Connected Cities 11th September 2015

The UK‘s shortfall in productivity can be solved by greater devolution, public services reform and locally led investment in infrastructure, according to two major reports set to be unveiled at the Connected Cities Summit at the QE2 Centre in London today.

Core Cities and Bilfinger GVA are co-hosting the conference, which will be attended and presented by City leaders, Mayors, business leaders and key decision makers, to launch the two new reports.

Each responds to the Comprehensive Spending Review (CSR) by setting out the critical requirements from both a regional business and public sector perspective.

The Summit will feature a keynote from The Lord O'Neill of Gatley, Commercial Secretary to the Treasury. He will present Government thinking on the best way to ensure effective investment in the regions. Contributions from City leaders and Mayors will follow.

Bilfinger GVA will unveil research entitled ‘UK Infrastructure: unlocking UK cities and Commercial Property’ on the infrastructure requirements of the Core Cities and what effectively deployed investment can mean for productivity and business growth.

Core Cities UK will launch a prospectus entitled ‘Unlocking the Power of Place’ calling for a joined up, 'place-based' multi-year approach to the Comprehensive Spending Review - the Government’s spending plans for this Parliament – so UK investment can be deployed in the best way possible to drive growth, rebalance the economy and contribute to sustainable deficit reduction across the UK’s biggest cities.

Whilst the Core Cities prospectus will set out how greater devolution can raise the UK’s productivity and close the public finance gap, Bilfinger GVA’s report calls for major changes to the way infrastructure, from broadband to roads, is funded and delivered.

Central to this debate is addressing the issue of low productivity. Bilfinger GVA’s report highlights that the UK’s core cities account for 25% of the economy, although output per capita remains below the national and EU average in each city bar one.

The debate seeks to establish how the overall quantum of investment can be increased through innovative approaches, not simply a redistribution of resource.  It argues that the UK needs to improve delivery of infrastructure to the rest of the country in a way that supports London’s critical role, but allows other places to achieve more of their potential.

Overall investment lags behind that of our major international competitors, largely due to a combination of slow political process, the clarity of long-term vision, and a lack of devolved power; all issues which are in the Government’s sightlines. Enabling cities to use innovative financing mechanisms would increase infrastructure investment to the areas where it is most needed.

Core Cities Chair and Leader of Manchester City Council Sir Richard Leese, said: “Our CSR prospectus sets out how our cities can become self-sustaining, rivalling any of our global competitors, strengthening the UK through its cities. As long as the UK state remains one of the most highly centralised democracies in the world, our cities will remain stuck in second gear, unable to realise their full potential. If the core cities close the gap on output and match the UK average, an additional £66bn can be added to the UK economy.

“As Bilfinger GVA’s excellent report illustrates, creating conditions for the type of higher value employment and innovation that will raise productivity in the core cities requires a range of measures, but first and foremost, investment in transport infrastructure and digital connectivity.”

A key project for supporting an increase in regional productivity is HS2. While it will decrease journey times, a key benefit is the increase in capacity between London, the Midlands and the North, by easing pressure on existing routes such as the West Coast mainline. Improving connectivity between the cities of the North West with Yorkshire and the North East also needs urgent attention. the report says.

It writes: "However, there is evidence that whilst the UK is increasing its focus on improving travel, there is a risk that digital infrastructure remains neglected. Of the major infrastructure projects currently identified by the Treasury, the £1.8bn cost of improving digital connectivity only accounts for 1.5% of total expenditure, compared to £91.5bn on rail (75.8%).

"Investment in information and communication technology is a major driving force behind increased productivity. Many developed and emerging economies are investing heavily in digital infrastructure and the UK is at risk of being left behind if average broadband speeds do not match those in competing economies."

Jo Davis, Senior Director at Bilfinger GVA, said: “We look forward to presenting our views alongside regional city and private sector business leaders to identify where the investment priorities sit for infrastructure; what approach to the allocation of public resources regional cities need from Government to realise these projects and their potential; what differences these could make to the regional and national economy; and what opportunities and challenges lie ahead for UK and overseas investors and developers.”

Sir Richard Leese added: “Economic growth is important but we should not pursue growth for growth’s sake. We need to make sure more people share in future prosperity, reducing inequality and the burden it places on the state. Our cities have a proud track record of working with partners across the private sector. But it’s time to fully realise their potential and give cities a greater role in building the new infrastructure our nation so badly needs.”