Cities limited

Published by Policy Exchange, London, 8 November 2007 (PDF)

“They persuasively argue that recent urban policy has had no real impact.”
Professor Paul Cheshire, London School of Economics

Committed to cities – Cities are thriving; attracting people and business and driving the national economy. This mantra has crept into common knowledge, but fails to capture the whole picture. While many cities have been prospering, others have not been so successful. These cities are becoming increasingly economically and socially marginalised. It is for this reason that urban regeneration policy has been so central to government strategies since 1997, and has spent over £30 billion on 14 different core policy initiatives. In 40 years it can be estimated that £100 billion has been spent on regeneration at today’s prices.

Failed cities – Yet over the last 10 years, and despite a doubling in funding levels, the very cities that have received these record levels of funding have fallen further behind. Urban policy cities – cities such as Hull, Liverpool and Hastings, which have suffered disproportionately from economic change and have received three-quarters or more of identified regeneration funding since 1994 – were compared with the national average and with a sample of successful cities. The conclusions were stark. Across all our indicators the urban policy cities not only failed to catch up to the national average or more successful places, but have fallen ever further behind.

Key findings

  • Urban policy cities have become economically worse-off. Gross value-added (GVA), a measure of economic productivity, is 13% below the national average in urban policy cities: this gap is 40% wider than in 1997. In contrast, successful cities’ GVA grew from 39% above the average in 1997, to 46% in 2004. Similarly, income levels in urban policy cities have fallen back relative to the national average, while those of successful cities have moved further ahead. Incomes in successful cities are now a third higher than in urban policy cities.
  • Urban policy cities offer fewer opportunities. Even after a decade of falling unemployment, unemployment rates in urban policies cities are 40% above the national average. In 1997 they were also 40% above, in other words, nothing has changed.
  • People are leaving urban policy cities and moving to successful cities. Housing prices are 30% lower in those cities in which significant urban policy investment has been concentrated, while in 1997 this gap was 19%.
  • Education, health and entrepreneurship levels have not improved. People are 38% less likely to register a new business in an urban policy city than in a successful city, a figure unchanged since 1997. Pupils are 13% less likely to get 5 good GCSEs, a figure unchanged since 2000. While in 2000 there was a 50% probability that an individual would have no qualifications, in 2005 this figure had risen to 60%. Life expectancy in these cities is 20 months lower than the national average, in 1997 it was 18 months.

What’s wrong with our cities

  • The prognosis is worrying. Despite concerted central government interventions, the cities which were in most need of change in 1997, are still waiting for that change. The promised renaissance has not arrived. These cities are failing relative to the national average in terms of economic and social conditions. When these are compared to successful cities, the picture becomes even starker.
  • As the economic locus of the UK has shifted south, many cities in the north have become marginalised. While government has tried to overcome this with subsidies, these cities are still finding it difficult to adjust themselves to the current economy.
  • The UK story is not one of successful city convergence, but is instead a tale of two types of cities, one free to prosper, the other dependent on regeneration funding. This situation needs to change.

Cities limited is the first report in a series of three analysing regeneration policy both in the UK and internationally.

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