Good growth for all across UK cities
08 November 2016
With a new government has come a renewed focus on supporting growth throughout the country. And while there is some nervousness about the potential economic impact of the UK leaving the EU, most cities are entering this period of uncertainty from a position of relative strength. But how do we define economic success at city level and build an economy that works for everyone?
For the past four years, PwC and Demos have published a Good Growth for Cities Index to put the spotlight on local economic performance, based on a broad range of indicators (see chart below) that our surveys show the public regards as important. As the push to devolve power and funding continues, we also look at how economic success can be delivered for everyone in a place.
One of the key results in our 2016 edition is that nearly all of our cities, and all Local Enterprise Partnership areas, have seen improvements in their Good Growth score between 2012-2014 and 2013-15. And, for the first time since we started producing this analysis, the overall national average index value has surpassed its pre-crisis peak in 2006-08.
However, this overall improvement masks considerable variation between cities and, in many cases, within cities. Furthermore, many cities are finding themselves having to tackle the ‘price of success’, which is characterised in particular by a worsening performance on housing affordability, transport and work-life balance (see Figure 1). This suggests that the recovery has put pressure on the scarce resources of housing, transport and skilled labour.
Failure to tackle these supply side factors will see the rate of improvement in city scores reduce, and potentially for the positive trend to reverse. These areas should therefore be top priorities for national, regional and local policymakers, including in places that are to elect mayors in 2017.
When looking at individual cities, the two highest performing cities are Oxford and Reading, though they have swapped places in the rankings this year by a small margin. Edinburgh, Southampton and Bristol are the other top 5 cities. The most recent results also show a substantial gap having opened up between Oxford and Reading and the rest of the cities in the index, which was not present in our 2015 report.
This reflects continued improvement across a range of measures in each of these top two cities, such as jobs, income and skills, during the recovery from the financial crisis. It is also indicative of the health of the business sector in these cities, which results in strong performance in the revised “new business start-up” variable.
It’s also worth noting, however, that some of the cities with lower scores have seen some of the biggest increases in this year’s report, with Doncaster and Wakefield & Castleford in the top 5 of cities with improved scores. This again shows that, while the success (or otherwise) of any place depends on the effects of long lasting structural factors, these can change over time: those ranking highly do not inevitably move further ahead, while those ranking lower in the index do not necessarily fall further behind.
This year, we also extended our analysis to include seven English Combined Authorities. As with the cities and LEPs, scores have generally improved since 2012-14. However, performance remains mixed. This places heightened importance on the role to be played by city mayors and other local policymakers to take advantage of newly devolved powers, the results of which in most cases are yet to come through fully in our analysis.
Our analysis suggests five broad implications for cities seeking to deliver good growth:
- Delivering good growth is all about balance, in particular between investment in growth and public service reform (including delivering on devolution deals).
- Places need to pick their priorities for investment for growth, including investing in social infrastructure, such as skills, as well as physical infrastructure, particularly housing and transport.
- Cities need to build distributed leadership. Over the next year there will be much focus on the new ‘metro’ mayors being elected in cities including Liverpool, Manchester, Sheffield and the West Midlands. But delivering good growth requires players across local government, central government and the private sector to act together and work collaboratively.
- There is a need to embrace key digital and data enablers to support delivery, from building an evidence base of what works through to transforming public services and delivering good growth from which everyone can feel the benefits.
- Finally, while the repercussions of the UK’s decision to leave the EU will not become apparent for some time, our analysis suggests that Brexit will bring new risks and opportunities for UK cities. Cities need to grasp the impacts, understand their strengths and weaknesses in a post-EU landscape and develop a prioritised action plan.
Overall, despite current political and economic uncertainties, we think there has seldom been a better time to deliver deep economic and public service reform and embed a more inclusive approach to growth across UK cities and regions, supported by a place-based industrial strategy.
For more on good growth in your local UK city, visit www.pwc.co.uk/goodgrowth