The process of devolving power and responsibility from Whitehall to UK cities (‘Devo Met’) should run in parallel with that of ‘Devo Max’ for Scotland, with draft legislation put in place by January 2015, according to the final report from the RSA City Growth Commission.
Unleashing Metro Growth concluded that by 2030, devolution has the potential to boost economic output in the UK’s 15 largest metros by £79bn per year – worth approximately 5 percent of current GDP.
The Commission concluded that our current centralised political economy is ‘not fit for purpose’ and that centralised attempts to manage down the deficit and national debt will be futile (and unsustainable) in the long term.
Encouraging the government to introduce a tight timetable for ‘Devo Met’ in order to build on the momentum of the City Deals and Growth Deals, the Commission concluded that shifting power away from ministers and officials in central government to cities would drive up the UK’s long-term trend rate of economic growth.
There needs to be a radical reshaping of the UK’s political economy, with our metros given sufficient decision-making powers and financial flexibilities in order to become financially self-sustainable. The scale of the challenge is huge, the report said, with Greater Manchester – our second largest metro area remaining in an annual £4-5bn fiscal deficit to the Treasury.
Commissioners also concluded that the current national approach to both skills training and immigration is failing cities across the UK that struggle to find highly-skilled talent. The Commission called for skills funding to be the responsibility of city-regions, enabling metros to target skills training with the jobs they aim to create. Metros should administer Adult Skills Budgets with advice provided by Local Economic Partnerships, the report concluded.
The Commission found that SMEs struggle to meet their recruitment needs through immigration because the system is costly and complex. Commissioners concluded that if the UK persists in restricting immigration in order to meet its (growth inhibiting) net migration target, there is a risk that households in all metros will suffer in the long-term as GDP and GDP per person falls and average incomes are squeezed.
The Commission recommended reforming national immigration policies in favour of taking a metro-led approach, including lifting the cap on Tier 2 skilled immigration to signal that the UK is keen to attract the brightest and best.
Chair of the RSA City Growth Commission, Jim O'Neill said: “The ambitious goal of the Commission was to think of specific recommendations to boost the trend growth rate of the UK economy. We conclude that bolder efforts to improve our infrastructure, both digitally but especially physically, are crucial for creating agglomeration. As I have become fond of saying, greater connectivity between ‘ManSheffLeedsPool’ and this 7 million person region could start to see the level of scale we need for change.
"We argue all 15 metro areas should be able to take on different packages of devolved powers over time, and there’s no reason why other places could not come together to take on policy and budget flexibilities too. The current five metro areas that have Combined Authorities seem to be the best placed, along with London for warranting earlier steps towards full ‘Devolved Status’.”
