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Core Cities Summit, Bristol

Date of speech	26 June 2006

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Draft text of the speech - may differ from the delivered version.

It is a privilege to be giving my first speech on cities and the wider devolution agenda, today, here in Bristol. I'm delighted to have been able to have taken part in some of the city summits that David Miliband launched after addressing you a year ago. Indeed in my first month in this exciting new job I've enjoyed meeting the leaders of some of our great cities - Manchester, Birmingham - to present their city business cases and I look forward to seeing the leaders of the other Core Cities soon.  I have also been hearing about the future plans of places like Hull and the Tees Valley who are part of the second wave of city summits. And of course I have had some very interesting discussions with Ken Livingstone.

As far as I'm concerned, these city summits have proved to be a great innovation. Not before time, the summits meant that senior representatives from Whitehall have been listening to our cities and towns rather than vice versa. They also challenged the local leaderships of our cities to think hard about what they want to achieve in the future. And - perhaps most of all - they demonstrated the extent of the enthusiasm, potential and new ideas that exist around the country. I'd like to thank all of you who took part in the summits and the follow-up discussions.  Working together since the summits, central and local government and our private and voluntary partners have driven the agenda forward and created real momentum.

Putting the current debate in context

I also welcome the wider debate that has taken place over the last few years on the future place of our cities in the world. It is not before time.

For much of this century, sweeping economic change has put enormous strain on our cities. England - the first industrial nation - was hit particularly hard. Jobs and people left our cities, and the economic and social structures left behind often struggled to cope. Governments - of both parties - recognised the problem, and from the mid-1970s a succession of policies were targeted at neighbourhoods and cities to help them restructure their economies and revitalise derelict areas. But despite these policy innovations, the problems continued. For example, in Liverpool between 1981-1991, the population fell by 8% and there was a 9% loss in employment in inner Liverpool  And for too long, urban regeneration was something that was done to local government rather than with it.

What we learned from the limited success over this period is that urban policies  - however well designed or executed - will only work if they are allied with successful and sustainable national economic management on the one hand, and strong and confident local leadership on the other.

Since 1997, our cities have begun to see a renaissance, conclusively demonstrated by the evidence amassed in the State of the English Cities Report. Six out of eight core cities showed economic growth above the national average. London is a successful global city and will host the Olympic Games in 2012. Population decline has been slowed, and then reversed - first in London, and then in most of the core cities also.  Residential integration by ethnic group has improved and there has been a measurable improvement in the liveability of our cities.

It is now widely recognised that the improved performance of our cities has been one of the great triumphs of the last decade. Whereas twenty years ago the words that typically were used in association with 'city' were deprivation or decay; today the terms vibrant and dynamic are more apt.  In November 2005, Lord Richard Rogers wrote "For the first time in 50 years there has been a measurable change of culture in favour of towns and cities, reflecting a nationwide commitment to the Urban Renaissance."

But we all know there is still much to do. Our cities have turned the corner, but - with the exception of London - are not yet leaders in their class by international standards. This is the next stage of the task that you and I are engaged in.  We need to build on the urban renaissance and the stable national economic framework we have created over the last ten years. We need to strengthen local leadership further. More than anything, we need to create structures and ways of working that look forward and not back. In public policy there is always the risk of designing elegant solutions to yesterday's problems. This is a risk we must avoid.

Economic imperative

Now, more than ever, we face an economic imperative that means we have to think afresh about how to support our cities. Globalisation - the increasing movement of people, money and ideas across borders - has repositioned cities as drivers of national economies. Already, capital is hyper-mobile; and as skilled labour and knowledge-intensive businesses become increasingly mobile - so places have to compete to attract and retain high value-added economic activity, and quality of place - in the widest sense -  becomes a key competitive asset.

In 1925, one quarter of the world's population lived in cities. In 2025, it will be three-quarters. By that date, 17 of the world's 25 largest cities will be in coastal regions in Asia. What is causing this urban explosion?

Throughout history, as the economist Ed Glaeser has written, cities have grown because of their "proximity to something valuable…Today cities succeed by offering proximity to people and their ideas." Our future prosperity lies in focussing on those 'knowledge sectors' in which we have a competitive edge.  Knowledge-intensive businesses tend to locate in cities where they can benefit from the knowledge transfer that happens from clustering together with other innovative firms and from access to the diverse labour markets of cities. And this is also key for much of modern manufacturing.

Indeed it is city-regions - that is, the wider economy of cities - that have generally led regional growth in the last decade.  But the performance of cities has varied significantly and has a striking regional pattern, with most of England's best performing cities located in the South of England.  This largely reflects the restructuring of the UK economy away from traditional manufacturing towards services. I am clear that we need to give these cities and regions the tools they need to lift growth rates and fulfil their economic potential.

If we are to compete as a nation we must have cities that can hold their own on the global stage. Much of this will come down to the dynamism of our private sector. But all the research shows that the quality of government - national and local - matters a lot. It determines the economic policies, the public services, the skills base and the infrastructure that allow cities to maximise their potential and make the most of their assets.

Leadership matters too. City leadership is crucial in developing economic strategies that reflect the reality of the economic challenge and the assets to be deployed in each of our cities.

And getting governance over the right spatial area is essential. Many of these challenges cut across local authority areas, suggesting that some key decisions need to be taken across the city-region. Indeed empirical research across EU cities suggests that a better fit between administrative boundaries and the real, underlying economic geography, strengthens economic performance across the city-region. This isn't about turf wars or power grabs. It is about creating new ways of addressing economic inter-dependence.

Of course, the best place to see the economic dynamism and continuing potential of our cities is on the ground.

London's regeneration began with Covent Garden in the 1960s, and London Docklands and the South Bank in the 1970s, and is still ongoing. Despite now being a leading global city in many respects it still faces major challenges -  particularly concentrations of worklessness and poverty.    Manchester  Birmingham and Leeds have made steady progress since the 1980s but have much more to do. We know that our cities are key to optimising success in the knowledge economy, but we also know that it can take 30-50 years to restructure a city for the new economy.

These cities have led the urban renaissance in part because of their sheer size. They have offered the deepest labour and product & service markets, and they began with more diversified economies. In the more specialised former industrial cities, as well as in many other smaller cities and towns I recognise that it may take longer to complete the economic and physical restructuring. It will require sustained effort to support city economic transformation of the kind we now see in Sheffield, Liverpool and Newcastle/Gateshead. We should all remember that the job is far from finished.

So we must focus on London and the core cities but our agenda goes well beyond them. While the issues are rather different, smaller cities and larger towns can also be engines of growth, especially where geographical neighbours work together, recognising in a similar way, their interdependence both with each other and with the largest cities. 

And, crucially, we need strong cities and strong regions. There is no case for saying that we must choose between them. Strong cities make stronger regions, and - furthermore - strong cities need strong regions.

We should be confident about this. The international evidence shows that there are no successful regions that do not have successful cities at their cores. It is hard to imagine how Massachusetts, Northern California, Washington State, or Southern Ontario would have become growth poles without Boston, San Francisco, Seattle, and Toronto driving the transition to a knowledge economy. Equally, without the successes in Dublin, Prague, Helsinki and in Barcelona I doubt Ireland, Czech Republic, South Finland, or Catalonia would have made quite the same progress. 

We all know that growth across the whole of the South East of England is linked to London's performance as a successful Financial, Creative Industries, and Tourism city.  And in Yorkshire, the growth of Leeds as a financial and services centre has created jobs and fostered opportunity for a wide catchment area across the whole of West Yorkshire and beyond. This does not mean that Leeds is the only employment centre in the sub-region, nor that Leeds should be the only focus of our efforts: Wakefield, Halifax, Huddersfield and other places are all important in their own right. But it does mean that each of these smaller cities and towns, needs a distinctive economic strategy that helps it to contribute to, and complement, the growth pole of Leeds. We need our cities and towns to be both competitors and collaborators: to strive to excel individually in economic performance and in quality of life but also to recognise shared opportunities, put aside parochial concerns and maximise joint advantage.

Civic identity and city renewal

Vital though these economic arguments are, it is important - even for economists such as myself - to remember that there is much more to the resurgence of our cities than the productivity and economic growth.

It is just as much about a modern sense of civic pride. For cities are the places where most of us grow up, forge identities and learn to appreciate the benefits of a vibrant public realm.  They are the crucibles of so much of our cultural, creative and sporting life. And they are the sites of our civic architecture and public spaces that inspire so many of us.  Here in Bristol, Brunel's Suspension Bridge and the SS Great Britain remind us that there is nothing new about the link between artistic endeavour, technological innovation and world changing economic advance.

I'm pleased to see the historian Tristram Hunt is speaking tonight - he's written a fine book, which I enjoyed, on the role of the Victorian city as the crucible of economic, social and cultural change. I'm convinced that English cities can play as important a role in the knowledge economy of the 21st Century as they did in the industrial economy 200 years ago. So I hope and expect that that in decades to come another historian will write about the early 21st Century as another golden era of urban renaissance in our country.

Turning to the future, what our future directions?

So what must we do to build on the progress of the last decade and help release the energy that I know exists in the cities (and towns) up and down the country?

I have five issues that I want to address over the forthcoming months:

First, we need to have a coherent approach to devolution and this means doing the right thing at the right level  - regions, city, local authority and neighbourhood. So, at the centre, Whitehall departments, such as my own, must be looking not only to devolve but to be far sharper at setting priorities and at reaching agreements with cities as equals rather than as the recipients of central diktat.

There will continue to be an important role for effective regional institutions. RDAs are already playing a key role working with cities in devising their business cases and city-region development plans. I want strong and effective RDAs, helping to give leadership and co-ordination across the regions, and championing the cause of our cities.

At the crucial LA level we need stronger accountability to citizens, more flexibility to respond to local concerns and sharp incentives for excellence in all local authorities.  These will be key themes of the forthcoming White Paper that we will publish in the autumn.

And, as is increasingly recognised, devolution doesn't stop at the townhall. We need now to think about how best to empower citizens, neighbourhoods and local community groups to improve services and get things done.

Secondly, we need to learn the right lessons of recent experience - not least from London. It seems to me that this shows that:

• devolution  can work - Londoners have seen improvements - whether it be the congestion charge, better buses, neighbourhood policing or even the successful Olympic bid - that have resulted from more local power
• strong leadership is vital to this success. Few doubt that these successes depended in no small part on the Mayor
• and with leadership comes clear accountability so that citizens and council tax-payers know who to praise - and who to blame!

Once you begin the process of devolution and people see that it works, a new political dynamic is created that favours further devolution, as has happened in London. I think we've reached a tipping point in this regard. In the past, strong initiative by central government created the demand for yet further centralisation. Now, the increased confidence and improved performance of LAs are, I believe, creating a climate of opinion and trust where more devolution is possible. It is this devolutionary momentum, based upon success, that I want to help foster. And in this context, I'm pleased that shortly we'll be able to announce an extension to some of the Mayor's powers in our response to the GLA review.

The third issue for us is to recognise is that cities are all different - at different stages, with different resources and geographies and different ideas about how best to move forward. We need to recognise that diversity, and come up with solutions that go with the economic grain in each place. This was a strong theme in the work of Jane Jacobs, who sadly died earlier this year, after a lifetime thinking about cities. She was asked what a city should be like and replied: "It should be like itself. Every city has differences, from its history, from its site, and so on. One of the most dismal things is when you go to a city and it's like 12 others you've seen."

Fourth, we need to clarify with you the areas of policy where stronger co-ordination and governance will really help our core cities to become dynamic areas of growth. In your draft business cases, you've identified some of these, including city-wide strategies for skills and employment and better integration between housing, planning and regeneration. In particular, you have made a strong case with regard to transport, arguing that it is key to unlocking economic potential. We are looking carefully at these proposals.

Finally, we need to ensure that leadership and accountability arrangements are commensurate with the powers on offer. I have no fixed blueprint here but I'm absolutely clear that if I'm to make the case in Whitehall for more devolution then I need to be able to explain in clear and simple terms to whom we will be devolving and how this will make sense to the citizen in the street. 

If you want to help me win the case for devolution to cities then let's work together on governance arrangements that provide a clear mandate to take tough decisions across a city or a wider metropolitan area.  Nothing less will equip our cities for the ever more competitive and globalised world of the decades to come.

Conclusions

These are exciting times for all of us. After just over a month in my new post, it is clear to me that we are on the cusp of a new and exciting agenda on cities. As both an economist and a politician I feel that this is the right direction for us to be travelling in.

Our core cities do not need to become capital cities to succeed. We all know that London is a huge asset to this country - we must never forget that. But for too long in this country we have been too London-centric.  I think we must aspire to having a number of cities that are genuine global leaders as well as being engines of growth in their region - a Barcelona of the North, a Milan of the Midlands and a Seattle of the West and powerful cities in other parts of the country.  Supported by the strong national economic framework in the UK, which is open to investment and entrepreneurship, our cities can, and will, succeed in the enlarged Europe as the next phase of globalisation unfolds. This is a time of opportunity in the global economy. Cities that are bold, strongly led and willing to make the adjustments required can reap the benefits from globalisation.

Achieving this vision will require leadership and commitment at all levels.  Since 1997, working together we have achieved a great deal. Our cities are becoming more productive, more diverse and more attractive places to live and work.  The challenge for us all is to build on these successes and to give cities the tools they require to compete successfully on the international stage, to ensure social cohesion and to deliver a good quality of life for all.