Cities matter
Alexandra Jones, CEO of think tank Centre for Cities, talks to Owen McQuade about the challenges facing cities in the economic downturn and how cities are crucial to the wider region.
Why are cities important for the economy?
Cities and towns are important because the global economy is changing. In many developed economies, most jobs are being created in services, particularly knowledge-intensive services and they are generating most of the growth.
Manufacturing matters but it is generating few jobs. In a world where jobs are more and more about service and knowledge, cities offer businesses access to customers, skilled workers and the opportunity to swap ideas and innovate.
Geography matters. When we talk about the city, we are not just talking about the city centre. City centres alone cannot offer businesses access to customers and skills. It is about thinking about the city centre and its surrounding areas.
For example, Manchester’s travel-to-work area extends well into rural areas and well into neighbouring towns and cities. Manchester already works with 10 surrounding local authorities because it has to.
Unless it works with the beautiful rural areas and surrounding towns, and they all work together, then the surrounding towns cannot benefit from the jobs Manchester offers and Manchester cannot do well either. So when Manchester goes out to get investment, whether it is for Oldham or Manchester, they talk about Greater Manchester.
What has been the impact of the recession on UK cities?
The recession has had a big impact on all UK cities. It has had the biggest impact on cities that did least well during the boom years. Cities that grew the private sector during the years to 2008 tend to be least effected, whereas the cities that struggled even during the boom years have been hit hardest. In cities such as Hull, one in 10 young people are unemployed. In York, it is one in 30. A big contrast.
In terms of unemployment, Belfast has been hit relatively hard compared to somewhere like Cambridge. Our annual report on UK cities, which was published in January, Belfast was 51st out of 64 UK cities when it came to claimant rates, and in terms of the rate of increase, Belfast was 62nd. Belfast was the UK city that saw the third biggest increase in unemployment during the recession.
What are the drivers for urban growth?
Clearly people drive successful economies, particularly places with high levels of skills. Skills make the biggest contribution to urban growth. When we looked back to 1901, at which cities have done well, we found that skills accounted for nearly 20 per cent of the difference in a city’s overall performance. We found that cities with high levels of skills 100 years ago did well over the century. It is not the only thing but it is a big driver.
The challenge for Belfast is that it does well with graduates (it has a lot of highly skilled people) but faces a real challenge with relatively high numbers of people with no qualifications. Belfast is 63rd out of 64 UK cities when it comes to the proportion of people with no qualifications.
Businesses are also another driver of the urban economy. This is about inward investment, innovation, supporting start-ups and a diverse business mix. In our study looking back to 1901, we found that those cities with the most diverse business structure did the best and the ones that were over-reliant on one or two industries struggled over that century.
For example Bradford, which was incredibly reliant on textiles, was much bigger than Leeds in 1901. It is now struggling much more than Leeds because Leeds was much more diverse and managed to cope better with industrial change.
Place is also a key factor. This is about having the housing and transport in the right places, having the right approach to planning and having the right quality of life. When we talk to inward investors they say it is about the access to culture, the quality of schools and the ability to get into the countryside quickly.
Finally, leadership matters: leaderships in all sectors, public, private and third sectors.
Is there one city that has impressed you in recent times?
Yes. Manchester is a fantastic example of a city that has re-invented itself. Its economy has improved in recent years. It has got more knowledge intensive jobs and more jobs at all skill levels. It is also re-inventing its image. Indeed, if you ask many people in England: “What is the second city in England?” they will often now say Manchester instead of Birmingham. They have done that through and events strategy rather that marketing the city: events such as an international festival.
They have also made good use of the football team and have brought the Bank of New York to the city as an inward investor. They have made good use of the airport and have regenerated the city centre. They have worked in partnership with neighbouring areas, recognising that Manchester cannot do all this on its own.
They have been really impressive in how they have recognised how the global economy is changing and looked outwards and then (together with its neighbours) looked inwards to deal with the big challenges they face and also to make the most of the opportunities.
What is the biggest issue for developing cities?
Investment. Getting money to kick-start things. You see a lot of investments, in all kinds of cities, stalled because you cannot get the public sector taking some of the risk. Finding innovative ways to get investment into cities, whether it is skills or physical development. This will be not just a short-term issue but a medium- and long-term trend as public sector finances will not be the same for decades to come. Finding new ways for investment will be key to cities’ future development.
Profile: Alexandra Jones
Alexandra Jones has led the Centre for Cities since 2001 and previously headed up Ideopolis, the cities team at the Work Foundation.
She has managed projects with a range of public and private sector clients on issues, including the knowledge economy, public service reform, management and human capital. Alexandra has also worked at the former Department for Education and Skills in Whitehall and as a researcher at the Institute for Public Policy Research.
The Centre for Cities was established in 2005 by Science and Innovation Minister Lord Sainsbury. Its main goal is to understand how and why economic growth and change takes place in Britain’s cities, and to help cities improve their performance.
