Regenerating places: redefining prosperity for UK cities

The UK is at a critical juncture. Buffeted by shocks ranging from extreme weather to the Covid-19 pandemic and a cost-of-living crisis, the UK’s resilience has been tested and often found wanting. Building resilience and generating prosperity does not come cheap. To avoid repeating the mistakes that have led us to this point, we need to rethink how and where we invest our scarce resources.

Our UK Urban Futures Commission report sets out a practical plan for national renewal. At its core, this plan demands a fresh definition of ‘prosperity’ - the outcomes we value when deciding what to spend our money on. The Commission also finds there is no route to delivering this prosperity that does not run through cities.

Why do cities hold the key? Most straightforwardly, they are where most people live and work. The UK’s core cities - Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield - were a focus for the Commission. They alone account for around a fifth of both the UK’s population and national gross value added (GVA - a measure of productivity), while over 80 percent of the nation lives in an urban area.

However, across a range of measures our cities currently fall short of their potential, to the detriment of residents and the country. The traditional measure of prosperity is economic. Here, the story is familiar – our cities are less productive than they should be. The graph above shows productivity does not increase with size for UK cities as it does for European counterparts. However, the picture is no better when viewed through a social lens. The core cities exhibit deep pockets of deprivation, with a disproportionately high share of neighbourhoods in the lowest income (below) and health deprivation deciles. Ecologically, our cities’ housing stock and public transport are not of sufficient standards to make the inroads into our carbon footprint necessary to reach net zero, leading to dangerous levels of air pollution (second below).

Fragilities reinforce fragilities

Crucially, these economic, social and ecological fragilities reinforce one another. Figure 4 shows low income, health deprivation and poor air quality cluster in similar spatial patterns. However, these issues tend to be addressed in isolation rather than as connected challenges, meaning solutions are partial by design.

The UK Urban Futures Commission was established to devise a practical plan for city and national leaders to help unleash the latent potential of our cities. At the core of the plan is a new paradigm. This means that ‘prosperity’ needs to be measured against the health of our social and natural systems and not just the strength of the economy alone. Further, we need to recognise that these systems are ‘nested’: a weak and imbalanced economy stymies action on communities and the climate. And without flourishing people and planet, economic gains are likely to be flimsy and uneven.

Prosperity also cannot simply mean arresting negative cycles. Such is the depleted state of the nested systems that we need to shift our aspirations from a ‘do no harm’ mindset to ‘do more good’ (see below). And if the interconnections between the systems present risks of downward spirals the reverse is also true. Tending adequately, equitably and durably to all three systems – and to the stores of social, economic and natural capital within each – will lead them to replenish and restore one another, creating regenerative cycles instead.

Why redefine prosperity?

So how will redefining prosperity actually make a difference? There are two main reasons.

1. National renewal

A broader definition of prosperity brings home the potential of cities as the perfect starting point for national renewal. They are replete with assets across each of the nested systems. These assets are the product of three cross-cutting traits: density, diversity and dynamism. For example:

• Cities’ density - offers well-known economic advantages of agglomeration, but this feature also makes them one of the most energy-efficient ways of housing and transporting people en masse, paving the way for net zero (see below).
• Cities’ diversity - with significantly higher rates of internal and external migration than other places – gives them a potential for creativity and connectedness that enriches their social and cultural offer (see second below).
• Cities’ dynamism - fosters change at a rate and scale unlike other levels of geography – not only gives them immense powers of innovation within their borders, but significant spillover effects to their hinterlands, region and the nation as a whole.

The unique potential of the UK’s cities (in particular its core cities) also comes into focus when viewed through the lens of the nested systems. They are where new companies are formed (see below) and all rank among the most popular destinations for people moving within the UK to make a new home. Further, our core cities are world-renowned, each synonymous with a well-known band or football team(s). The second graph below illustrates the strength of the core cities’ ‘brand recognition’ based on the frequency with which they appear in a corpus of modern texts, compared to the largest 10 non-capital cities in each of the 38 OECD countries. All of the UK’s core cities are ranked in the top 100 (out of 360), with Manchester and Liverpool making the top 10.

2. What gets measured gets managed

Our current definition of prosperity is leading to suboptimal investment decisions in our cities. The graph below shows that, for the economic system at least, comparative levels of per capita investment (captured by ‘Gross Fixed Capital Formation’) into our cities are low compared to London: the core cities range from £3,525 per head in Tyneside to £9,250 in Manchester, paling in comparison to that in London boroughs like Camden or Westminster, at a whopping £54,000 and £42,000 per head respectively.

When the core cities are set alongside comparable cities in France or Germany (see graph immediately above), we see that not only are total levels of investment lower, but the UK also has a markedly higher share of investment in real estate as opposed to more diverse, potentially more productive areas of the economy. What is missing is any picture of investment in social or natural forms of capital, an indication of our relative inability to measure – and in turn to manage – the flow of investment into our communities and social infrastructure or towards our climate and biodiversity.

Benefits massively outstrip cost

The Commission calculates that the size of the prize for adequate and balanced investment in line with a refreshed definition of prosperity is enormous, far outstripping the costs. Simply catching the core cities alone up to their European peers has the potential to add £100bn (around 5 percent) to GDP each year. Further, if social outcomes could mirror those in London, then this would lift 250,000 people out of unemployment, 1.2 million out of poverty and increase healthy life expectancy by up to eight years. And when it comes to the environment, we need only think of the costs of inaction – estimated at multiples of GDP – to consider investments in mitigation and adaptation well worth making.

The Commission sets out three steps to unleashing the potential of our cities. It should come as no surprise that a new definition of prosperity sits at the heart of recommendation one. This calls for cities and national governments alike to devise plans that speak to each of the economic, social and ecological systems. If acted upon, we can incentivise adequate, equitable and sustained investment across the three nested systems and their related capitals, and guard against the short-termism plaguing UK politics that prioritises superficial gains for one system at the expense of the others. These are the ingredients for regenerating our cities, improving the lives of residents and ensuring the UK is positioned to respond better to future challenges than it has those in recent memory.

Are you attending Anthropy 2023? Be sure to attend our Regenerating cities panel discussion between 12:30 and 1:30pm on Friday 3 November to learn more about how we can unleash the potential of our cities.

You can read more on our UK Urban Futures Commission by visiting the intervention page and reading the Unleashing the potential of the UK's cities report.