End of term report: How is Ben Houchen doing as mayor of the Tees Valley?

The Tees Valley. Image: Google.

Continuing the Centre for Cities’ round up of the first half-year of metro mayors, we look at Ben Houchen, Conservative mayor of the Tees Valley.

To many observers, it came as a surprise when Tees Valley succeeded in securing a devolution deal and mayoralty ahead of bigger places, prompting Centre for Cities to bill the city region as the “dark horse of devolution”. However, an even bigger surprise came with the election results in May, when Conservative candidate Ben Houchen defeated the favourite Sue Jeffrey (Labour) by just 0.5 per cent of the vote.

This Conservative victory in a Labour stronghold suggested that Theresa May’s government was set to sweep the board in June’s general election, by making serious inroads into Labour’s traditional areas of support across the north. In the end, of course, the Conservative hopes raised by Houchen’s victory went unfulfilled at the polls.

But after seven months, has the mayor himself been more successful in building on the promise of his triumph? Here we assess the progress made by the Mayor, and the opportunities and challenges he faces.

Progress

Houchen’s election commitments were distinctive among other candidates both within the Tees Valley and the other city regions. They included a pledge to take control of the local airport (which was surprising from a Conservative) and to open a commission into the local police force. Neither of these pledges has so far come into being, but in a message to mark his first 100 Days, Houchen said that progress was being made on both – including announcements on new investment and routes for the airport.

The mayor has also had a notable presence on the national political stage, aided in part by his significance as a Conservative city leader in the north. For example, he joined his northern mayoral counterparts Andy Burnham and Steve Rotheram in negotiations with the Chancellor about the Northern Powerhouse.

He also hosted the Prime Minister Theresa May in August, who came to Tees Valley to launch the South Tees Development Corporation. This will be the first mayoral development corporation outside of London, and more progress should be evident on this next year, with a masterplan due to set out how initial interest from investors might make the best use of the land. The site includes the former Redcar SSI works, where around 3,000 jobs were lost when the steel works closed down two years ago. As such, there is a strong political and economic imperative to transform the site, and Houchen’s progress in doing so should earn him considerable political capital in the city region.

Other concrete activity which has taken place thanks to the mayor’s influence includes the introduction of a £6m pilot with the Department for Work Pensions, Routes to work. It will target people over the age of 30 facing significant barriers to getting into work, such as long-term unemployment, or physical and mental problems. This funding at the local level should allow support to be tailored to individuals across a range of local services. Mayor Houchen has also persuaded the Teesside Pension Fund to invest £200m in projects to support economic growth in the city region.


Challenges and opportunities

Progress has been slower on local public transport issues in the Tees Valley. In part, this reflects the fact that a number of larger transport projects were specified in the text of the devolution deal. So far, Houchen’s transport announcements have largely focused on getting to work on these and other road development to deal with bottlenecks, which is an appropriate priority in the short term.

Longer term, however, the mayor also needs to ensure that improving and expanding the bus network across Tees Valley is a top priority. As can be seen in our Metro Mayor data dashboard, this is a key issue in a city region where bus journeys have fallen by 20 per cent since 2010, much faster than the national average. Budget cuts have also seen bus subsidies withdrawn by every local authority except one in the city region. Nonetheless, buses are the most used form of public transport in the region and should be the priority for the metro mayor and combined authority above other forms of transport.

And while Houchen isn’t taking over control of a city-region transport body, as other mayors have (such as TfGM in Greater Manchester, TfWM in the West Midlands or Merseytravel in Liverpool), the Bus Services Act does offer the mayor considerable scope to either put in place directly or encourage a more integrated, efficient and affordable bus service across the city region.

Another key challenge – and opportunity for the mayor to have an impact – will be making more of Middlesbrough’s city centre. This is the densest area of economic activity in the city region, but is underperforming thanks to the dispersed nature of the local economy, driven by both economic history and policy which has favoured out-of-town business development.

Mayor Houchen has pledged to support every town centre in the city region, but as our briefing on the economic geography of Tees Valley made clear, focusing efforts and investment in Middlesbrough city centre will have the greatest impact in attracting the high-knowledge, high-wage jobs that the city region needs. It will also be key in retaining and attracting high-skilled workers and graduates to the city region.

Prioritising Middlesbrough will be difficult politically, but if done alongside efforts to improve transport links across the city region, will help to create more opportunities for people living everywhere in Tees Valley. On the other hand, spreading investment across each local authority will be politically safe but would dilute the benefits that a strong Middlesbrough city centre would bring in terms of providing long term and sustainable economic development.

Simon Jeffrey is a researcher and external affairs officer at the Centre for Cities, on whose blog this article first appeared.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.

 
 
 
 

“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

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

Want more of this stuff? Follow CityMetric on Twitter or Facebook