14 to watch in 2014 (part 1 of 3)

My predictions on what will be the big issues and trends for UK cities and regions in 2014. I will blog in more detail on these, and other, issues through the year. See also part 2 https://citypolicy.wordpress.com/2014/01/02/14-to-watch-in-2014-part-2-of-3/

1.    The shape of economic recovery

The pace, shape and nature of economic recovery will be one of the big issues for cities and regions in 2014. The latest data shows growth is at last gathering pace. There is a palpable sense of growing optimism. But few are complacent. Even in Leeds, which is growing faster than most cities, there remains some way to go to reach pre-recession employment levels.

My prediction is that the geography of recovery will be uneven. London and the South East, the Core Cities and some small to medium sized cities will pull away from other places that lack critical mass, a sufficiently diverse economic base, and drivers for growth such as major universities.

I also think that the pace of jobs growth could be slower than anticipated. The recovery could result first in higher wages and people working longer hours before new jobs are created. Further austerity means job creation in the private sector will need to offset more redundancies in the public sector.

2.    More austerity will have big implications for cities and local authorities

Local authorities will need to make further significant financial savings. For example Leeds City Council, which has already saved £200m over the past three years, must save around another £80 million in 2014-15 and 2015-16. It will be in cities and local authorities where the impact of the cuts will be most significant, and also where the policy responses most important.

Whilst local government will be smaller, there remains a positive and substantial role for councils in supporting growth. Growing the “top line” of income needs to be a big part of the local response to austerity.  One benefit of difficult times is the positive climate for innovation and culture change.

3.    Strategic economic plans and city growth deals 

The priority for Local Enterprise Partnerships (LEPs) in early 2014 will be to develop the Strategic Economic Plans into distinctive, ambitious and realistic frameworks for action by the public and private sectors to support growth.

The Strategic Economic Plans (the first drafts of which were produced in late 2013) will be finalised in the first half of 2014. They will be the bids to Government for a share of the Local Growth Fund (worth £2bn a year nationally from 2015-16), and set out the approach to European Structural Investment Funds. They will be the basis for negotiations with Whitehall on City Growth Deals: packages of devolved powers and funding.

The stakes are high. For example, rough calculations suggest that if the Leeds City Region secures its “fair share” on a per capita basis (and it is aiming to do better than that) it will have a higher annual spend commensurate with the levels of Yorkshire Forward investment in the city region. A big challenge for LEPs will be to build robust capacity and networks for implementation.

4.    The case for devolution to cities and city regions in England 

The Scottish independence referendum will throw into sharper focus the case for greater devolution of powers and resources to cities and city regions in England. There is increasing evidence that successful second tier cities in England need the freedoms and flexibilities enjoyed by their continental counterparts (and competitors) and proven by London (see v good piece by Stephanie Flanders: http://www.bbc.co.uk/news/business-21934564).

The Core Cities and London have already teamed up to launch a campaign http://www.corecities.com/news-events/london-and-englands-largest-cities-join-call-greater-devolution-drive-economic-growth for devolution. Watch out too for Centre for Cities “Think Cities” campaign http://www.centreforcities.org/40/about/.

5.    An increasing focus on London’s role as a capital city, not just as a global city

As London continues to power away from the rest of the UK in terms of economic performance, I predict (perhaps somewhat optimistically) that the Capital will start thinking more about its role in the UK economy.

There are a number of reasons for this: the growing north-south divide; recognition that London will need to work with the rest of the UK to meet is challenges of huge population growth; and an understanding that if the UK economy is to grow to its full potential it needs to grow together. The UK’s competitive position globally in sectors such as financial and business services or digital require us to think about how business networks and markets work across London and other UK cities. From a perspective in Leeds, London is a huge asset to the UK economy. We need to avoid lapsing into a “Leeds versus London” narrative and think about how we can build on the hugely important economic linkages between the two cities.

Watch for work planned by Centre for Cities and Centre for London (see a thoughtful piece by Centre for London’s Ben Rogers: http://centreforlondon.org/northern-prosperity-london-prosperity/.)

More to follow in the next few days……