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Damian Walne
Director, Socio-Economic Centre
Damian Walne

Unleashing Metro Growth?

Authors: Damian Walne

22 October 2014

The Royal Society of Arts published their much anticipated recommendations from their year-long City Growth Commission. I was at the launch event today. The Commission team deserves credit for their series of seminars and reports through the year; and the engagement they have had from local government leaders from across the country.
The Commission’s report, “Unleashing Metro Growth” does capture a moment. Perhaps having Jim O’Neill, formerly of Goldman Sachs, leading the Commission helps sprinkle a little political and media impact around. But this work also rides something of a wave in terms of thinking about urban growth (including our own ‘Cities 2020’ here at The Work Foundation); but also the momentum that has built up around arguments for decentralisation. The energy behind Scotland’s Independence Referendum, the subsequent pledges of greater devolution to the Scottish Parliament, followed by questions about what this means for governance in the rest of the UK, feeds through into pertinent challenges about the powers and responsibilities to local government in our cities.
This set the context for some rather bullish talk at today’s event. Lord Heseltine, in candid opening remarks, argued the need to end the monopoly of the Whitehall machine. Speakers from Manchester and Leeds city councils spoke of how Whitehall’s top-down silos and targets were broken and how it was only powers to cities that could fix things.
I do have sympathy with these arguments. My own past stints in the Greater London Authority and the Department of Communities & Local Government mean that I’ve formed my own sentiments of the merits of city-level government and Whitehall departments. But it is the evidence that needs to be persuasive.
So does this report hit the mark? I am not so sure. But here are my top three worries:

1. The predicted boost to economic output.

The media coverage and the Commission’s press release pushed a line that “devolution has the potential to boost economic output in the UK’s 15 largest metros by £79 billon per year”. It is the kind of message that hits.

When you look for the explanation of where this figure come from, it is a crude projection that the growth rates of 14 city areas will match the UK growth rate until 2030. So it simply assumes that growth rates will increase. It does not tell us if and how this growth relates to devolution. So the £79 billion figure troubles me. It may mislead a wider audience that we really measure the impact of devolution.
In truth the empirical evidence of a relationship decentralisation and economic growth is ambiguous. That is a whole other blog! Generally, it is more persuasive to find evidence on the outcomes how to finance and provide different public services rather than make sweeping calls about GDP growth.

2. The idea of “ManSheffLeedsPool”.

The message of “agglomeration” recurs throughout the Commission’s report; with nods to how London’s size and scale is what the UK’s other cities lack. In particular this gives a push to the concept of a “ManSheffLeedsPool” – where by bringing the four-regions of Manchester, Sheffield, Leeds, and Liverpool closer together, this will create a 7 million region to rival London.

It is an intuitive idea. There is a fair economic case for improved travel times across England’s Pennines. But I am yet to see compelling evidence that this would London-type agglomeration gains implied by the Commission. Compared to London, with a key central area that draws in commuters from areas that are much cheaper or offer rural amenities, the northern industrial cities remain very poly-centric with limited commuting between them. I recall LSE research for the former Northern Way which showed how the agglomeration gains would be stronger from improved connectivity within those cities rather than between them.

3. Many of the recommendations are a little contentious…

The list of policy recommendations is long, with dozens of ideas. But I do not get much sense of prioritising between them; or how much the rationales or economic implications were considered.

For example, I’m not so sure about “golden handcuffs” for graduates – I suspect there are implications for labour mobility and perhaps such financial incentives would be better targeted to assist low-skilled and low paid people. Or there are calls to devolve budgets for adult skills – but given the existing complexity in vocational education, it is not clear how local coordination would resolve this.

The report is wide-ranging and there is much to take in. Alongside Lord Heseltine’s own recommendations in ‘No Stone Unturned’, or for the Labour party, John Healey’s review on “Making Local Economies Matter”, Unleashing Metro Growth, is a welcome contribution. For those of us working in local economic growth, we’re going to be kept busy..