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Cities

My Lords, it is a great privilege for me to lead on this debate as a former leader of a major city and as someone who has spent all his political career in that major city. Cities, as we know, deliver growth and are places that will drive the future economic performance and productivity of the UK. We must remember that four in five people in the UK live in an urban area and that 62 per cent of jobs are located in them. People are drawn to cities for their cultural vibrancy and the economic opportunities that they offer. Cities drive innovation and have a brand and a status that attract investment to their local and wider areas. For businesses to compete nationally and globally, they need the assets provided by cities: intellectual capital, private sector agglomeration, connectivity and investment in public services. Let us remember that strong and prosperous cities in their regions contribute to their rural surroundings, making them equally prosperous. The great cities of the UK have seen a renaissance over the past decade or so—particularly the great northern cities, which previously seemed to be in a cycle of decline, with high unemployment, population loss, social deprivation, a lack of investment, confidence and civic pride and, of course, with high levels of crime. My own city of Liverpool is one of the great cities of the world; indeed, it was once regarded as the second city of the then British Empire. The 1970s and 1980s saw a huge decline in the fortune of that city, with massive job losses. Almost every week, a company closed down: Tate & Lyle, Dunlop, Triumph motors—the list went on. It is hard to believe this, but in parts of the city unemployment was running at 28 per cent. This lack of jobs impacted on the social fabric of the city and a militant council came to power. The council regarded the Government and the private sector as the enemy. Liverpudlians felt as though the stuffing had been knocked out of them and that no one cared about them, other than for them to be the butt end of jokes. Then Liverpool and these other great cities picked themselves up and are now becoming the engines of growth not just for their subregion but for the UK as a whole. Indeed, eight of England's core cities—Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield—and their subregions alone produce 27 per cent of England's wealth. These eight core cities contain 25 per cent of our entire population, and the cities themselves have a higher than average share of employment and growth, highlighting their key economic role. They have a broad sectoral employment base and are home to large, graduate-hungry business and professional services sectors. How has this come about? How have they turned themselves around? First, their reinvention has been based on sound political leadership and the realisation that councils do not actually create jobs but do create the confidence and conditions for businesses to prosper and to create that wealth, thereby creating employment. They also realised that all stakeholders, including government, have an important part to play. By working together to understand the things that will turn their cities around, they have literally had the single-minded determination to pursue those goals. However, what of the future? How can cities continue to grow in economic importance and play a bigger part in the economic well-being of the whole country? Many of these cities are hugely dependent on the public sector. They need to move on from being so heavily reliant solely on public sector jobs; they need to develop their business and manufacturing capacity and to ensure that a skilled workforce is available. The companies, businesses and firms that are success stories, both big and small, need to be nurtured and developed further. After the so-called Toxteth riots in Liverpool in 1981 the then Prime Minister, Margaret Thatcher, dispatched a certain Michael Heseltine to Liverpool and he became the Minister for Merseyside. I am sure his perception of the city and its people changed. He realised the potential and he not only became a champion for Liverpool, which had been written off by many, but by working with stakeholders formulated and introduced the policies that started to turn the city around. Interestingly, the now noble Lord, Lord Heseltine, by working with Sir Terry Leahy—a Liverpool lad done well and a former chief executive of Tesco—and involving local stakeholders, has produced a new report, or blueprint, on Liverpool and its subregion, and how it can further develop. We need that approach of an individual plan for each of our city regions so that we can build on their strengths, think imaginatively, do what needs to be done and then, as I said, have the determination both at local and government level to carry it through. The same reforming zeal that has radically changed our public services should be unleashed to be pro-business, aspirational and transformational in our cities. Successive Governments have told cities how they can develop and what they should do, and if they do not do it the resources will not be released: a universal top-down, one-size-fits-all policy. Often, those programmes have no recognition of the individual city's circumstances and needs. The altar of urban regeneration is littered with dozens of government programmes and schemes that had absolutely no real local ownership, no local buy-in and that councils went along with quite frankly because there was no alternative—they would lose their money and lose out. The Deputy Prime Minister is right when he says that we need our cities to become economic, social and cultural magnets—places where people aspire to live. He is absolutely and equally right to give them powers to help that growth. The Deputy Prime Minister has announced the first wave of cities to be given these extra powers. There is a suggestion that a second wave is being considered and I hope that the Minister will indicate whether this is the case. I also place on record my thanks and appreciation to my noble friend Lord Shipley for his work on this matter and for the way in which he has secured real progress. Those core cities of England, which, as I have said, have a third of the UK's population, generate 27 per cent of England's wealth—more than London—and are home to half the country's leading universities. They also contain 28 per cent of all highly skilled workers. Yet compared with London, they receive considerably less in finance, resources and subsidies, so what needs to be done to release further the potential of our cities? First, there is investment and funding. There is compelling evidence, particularly from Europe, that cities with more decentralised public finance are more competitive. In the UK, central government's share of public spend is high by international comparisons—it is 72 per cent, compared with 19 per cent in Germany and 35 per cent in France—and limits local control over the levers of growth, so the recent policies announced by the Government on this matter are most welcome. Secondly, there is devolution. We must allow our cities greater control over the policy areas that can drive growth and skills, housing, transport, planning et cetera. Thirdly, of course, there is good city governance. Democratic legitimacy, when combined with private sector and voluntary leadership and strong governance structures, provides a powerful engine for growth in cities and should be recognised more clearly in the relationship between national and local government. There is more democratic legitimacy to the notion of a city leader being elected by the people than by a party caucus. However, city mayors must be part of strong, democratic and open structures, and will be worthwhile only if they have more decentralised power and responsibilities. For every successful city that faces up to the challenges of the 21st century there will be those that fall behind. Cities need to be places that people want to live in, and must provide decent housing and good transportation links. The coalition announcement on high-speed rail links was hugely important. In my own area, the Government can be credited with agreeing the second crossing over the Mersey, which looked as though it might drag on for years. Investing in cities would mean a significant opportunity to increase jobs and growth. The transformational effects would be profound for the local and national economies. Independent forecasts for our core cities predict that, by 2022, the additional economic output by GVA will be an extra £29 billion, there will be 747,000 additional jobs, and 170,000 people will be brought out of economic inactivity. Finally, the net fiscal contribution to the Exchequer will be £20.5 billion. The figures show how important it is to get the policies right for our major cities. I am sure that the policies the coalition Government are pursuing in relation to our major cities will create a real renaissance for urban areas, which will benefit the whole of the UK.