Devolution to key cities offers path to inclusive prosperity

This appeared at on 01 May 2015.

The UK faces defining challenges as a nation: how to build a more productive economy, how to adapt our health service to an ageing population, how to educate our children to succeed as the world changes rapidly around us.

In these circumstances, we have a historic opportunity in the coming years to reshape the way we pursue economic development and deliver public services. Devolution of powers can transform our cities into places which act as test beds for innovation and springboards for prosperity across the UK.

Our report Power, people, and places: A manifesto for devolution to Britain’s Key Cities, lays out how local government can help us achieve that goal. Britain cities are ready to provide innovations in public services and deliver growth right now – our report shows that there is no ideal scale of devolution.

We don’t need the biggest cities and metropolitan areas to deliver big results. In fact, the 26 midsized cities represented by Key Cities have been adding value as fast as any other cities since the recession in 2008, and currently contribute £163bn of gross value added to the UK economy.

To realise our potential, what we ask is five-year funding settlements in key areas including skills and training, local transport, and housing, as well as increased fiscal powers over council tax, stamp duty, and VAT. This could save the Treasury £2.5bn each year – and £12.5bn over the life of the next parliament. We can achieve this by allowing cities to pursue local economic strategies that take advantage of their specialist expertise.

Key cities are already leading in a number of sectors which are essential to increasing the UK’s global competitiveness and building a high-skilled economy, including advanced manufacturing, digital, research and development. Key cities are pioneering collaboration with cities who share sectoral expertise, rather than being tied to geographic proximity. With more fiscal powers and ability to innovate in public services, our cities can help Britain resolve its productivity issue and build a high-skilled, rebalanced economy.

To deliver on this vision, we must be bold. This is the moment for a radically new direction – this is the moment to cut through the shouting, and the mudslinging and the uncertainty, and put Britain on a new course.

If we do not embrace devolution, we will continue to struggle with familiar problems: lacklustre productivity, skills gaps, and an imbalanced economy dependent on specific service sectors. If we do not embrace devolution, we will allow the main challenges facing our public services, an ageing population and global economic competition, to overwhelm us rather than using them to discover new and more efficient ways of doing things.

We will lose opportunities to assert global economic leadership in a number of economic specialities – opportunities that may never come back. Regardless of the election result, we must continue to think creatively about the problems we all confront. By devolving powers to our cities, the UK can open up a new path to inclusive prosperity.

Dave Smith, chief executive, Sunderland City Council, and chair, Key Cities chief executives group