A new economics agenda for a new minister for cities

The government recently announced a new minister for cities. Greg Clark will take on the role, alongside his current responsibilities as minister for decentralisation.

As part of a ministerial group chaired by Nick Clegg his remit will be to ‘develop new ideas for cities and consider the impact of existing policies’, focusing on the eight core cities of Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield.

This is a welcome move.

To set the new ministerial group on its way, particularly in fulfilling its remit to ‘develop new ideas for cities’, there are a number of ideas I believe ought to be topping their agenda.

First, the core cities have great potential to help transform the economy through pushing for, and implementing, a much needed industrial strategy. This will ensure investment is channelled to the sectors, industries and localities that need it most. It will also play a crucial role in creating ‘good jobs’ – jobs which provide a decent income and satisfying work for everyone within environmental limits.

Next, those concerned with creating thriving local economies must recognise that how money circulates in an area is just as important as the amount of money flowing into it. One of the lessons for cities is that they need to be aware of where the money goes and where the leaks are, and to look for opportunities to create businesses to minimise the leaks.

Providing enterprise coaching, support and advice at the neighbourhood level are key interventions the cities can, and should, take forward alongside working out where the money goes. In any community there are people who have a passion – based on an idea, a skill, a hobby or an interest – that they could turn into a business. By providing an enterprise coach backed up by a panel of local business people, local agency representatives and other local volunteers, they get the support to make their idea a business reality.

Establishing a local lending infrastructure is vital. Our businesses are now in a far weaker position than competitors because we have no equivalent lending infrastructure. The real problem is not lack of capital to lend, it’s a serious lack of institutions capable of lending it. For example, there are only 170 bank branches per million people in the UK, compared to 520 in Germany and 960 in France. The importance of local banks is made even clearer now that local and state government in the USA is increasingly moving their money out of big banks and into their local competitors.

In addition to a better infrastructure for lending, we could also do well to create new kinds of money. Successful models of ‘community currencies’ are now running all over the world, helping to retain resources in the local economy and encouraging business-to-business transactions. Encouraging local authorities and state-run services to accept approved local currencies in payment or part-payment of services, rent or rates could be a viable next step – not only supporting the local economy but forging new relationships between local service providers and citizens.

A final idea to get the ministerial ball rolling is that cities could invest more, much more, in local food and energy production. At present, for instance, only 0.01% of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings. In Germany the equivalent figure is 100 times higher.

Within the context of greater decentralisation, the core cities (and others) now have the opportunity to grasp new economic techniques and to play a lead role in ensuring the resilience and effectiveness of their local economy. The opportunities are extensive, with examples of successful practice identifiable throughout continental Europe and North and South America to guide our efforts.

Not all of these ideas can be organised tomorrow, and not all without central government support.

But many can be done by imaginative and forward-looking city leaders, and can be done immediately.

Let’s hope Greg Clark, and the cities themselves, make the most of the new powers of general competence available in the localism bill and grasp this opportunity.