Good growth for cities: from strategy to execution

20 December 2016

While quarterly GDP growth figures and headlines on economic recovery make the news, the figures don’t always chime with the experience and everyday lives of ordinary people, as Jonathan House explains to the MJ.

Now in its fifth year, the Demos-PwC Good Growth for Cities Index measures the performance of the UK’s largest cities against a basket of 10 categories based on what the public see as key to economic success and wellbeing. Employment, health, income and skills are the most important of these factors, while housing affordability, commuting times, environmental factors and income inequality are also included.

 Our 2016 edition of Good Growth for Cities has a positive story to tell for UK cities as a whole. The Index has surpassed its pre-financial crisis peak for the first time this year, suggesting that we are entering the uncertain period brought about by Brexit from a position of relative strength.

Topping this year’s Index are Oxford and Reading, both with continued improvements across a range of measures, such as jobs, income, skills and new businesses. Furthermore, the gap between these two cities and the rest has increased to an extent not seen in previous years.

However, as with many cities at the top of the index, Oxford and Reading are finding themselves having to tackle the ‘price of success’, with below average performance on transport, with commuting and congestion meaning long journeys to work; with fewer able to afford appropriate housing and work-life balance, with a growing proportion working over 45 hours a week.

It is also notable that the best ‘improvers’ come from right across the Index, showing that a city’s success is not pre-determined.  Doncaster and Wakefield, towards the bottom end of the Index, have shown notable improvements alongside Swindon and Coventry, both places which are closer to the top.  For Doncaster and Wakefield, improvements were driven by significant reductions in the unemployment rate and pick-ups in the new business start-up rate.

For the first time this year we have looked in detail at the performance across combined authorities.  The story that emerges is one of mixed performance across the Good Growth variables.  All combined authorities score below average on owner occupation and income as a whole, while all score above average on house price-to-earnings-ratio.  There are also different strengths and weaknesses across the different local authorities which make up the combined authority area. These will be challenges which combined authorities need to address as they deliver their future strategies, both as a whole, and in terms of their constituent parts.

The findings show that delivering good growth is all about balancing priorities: between going for growth and investing in public service reform and between focusing on social infrastructure, such as skills, as much as physical infrastructure, such as housing and transport.

There is also a need to refocus on delivery and to shift decisively from planning and doing deals to delivering on ambitious plans for good growth.

Looking ahead, while there is still much uncertainty about the impact of leaving the EU and it is certainly too early to read anything from the Good Growth data, cities need to grasp the impacts, understand their strengths and weaknesses in a post-EU landscape and develop a prioritised action plan in response.

Our economic forecasts suggest that UK economic growth is likely to be disappointing for a number of years, making the challenge of reducing the deficit harder and the expectations of further austerity more likely.  Increased political and economic uncertainty will also lead to slower growth in both jobs and average income levels.  At the same time, the distraction of EU negotiations has the potential to slow momentum on devolution and deprive local areas of control of the local levers for growth that they need.  However, Brexit also creates a space for local places to establish a bold vision about the future they want to shape for their places.  A positive impact, particularly for those cities in the category of dealing with the ‘price of success’, could be improvements in housing affordability as house prices fall.  

How these changes will play out over the next year is uncertain but what is clear is that it is all there to play for.  Different cities face different types of challenges but the Index shows success is not pre-determined.

With the right leadership and strategy in place, all cities can make improvements for the benefit of their economy and their communities. Moving from strategy to execution will be key to cities’ future success.

This article first appeared in the MJ.

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Jonathan House | Partner
Email | +44 (0)77 9111 4593

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