Economic Leadership for Cities

Baroness Eaton Excerpts

Thursday 11th December 2014 Lords Chamber

[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.