Mixed forecast

This year’s Cities Outlook report from Centre for Cities paints a picture of growing disparities across the UK with some cities untouched by recession and cutbacks while others have seen deep-seated problems compounded. Austin Macauley talks to co-author Paul Swinney about the findings

Q. Did this year’s Cities Outlook throw up any surprises?
In general it tends to confirm things that you know intuitively but this puts numbers to it and identifies the magnitude. But a couple of places have done better than we would have expected, for example Burnley and Birkenhead. There’s been only a small increase in claimant counts despite their industrial nature suggesting they might have been hardest hit. Birkenhead’s large public sector economy has sheltered it but continued cuts may mean it won’t be as sheltered in the future.

Q. The report talks in positive terms about the various measures introduced by the coalition government to boost growth. But how do you square that with the picture it paints of ever growing disparities?
I think it’s been a mixed bag. Government seems to have become a bit more interventionist in terms of economic development, for example through City Deals – something that we’re excited about. Cities should have more power over policies, they have the greatest knowledge of those economies. It puts cities in a much better position to deal with the issues they face. But other policies have been very much demand led, eg TIF and to a lesser extent the New Homes Bonus. Government will have to think about what policies work for mid-sized cities and the differences between places, for example Cambridge and Wakefield, and about unemployment and inequality. On the latter, the specific intervention that the government has made to date is the Youth Contract. It’s very much a national approach. The problem is if you have one in ten people claiming JSA in Hull they will find it much more difficult to get jobs than somewhere like York where it’s one in 40.

Q. Has anywhere bucked national trends?
As mentioned before, Burnley and Birkenhead to a certain extent. The other is Grimsby. Grimsby has a high start-up rate and we have no idea why that’s the case. But its closure rate is really high as well so the overall change is really small.

Q. Did you find a strong correlation between a city’s reliance on public sector jobs and performance after austerity measures were introduced?
Not as yet. These measures are coming over a seven-year period and we are only seeing the start of it. For example, Birkenhead hasn’t seen a huge increase in JSA claimants to date. But these things take a while to work through. In some places you definitely will see a negative impact on growth while in others the private sector will offset those job losses.

Q. Cities Outlook 2012 highlights the widely differing prospects for UK cities when it comes to jobs growth. Do you expect these disparities to grow?
Over the next year or so some areas are vulnerable to further increases in unemployment. Ultimately, government can fiddle around the edges, but if there simply aren’t any jobs in some areas there’s not much it can do to create growth. Cities like Cambridge and Aberdeen that have been very sheltered will be in a good position to grow. At the other end of the scale you have cities like Hull with a high claimant count, reliant on public sector jobs – where there will be further cuts. In the short term it’s not clear that places like that are in a position to grow. When you look back at Cities Outlook in previous years you find a lot of this stuff is governed by long-term trends and will require many years to come through. This particularly applies to skills where it could be five, ten or 15 years for it to flow through. It’s about recognising these fundamental weaknesses.

Q. We’ve seen the Regional Growth Fund, enterprise zones and other initiatives launched to support poorly performing cities, but are they anywhere near sufficient given the scale of the challenge? Should we be seeking alternatives for some places?
It’s a very difficult one and politically a difficult topic. Policy interventions in different places may have to have different objectives. If you want to focus on growth in the short term it must be in places that have a strong base already. That can seem unfair but in the past we’ve seen a lot of growth policies being applied in a lot of places and they haven’t worked in some cities because they have fundamental problems. You definitely still need investment but the objective of that investment has to be about addressing issues that will have an impact in five, ten or 15 years’ time. It’s not to say there won’t be growth, it’s about the scale of that growth.

• Paul Swinney is an economist at Centre for Cities and one of the authors of Cities Outlook 2012.