Budget 2017: Philip Hammond just showed that rejecting metro mayors was a terrible, terrible error

Sorry, Leeds, nothing here for you: Philip Hammond and his big red box. Image: Getty.

There were some in England’s cities, one sensed, who breathed a sigh of relief when George Osborne left the Treasury. Not only was he the architect of austerity, a policy which had seen council budgets slashed as never before: he’d also refused to countenance any serious devolution to city regions that refused to have a mayor, an innovation that several remained dead-set against.

So his political demise after the Brexit referendum was seen, in some quarters, as A Good Thing for devolution. The new regime, it was hoped, would be amenable to a variety of governance structures more sensitive to particular local needs.

Well, that theory just went out of the window. In his Budget statement today, in between producing some of the worst growth forecasts that anyone can remember and failing to solve the housing crisis, chancellor Philip Hammond outlined some of the things he was planning for Britain’s cities.

And, intentionally or otherwise, he made it very clear that it was those areas which had accepted Osborne’s terms which were going to win out. 

The big new announcement was a £1.7bn “Transforming Cities Fund”, which will

“target projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology”.

To translate this into English, this is cash for better public transport.

And half of this money will go straight to the six city regions which last May elected their first metro mayor elections. The money is being allocated on a per capita basis which, in descending order of generosity, means:

  • £250m to West Midlands
  • £243 to Greater Manchester
  • £134 to Liverpool City Region
  • £80m to West of England
  • £74m to Cambridgeshire &d Peterborough
  • £59m to Tees Valley

That’s £840m accounted for. The rest will be available to other cities – but the difference is, they’ll have to bid for it.

So the Tees Valley, which accepted Osborne’s terms, will automatically get a chunk of cash to improve their transport system. Leeds, which didn’t, still has to go begging.

One city which doesn’t have to go begging is Newcastle. Hammond promised to replace the 40 year old trains on the Tyne & Wear metro at a cost of £337m. In what may or may not be a coincidence, he also confirmed a new devolution deal with the “North of Tyne” region (Newcastle, North Tyne, Northumberland). This is a faintly ridiculous geography for such a deal, since it excludes Sunderland and, worse, Gateshead, which is, to most intents and purposes, simply the southern bit of Newcastle. But it’s a start, and will bring £600m more investment to the region. A new mayor will be elected in 2018.

Hammond’s speech contained other goodies for cites too, of course. Here’s a quick rundown:

  • £123m for the regeneration of the Redcar Steelworks site: that looks like a sop to Ben Houchen, the Tory who unexpectedly won the Tees Valley mayoral election last May;
  • A second devolution deal for the West Midlands: that includes more money for skills and housing (though the sums are dwarfed by the aforementioned transport money);
  • A new local industrial strategy for Greater Manchester, as well as exploring “options for the future beyond the Fund, including land value capture”;
  • £300m for rail improvements tied into HS2, which “will enable faster services between Liverpool and Manchester, Sheffeld, Leeds and York, as well as to Leicester and other places in the East Midlands and London”.

Hammond also made a few promises to cities beyond England: opening negotiations for a Belfast City Deal, and pointing to progress on city deals in Dundee and Stirling.


A city that doesn’t get any big promises out of this budget is – atypically – London. Hammond promised to “continue to work with TfL on the funding and financing of Crossrail 2”, but that’s a long way from promising to pay for it. He did mention plans to pilot 100 per cent business rate retention in the capital next year, however – which, given the value of property in London, is potentially quite a big deal.

So at least that’s something. And London, as has often been noted, has done very well for itself in most budgets down the year.

Many of the other big regional cities haven’t. Yet Leeds, Sheffield, Nottingham and Derby were all notable for their absence, both from Hammond’s speech and from the Treasury documents accompanying it.

And not one of them has a devolution deal or a metro mayor.

(If you came here looking for my thoughts on the housing element of the budget speech, then you can find them over at the New Statesman. Short version: oh, god.)

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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Could modular housing help Britain build the homes it needs?

Pre-fabricated housing being moved into position in Los Angeles in 2012. Image: Getty.

We’ve got ambitious government targets, an appetite to build and huge numbers of people who need housing. But we’ve known all this for some time, yet we are still in the same situation – a housing crisis.

So let me start with an obvious yet uncomfortable truth - relying solely on traditional construction methods will not halt the housing crisis. This isn’t a comment on the traditional product or its processes, more a reiteration of a well-known fact: skills capacity is also at crisis point. 

It’s a stalemate situation. In 2016, the Joseph Rowntree Foundation released a report on the relationship between housing and employment. The report found that neighbourhood investment creates a sound basis for employment, and that affordable rent provides a greater incentive for people to work.

One relies to some degree on the other. After all, a home is about so much more than bricks and mortar. So why aren’t we jumping at the chance of doing things differently to get out of this impasse?

The UK is something of an outlier when compared to many of our continental neighbours. Areas like manufacturing have seen steady productivity growth over the last twenty years, allowing more economic growth with the same or fewer number of workers. However, the UK construction sector has seen productivity flat line for the past two decades. This limits growth, and means a loss of more than £100bn a year of economic benefit.     

There are alternative products and processes we can take advantage of – but we seem to be simply dipping our toes in the water. Personally, I think we’re suffering from a lack of confidence. We need confidence in the quality of modular products (which, clearly, from our recent YouGov research, the public doesn’t have). We need confidence in the durability of MMC (modern methods of construction) products.

And we need confidence in the sector that the intention of modular suppliers is to add to capacity, not to replace traditional processes.

This is why my team are currently working with a range of modular and MMC suppliers to robustly compare and contrast a range of housing products. It’s a live research project in Gateshead that will monitor and evaluate the build process and lifestyles on offer through a range of different construction methods – including traditional. The homes will be for affordable rent and tenants will be involved in the ongoing evaluation.


So why are we doing it? If we make this research available to other developers perhaps as a sector we can make more confident and informed decisions about new construction methods.

Because while MMC is being used across the sector, we’re not using it at scale. And its scale that we need to affect change: 300,000 homes is no small number, after all. (What’s more, according to a survey by the Royal Institution of Chartered Surveyors, only 12 per cent of surveyors believe we can hit that target – another confidence boost needed).

 MMC isn’t as affected by the crisis in construction skills capacity. It’s an entirely different skillset. So it’s not about skilled tradespeople jumping ship.

You could almost envisage two different pathways into housebuilding. Studies have told us that millennials are purpose-driven, and therefore most likely to be attracted to organisations that are driven by purpose. So maybe that’s how we have to think about careers in construction.

There may be two distinct pathways being formed with two distinct skillsets – but ultimately, both are responding to the housing crisis. Perhaps that’s the draw. And having increased opportunities may well see an increase in people working in the sector overall. 

We’re not competing in a crowded marketplace. There is a desperate need for more homes. We need to embrace every construction method available to us and work collaboratively to meet the government’s targets.

Let’s keep the end goal in mind and not be restricted with the way we’ve always done things. It’s time to take a different approach.

Mark Henderson is chief executive of the housing association Home Group.

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