At a launch event at the RSA Great Room with Jim O’Neill, Lord Heseltine and Sir Richard Leese, the Commission today set out the recommendations from its final report, Unleashing Metro Growth. New analysis released by the Commission revealed that:
Devolution will boost economic output in the UK’s 15 largest metros by £79bn per year – worth approximately 5 percent of current GDP.
This equates to £60bn in real terms (using 2012 prices) and would represent a 0.2 percent uptick in annual growth in 2030.
The Midlands (including East Midlands, West Midlands and Leicester) could be expected to see the highest uplift in GVA, adding an additional £28bn to its economy by 2030 in real terms. Growing from its larger economic base, the North (including Greater Manchester, West Yorkshire, South Yorkshire and Merseyside) might see an uplift of £19bn.
“I think Jim O’Neill has done an absolutely first-class job with this report. I shall be seeing him later today, and I want to congratulate him on what he has done. There is a real opportunity here—the Chancellor has spoken about it—to create a northern powerhouse by looking at how we can use high-speed rail and other infrastructure to link up our great northern cities so that we really have a proper rebalancing of our economy. That is what this is all about, and I think that Jim O’Neill’s work is all to the good.”
In response to the report, Chancellor of the Exchequer George Osborne said:
“I’ve been talking with Jim about many of these ideas for some time and warmly welcome the overall report. It makes a strong contribution to delivering the northern powerhouse I am determined to build.
“The Commission recognises that for cities to be successful they need directly elected mayors combined with real power and to be better connected both physically and digitally.
“This is what the Northern Powerhouse is all about – giving Northern cities the local power and control that a powerhouse economy needs – and I am determined to turn this vision into a reality.”
In response to the report, the Deputy Prime Minister said:
"We’re ending the era where Governments in Whitehall think they know best. Rebalancing and strengthening the economy right across Britain has been something the Liberal Democrats have been fighting for in government ever since we entered the coalition. We need to give our cities the space and the power to grow.
“Growth Deals and City Deals that I have agreed with every area of the country have freed up billions which can be spent at a local level, and for the first time councils have control over how they spend business rates raised in their area. But we must go further.
“This report is a welcome and timely addition to the conversation and I look forward to debating all these issues at my Northern Futures summit in November.
“We need to get this right, and the only way to do it is to work together to turn ideas into action.”
Chuka Umunna, Shadow Business Secretary said:
“Time and time again, cities have led the way around the world as incubators for innovation. The Cities Growth Commission is absolutely right to point to the ‘rise of Cities’ across the globe – there are hugely important lessons here as we look to ensure growth is more fairly balanced across the UK and the creation of more high-skilled, better paid and secure jobs.
“We must push power away from the centre and empower our cities and city regions to drive local growth. As well as new powers, Labour’s plans would see £30bn of budgets devolved away from Whitehall.
“As this report highlights, we must go further and faster to ensure our cities can better compete on the global stage and be masters of their own destinies.”
Jon Cruddas Chair of Labour Policy Review, said:
“I welcome the recommendations of the City Growth Commission about how we can empower our cities. Many of these ideas about devolution and decentralisation are at the heart of Labour’s programme for Government.
“In Britain our cities will accelerate the forces of economic development. With better infrastructure and digital connectivity, and good skills and employment strategies, they will play to the creative strengths of their people.”
Speaking at the launch of the report, Chair of the RSA City Growth Commission, Jim O'Neill said:
"When we started, we set out our purpose of only thinking in such ways that would boost long term national real GDP growth and our illustration suggests specifically how we might achieve that.
“The prospect of an additional 0.2 percent demonstrates the importance of the city growth agenda. We’ve got to give our major metros the tools they need to thrive."
The Commission defined 15 major metros, based on population size and travel to work patterns. Its recommendations are designed to give metros greater freedoms and flexibilities to manage their social and economic policy, including control of devolved Adult Skills budgets and – for those with most robust, accountable forms of metro governance – greater borrowing and tax raising powers.
With improved connectivity, other ‘powerhouse’ city-regions could emerge to include Central Scotland (Glasgow and Edinburgh metros areas) and the Severn (Bristol and Cardiff metros areas). The One North and Midlands Connect transport proposals put forward by cities are two examples of what can be done, and fast, when metros collaborate to develop the economic prosperity in the wider region.
Notes to editors
For more information contact RSA Head of Media Luke Robinson on 020 7451 6893 or 07799 737 970 or [email protected]
Economic analysis by New Economy, Manchester for the City Growth Commission (October 2014). Uses data from the ONS and the OBR’s forecasts to calculate the boost in economic output in the UK’s 15 largest metro areas. London is treated separately and estimated to continue to grow at its historic growth rate since it grew above the national average for this period. If given greater flexibility, London may grow above this trend but this has not been modelled here. Regional economic output is measured annually by the ONS. 2012 is the latest data that we have for GVA data so we estimate growth over the past 16 years as 1997–2012, and growth over the next 18 years we mean 2013–2030.
The Commission has been set up with the support of the Core Cities Group, London Councils, the Greater London Authority and the Local Government Association. Other project sponsors include the Joseph Rowntree Foundation, Universities UK and British Private Equity and Venture Capital Association.
Commissioners include: Jim O’Neill – Chair, retiring Chair of Goldman Sachs asset management (Chair of the Commission); Greg Clark – Chairman of the OECD Forum of Development Agencies and Investment Strategies; Bridget Rosewell OBE – Chair Volterra Economics, former Chief Economist to GLA; Professor Tony Travers – Leading British Government academic and Chair of London Finance Commission; Bruce Katz, is a vice president at the Brookings Institution and founding director of the Brookings Metropolitan Policy Program; Peter Vernon MRICS, Chief Executive of Grosvenor Britain & Ireland and previously Partner at IBM Business Consulting Services and PricewaterhouseCoopers; Rohan Silva, previously Senior Policy Adviser to the Prime Minister and Economic Adviser to the Shadow Chancellor George Osborne; Ben Lucas – Principal Partner, RSA 2020 Public Services.
The process of devolving power and responsibility from Whitehall to UK cities (‘Devo Met’) should run in parallel with that of ‘Devo Max’ for Scotland, with draft legislation put in place by January 2015, according to the final report from the RSA City Growth Commission.
As the government considers devolving public expenditure powers to nations and metros, radical new incentives should be put in place to ensure our universities play a bigger role in promoting local economic growth, according to the RSA City Growth Commission.
Giving cities the power to revalue council tax bands as well as pool and allocate central government revenue without ringfencing are just two of the recommendations made today by the RSA City Growth Commission, which has proposed the devolution of finance away from central government to city-regions.