01The clash of politics and economics in a general election year
Cities Outlook 2024 provides a comprehensive overview of urban Britain in what is set to be the year of a general election. It shows that serious choices and decisions need to be taken around domestic economic policy if the next government is to make inroads into the longstanding challenges that shape the geography of the UK economy.
The last election was one where domestic economic policy, and particularly levelling up, was central to the debate. But for all the heat that surrounded it, the actual policy action, while not absent, has fallen short of what was promised.
There are mitigating factors. Covid, Russia’s invasion of Ukraine and the surge in inflation have all been crises demanding immediate attention, and any government would have struggled. But despite this, it should still be possible for a government to show more progress on its flagship domestic policy than it has, come the end of a parliament.
Some progress has been made. The Government published the Levelling Up White Paper in early 2022 and allocated pots of funding via competitive bidding. And it has made progress on devolution, both through its extension to areas such as Hull and East Riding and the East Midlands, and by deepening it with trailblazer deals for Greater Manchester and the West Midlands.
But in terms of making progress towards its ambitious (and laudable) 12 targets by 2030, set out in the White Paper, it has left a lot of work to be done for whoever wins the next election.
In the context of a general election this lack of progress will create a challenge for the Conservatives to demonstrate to voters in the Red Wall how they are better off five years on. It will also require Labour to show the same voters how its approach would be better.
To govern effectively is to choose. For the next government there will be serious choices and decisions to make for domestic economic policy, as in other areas of policy, if it is to make inroads into the longstanding challenges that shape the UK’s economic geography.
Inevitably, the politics of an election will drag politicians in directions that distort these choices and decisions. There are three areas where this is likely to be a problem in the coming months – the differing role of cities and towns in the national economy, planning reform and the stuttering of London.
The differing roles of cities and towns
This has already become apparent in the very unhelpful cities versus towns debate, which politicians had seemingly moved on from. But it reared its head once again at Conservative Party Conference in October, where Rishi Sunak claimed the economy had been too focused on cities and his plan would be to shift the economic geography away from them towards towns.1
Given ongoing narratives around the Red Wall, the political draw of this approach for both parties is obvious. There are, however, both economic and political reasons why this isn’t a smart move.
There’s no doubt that several towns outside the Greater South East are struggling, but the reasons for this are often found in their nearby cities. Big cities should be leading the regional and national economy, as is the case with comparable cities on the continent, creating wealth and opportunities for people who live in and next to them.2 The fact that they don’t is bad news for neighbouring towns and villages. While a region’s prosperity is disproportionately generated in these large centres of production, it is spread much wider. Centre for Cities showed in September how ‘trickle out’ is a thing – large cities provide prosperity for the towns and villages around them. But because they aren’t generating as much prosperity as they should be, there is less for residents in these towns and villages than there should be.3 Politicians of all stripes need to recognise that while cities won’t provide all the answers, it is hard to see a route to prosperity for struggling towns that doesn’t involve an improvement in the performance of their larger neighbours. The affluent towns and villages around London and Bristol are testament to this.
This is now well understood, which made the Prime Minister’s comments more jarring. The Government is to be applauded for making the choice of focusing on the underperformance of large cities in the Levelling Up White Paper, something influenced by the work of Centre for Cities.4 If we are to help people and places across the country, whoever leads the next government will need to continue with this framework.
Planning reform
This is an area where, for a long time, economics and politics have disagreed. The good news is that both parties know that changes need to be made. And the Government has made some progress with the changes set out in last year’s Levelling Up and Regeneration Act.
The reason for this consensus is the size of the problem. Centre for Cities showed in February how the existing planning system, with its roots in the 1947 Town and Country Planning Act, has had a large role to play in the missing 4.3 million homes that the UK has built up, compared with other European countries since the end of the Second World War.5
The politics here though have long been the barrier to change, and history reminds us that rhetoric isn’t always followed with action, especially in this policy area. How serious either party is will be revealed by the change they bring about after they are elected rather than the words they choose to use in the run up to the election.
London and levelling up
A third political challenge will be putting policies in place that deal with London’s stuttering economy alongside the levelling up agenda. Policy support for the Capital has become more difficult in recent years because of its much higher levels of prosperity than other parts of the country and the wrongly held perception that it has been favoured by successive governments for investment and support. But London’s productivity slowdown since 2008 is a big factor in the wider national malaise, as Centre for Cities showed back in March.6 To get the UK economy firing again the next government must overcome the reluctance to support London.
This isn’t just something that has been seen in the Capital – the poor performance of the national economy since the financial crash has been felt across the country. The next chapter of the 17th edition of Cities Outlook sets this out in detail.
This underwhelming growth has been a hallmark of the economies of almost every UK city or large town. The chapter highlights the scale of the challenge for the next inhabitant of 10 Downing Street to overcome if the UK is to be markedly more prosperous by the end of the decade.
Box 1: Defining cities
Centre for Cities research focuses on the UK’s 63 largest cities and towns, defined as primary urban areas (PUAs). Unless otherwise stated, Centre for Cities uses data for PUAs in its analysis – a measure of the ‘built-up’ area of a large city or town, rather than individual local authority areas. You can find the full definitions and a methodological note at www.centreforcities.org/puas.