Comment

29.04.19

Cities as places of opportunity

Source: PSE April/May 2019

Andrew Carter, chief executive of Centre for Cities, asks: if cities are places of opportunity for the low skilled, why are so many struggling?

Those looking for Brexit respite had their prayers briefly answered recently as MPs paused to scrutinise the government’s Stronger Towns Fund.

The £1.6bn cash injection was lauded by the prime minister as a way of addressing the perceived lack of attention paid to many so-called ‘left behind’ areas over the last decade or so, which many claim paved the way for Brexit.

Irrespective of the political motives behind the fund, or arguments over whether the pot of cash is large enough, the fund should be welcomed as a means to support economically struggling towns –mainly in the north and Midlands.

What is guaranteed is that ‘inclusive growth’ – economic growth that benefits all segments of a place’s population – will feature prominently in the plans put forward to regenerate struggling towns, as it does for cities up and down the country.

This reflects the widely-held view that the economic growth the UK has experienced over the last decade or so, and particularly in cities, is not benefitting the lower-skilled people living and working in these places. Our recent research shows that there is some truth to this view, but as always the picture varies depending on the city you’re looking at. 

Using the latest data available from the census shows that in Exeter, less than 10% of low-skilled workers living there were unemployed, while over half were working in a job above their skill level. Similar patterns of inclusive growth can be seen in cities across the country, from Aberdeen to Aldershot. However, not every city offers its residents and workers these inclusive growth opportunities – and many of the cities that struggle to offer these opportunities are located in northern England and the Midlands.

Many of these places are likely be covered by the Stronger Towns’ Fund. So what should these places focus on to achieve inclusive growth?

Centre for Cities’ report ‘Opportunity Knocks?’ found that the best way for cities to generate inclusive economic growth that benefits people – irrespective of whether they hold a PhD or a single GCSE – is to grow the total number of high-skilled jobs within a local economy.

While this approach seems counterintuitive, there are solid reasons to support it. For every 10 high-skilled jobs created in a city, 17 further lower-skilled jobs in service industries such as retail and hospitality are created. Because of this, economically stronger cities such as Cambridge, Oxford and Exeter have more low-skilled jobs than low-skilled people – providing those at the lower end of the job market with more employment choice and more bargaining power.

At the other end of the spectrum, in cities such as Southend, Barnsley and Birkenhead, there are fewer high-skilled jobs and at least two low-skilled people competing for every low-skilled job – making it much more difficult for those out of work to get a job and for those in work to progress.

These findings suggest that in the short term, urban areas would benefit from increased investment in both transport and housing infrastructure to ensure that low-skilled people have access to jobs nearby – and can afford to live close to their job. This is especially important in more economically successful places where low-skilled workers are struggling with the cost of living.

However, if implemented alone, these interventions will only be a sticking plaster for places with weaker economies in the north and Midlands. To establish the foundations for sustainable economic growth, urban policy makers should focus on upskilling low-skilled adults.

As a result of decades of improvement in education, older people are now more likely to be low-skilled than younger generations; people aged between 50 and 64 accounted for 25% of the working-age urban population in the last census, but 34% of all the low-skilled people in urban Britain.

Greater investment in work-based education is crucial if we are to ensure that a whole generation of people have the skills that they need to succeed in the workplace of today, never mind the future. Investment in adult education will be one of the strongest means of ensuring inclusive growth for Britain’s left behind urban areas and futureproofing the careers of the people who live and work in them. It must be prioritised, or we risk inadvertently creating a lost generation of people in cities who are unequipped to respond to changing economic realities. To this end, the chancellor should use the next Spending Review to significantly increase funding in further and adult education. 

But it’s not just money. Addressing the challenges of urban areas across the country requires the coordination and integration of several policy areas – welfare, education, skills, transport, housing – which is best done locally. Local leaders are the most informed about local problems and are best placed to decide on solutions, as well as being more accountable.

Irrespective of the politics behind the Stronger Towns Fund, it has shone a light on many of Britain’s left behind urban areas and raised important questions about what they need to succeed. As we look ahead past Brexit and towards this year’s Spending Review and next year’s metro mayor elections, urban leaders should ‘take back control’ of the urban policy agenda, and demand that Whitehall gives them the tools to ensure their areas thrive.

 

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