The three things metro mayors must do to deliver real prosperity

Moving skilled people away from London and into the regions is not the same thing as rebalancing the economy.

NS

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Imagine waking up on the morning after an election to discover that you have been granted a personal mandate to govern. There are not many politicians in the UK who have experienced that feeling. The mandate received by Prime Ministers and local government leaders goes way beyond winning the right to represent an area. What little remaining faith people have in politicians is placed in these individual leaders to make important decisions on their behalf. It is no doubt an exciting feeling. It should also be a daunting one.

By the end of this week, six new "metro mayors" woke up to this special experience. They have been granted powers over their domains which far exceed the limited functions available to traditional council leaders. These powers are still relatively feeble compared to mayoralties in other developed democracies, but at the very least they have access to a 30 year strategic investment fund and some influence over education, skills, housing and transport in their areas. Now it’s time to see what they do with these powers, and how they respond to the mandate they have been given.

There is an extra source of pressure bearing down on these new metro mayors. The woeful imbalance of the British economy towards London and the City is well documented, but the Brexit vote last year revealed with added potency the breadth and depth of discontent around the country. It showed the urgent need to start building a new economy that allows people, no matter where they live, to take real control over their lives. That means finding ways to support local economies to thrive. And that puts the new metro mayors at the front line of this battle.

To do this, the new mayors will have to go beyond the usual prescriptions for regional development. For too long, central government and big business have assumed that attracting high-growth sectors through infrastructure, housing and city centre regeneration is the ticket to prosperity for the UK’s regions. In reality this cookie-cutter approach tends only to attract mobile populations of high-skilled and well resourced people, rather than delivering for existing communities. It leads to housing which too few can afford, and jobs for which too few have the requisite skills. Moving skilled people away from London and into the regions is not the same thing as rebalancing the economy.

If you want to know whether the mayors are delivering real prosperity – the kind of prosperity that genuinely empowers existing communities in the areas they represent – then ignore the usual headline stats of "gross value added", inward investment or total employment. In six months or a year, check back on their performance and ask whether they are doing these three things:

  1. Are they building up local supply chains? Without local supply chains, the money you bring into the region doesn’t flow through local businesses but instead goes towards national or international profit margins. Some of that investment may go on local wages – but unless a substantial amount of it is being spent on local contracts, simply looking at a total inward investment figure in the economy doesn’t actually mean it is making its way into the local economy.
  2. Are they providing good quality, well paid jobs for local people? There is a huge difference for people who live in the region between development which offers them good jobs that didn’t exist before, and development which can only function by rapidly attracting a workforce which was already doing those jobs in other parts of the country, to come and live and work in the region. Realistically, you probably need a bit of both – but regional economic development will only benefit local communities if it’s designed to build on the skills and expertise of the local population in a steady and sustainable way – not if it is only based around shifting jobs and the workforce that goes with them from London up to another region.
  3. Are they building local infrastructure in a way that helps new wealth to accumulate locally? It matters where you build housing, where you build retail space, and who gets first dibs on owning retail space in areas of wealthier residents. It matters how you design your transport system: if you build a "hub and spoke" train or metro infrastructure, you tend to draw labour in from outlying town centres into a large city hub, sending them home with most of their pay packets already spent in the city centre and on the transport itself, which ends up starving local economies and high streets outside of the city centre. There are lots of more exciting and innovative ways to think about planning and transport, but if the focus is simply on increasing overall "gross value added" then many of the opportunities to spread wealth around the region and to different communities simply get missed.

It will not be easy for the new mayors to deliver this kind of real prosperity. Pressures from central government, from UK-wide business lobbies and from other vested interests will start to bear down on them quickly. That post-election euphoria will wear off fast. But as they go about their business, they should remember the precious cargo they are carrying. Voters have placed their trust in them to help them achieve what they are yearning for – real economic progress, and some control over future prospects for themselves and those they love. Over the coming months and years, we will be watching closely to see whether the new metro mayors can deliver.

Rachel Laurence is Principal Director for Communities and Localities at the New Economics Foundation