British cities have weak governance, limited public transport – and terrible productivity. Coincidence?

A gratuitous picture of the Wuppertal Suspension Railway in the Ruhr. Image: Mbdortmund/Wikipedia.

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

Last week, over at the good ship New Statesman, I wrote about my irritation with the widespread habit among journalists of explaining everything that ever happens in terms of whatever it is they spend their lives writing about. It’s lucky I have no fear of hypocrisy, then, because I’m about to do exactly that.

For the last few weeks I’ve been trawling Centre for Cities data in an attempt to explain a mystery: why are the big British cities outside London so much less productive than cities of similar size and stature elsewhere in Europe?

Click to expand.

Digging through the numbers, I found that less productive cities have a few things in common: smaller services sectors; lower numbers of businesses; fewer patents registered; a lot of unskilled workers. Which way the causality runs is not always clear – a lot of those things could be the result of talented people leaving, to work in more productive cities where career options are wider and wages are higher. Nonetheless, it’s clear that, whether symptom or cause, there are certain characteristics that struggling cities tend to share.

Reading up on the various cities, though, I started to wonder if there might actually be other ways in which the four British ones were unlike their European peers – ways which aren’t captured by this dataset. Here are three.

1) The other countries I looked at all have regional governments

France has regions and, more recently, metropoles (collections of councils, covering entire metropolitan regions). Italy has provinces, Spain has autonomous communities and Germany has states. (Hamburg, indeed, is a state in its own right.)

In England, though, for most of recent history there’s been no administrative layer between local councils and national government. (The three Celtic nations have at least had their own administrations since 1999.) There has thus been no layer of government whose job it is to think about the needs of specific metropolitan regions.

This is, gradually, changing: Birmingham and Manchester now sit at the heart of their own city regions. But there’s still nothing on offer in Leeds, and no democratic body tasked with planning for the needs of greater Glasgow. (The closest is the Scottish Government, but that’s up the road in Edinburgh and responsible for a much, much bigger region.)


2) Mayors are standard on the continent

...but not in Britain, where the council & leader model has historically held sway. So while there are individual politicians whose job it is to speak up for Milan or Marseille or Munich, British cities have had no such representatives.

Again, this is changing: some councils are now led by directly-elected mayors; some city regions now elect metro mayors. There are individuals whose job it is to stand up to central government for the needs of Greater Manchester or greater Birmingham (Andys Burnham and Street, respectively).

This, though, is a very recent phenomenon – and once again, Leeds and Glasgow are still out in the cold.

3) Continental cities have public transport

I looked at 15 continental cities in this exercise. All but one, Hamburg, have tram networks. As far as I can see, literally all of them have heavy-rail metro networks, too – whether subways or S-Bahn commuter rail networks.

Once again, it’s the British cities that are the outlier. Glasgow has its subway, and very nice it is too, but it serves only a small part of the city, and attempts to extend it have repeatedly been abandoned. Manchester’s Metrolink tram network is now pretty extensive, but also very recent.

Birmingham, meanwhile, has only a single light-rail line, and Leeds nothing at all. All four cities are still fairly limited in their powers to regulate the buses or trains on their patch. None of them offer the sort of extensive public transport networks you’d expect when visiting almost any continental city.

Spot the difference. Image: Tom Forth.

You’re getting the point now, I hope. Most continental European cities have visible local and regional governments whose job it is to speak up for their cities and plan for its needs. They also have extensive public transport networks. British cities have not, in recent times, had any of those things.

Correlation is not causation, of course, and as I admitted above, I’m primed to see the world this way. Perhaps these are the things holding British cities back; perhaps they’re not. At the very least, we have to accept that a mayor and a subway is no magical formula for creating productivity, because if it were, Naples wouldn’t be also struggling along at the bottom of the league table.

Nonetheless, it’s hard not to spot a pattern here. The big British cities have had nobody to speak up for their needs. They’ve had limited investment in their transport networks. And they’re not as productive as their continental peers.

Perhaps these things are unrelated – but it’s a bloody big coincidence, don’t you think?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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The number being helped by Help to Buy is at a record high. That’s not a good thing

Help to Buy, Bristol, 2013. Image: Getty.

James Brokenshire the secretary of state for the Ministry of Housing, Communities and Local Government (MHCLG) has been having a busy week. On Monday, the department published its rough sleeping strategy, while Tuesday saw the release of the long awaited social housing green paper.

Neither has filled commentators or the housing sector with much confidence – not least because they offer no new support for genuinely affordable homes. This is a problem because, well, there aren’t enough and building more will cost money. 

Since 2010, affordable housing funding has taken a significant hit. Financial support for building social rented homes, where rents are linked to local earnings, has been cut in favour of rents set at 80 per cent of market rents. As a result the supply of new homes at social rent has dwindled dramaticallyIPPR research has shown that, across the country, the so-called affordable rents which have replaced them are simply too expensive for many households on low incomes.

This lack of a support stands in marked contrast to government’s approach to homeownership, as figures released today on sales through the Help to Buy show. Help to Buy loans, in which government lends a household 20 per cent of the value of a new build home (40 per cent in London), are at a record high. To date, around 170,000 homes have been sold through the scheme.

But the Help to Buy policy has two key problems. Firstly, far from supporting those who otherwise couldn’t afford to buy, the scheme is instead assisting households who would be able to buy at some point without support; lower income households continue to be priced out. The government’s own analysis shows that many of those buying through the scheme would have been able to buy at some point in the future without the scheme.

At the same time, the data released today shows that more than a third of those who have made use of Help to Buy to date have household incomes of £50,000 or higher. Around 1 in 10 of those who have bought through the scheme have a household income of over £80,000.

Secondly, far from improving affordability, Help to Buy worsens it. Research by the housing charity Shelter has shown that, through boosting demand for scarce housing, Help to Buy has inflated house prices. 


The main beneficiaries of this are the developers who have factored the scheme into house prices and as a result have seen a significant increase in their profits. Take, for example, the excessive bonus paid to the CEO of Persimmon Homes earlier this year of £75m (originally £100m), which stoked such shareholder and public fury: that was linked to a surge in profits driven by the Help to Buy scheme.

Both of these critiques demonstrate that government is currently not putting its balance sheet to best use. To date, Government has leant out £8.9bn through the Help to Buy. In 2017 alone, the money could have been used by councils to build somewhere in the region of 22,000 homes for social rent, over 400 times the amount actually built in 2016-17.

Letting councils borrow to build affordable housing would make significant steps towards delivering the 145,000 affordable homes which are needed each year, tackling poor housing conditions, over-crowding and poverty. At the same time, it would generate a return for councils, which could in turn be used to invest in more affordable homes and improve existing ones.

Yet, our absurd national accounting rules currently prevent this from happening. Help to Buy lending is not counted towards the deficit. This is because, asGeorge Osborne boasted when launching it, the Help to Buy scheme is a financial transaction, and therefore the taxpayer would be “making an investment and getting a return”.

By contrast, under rules imposed by the Conservative Government of 2010-15, councils are subject to a debt cap on what is called the housing revenue account. This prevents them from borrowing prudently against future rental streams to build council homes. This is despite cries from the Local Government Association that councils want to get building in order to tackle the housing crisis.

On a more positive note, the social housing green paper indicates that the government is starting to budge on this. It has already lifted the borrowing cap slightly in areas with pressure on affordability and is using these schemes to test the possibility of going further. 

This is welcome, but as the social green paper shows warm rhetoric on its own is not enough. Government should commit to changing the borrowing rules, lifting the local authority debt cap and phasing out help to buy.

Darren Baxter is a Research Fellow at IPPR he tweets @DarrenBaxter.