Wednesday 21 May 2014 2:48 pm
How regional cities can match London’s success
BRITAIN’S cities face a challenge: the economy may be powering forward, but London and the south east so dominate economic performance that some commentators have been questioning if the capital is becoming overmighty. It may not have the population density of a Tokyo or Mexico City, but London is the Bric capital of the world – a hub for trade and commerce from key emerging markets, and a financial centre that has even put New York in the shade.
But the debate over whether London’s success is “bad for Britain” misses an important point: what our other cities can learn from the capital. There is a job to do in generating stronger growth across urban Britain. Infrastructure is a missing piece of the jigsaw, and we have a pitiful record both in developing connectivity across the UK and, critically, with international markets.
First, UK airport capacity remains a serious issue, and the HS2 rail project is en route to acquiring the same intractable status. Indeed, the high speed rail plan is something we have debated at great length on the City Growth Commission. Yet the important development is not journey times to London, but improved connectivity between midlands and northern cities. We need a tube network for the wider UK: Birmingham to Derby in the same time it takes to go from Hammersmith to Kings Cross on the Piccadilly Line. That’s a genuine game changer.
Secondly, we need to recognise our existing assets. At our universities, for example, talent and innovation are diversely spread: one of the most significant British inventions of the last decade was graphene at the University of Manchester. Today, Cambridge is Europe’s largest technology cluster – with around 54,000 people employed by over 1,500 tech-based firms.
But we also need to find ways to incentivise universities to retain talent after graduation. Increased partnerships between schools, universities and local businesses would improve work opportunities, while focusing on the specific needs of the local economy. And we need to make it easier first, for businesses to employ international students educated at British universities; and second, for talent to stay and work in the UK. Today, a visa to work beyond four months after graduating from a UK university normally requires a job with a minimum salary of £20,300 a year.
Throughout human history – from the Industrial Revolution to the fast growth of Japan in the 1980s – cities have held the key to economic growth. Density is an economic but above all a social catalyst. It’s the Joneses effect: in the country, you might see someone with a better piece of tech than you once or twice a week. In a city, it will be several times a day. Bring people together and human instinct is to compete, surpass and outdo.
The UK’s regional cites have talent and capital. In many cases the assets are there and ready to be realised. What is missing is the boldness to unlock this latent potential.
Jim O’Neill is a former chairman of Goldman Sachs Asset Management and chair of City Growth Commission. He is also a contributor to the Growth Britannia report, launched at SUMMIT: The Future of Growth.
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