Cities and Towns

Paul Swinney, Rebecca McDonald and Lahari Ramuni – originally published at the Centre for Cities

Since the Brexit vote, there has been a great deal of policy debate and focus on ‘left-behind’ towns, and whether consecutive governments have focused too much on cities at the expense of smaller places.

But what is overlooked in these debates is the economic relationship between cities and towns, and how this should inform policy.

A new report explores the ways that the economies of cities, towns and villages interact. It shows that the impact of cities goes well beyond their boundaries – and that they shape the economies of the places around them – in two key ways:

1. Cities are home to the majority of the economy – bringing benefits to other places

Cities account for just 9 per cent of land in Britain, but are home to 55 per cent of businesses and 60 per cent of jobs. This has a number of implications for people who don’t live in a city:

  • Cities raised 63 per cent of all growth-related taxes in 2013/14, which was then used to provide public services across the country.
  • Cities provided jobs for more than 1 in 5 working residents living outside cities in 2011.
  • Due to their larger markets, cities are able to support specialisms in health, education, arts and entertainment activities that people living in nearby towns and rural areas are able to benefit from.
2. The economies of cities and towns are intrinsically linked

The report shows that when a city prospers, nearby towns are also more likely to be successful:

  • Towns close to highly productive cities perform better in terms of attracting high-skilled business investment, jobs and firms. And they also have lower unemployment rates.
  • In contrast, towns close to less successful cities have higher unemployment rates, and have also struggled to attract high-paying firms and jobs.

The report argues that these factors should be important considerations for policy debates on industrial strategy, inclusive growth and productivity. It makes the following policy recommendations:

  • Focus on improving skills in all places across the country
  • Recognise the role that cities play in their wider local economies
    and the national economy
  • Proceed with further devolution to tailor policy responses to different
Talk of the Town can be downloaded here.


Keeping a creative focus

Tom Campbell, KTN

A decade ago, there was barely a part of the UK that didn’t aspire to be world-leading in the creative industries. Every Regional Development Agency prioritised the sector, and dozens of areas, from Cornwall to Sheffield, adopted the ‘creative’ prefix and associated strategies to boost their creative economies. Much has changed, and much has been learnt since then. But while funding is far from the level it once was, cities and regions continue to develop initiatives to support creative clusters.

An important difference, however, is the greater emphasis on focus and the use of evidence. This is well demonstrated in Coventry and Warwickshire where the LEP is implementing a growth strategy not for the creative industries, or even the audio-visual sector, but exclusively the video games industry – building on the strengths of what has been dubbed ‘Silicon Spa.’[1] While this might have risked upsetting the region’s wider creative industries, it has enabled the LEP to invest its resources more strategically with a bespoke programme of support, skills and trade promotion tailored for its games businesses.

There are several cities in the UK that can claim to be leaders in certain creative industries – or rather, distinctive elements and supply chains of industries. Oxford, for instance, is arguably the global centre for academic journal publishing. Cardiff’s television production industry is thriving, designer-making in Stoke is undergoing a renaissance, Liverpool has recently launched a strategy for growing its renowned music sector, while both Warrington and Dundee have nurtured significant games production clusters.

This more granular approach to economic development is known within the EU by the term ‘smart specialisation’[2], with a recognised process for identifying place-based interventions on the basis of mapping existing strengths and stakeholder engagement. Central to this is the prioritisation of knowledge domains and market niches – specific activities where regions have a competitive advantage and the potential for growth. Through this approach, innovation support programmes in small urban areas have enabled countries such as France and Germany to successfully build up knowledge-intensive regional economies in fields such as advanced manufacturing, chemicals and aerospace.

Given the alarming, and worsening, regional imbalance in the UK’s economic performance[3], a similarly fine-grained approach is badly needed. By contrast, the UK’s large metropolitan centres are competitive because of their breadth and do not need to focus: London’s strengths in a dazzling range of creative industries, from advertising to fashion and film, give it a scale that fosters innovation, attracts skilled workers and captures investment. Strategies intended to replicate this and simplistically boost local creative economies will not work for the likes of Coventry. Not every city can be a centre for feature film production or home to multi-national advertising agencies. But through an approach rooted in depth rather than breadth, and an understanding of distinctive strengths, markets and supply chains, there is real potential for cities, whatever their size, to flourish in the global creative economy.