Economic Leadership for Cities

Lord Whitty Excerpts

Thursday 11th December 2014 Lords Chamber

[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.