Will the spending round crush urban growth?

Alexandra Jones welcomes funding for skills, but worries that grants to pay for councils and growth have been wiped out.

Everyone knew there would be very little money to spare in Wednesday’s spending round and Thursday’s "growth statement". The economy’s poor performance has put paid to any attempts to move away from "austerity" government, so departmental cuts of up to 10 per cent came as no surprise. Yet the big question for me was whether the Review – which, it’s worth remembering, doesn’t even get put into practice until 2015 – would start to signal an alternation in the balance of power, away from most decisions being taken centrally about how money is spent and towards more local decision- about how best to deliver jobs, growth and better public services for much less money. So did it happen?

The honest, if unexciting, answer is that it’s a mixed picture – the rhetoric is going in the right direction but Government still lacks a "place" focus in its approach to national policy, and many of the the decisions about devolution were fairly timid, with too much emphasis on central government control rather than local autonomy.

Take Heseltine’s Single Local Growth Fund. Heseltine suggested it could be as much as £49bn over four years; it ended up being £2bn a year for five years. While it’s good news that a direction of travel has been established, creating some degree of certainty for local enterprise partnerships (LEPs) wishing to make investment decisions, £2bn is hardly a ringing endorsement for devolution to local areas. Digging beneath the detail, much of the money is not new – about £700m has already been allocated to local areas for transport or the New Homes Bonus – and when you divide it between 39 LEPs, it's not a great deal of money, roughly the same as the nine Regional Development Agencies had in the mid 2000s. 

It is good to see skills money in there, however, and now it’s been created it will be difficult to put the localism genie back in the bottle – provided local areas deliver. The challenge for Whitehall as it finalises guidance about how the money will be allocated is to ensure that, even if the amounts are smaller than I had hoped, there is devolution of decision-making and that access to the funds do not involve local areas jumping through a lot of Whitehall-devised hoops.

It’s also unclear whether the welcome announcements on affordable housing, super-fast broadband and transport will respond to the needs of different places. The £3bn of capital investment to build 165,000 affordable homes, along with the £250m announced for more super-fast broadband are welcome and will make a difference in cities across the country, as will the vast number of inter- and intra-city transport schemes that were announced. My concern is that as we move from policy announcements to prioritisation and implementation, the significance of the differences between places will be missed by Whitehall departments. 

Finally, it was not a surprise that local government has again been hit hard by cuts, receiving a 10 per cent cut that Stephanie Flanders of the BBC suggested would amount to a 35 per cent cut in real terms for local government since 2010 (although the Chancellor argued that other measures meant that the "true" cut for local government would be 2 per cent in 2015/16). Combined with cuts in welfare, which will affect some city economies significantly, it will be very tough for many cities to manage their budgets giving rising demands for their services. 

To help them manage cuts more effectively, more action is needed on innovative measures that increase local autonomy. It was good to see confirmation of Manchester's Earn Back deal, involving Manchester keeping a proportion of the benefits generated by increasing local economic growth. It was also good to see additional money for Troubled Families, but I would have liked to see more steps taken down the road of "Community Budgets", allowing local areas to pool budgets across silos in order to deliver more effective, efficient local services in a way already demonstrated in pilot areas such as Manchester and Essex. 

So where does this leave us? I’m an optimist, so I still hope that as the detail emerges over the next few weeks and months this will show that government is putting "place" at the heart of its policy-making. In the meantime, in the two years before these announcements kick in, there’s still more to do to give greater freedom to cities with the capacity to deliver and provide greater support to those cities struggling with capacity, decline or both.

Alexandra Jones is the director of the Centre for Cities

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.