of negotiating with two very different authorities, so it walked. I lost 600 good jobs for Norwich and for Norfolk. What was the difference? It was the disastrous 1974 local government reorganisation, with its alpha male obsession with size. Despite our cathedrals, university, research parks, international airport and 600 years of unitary status, Norwich became a district council, the largest in the country, and larger than a dozen or so unitary authorities.
Today, we are still the regional capital of East Anglia, providing half of Norfolk’s jobs—and half of those jobs are in knowledge-intensive industries—as well as most of the leisure, retail and media services for Norfolk, Suffolk and Cambridgeshire. Our economic multiplier effect stretches far beyond our formal functions. Like other mid-sized cities, we think that we are focused, energetic, fast, innovative and entrepreneurial. We strive to do all this within the constricted boundaries, functions and revenues of a district council. We are fettered, and yet we are the key city of East Anglia.
This debate from the noble Lord, Lord Shipley, is superbly timed. Cities drive our economy. They are where things happen, but that potential is not limited to the great core cities. Mid-sized cities like Norwich and Luton are also key. They contribute £162 billion to the national economy alongside the £173 billion of the eight core cities. Some have a manufacturing or maritime identity, such as Coventry and Plymouth. Some share interdependent economies, such as Southampton and Portsmouth. Yet others are self-contained, travel-to-work centres like Norwich and Sunderland. All of us are driving growth and turning around the life chances of the deprived, the ill educated, the ill housed and the overlooked.
What do mid-sized cities such as ours need to grow our local economies? It is, of course, unitary status, as do Cambridge and Oxford, if we are to fulfil our potential to transform our knowledge economy into knowledge jobs. Who, in the recent Pfizer bid for Astra-Zeneca, spoke for Cambridge? Nobody. Combined authorities really work only where there are shared goals. Despite this, Norwich has formed a Greater Norwich Growth Board, a partnership that will drive forward our city deal to spin off new businesses from our research park, plan our wider growth programmes for 13,000 more jobs and 3,000 more homes, and attract the £2.5 billion private sector investment we need.
Over and beyond unitary status, we need additional economic powers and flexibilities, which have already been cited in this debate. First, we should localise the ineffective government Work Programme. Secondly, we need commissioning powers for the wider public services, irrespective of elected mayors, to work with the private sector and public agencies. Thirdly, all publicly held land within a city should be brought into a single property board to make the best use of development sites. Fourthly, on finance, ring-fenced funding should be removed in order to encourage new funding models, along with funding for five years for greater stability. I could go on.
Above all, we need a culture change within Whitehall and at Westminster. They need to understand that local government is about local difference, so they should respect our sense of place and encourage diverse structures, as the noble Lord, Lord True, said. They should stop being hung up on size and stop trying to impose on us the macho model of elected mayors. As a leader, I could do everything a mayor does, and consensually. Trust us: we are better at doing most of this than central government. Finally, that utterly insulting phrase, “earned autonomy”, should be banished from the Westminster and Whitehall mindset. My Lords, I wish.
Lord Graham of Edmonton (Lab)
My Lords, it is a joy and a pleasure to take part in this debate. I congratulate the noble Lord, Lord Shipley, on giving us the opportunity to talk about these issues. He and I share a pride in Newcastle, of course, and in particular in Newcastle United. My mind goes back to the 1920s, when I was born. One never loses the link with where one was born. You follow the history and activities of your area over the years.
I also want to congratulate the staff of the Library on producing the document for today’s debate. Quite frankly, over the 30 years that I have been in this House, I have had to call upon the service of the Library many times. It has always been good, but I cannot recall such a comprehensive and helpful document as the one for this debate. The name attached to it is Russell Taylor, who compiled it. I just want to say that we are all indebted to him.
I was the leader of the London Borough of Enfield in the 1960s. When the reorganisation of local government took place, we finally had Southgate, Edmonton and Enfield. Edmonton was solidly Labour, Southgate was solidly Conservative—although they called themselves ratepayers—and Enfield was sometimes Labour and sometimes Conservative. One of the lessons I learnt was this. When you are trying to weld together a common purpose, you have got to be prepared to give as well as to take. It is not easy. What was reinforced for me at the time was how much pride there is in territory. We wanted to get Edmonton and Enfield in with Tottenham, along with the Lee Valley Regional Park, but we did not get it. However, I am very pleased to say that, 50 years later, that has been taken care of.
The other thing that I want to emphasise is that there are problems with an amalgamation of any kind. The House knows of my background with the co-operative movement. In Tyneside in the 1960s, 31 separate co-operative societies were brought together—at that time, by the way, there were 1,000 individual Co-ops in the country and now there are fewer than 20. All amalgamated by agreement, but it has not been easy. In my view, one has to keep in mind the sensitivity of people who patently are seen publicly as having lost out on the argument. People do not forget that they have lost out and they wait for the opportunity to get back at the other people.
In London in the 1980s, a reorganisation took place, and at that time the structures that we are talking about now were regional authorities. It was an attempt by the then Government to try to co-ordinate what was going on. What happened, of course, was that the Labour GLC became very Bolshy. It used to have great posters, which you could see across the river from here, simply pointing out the number of people who were unemployed in the London area. That irritated Mrs Thatcher so much that she decided that when her time came—and it did—she would abolish not just the Labour GLC but all the other economic entities.
I make no complaint—I am watching the clock and I will sit down before it gets to the number five because, as a former Chief Whip, I know my place in this House. All I want to say is that I wish those who are going to make the decisions well. Having already committed myself to sit down, I will not drop any other pearls of wisdom. Thank you.
Baroness Mobarik (Con)
My Lords, the subject of this debate, enabling economic leadership in cities, can be interpreted in a number of ways, but the aim is clearly a constructive discussion on how we encourage economic activity in our cities and give people the tools, the skills and the space to flourish. With ever more people moving to cities, it is clear that our economic future is dependent on these urban centres. As we well know, where you have a critical mass of people, there is a growth in creativity and economic activity; thus cities should be nurtured. I think it is precisely this sentiment which is the driver behind the city deals agenda currently being implemented. The drive towards localisation, and the understanding that local communities themselves best understand what they need for economic growth, is a really positive and ambitious step.
Twenty-six city deals have been announced and each of these has its own unique formula or mix of priorities in deciding how to spend funds and create an environment for growth. In the limited time available to me, I shall make a few points on my own city of Glasgow and on the £1.2 billion Glasgow and Clyde Valley city deal. It is hoped that this will create 29,000 jobs over the next 20 years and unlock a further £3.3 billion of private investment across the city region. The proposals as to how this money will be used are available for those interested. Up to 20 major infrastructure projects across the city region, including rail and road, have been proposed. Among several employment schemes there is a £9 million scheme proposed that will work with more than 4,000 vulnerable and unemployed residents currently in receipt of employment benefit, along with life science research and medical technology projects. This is an exciting time for the city.
For this strategy to be the kind of success that we would wish for, true leadership and vision are required to make the most of it. This is an opportunity for generations to come and should not be squandered. First and foremost, there has to be complete transparency in implementing these projects. A fair chance must be given to the SME community to benefit from contracts, as ultimately they are the real drivers for future economic and job growth. Part of our consideration has to be about public procurement so that some of the benefits of this injection of public funding filter down to SMEs. A lot of thinking and discussion has taken place in Scotland on the subject of public procurement—certainly, as far as my own involvement is concerned— for the past decade and a half,—but I know for a fact that it goes much further back than that. We are sadly still far from the ideal situation of a fair bite of the cherry for SMEs, but perhaps that discussion is for another time.
I would suggest that we offer affordable space in the heart of the city for small-scale manufacturers such as weavers, potters and all manner of artisans. When do young people see someone making something with their hands and then selling it for a profit? These are basic principles to encourage enterprise and at the same time bring back vibrancy, creativity and industry to the city centre. I would add that along with affordable industrial and commercial space must come better public transport and affordable, accessible parking. In Glasgow, those at the helm of the revival of the city have to take into consideration the current prohibitive access to the city by their draconian use of parking meters and other road regulations. According to a BBC report on 2 September 2014, Glasgow city imposed £3.2 million of bus lane fines in 2013, one of the highest figures in the UK. I refuse to believe that there were so many people in Glasgow deliberately breaking the law.
I would suggest that, when we come to implement these major projects, true leadership means talking to ordinary people in the street—the workers and the small businesses. We have become too accustomed to dancing to the tune of interest and lobby groups. While there is most definitely a place for these groups as experts on many social and environmental issues, there is also something to be said for speaking to those who simply work, live and breathe in the city.
I am grateful to the noble Lord, Lord Shipley, for securing this debate and I congratulate the Government on the city deals initiative. I am confident that true leadership at the local level will bring rich rewards to our cities and communities.
Lord Whitty (Lab)
My Lords, I find myself in this House agreeing with the noble Lord, Lord Shipley, far too often, to the consternation of my friends in the north-east, and I am very glad that he initiated this debate. I also find myself slightly out of place in that I have only ever lived in either London or the English countryside and my football team is Millwall. Nevertheless, I have developed a great love for the English cities, although over most of my lifetime there has been a sad relative decline of those cities, as my noble friend Lord Monks said. That has turned around a little in recent years, and the city centres certainly look a lot better than they did 20 years ago, but there is still much deprivation, dereliction and lack of economic activity.
We need to emulate in our key cities the performance of European cities and the performance of our own cities back in Victorian times. Relative to the national economy, they should be leaders, whereas at the moment many of them are followers. To do that, I commend the reports of my noble friend Lord Adonis and the noble Lord, Lord Heseltine, who has been praised much in his absence.
That sometimes requires bringing together a city region rather than observing the local boundaries, such as they are at the moment. Issues of transport, planning, housing, skills, employment, training and regeneration require crossing what are very tight boundaries within our urban areas. In my own area of housing, you need a wider area of approach than current city boundaries allow. This can be done. You can create combined authorities and co-operating councils without necessarily unravelling the whole of English local government; you can do so without recreating regional structures or metropolitan counties; you can do so without requiring a mayor in each of these areas; and you can do so without any net increase in central government spending.
But it will work effectively only if those combined authorities are supported by the local authorities within their area, and by business within their area, and—more importantly perhaps—only if the Treasury is prepared to let go of a lot of things, including the expenditure identified in the various reports and control of business rates. Not only the Treasury but all Whitehall departments have to eschew their ring-fencing, their requirements, their stipulations, their minimum standards and so forth. It is not only the political and administrative apparatus; the media and the public at large need to get rid of their obsession about the postcode lottery, because there will be different solutions in different parts of the country and quite rightly so. That is what local democracy is about.
More specifically, we have to allow the new city regions and local government generally, contrary to existing Treasury rules, access to borrowing powers so that they can genuinely invest in housing and infrastructure in their own areas. It means a genuine absence of strings on block grants and it means that there are at least some discretionary powers of local taxation. That is what happens in all those European cities we are seeking to emulate.
We must also recognise that partly because of the dominance of London and the south-east in our whole structure, any move to city regions will require a significant redistributive process from the centre. London has twice the level of value added per head even than Manchester. That means some serious redistribution will still be needed. The recognition of the dominance of London means that the strategy within which we are attempting to recreate our cities also has to do something about the overheating of London and the south-east. As my noble friend Lady Hollis said, it also has to do something about the other parts of England. I would add Exeter to her list of areas that require unitary status. Unless we do something for the shires and the small towns of England, the cities will not prosper. We need a balanced approach.
This debate is about economics and devolution of democratic powers. But the terminology of devolution is going to undermine the importance of this debate. This is not the same as legislative and political devolution to Scotland and Wales, and the constitutional arguments should not be mixed up with the arguments about economic autonomy.
Lord Borwick (Con)
My Lords, I declare an interest in the register that my wife is the statutory Deputy Mayor of London and a local councillor in London. So I welcome this debate, and thank the noble Lord, Lord Shipley, as I know first-hand that great cities need great economic leadership.
I find it particularly interesting to debate this issue here in the House of Lords, where cities are perhaps underrepresented relative to the countryside. This is partly because of our age profile, as young people go to cities. But the truth is that the cost of houses means that many noble Lords cannot live in London. Indeed, the cost of living in cities is generally higher than outside them, partly because of higher housing costs. For that reason, the London living wage is higher than the minimum wage.
The Government’s emphasis is on building new garden cities; one to be built in Bicester was announced recently. I declare another interest in a property company building homes there. Garden cities will certainly have less air pollution than bigger city centres, where levels of dangerous PM2.5 particles are much higher. Perhaps we can give the Green Party some credit for helping us to focus on building new towns that will be cleaner and greener.
A city is only as good as its people and we have to ensure that the younger generations are capable of economic leadership so that our great cities compete globally. That is why I am so happy about the work being done to improve economic and business competence among young people. I have been very impressed by a fantastic charity called Young Enterprise, which does exactly that. It operates in nearly half the schools in the entire country, teaching children to operate small businesses. That is exciting because more young people should be encouraged to go out and get some real experience, take some risks and see how far their new ideas go. That way, we will be bringing through a much bigger and more talented group of people, with knowledge of economic leadership.
There are reasons why we are not yet seeing enough young people coming through with the right leadership skills. They should experience leadership in school. But between supply teachers, a lack of autonomy for good teachers, a wide variety of first languages and large class sizes, children do not get the leadership they need. It is extraordinarily difficult for a teacher to both teach the material and inspire the students. This is something that people just do not talk about enough.
We know that cities work well. They make people more efficient. As they get more efficient, they become more prosperous. Will cities become the new heartlands of Conservative voters? But what is a city? Could a whole group of people and businesses in the countryside connected to the internet operate as efficiently as a city—but without the traffic jams and bad air pollution that we suffer from in cities?
We know how important cities are for a nation’s economic growth. In the UK, cities occupy 9% of the land but provide 61% of the output. But do we need different economic leadership in each of our cities? If economic leadership means inspiring young people to contribute to the economy, I am thoroughly in favour of it. If it means the ability to come up with new taxes, I am against it. The most valuable economic leadership comes from the family. No economic leadership from any city could ever compete with taxpayers deciding what to do with their own money.
Lord Snape (Lab)
My Lords, first, I congratulate the three maiden speakers from the Liberal Benches on their contributions. I look forward to hearing from all three of them in future. I particularly single out—I hope without upsetting the other two—the contribution of the noble Lord, Lord Goddard of Stockport. As some noble Lords know, Stockport is my home town. It is traditional never to criticise a maiden speech and I hope the noble Lord will not think that I am breaking that tradition when I say, as a former chairman of Stockport County Football Club, that his espousal of the cause of Manchester City will not be universally satisfactory in the town itself.
In the short time open to me, I wish to make just two points. My first is to express concern, not about the motives behind the debate today—I congratulate the noble Lord, Lord Shipley, on the fluent way in which he moved it—but I have never believed that devolving power without resources is a sensible way to run things. We have been here before. It was a Conservative Government who created the metropolitan county councils, as my noble friend Lord Graham reminded us. Of course, that was partly out of a political motive as the Conservative Party could not win the big cities at that time and thought that by extending the electorate and taking in the suburbs it might be able to do so. When that proved to be fruitless, it promptly abolished the metropolitan county councils using the excuse of the abolition of the GLC. The previous Labour Government decided that some of the powers we are discussing today could perhaps be administered by the regional development authorities. The incoming coalition Government abolished the RDAs and replaced them partly with the LEPs—in my view a totally undemocratic group; women make up far less than 50% of the membership and as far as I am aware there are no women at all in the West Midlands LEP. There is nothing particularly democratic about that.
My second point is about resources. As I have indicated, if there is no money to do these things, there is no point creating a structure to do them. I was struck by the contribution from the noble Lord, Lord True. Like him, I am rather against Whitehall and Westminster dabbling in local government. I was a councillor during the passage of the Local Government Act 1972 referred to by my noble friend Lady Hollis. If the electors had felt differently, I might have been a member of Stockport Metropolitan Borough Council before the noble Lord, Lord Goddard, but democracy prevailed and my candidacy was rejected. But I do not feel that the structures set up by the 1972 Act were necessarily more efficient, democratic or fiscally responsible than the authorities that they replaced. I remain to be convinced that the devolution of powers that is behind this debate will work without adequate financing.
It is traditional in your Lordships’ House not to get too involved in politics, although what we in the other place called the Front Bench below the Gangway on the Government’s side is pretty adept at it when it comes to attacking my own party. This Government have waged a fiscal war against local government, and they show no signs of relenting. In the West Midlands, I am not alone in expressing my concern that the Chancellor of the Exchequer says that in future greater Birmingham—a greater Birmingham authority or a greater Birmingham structure—will have an elected mayor. I remind your Lordships that it is less than three years since the citizens of Birmingham, including me, voted not to have an elected mayor. Flouting democracy in that way is something that we ought to regret in this House. I see the Whip and I will sit down in a moment. I voted on the wrong side: I voted for an elected mayor. The fact is that, according to the LGA, by the end of this Parliament the real-terms reduction in government funding to the city of Birmingham will be 41.5%. In the borough of Sandwell, where my former constituency lies, it is 39%. These freedoms—the freedoms spoken about in this debate—are valueless without adequate and proper funding, and that is not what we will get under a Conservative/Liberal Democrat Administration.
Lord Teverson (LD)
My Lords, I also congratulate my three city and urban colleagues on their maiden speeches. Certainly if I ever thought of looking back at my own, I am never going to again, given their erudite speeches.
It was not seen—or not noticed—much this week, but an OECD report came out which talked about inequality of incomes nationwide across all OECD club members—the developed nations. It pointed out very strongly, perhaps controversially, that the greater the income inequality within an economy, it forgoes economic growth over that period and thereafter. It calculated that in the UK over 1990 to 2010, we lost some 10% of growth because of inequality.
If this is controversial in terms of population incomes, I guess it is not in terms of regional disparity. It is quite obvious that where we do not have economies fully functioning within our nation state, we are losing economic output, incomes and jobs and creating unemployment. In the short time I have in this debate, I want to talk not about the metropolitan areas but about that other 91% of our land mass: the non-metropolitan and rural areas. These include important cities like Norwich and Exeter—its economy is vibrant at the moment. It is perhaps important to realise that those non-metropolitan areas provide some 56% of England’s economic output. That leaves only 44% for the metropolitan areas, but four-10ths of that is London. That illustrates what a great issue this is. I do not dispute it at all in terms of other non-London metropolitan areas, particularly the northern challenge.
It is really important that rural areas and non-metropolitan areas stay very much on the agenda in terms of this wish and momentum towards devolution, which I welcome strongly. Non-metropolitan rural areas have specific problems that maybe metropolitan areas do not have; transport, getting to work, access to services —particularly in rural areas—the digital divide and, in particular, affordable housing. Apart from those specific areas, there are a lot of similarities. That is why the solution towards devolved government is equally important in that part of our kingdom as it is in metropolitan areas. It is quite clear that cities such as Manchester have the capability for devolution to take place. I welcome that they are ahead and moving forward. But I believe strongly that, after those initial larger metropolitan areas, rural areas and shires are equally able and competent fiscally, in terms of their administrations and in their strength of culture and identity, to move forward on this agenda as well. I give the example of Cornwall where I live. We already have a unitary authority—a competent and very successful administration that is able to move this forward.
In the last few seconds of my speech, I ask the Minister whether she will guarantee that there will be no discrimination between metropolitan and non-metropolitan and rural areas, and that there will be a road map for such local authorities and areas. It is quite clear that we ignore non-metropolitan areas at our peril. They should not be an afterthought. They have a great role to play in the economic future of this country.
Lord Hunt of Chesterton (Lab)
My Lords, I welcome the debate of the noble Lord, Lord Shipley—and indeed the arrival of his new colleagues on the Lib Dem Benches. But I was surprised, from his opening remarks, to hear that somehow the clocks started in 2010. In 2010, as you will recall, the Lib Dems did not demur from the coalition Government’s reduction, or taking away, of the regional economic organisations. This of course is another example of stop-go—and now we are going again with more funding and providing more impetus to these areas.
It is, however, excellent that the House of Lords is debating the issues of urban areas. We had a discussion on planning a month or so ago. I believe it would be advisable for the House of Lords to have a Select Committee to review all the relevant aspects of the development of urban areas. There has been a circular note from the Chairman of Committees, the noble Lord, Lord Sewel—and if noble Lords are minded like me that this should be a very topical and appropriate area for the House of Lords, I ask them to write in with their views, as I am doing. If they would like to copy me in with what they say, I would be very pleased.
Another important feature of this discussion is that the Government Office for Science has been producing documents. Maybe these have the statistics that have been referred to. For example, in August it produced The Evolving Economic Performance of UK Cities: City Growth Patterns 1981-2011. There are interesting and surprising results in it. There are statistics of employment, population, output and productivity. The biggest qualitative change seems to have been in small and medium-sized cities, and these seem to be the ones most successful in employment, health, environment and output. The largest cities have either grown, like London, or have, as it were, reduced in northern areas —northern cities—as mentioned by the noble Lord, Lord Shipley.
Whether or not they are growing or not, there seems to have been a significant growth in inequality in these large cities—also inequality in health. Indeed, Sir Michael Marmot has pointed out that the mortality for males between one part of London and another may be affected by as much as 20 years. In fact—this might have been raised earlier—as Jonathan Glancey wrote in his powerful essay in the book on London’s environment, the morality of London is more like that of piracy than civic duty. I applaud Sheffield for remarking that this is an important area which cities should think about.
Over the past 20 years in the medium-sized cities mostly in southern England—Telford, for example, is counted in the north in these statistics—there has been a substantial rise in population and in output. For example, the economics of these areas has been associated with services, commerce and retail. But a clutch of northern cities have experienced a much lower population growth and output growth, as the noble Lord, Lord Shipley, explained.
The surprising result of these government reports is the question of whether high-tech cities are the future. Surprisingly, it shows that in the high-tech Meccas of Oxford and Cambridge, where Nobel prizes abound, the average income and growth rate have in fact not been very impressive. The argument given is that a lot of these people work in the public sector and, as noble Lords all know, if you work in the public sector you have pretty low pay. The cities that are in fact growing fastest in population and productivity in income are those such as Milton Keynes and Crawley.
The other feature of these high-tech cities—I have some experience in this area, having been a city councillor in Cambridge and set up a company—is that quite a few companies have been set up and then all sorts of takeovers have occurred. Very few significant companies have grown, so it is very far from the Silicon Valley phenomenon. ARM is of course a great company in Cambridge, as is Oxford Instruments in Oxford. In fact, if you are involved in running a company in Cambridge you will get endless e-mails from people in London saying, “Can I invest in your company?”. However, you know that it is a trap; they want to raise the value of the company and then sell it off. It is all a kind of gambling operation as opposed to a long-term investment using companies to develop services and products. The word “start-up” in the English language now almost means a company that is on a path to making a lot of money for someone who then sells it off.
Lord Hunt of Chesterton
The other important feature of the cities is that we have not yet developed enough of the citywide companies, such as those in France, that are developing cities around the world.
Lord Adonis (Lab)
My Lords, I congratulate the noble Lords, Lord Goddard and Lord Scriven, and the noble Baroness, Lady Janke, on their excellent maiden speeches. They add lustre to the distinguished group of former and current leaders of local authorities in the House who play such a big part in our debates, and who will promote even more forcibly in future the cause of cities in our deliberations.
I note that the past or current leaders of Newcastle, Bristol, Luton, Sheffield, Bradford, Norwich, Cambridge, Stockport and Sutton have all spoken. Indeed, Sheffield has been doubly blessed by having both its Lords spiritual and Lords temporal taking part in our debates. As the noble Lord, Lord True, noted, the spiritual dimension to our cities—of course, the definition of a city historically is a place with a cathedral—is an important part of their life and vibrancy. One might also add sport—most football teams are city-based; I have nothing against cricket but it is very notable that football has had a great revival in the past 20 years—and universities and places of learning, which are predominantly based in cities.
The Library Note that my noble friend Lord Graham referred to as excellent says that although cities account for only 9% of land use, they account for 54% of the population, 59% of the country’s jobs, 61% of output, 73% of highly skilled jobs and 60% of new businesses. However, I hope that we are not going to see in future, as we have not seen in this debate, a pitting of the rural against the city. As many noble Lords emphasised, without strong cities we would not have strong rural areas. We need to see regional growth—cities and their hinterlands working together and forging much stronger partnerships together in future. As my noble friend Lady Hollis said, cities drive growth, in neighbouring areas as much as in the city regions. We need to ensure much stronger collaboration in future between the urban areas, the suburban areas and the rural areas—which, to be frank, have too often in the past seen their interests as being in conflict. If we are to have a successful economy and society in future, they need to align their interests much more strongly than has sometimes been the case.
The noble Lord, Lord Shipley, in his excellent introduction to this debate—I pay tribute to the work that he has done with the Deputy Prime Minister and others on city deals—said that what we are about is emphatically not forging independent city states but enabling cities to grow faster and bring wider benefits to their wider regions. I entirely endorse that approach, just as I very much endorse the words of the noble Lord, Lord True, that the last thing we want to see is a repeat of the great error of the 1960s and 70s—my noble friend Lady Hollis referred to this—which was the belief that endless local government reorganisation itself would produce better-run cities and more growth. We need to see more collaboration between authorities, but not an endless redrawing of boundaries. Indeed, we are just about to celebrate the 50th anniversary of the London boroughs; the last thing that we need to see is more navel-gazing and redrawing of lines on maps.
As many noble Lords said, though, although there is great potential in our cities, unless that potential is realised we face a bleak future. The challenges are enormous. We went through the middle period of the 20th century with almost all our cities in decline, in terms of their ability to sustain jobs but also in terms of the quality of their cityscapes and, for the most part, their city institutions. There was also some spiritual decline that went with that, in the sense of a great loss of faith in the capacity of cities to regenerate themselves and to be a driver of growth and enterprise in the way that they had been in the Victorian period.
My noble friend Lord Monks put it well when he said that although there has been some revival—he referred to the revival of many city centres—it is, as he put it, still very fragile in many areas. In too many cities the city centre has been rebuilt but, if you go just a mile or two outside it, you still have council estates that are in a poor state with very high levels of unemployment. There are many areas of great wealth in most of our cities but, cheek by jowl, some of the very poorest areas of our country are located there, too.
In reviving cities—I put London fairly and squarely in that camp, alongside Manchester; they are two of our greatest success stories—the challenges of growth are as great in many respects as the challenges of decline. Our growing cities have a huge problem of a shortage of housing and weak infrastructure, and transport systems that have been underinvested in for a large part of the 20th century and simply cannot cope with the numbers when these cities are growing. We are seeking to address, at one and the same time, the challenges of past economic failure and weakness, which need to be addressed systematically, and the mobilisation to the fullest extent of the resources of our cities, such as the great enterprising side of our cities that the noble Lord, Lord Wei, referred to—the Shoreditch and Tech City clusters that are replicated across so many of our cities. We are seeking to address the problems of the past but also to equip our cities with the infrastructure without which they will not be able to flourish in future.
That can happen, in our judgment—and I think this judgment is shared across the House—only if there is more devolution of responsibility to the cities in terms of being able to take charge of their own destiny. With that devolution of responsibility must come the devolution of funding and some element of fiscal devolution, too, so that cities are actually able to take advantage of more of the proceeds of growth than has been the case in the past. In the second half of the 20th century, not only did we centralise functions too much on Westminster and Whitehall but we centralised too much funding on Westminster and Whitehall and we largely removed the fiscal base of local government, which is why our local authorities have a smaller share of their spending covered by locally raised taxes than almost any other democracy in the world. The debate is now taking place about how we can start to reverse that trend.
In my view, all three of these need to proceed in tandem. We need more powers devolved to our local authorities, and to groups of local authorities working together through partnership arrangements of the kind that we have seen in Greater Manchester with combined authorities. We also need more funding to be devolved, and we need the capacity for our local authorities to raise more of their own funds and share more in the proceeds of growth. The measures that the noble Lord, Lord Heseltine, set out in his report, and which I set out in my report, all move in the same direction in this respect: we need to see more devolution of functions that are crucial to growth, particularly functions in relation to skills, transport and economic development, passed down to local authorities or groups of local authorities. The funding needs to follow those functions. We are going to have some very difficult debates about how funding will be devolved in that respect.
We also need to see that there is more fiscal capacity at the local, city and regional level. My report sets out proposals, which have been endorsed by Ed Miliband and Ed Balls, for significant devolution of business rates so that the full growth in business rates, allowing for redistribution, takes place within an existing system; so that the full proceeds of growth in business rates are secured by local authorities; and so that other local property taxes, specified in Tony Travers’ report, are devolved as well.
My time is up; I will say just one thing in conclusion. Unless we have a programme of systematic devolution of functions, funding and fiscal powers over the next 20 years, the problem will not be simply that we will be unable to tackle our individual city problems, great as they are; we will not provide that strong and visionary leadership in our cities, without which there will be no future for them.
We have so many leaders and past leaders of local authorities here, all of whom have a vision for their cities and their localities. One cannot have vision when it comes to politics without having power. Local leaders need the capacity to set out visions of growth, of jobs and of revival and regeneration for their cities, but they will not be able to set those out with any conviction and carry local support behind them unless they also have the powers necessary to deliver policy programmes and visions. We need, therefore, to see from Government —and any Government which follows this one—not simply aspirations for more devolution but real, solid proposals for devolving functions, powers and, increasingly, tax-raising powers as well.
Baroness Williams of Trafford (Con)
My Lords, I thank my noble friend Lord Shipley, who brought forward the debate today, for his work on devolving new powers to our cities and regions. My noble friend was involved in the city deal negotiations and—together with my noble friend Lord Heseltine, who is not here today—he played a key role in helping to secure a number of agreements. I would like to place on record my thanks to him for his crucial role in these discussions. He is a key figure on this agenda, and has been for many years, and it is fitting that he was leading today’s debate.
It is also fitting that the noble Lord, Lord Adonis, is here today. I pay tribute to the work that he has done over the years in getting us to where we are today. He has been very much part of the cross-party approach that has in fact led to this, as has my noble friend Lord Heseltine. This cross-party approach—which has not been talked about much today, but is actually very much seen here today, with all the noble Lords who are from cities and from local government—has enabled some of the big shifts in devolution that culminated in the announcement by the Chancellor in November of devolution to Greater Manchester. I do not think that, without the other parties, this could have happened and I must place that on record.
I must also declare not just an interest in this matter but a very great enthusiasm because, like my noble friend Lord Goddard, I was at the start of what has become the first devolution deal for Greater Manchester, and it is a great pleasure to talk about it today. I pay tribute to all noble Lords who have made their maiden speeches. I am delighted that so many—my noble friend Lord Goddard, the noble Lord, Lord Scriven, and the noble Baroness, Lady Janke—have chosen to make them in this debate. All are from a local government background, which is great.
My noble friend Lord Shipley’s comments were very helpful and very constructive, as were those of many noble Lords. He talked first about not disempowering London. I think this is a crucial point. In the conversations that we were having in local government 10 or 15 years ago, we did have a bit of a tendency to whinge about how much London got and how we were so badly done to. I think the narrative has moved on in a far more mature way, to be not about how much London has got and how much it has grown—because, actually, that bodes well for all of us in this country—but how cities outside London can punch above their weight in terms of progressing growth and unlocking their growth potential. I think that was a very good point to make at this stage.
Many noble Lords, including my noble friend Lord Shipley, have talked about not creating city-states and about the link with the rural areas and the inner cities. As the noble Lord, Lord Adonis, said, we should all collaborate to create a better economic outlook for our country. My noble friend also talked about how this is not just about posting out cheques from Whitehall —if any noble Lord has studied the devolution deal for Manchester, that is very clear. It is based primarily on a proposition to government about growth, based on making better use of the funding that would be coming down to Greater Manchester anyway. It is about not just using it more efficiently but getting to the point where city regions like Greater Manchester are not recipients of public funds but actually become net contributors to the Treasury.
This is very much about accountability. Several noble Lords have asked, “Do we want a mayor? Do we have to have a mayor?” What I think the Government expect is a very clear accountability and leadership role. Certainly, in Greater Manchester, the advent of a mayor in 2017 is not going to create another layer of government. It was very clear that that was what Greater Manchester did not want, and in fact the Government did not want to create another layer of bureaucracy but to enhance what was already there, to create clear leadership.
My noble friend Lord Shipley also talked about underperforming cities. The figures are stark when one compares the different regions of this country with the south-east. The north-west is the second most productive region outside the south-east, but its productivity lags behind by some £30 billion, and that figure is not shrinking, so something does need to be done. This is a radical proposition, but it will be done by increment. We hope it will help to enable areas outside the south-east to punch above their weight and to unlock their potential to do so and to shrink that gap.
My noble friend also asked about the government commitment to devolution to cities. I do not think there needs to be any greater demonstration of this Government’s commitment to devolution to cities, certainly in starting with Greater Manchester. I do not think that, by this time next year, every single city in the country will have a devolution deal; there needs to be a step-by-step process where this agenda is advanced. My noble friend also talked about the pace quickening. I would like to see a sort of point of no return, whereby—a hopefully successful—devolution to Greater Manchester paves the way for other cities and, indeed, rural areas to follow.
My noble friend also talked about responsibilities—I think we have covered this—and also about functional economic geography. Certain things have to be done at scale and across local authority boundaries. In fact, that already happens, as it did with the regional development agencies with things like transport. It is very difficult to deal with transport in a single local authority area, because it transcends authorities and authority boundaries. He also talked about Newcastle’s success and introduced what for me is a new term, “the boomerang Geordies”. I may be one of them, because I left Geordieland 30 years ago; I may return after my retirement—I do not know.
My noble friend Lord Lyell talked about his walk through Liverpool in November 1967 and about the renewal that it has enjoyed. He talked in particular about the port and the waterfront. I declare an interest, which is outlined in the register, in that I was executive director of Atlantic Gateway. There is no doubt that the recent developments of the superport in Liverpool, which is being developed in response to the expansion of the Panama Canal, will provide a fantastic post-Panamax terminal that will be able to receive those massive vessels that will cross the world. It will enable round-the-world shipping again and a huge potential in logistics and distribution and, going back to some of the papers that have been produced in the last few months, it will very much enable those east-west links to be taken forward.
My noble friend also talked about private sector employment. He mentioned Halewood and the Range Rover Evoque; if he has been there recently, he will have seen them all lined up, waiting to be shipped off. I understand that you now have to wait six months for a Range Rover Evoque, such is the demand for them. However, it also has such great potential to revitalise that area of Liverpool and indeed the whole Liverpool city region.
My noble friend also talked about the Liverpool waterfront, which is the most wonderful asset—Liverpool is so lucky. As somebody—I think it was Noel Gallagher —once said, “Manchester’s got everything apart from a beach”, and it is true. Manchester has plenty of assets, but Liverpool has that beautiful waterfront. He also talked about governance. Here I pay tribute to Mayor Joe Anderson, who has shown such strong leadership in Liverpool, and to how Liverpool and Manchester work so brilliantly together to take forward that whole agenda for growth in the north-west.
The noble Lord, Lord McKenzie, talked about not allowing the Treasury to stymie progress. The proposition between local government or groups of local governments and the Treasury has to be crystal clear so that there is no room for manoeuvring as regards what was promised and what was promised to be delivered. As far as I know from Greater Manchester, which was the first deal to be done, the expectations and the expectations of the outcomes are very clear. The noble Lord also talked about how local authority cuts hit the poorest most. In fact, as I said in answer to a question the other day, the bottom 10%—in terms of the most deprived local authorities—receive on average 50% more money, so I must disagree with him on that. He also asked whether any area will be allowed devolution. There is a challenge to groups of local authorities to put forward propositions to government, and I think that the Government do not rule anything out as regards what they want to see put before them. As far as I know, there is no bar to propositions going to government.
I come to my noble friend Lord Goddard. I would say that we were “partners in crime”, but I do not mean that. We served on the Association of Greater Manchester Authorities for some time, both as deputy leaders, and we led the journey to become a combined authority that took place in 2011—I had gone by then, but he was still there. In his very amusing maiden speech he also talked about going to the wrong Benches. I nearly did that, but realised my mistake when I did not recognise any of the faces on the Labour Benches. He talked about the collaboration we enjoyed. That collaboration, which was mentioned by the noble Lord, Lord Adonis, and other noble Lords, has been absolutely essential to our getting where we are today. We would not be here if we did not collaborate.
Another noble Lord made a very good point, which I want to bring out. I think it was the noble Lord, Lord Graham of Edmonton—
Baroness Williams of Trafford
It was, and there he is. He talked about a common purpose, and having sometimes to swallow the fact that you do not get everything that you want. That has been key to how we have worked together. If there was ever a handy tip I could give local authorities that wanted to achieve devolutionary status, it would be that: collaborate, co-operate, allow for the fact that you might have to compromise slightly, but you will get there in the end.
My noble friend Lady Eaton talked about skills and about local areas being best placed to respond to local need. That is crucial in devolution deals, and it is interesting that skills were mentioned in the first devolution deal we got. If local authorities do not engage both with employer need and therefore with those learning institutions, those skills will just not be there and we will have to import them from elsewhere, whether that is from home or abroad.
I am very conscious that I am running out of time and that I am not even half way through what I wanted to say. The noble Lord, Lord McFall, I think, made a point about the Glasgow and Clyde Valley city deal, which I think is one of the largest ever under the city deals—we wish it well.
I pay tribute to my noble friend Lord Scriven’s maiden speech. It was uncontroversial, coming from a controversial man, as he promised us he is, and a young man—you sometimes feel very young when you come here. He mentioned the Sheffield city deal, which we wish well.
I will just try to pick up on some more points. My noble friend Lord True talked about avoiding faddish political structures in bringing forward devolution. I totally agree with that; to come back to a point I made earlier, Greater Manchester was very much against doing that—I realise that I am now completely out of time. I thank noble Lords who have taken part in this debate—
Baroness Williams of Trafford
Oh, I have two more minutes.
I totally agree with that, and in fact, Greater Manchester was very clear that it did not want a layering-on of structure, so it has decided to go to the model of having an 11th leader until 2017, when it will elect a mayor, but it will still keep that core of 10 local authority leaders. The noble Lord also asked about the imposition of local structures. That is not true in the sense that, as I have said, it is a proposition to government; whether it is agreed or not will be the result of a dialogue between local authorities. Therefore nothing will be imposed upon anyone unless they want it.
The noble Baroness, Lady Armstrong, talked about being born in Sunderland. I was brought up in Hetton-le-Hole, so we have more in common than she thinks. You could not vote Tory there if you wanted to, because—well, they did not want to. The noble Baroness also talked about the size of the state and asked a crucial question about where we want it to lie. I think that trust has to be given by central government to local government. It is no small wonder that central government have taken what is probably the best and most worked-up proposition forward first. Hopefully, that will lead incrementally to such trust being built up between central and local government. The coalition are a Government who want to decentralise, not to create more state intervention—the noble Baroness clearly does not agree with me there. She talked about the back of a fag packet. This is not the back of a fag packet; it has taken years.
But I realise that my time really is up now. I thank all noble Lords, and I will write to anyone whom I have not answered fully.
The Deputy Speaker (Baroness Fookes) (Con)
My Lords, the time allowed for this debate has now elapsed, and I must put the Question that the Motion be agreed.