Economic Leadership for Cities

Lord Hunt of Chesterton Excerpts

Thursday 11th December 2014 Lords Chamber

[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 Wallace of Saltaire (LD)]

My Lords, we are very short of time.

[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.