Economic Leadership for Cities

Lord Adonis Excerpts

Thursday 11th December 2014 Lords Chamber

[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.