Manchester’s renaissance is underway – what’s next?

Last Wednesday (27 April), Centre for Cities hosted the first in a series of three regional growth events at the Science and Industry Museum in Manchester, alongside Lord Sainsbury, Andy Burnham, Gordon Brown, and other local leaders. The guests and panellists spoke, discussed, and took questions on Manchester’s economic history and future, the next steps on devolution, and how they aim to deliver their ideas for the city.

Here’s what they had to say:

Manchester’s trailblazer deals will get central government out of the way

In February, the government published its Levelling Up White Paper, which set out two short-term devolution goals.

First, all the mayors would be “levelled up” to have the same powers, completing the first phase of mayoral devolution. Second, Greater Manchester and West Midlands would negotiate “trailblazer” deals, beginning the second phase of city devolution.

At last week’s event, the Mayor of Greater Manchester, Andy Burnham, gave his first indication of what Greater Manchester will ask for in its trailblazer deal. His three priorities are: complete control of non-university 16+ education; control of all 98 railway stations in Greater Manchester; and the power to run a landlords’ charter to ban abusive landlords from operating in the city-region.

The common theme across all three of these areas is that these are all policy areas where central government insists in getting in the way of local authorities’ attempts to address local priorities.

That Greater Manchester still has to ask for these powers means devolution still has a long way to go. As John Holden from the University of Manchester put it, Manchester does not yet have devolved competencies, but simply delegated responsibilities. Wherever the line between the roles of central and local government is eventually drawn, its current fuzziness is especially frustrating when Manchester wants to fix local problems but still requires permission from officials in London to do so.

In Burnham’s words, it’s time for Whitehall to either “fix it, or give it to Manchester”.

Both the frontier and the foundational economy matter – and need devolved skills policy

Greater Manchester’s economy has turned itself around over the past twenty-to-thirty years, and this is visible in both its data and skyline. The quantity and quality of jobs have improved and the city now has more jobs than ever before. The number of Knowledge Intensive Business Services in Manchester boomed by 84 per cent from 1998 to 2015.

The high-skilled jobs on the “frontier” sectors of Manchester’s economy and engaged in highly innovative, high-paid work, mostly in the city centre, are essential for the city’s prosperity. As Lord Sainsbury spelled out, the decline of Manchester and the other great cities outside London across the 20th Century was primarily due to their failure to transition their local economies from manufacturing to new frontier sectors that demanded and produced new innovation and skills.

Their urban renaissance has emerged from new success in doing so, and Lou Cordwell at Greater Manchester LEP told the audience that the city is now working on ensuring the new Innovation Accelerator promised in the Levelling Up White Paper will build further on this progress.

Yet, all the speakers agreed that the benefits of this growth still aren’t felt right across the city. Andy Burnham and Gordon Brown both stated that the city’s social contract and future success also depend on improving living standards for the majority of workers in “foundational” sectors, such as retail and public services.

The city centre will continue to drive growth due to its special appeal to certain kinds of frontier work. Meanwhile Greater Manchester’s growing prosperity, in part thanks to the success of the city centre, will generate more jobs and opportunities in foundational work across the city-region, including in the surrounding boroughs.

These foundational workers are why devolving skills policy is so important. Most of these workers have not and will not attended university. Improving their skills will depend on providing courses that are valuable and worth doing because they are connected to the economic needs of where they live and work.

At present, further education does not manage to do this. Lord Sainsbury gave the example of the overprovision of hairdressing and barbering courses, partly because skills policy is unconnected to local leadership, meaning it underprovides training in skills that are in high local demand.

Policy to improve Greater Manchester’s outcomes will also need to be sensitive to the different economic roles of various parts of the city as well as local bottlenecks. For instance, transport access to the city centre with better public transport and development around stations will be an immediate priority, but most attendees agreed a shift towards city-region transport and spatial planning across Greater Manchester should be a medium-term goal, primarily to help the foundational economy.

Cities need to start thinking and talking about proper fiscal devolution

The issue overhanging everything though is the funding question. Although Manchester is slowly securing more and more local policy levers, like the rest of local government, it currently has very little control of its own funding and with only small amounts of money either raised locally or granted by the centre. Large parts of the devolution process are actually spent bidding and negotiating over funding for specific pots of money for specific projects.

As Jessica Bowles from Bruntwood said, this is throttling economic growth by reducing the capacity of local government to engage with partners. Going through endless rounds of bidding to maybe get pots of money wastes everyone’s time.

Fiscal devolution is slowly moving up the agenda in response. Burnham said he was keen to explore a “tourist tax” for Greater Manchester, as is common in other European cities, and some of the Combined Authorities have previously run business rates devolution pilots.

However, proper fiscal devolution cannot be delivered in this case-by-case manner. The problem isn’t that the system needs a tweak or two, but rather that the whole system fails to provide sufficient central funding, while also stopping places from raising their own revenues. A return to block grant funding will only deepen centralisation further and leave cities vulnerable to future cuts from Whitehall.

It will take time to develop a comprehensive, alternative model for fiscal devolution, and the government has already said it’s not on the table for the trailblazer deals. But that’s exactly why mayors and local leaders should begin thinking now on what principles a new funding model would require. When Government is finally ready to consider fiscal devolution in the next decade, cities will need to be ready.

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Manchester’s renaissance is underway – what’s next?