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Volume 734: debated on Thursday 19 January 2012

Motion to Take Note

Moved by

That this House takes note of the case for developing the growth of the United Kingdom’s major cities.

My Lords, it is a great privilege for me to lead on this debate as a former leader of a major city and as someone who has spent all his political career in that major city. Cities, as we know, deliver growth and are places that will drive the future economic performance and productivity of the UK. We must remember that four in five people in the UK live in an urban area and that 62 per cent of jobs are located in them. People are drawn to cities for their cultural vibrancy and the economic opportunities that they offer. Cities drive innovation and have a brand and a status that attract investment to their local and wider areas. For businesses to compete nationally and globally, they need the assets provided by cities: intellectual capital, private sector agglomeration, connectivity and investment in public services. Let us remember that strong and prosperous cities in their regions contribute to their rural surroundings, making them equally prosperous.

The great cities of the UK have seen a renaissance over the past decade or so—particularly the great northern cities, which previously seemed to be in a cycle of decline, with high unemployment, population loss, social deprivation, a lack of investment, confidence and civic pride and, of course, with high levels of crime. My own city of Liverpool is one of the great cities of the world; indeed, it was once regarded as the second city of the then British Empire. The 1970s and 1980s saw a huge decline in the fortune of that city, with massive job losses. Almost every week, a company closed down: Tate & Lyle, Dunlop, Triumph motors—the list went on. It is hard to believe this, but in parts of the city unemployment was running at 28 per cent. This lack of jobs impacted on the social fabric of the city and a militant council came to power. The council regarded the Government and the private sector as the enemy. Liverpudlians felt as though the stuffing had been knocked out of them and that no one cared about them, other than for them to be the butt end of jokes.

Then Liverpool and these other great cities picked themselves up and are now becoming the engines of growth not just for their subregion but for the UK as a whole. Indeed, eight of England's core cities—Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield—and their subregions alone produce 27 per cent of England's wealth. These eight core cities contain 25 per cent of our entire population, and the cities themselves have a higher than average share of employment and growth, highlighting their key economic role. They have a broad sectoral employment base and are home to large, graduate-hungry business and professional services sectors.

How has this come about? How have they turned themselves around? First, their reinvention has been based on sound political leadership and the realisation that councils do not actually create jobs but do create the confidence and conditions for businesses to prosper and to create that wealth, thereby creating employment. They also realised that all stakeholders, including government, have an important part to play. By working together to understand the things that will turn their cities around, they have literally had the single-minded determination to pursue those goals.

However, what of the future? How can cities continue to grow in economic importance and play a bigger part in the economic well-being of the whole country? Many of these cities are hugely dependent on the public sector. They need to move on from being so heavily reliant solely on public sector jobs; they need to develop their business and manufacturing capacity and to ensure that a skilled workforce is available. The companies, businesses and firms that are success stories, both big and small, need to be nurtured and developed further.

After the so-called Toxteth riots in Liverpool in 1981 the then Prime Minister, Margaret Thatcher, dispatched a certain Michael Heseltine to Liverpool and he became the Minister for Merseyside. I am sure his perception of the city and its people changed. He realised the potential and he not only became a champion for Liverpool, which had been written off by many, but by working with stakeholders formulated and introduced the policies that started to turn the city around. Interestingly, the now noble Lord, Lord Heseltine, by working with Sir Terry Leahy—a Liverpool lad done well and a former chief executive of Tesco—and involving local stakeholders, has produced a new report, or blueprint, on Liverpool and its subregion, and how it can further develop.

We need that approach of an individual plan for each of our city regions so that we can build on their strengths, think imaginatively, do what needs to be done and then, as I said, have the determination both at local and government level to carry it through. The same reforming zeal that has radically changed our public services should be unleashed to be pro-business, aspirational and transformational in our cities. Successive Governments have told cities how they can develop and what they should do, and if they do not do it the resources will not be released: a universal top-down, one-size-fits-all policy. Often, those programmes have no recognition of the individual city’s circumstances and needs. The altar of urban regeneration is littered with dozens of government programmes and schemes that had absolutely no real local ownership, no local buy-in and that councils went along with quite frankly because there was no alternative—they would lose their money and lose out.

The Deputy Prime Minister is right when he says that we need our cities to become economic, social and cultural magnets—places where people aspire to live. He is absolutely and equally right to give them powers to help that growth. The Deputy Prime Minister has announced the first wave of cities to be given these extra powers. There is a suggestion that a second wave is being considered and I hope that the Minister will indicate whether this is the case. I also place on record my thanks and appreciation to my noble friend Lord Shipley for his work on this matter and for the way in which he has secured real progress.

Those core cities of England, which, as I have said, have a third of the UK’s population, generate 27 per cent of England’s wealth—more than London—and are home to half the country's leading universities. They also contain 28 per cent of all highly skilled workers. Yet compared with London, they receive considerably less in finance, resources and subsidies, so what needs to be done to release further the potential of our cities? First, there is investment and funding. There is compelling evidence, particularly from Europe, that cities with more decentralised public finance are more competitive. In the UK, central government’s share of public spend is high by international comparisons—it is 72 per cent, compared with 19 per cent in Germany and 35 per cent in France—and limits local control over the levers of growth, so the recent policies announced by the Government on this matter are most welcome.

Secondly, there is devolution. We must allow our cities greater control over the policy areas that can drive growth and skills, housing, transport, planning et cetera. Thirdly, of course, there is good city governance. Democratic legitimacy, when combined with private sector and voluntary leadership and strong governance structures, provides a powerful engine for growth in cities and should be recognised more clearly in the relationship between national and local government. There is more democratic legitimacy to the notion of a city leader being elected by the people than by a party caucus. However, city mayors must be part of strong, democratic and open structures, and will be worthwhile only if they have more decentralised power and responsibilities.

For every successful city that faces up to the challenges of the 21st century there will be those that fall behind. Cities need to be places that people want to live in, and must provide decent housing and good transportation links. The coalition announcement on high-speed rail links was hugely important. In my own area, the Government can be credited with agreeing the second crossing over the Mersey, which looked as though it might drag on for years.

Investing in cities would mean a significant opportunity to increase jobs and growth. The transformational effects would be profound for the local and national economies. Independent forecasts for our core cities predict that, by 2022, the additional economic output by GVA will be an extra £29 billion, there will be 747,000 additional jobs, and 170,000 people will be brought out of economic inactivity. Finally, the net fiscal contribution to the Exchequer will be £20.5 billion. The figures show how important it is to get the policies right for our major cities. I am sure that the policies the coalition Government are pursuing in relation to our major cities will create a real renaissance for urban areas, which will benefit the whole of the UK.

My Lords, I am pleased to contribute to the debate this afternoon, having had the privilege for a number of years of being the leader of a major northern city. I compliment my noble friend Lord Storey on instigating the debate.

Economic analysis shows the dramatic variation in the performance of the UK's cities. Each city has its own economic story. Economic statistics demonstrate that each city's economic performance is complex and nuanced. Once we layer in the city's history and culture on top of the different economic indicators, the picture becomes even more complex. To be effective, economic policy has to respond to local economic complexity. Some parts of government recognise this important point and have moved in this direction. The creation of local enterprise partnerships and city deals are important milestones, but have we moved far enough towards local decision-making to allow the effective targeting of economic policy?

The need for flexibility to develop locally tailored solutions was recognised in an amendment to the Localism Act supported by many in this House. It gave councils the right to ask for powers to be devolved so that they could pursue policies for economic development. The city deals project that the Government are pursuing with cities offers a way to devolve funding pots and give councils and local enterprise partnerships a greater role in skills and investment policy. It is a real opportunity to unlock local growth and increase local accountability. The challenge will be to make sure that city deals offer genuine decentralisation without bureaucracy and red tape, and are available to all local authorities that can make their case. Having been the leader of the fourth-largest metropolitan district in the country, I was somewhat surprised that we were excluded from the special list of eight.

Councils understand and have identified opportunities for local growth, and are working with partners to find investment for infrastructure to unlock ambitious schemes. For example, Kettering has planning permission for 5,000 houses and support for huge investment on renewable energy that will create jobs to stimulate green-growth development. However, it needs funding for road improvements to unlock £2 billion of investment. The Government's focus must be on removing barriers to local decision-making and on how investment is targeted locally. They must champion area-based approaches that enable partners to join up assets and investment locally.

Power should continue to be decentralised to the lowest appropriate level to help local councils tackle their local economic challenges and help them deliver better value-for-money services. In particular, there is a compelling case for further decentralisation of skills and transport services to support economic growth. Many of our major cities and towns underperform on key economic indicators compared to their European equivalents. Part of the reason is the quality of local transport systems that make cities attractive places in which to invest and enable people to get to jobs. I know from experience of my own rural board the problems of young people who cannot access jobs because there is no public transport. We facilitated a wheels-to-work scheme with the voluntary sector that helped many young people access the job market.

UK transport infrastructure problems are estimated to cost every business nearly £20,000 on average each year. Nearly 40 per cent of jobseekers say transport is the key barrier to getting a job. I agree with the Local Government Association, which has long argued that greater local control over decisions about transport investment would improve integrated decision-making to achieve the full economic benefits of public transport investment. London, Merseyside and Scotland demonstrate that local decision-making can lead to improved usage of public transport and higher satisfaction levels, with knock-on effects for the economy.

There is more to town and city centres than shopping, and we should encourage this. City centres can transform into almost anything. They are central and well connected public spaces, and innovative use of them can attract and engage people, creating valuable retail demand in the process. My own city centre is undergoing a major transformation; a new large city park has given the city a new heart.

Councils continue to lead this effort locally, working with local communities and businesses to build on the opportunities for growth and to reshape high streets and shopping centres. Local partnerships are crucial because high streets, unlike shopping centres, represent complex sets of interests. The Government must think about how to further empower local partnerships with the necessary funding and tools, and must shift the policy emphasis away from retail alone.

As my noble friend Lord Storey said, people in cities need decent homes to live in. Councils are playing their part to encourage growth. Through the planning system they are overwhelmingly saying yes to viable and sustainable residential and commercial development. Councils play a key role in facilitating housing supply locally, both through council building schemes and via their leading role in, and facilitation of, partnerships, the de-risking of sites and the provision of land or support in kind.

However, councils could do more if they were provided with genuine self-financing. We welcome recent moves by the Government towards a devolved finance system for council housing, but the system will not be genuinely self-financing unless councils can keep the proceeds from the sale of council housing under the right-to-buy scheme. We need a reversal of the Treasury's position on creaming off the forecast growth in the business rate yield for 2013-14 and 2014-15. The proposals for relocalisation of business rates could be an important step in this direction, provided that councils are able to retain all the proceeds of growth. The presumption that in 2013-14 and 2014-15 the Treasury will cream off a predetermined level of forecast growth will mean that local authorities will only be able to benefit financially from growth over and above the Government’s forecast.

I firmly believe that our major cities will thrive and grow if economic development is devolved to them and if they work with the Government on tailor-made city deals, which I am sure we all thoroughly welcome.

My Lords, I join in thanking my noble friend Lord Storey for initiating this debate. I thank him too for his comments on my role as adviser to the Government on cities policy. I have taken a very close and detailed interest in this over the years. I am pleased that great progress has been made because we need to make progress urgently.

In contributing to this important debate, I want first to make one very simple point: cities drive growth and jobs and they do it best when freed from central constraint. The Core Cities Group in England, of which I was a member when leader of Newcastle City Council, has laboured over this one critical message for more than a decade, building evidence, demonstrating practical examples, and developing new instruments and financial models. Yet the productivity of our greatest cities still lags behind that of their counterparts in Europe and elsewhere.

Let me give two examples. My noble friend Lord Storey referred to GDP figures. The eight English core cities account for some 27 per cent of GDP, while Greater London accounts for 28 per cent. If you compare them with other major European countries, for example, you see the gap. If we compare the GDP figures for the eight largest non-capital cities in England with the eight highest performing non-capital cities in Germany, France, Spain and Italy, the examples of Germany and France, which are closest to us, are particularly revealing. We are simply much lower in any GDP test that we seek to apply.

A simple and practical example is the annual patent applications per million of population. Germany’s top non-capital eight cities have an average of around 400 patent applicants a year, France has around 200 patent applicants a year, and the top eight non-capital English cities have an average of 70 patent applications a year. To me, that sums up the problem. England has been—the United Kingdom less so—hugely overcentralised. One of the things that the Government are trying to do which I am particularly pleased about is to reverse that trend. The economic contribution of our cities has never been more vital to the growth of the United Kingdom.

The government publication Unlocking Growth in Cities, launched in December, comes at a decisive moment for the economy. The document builds on an amendment to the Localism Act, originating from the core cities, which I and other noble Lords present have spoken to and supported in this House. It sets out the goals, opportunities and process for bespoke city deals, giving each place the means to improve their specific circumstances—not to a one-size-fits-all formula. These are called city deals and initially those deals will be with each of the eight core cities—Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield—but with a clear and stated ambition to go much further.

Each of these cities, working with their local enterprise partnerships, is engaged in discussion and negotiation across Whitehall for further decentralisation of the tools and resources to drive up growth and jobs and drive down dependency on public services. As I said, these eight cities already produce 27 per cent of the country’s total economy. However, recent independence forecasts by Oxford Economics demonstrate that the eight core cities local enterprise partnership areas are capable of delivering an additional £61 billion in GVA and 1.3 million jobs beyond those currently predicted up to 2030.

Some contributing growth factors are beyond the control of local or national governments, and we need to recognise that. But others, including a more locally sensitive application of the levers of growth, can and should be devolved.

The eight core cities I mentioned have a particular role, but their work has always been applicable to a much wider constituency of towns, cities and local authorities. What works for them can work in other places, particularly using the bespoke method that the Government have put in place. Unlocking Growth in Cities and the Localism Act set in motion a long-term process of decentralisation for growth, and it is not a one-off initiative. It is my hope that many other places will in due course come forward, jointly with business leaders, to benefit this process—perhaps several times as needs change—and that we will in turn all benefit from the increased growth that they produce.

I listened with interest to what my noble friend Lady Eaton said about Bradford. It has been a common comment, because there has been a misunderstanding that somehow this is only about eight cities. It is about those eight core cities that have for the past decade been planning for how they could use the levers of government to drive growth. It was made absolutely clear by the Deputy Prime Minister in his speech in Leeds in early December to launch the new cities policy that this was the forerunner for other cities. There will be a second round starting later this year, and this should be perceived as a continuum.

Cities will need to be bold, and all those who would like to be in a further round will equally need to be as well. Government departments will also need to be bold following the localist lead set by my right honourable friend the Minister for Cities. This requires nothing short of a complete culture change in the way we all work, moving from a central to a more local model, driven by good city governance, with political and business leaders working more closely together.

This is about rebalancing the economy away from an overreliance on London and on financial services; it is about our need to invest and build in our cities so that they can create more of their own wealth and a rising tax base, without simply being dependent on financial support from London and the south-east.

So what needs to be different? We need to manage cities in a different way. Rather than waiting for the centre—Whitehall—to give out money tied to specific programmes and outputs, we need to use money, which may be limited, wisely, defining the local priorities that are felt to be important, and let them shape the funding to fit that set of local priorities. Local authorities will in future be less development managers and more development facilitators. They will act less on the basis of national targets and work more in collaboration with neighbours to establish growth ambitions and delivery. Crucially, risk and funding, which are currently undertaken at the centre, will be managed by the local authority, the council, the first eight core cities and their city regions. This is quite a significant culture change that the Government are proposing.

However, the context is very important and it relates to governance of the United Kingdom. There has been devolution to Scotland, Wales, Northern Ireland and London, and there will probably be increasing devolution to all those places. Perhaps we do not talk enough about the implication of that for England, which cannot be left out of that process. The Localism Act, which is now in place, focuses mostly on local government and its relationship to Whitehall within a context in which government offices in England have been abolished.

There is a strong centre of government in London and there are strong centres of government in Wales, Northern Ireland and Scotland, but there is no longer a government office in Newcastle upon Tyne, my city, or in any other regional capital in England that hitherto existed. There are some outposts of Whitehall departments, which are very welcome, although I sometimes feel that they could be better co-ordinated. Perhaps at some point they might all be collocated. We will see. As I said a moment ago, we have to address the issue of devolution from Whitehall.

Noble Lords may care to look at the document, Unlocking Growth in Cities, which was published in December. It gives a list of 21 policy areas in which the Government are prepared to enter into negotiation with cities to establish greater freedoms to invest in growth. I cannot go through all of them but some are very important. It refers to one consolidated capital pot for local decision-making and powers for cities to offer business rate discounts to local businesses. There will be a particular role, from 2014, for structural fund—the European RDF and European Social Fund—programmes under which there is a plan across Europe to adopt a special focus on cities and which will be able to play more of a leading role in shaping bespoke and integrated programmes.

There will be the ability to create industry-specific business improvement partnerships and tax increment financing, which is part of the Localism Act and in essence enables a local authority to borrow against future business rate income. At the moment, in England, councils are required to borrow prudentially against guaranteed sources of income. Therefore, there is a greater risk management in tax increment financing but also enormous potential rewards in the form of growth. There could be benefits in local authorities opting to pool business rates across their local enterprise partnership. There is the possibility of devolving local transport major funding and the responsibility for commissioning local or regional rail services, and for developing greater accountability to local communities for local bus services in the context of wider bus service operator grant reform. Public sector assets could be vested locally in a single local property company. As I say, no longer are there government offices to manage some of these things. There is a gap which someone else might have to step into to do these things.

Some of the spending functions of the Homes and Communities Agency—including a whole range of things such as planning, broadband and skills—could be devolved to councils and cities. It is a major concern to me that, despite all the multi-millions of pounds that have been spent in my region and in many others on skills development in the north-east of England, 25 per cent of manufacturing and processing companies are finding it difficult to recruit people to work in them. There is a mismatch between what the private sector needs to create wealth and therefore tax income for this Government, and the investment that is being put in. It seems to be leading people to develop skills, which in one sense is very good but in another sense does not help us drive the growth of the economy that we need.

Areas that should be looked at are city apprenticeship hubs, the creation of a city skills fund, and much closer working with and perhaps leadership of Jobcentre Plus. There certainly should be greater integration in the service of Jobcentre Plus at a local level. I would welcome it working much more closely with the Department for Work and Pensions. The Government can do a whole range of things. Each city will be different. One size will not fit all. I hope, first, that by Easter some cities will have reached agreement with the Government and that others can follow quickly. After that, round 2 can start and it is to be hoped that similar agreements can be reached.

As I said at the start of my speech, I am immensely encouraged by what the Government are doing. There is enormous potential in the policy work that is now being done and I hope very much that this will be grasped by all the cities and urban areas in England in order that we can produce the growth that the country needs.

My Lords, in the past decade we have seen for the first time more than half the world’s population living in cities and city regions. In the United Kingdom, 74 per cent of the population lives in cities and their regions. Therefore we are more urbanised than most. That figure is forecast to rise to more than 90 per cent by 2030.

As my noble friend said, cities are the engines of national economies but it is important that we take note that not all our cities are automatically winners. A recent paper by the Institute for Government and Centre for Cities has an interesting analysis. It contrasts Brighton, which saw a 25 per cent increase in private sector jobs between 1998 and 2008, with Stoke, which was once at the centre of our international pottery industry and has lost getting on for one in five private sector jobs in that same decade. That is why I strongly recommend and welcome the Government’s document, Unlocking Growth in Cities. The picture is not one of even growth and a great deal must be done. Along with Stoke, the other losers in that analysis are Burnley, Birkenhead, Gloucester, Blackburn, Oxford, Birmingham, Nottingham, Swindon and Blackpool. I should like noble Lords to note that these cities are not all in the Midlands and the north of England. In the past decade, for every 10 jobs created in London and the south-east, just one was created elsewhere, which is why our economy desperately needs rebalancing.

Cities compete all the time with each other for talent, investment and funding. That competitiveness is encouraged by even artificial constructs and devices, such as the city of culture. I well remember that my own city of Cardiff lost out to Liverpool, the city of my noble friend Lord Storey, in the city of culture competition a decade or so ago. Although we were really sorry not to have won and although we envied Liverpool its year of culture, we benefited from that competition. It stimulated cultural ideas and cultural planning in Cardiff. We have, for example, the Artes Mundi competition. It is a modern art competition of world status and was established when we were hoping that we might win the city of culture competition.

I make no apologies for drawing on examples from Cardiff. I know that it is not on the magic list of the eight core cities that have been referred to but we are a city of considerable significance. Although Cardiff is a minnow in terms of size compared with Liverpool, Manchester and Birmingham, it is a city of considerable strategic importance because it is the capital city of a small nation.

Looking across the cities of Britain, historically, each of them has a reason for being—a geographical reason, a reason of climate or of raw materials. Manchester, for example, exists because of its climate and the cotton industry. Stoke exists for the potteries. My own city, Cardiff, exists because it was a port and because of the proximity to that port of mines, the iron industry and, later, the steel industry. It was at one point the greatest port in the world. It is an interesting piece of local history that the first £1 million cheque in the world was signed in the Coal Exchange in Cardiff. The port still remains, of course, but is a shadow of its former self, so, like other cities, Cardiff has had to find a modern reason for being. Like other cities, it relies on being a thriving retail centre. In 2009, the largest new shopping centre in the UK was opened there, bringing, at a very difficult time for the economy, more than 400 new jobs. Cardiff now ranks among the top 10 retail cities in the UK. However, you have to have more than shopping and retail, so the city council has important plans for a central business district and has already indentified £40 million of capital finding to take that project forward. Rather belatedly, I am very pleased that the Welsh Assembly Government opted to follow the example of the UK Government by establishing a series of enterprise zones. One has been earmarked for Cardiff, specialising in the financial sector.

I put in an unashamed plug to the Minister. Cardiff would be an ideal location for the green investment bank, especially because of the promised electrification of the train service through to Cardiff, and the almost promised electrification of the valley lines. The central business district will create, as well as a lot of jobs in an important financial sector, a new bus station and will improve the train station. I am talking about transport because transport links are the key to the development of city regions. City regions are the way forward, because they spin out jobs to the rest of the economy in the area around the city.

While many of our great cities can be recognised as city regions, the idea has been resisted in south Wales until now. There has almost been a resentment of the growth of Cardiff. Therefore, I strongly welcome the fact that there is currently a Welsh Government consultation on Cardiff as a city region. It is so important that it is recognised that the future prosperity that we all hope the south Wales valleys will have depends on Cardiff, Newport and Swansea flourishing as cities, because they provide jobs for that region.

City regions can be seen as a sign of co-operation between urban areas rather than competition. The region of Leeds, which I do not think anyone has specifically mentioned so far today, includes Bradford, Kirklees, Barnsley, Wakefield, York, Harrogate and more. It is a massive conurbation which requires a great deal of co-operation across local authority boundaries. It is absolutely essential that that co-operation takes place. It has to be the way forward, because outright competition on all fronts often simply means shifting the jobs around from one area to another. The current crisis in the retail sector might be partly due to the fact that we have decided to shop online instead of in the city centres. It is also partly due to the difficult economic times that we are in. However, it pinpoints that you cannot have a city based entirely on the fact that it has a nice shopping centre. The shoppers move, and the jobs move, to the newest shopping centre which has opened. You always lose shoppers and jobs when a new shopping centre opens within your area.

We have to be careful about initiatives which might move jobs from one area to another. I think back to the 1980s and the enterprise zones. Analysis since then has shown that, to a large extent, they moved jobs around the country. Although I strongly welcome the enterprise zones that the Government have now introduced, I am pleased to see that there are measures to prevent that happening this time.

The Government’s strategy starts with the eight core cities, our largest. As my noble friend said, there will be, we hope, a second tranche. Of the eight that have been announced so far, I note that only one of them, Bristol, is not in the Midlands or the north. That is understandable, but it is important that the balance is redressed in the future. Otherwise there is a danger that the south-west will be excluded from growth because of the empowerment and funding that is going into those eight core cities. I realise, of course, that the core cities have chosen themselves on the basis of size, but a strategic look at the geographical spread of the cities in the second tranche is needed.

My noble friend Lord Shipley has referred to the fact that devolution inevitably means that there is a separate treatment of the cities in the devolved nations. None of the Welsh cities that I referred to earlier is included. That is because of devolution. It is thus important that the two Governments work closely together. To return to Cardiff, there are already concerns that although the UK government initiatives such as enterprise zones, tax increment financing and local enterprise partnerships are being copied in Wales, they are being copied at a slower pace. In the economy, there is often no prize for second place. There is nothing if you have done a very good job but have not managed to be the best. Indeed, Wales has already lost one major development to an enterprise zone in England: the Jaguar Land Rover engine plant. Plans have been announced to establish it in an enterprise zone in Wolverhampton. The hope that it would be located in south Wales was unfulfilled.

Whatever the political differences, it is essential that economic policy in all devolved Administrations works with the grain of the UK’s Government’s macroeconomic policy. Otherwise, the cities of Scotland, Wales and Northern Ireland risk falling into the gap between the two Governments and the two sets of regulations. I am particularly attracted by the “tailored city deals”, as the Government’s strategy refers to them, empowering the leadership of our great cities. For many decades, we have had the drift of power to the centre, away from local government. Indeed, the term “local government” really does not reflect the reality of city regions such as Manchester, with a population of 2.6 million people. That is almost as large as the whole population of Wales and larger than the population of Northern Ireland. It is vital that we think globally. The competitors to our major cities lie not just in other parts of the UK but across the world. That global success is the envy of the UK economic success as a whole. We need to do comparatively better than other global cities if we are to succeed internationally. We are not, as my noble friend explained, doing as well at the moment as they are in many European cities.

I very much support the power of general competence given to local authorities in the Localism Bill and the proposed business rates retention that will enable local authorities to create tax increment financing schemes and allow borrowing for capital investment. I support financial empowerment. It is so important that cities are enabled to look towards the private sector to energise and empower them, rather than, as they have been doing for decades in the past, looking upwards to government for a handout in difficult times. Our cities are the strength of our economy and they need to be empowered in order to fulfil that.

My Lords, I thank my noble friend Lord Storey for initiating this important debate. The White Paper, Unlocking Growth in Cities, which was published in December, received remarkably little publicity for what it had to say, so it is good that we now have a chance to debate it at somewhat greater length.

As has already been mentioned by other speakers, the White Paper had two key themes: first, that,

“Cities are the engines of economic growth and they will be critical to our economic recovery”;

and, secondly, that,

“for too long decisions about the future of these proud cities have been taken in Westminster, constraining local leadership and stopping cities reaching their full potential”.

As the White Paper says,

“We want to help cities exercise their independence and take their economic destiny into their own hands”.

When I announced that I was going to participate in this debate, somebody jokingly asked me, “Are you going to talk about Guildford?”. I said, “Certainly not, the last thing that Guildford wants is talk about the case for any sort of growth”, although it does have aspirations to be a city. No, my reason for wishing to participate in this debate stems from research that I undertook during the 1990s, when I was a research fellow at the science policy research unit down at the University of Sussex—I should perhaps declare an interest as I remain a visiting fellow of that unit—and was looking into innovation in Europe.

In particular, one issue that emerged from that research was the role played by a number of the core cities in Europe. In Germany, a large number of the cities play a vital role within their Land—one thinks of Munich, Stuttgart, Frankfurt and Dortmund. With the increasing prosperity of eastern Germany, cities such as Dresden are now emerging as core cities that lead their local areas. However, we looked not just at what was happening in Germany, which is the most decentralised of the European countries, but at what had happened in Spain, where devolution had encouraged Barcelona. Over the past 20 years since the Olympics, Barcelona has built itself to be a hub of growth within its local region of Catalonia. Again, Helsinki in Finland, which 20 years before had been a dull city, had also taken itself forward—partly on the back of Nokia and the electronics revolution—to become much more important and another hub of growth. I was interested in the role of cities within their sub-regions and regions, and I was interested in the degree to which they became a core for growth.

The other reason I wish to participate in this debate is because, in the course of the past year, I have been chairing a commission for the National Institute of Adult Continuing Education and the AOC that is looking at the role of colleges in their communities. I wanted to flag up the importance of colleges as well as universities within this agenda.

Let me start by taking up the whole issue of European cities, which has already mentioned by my noble friend Lord Shipley. As I said, my interest stems from the work that I did in the 1990s, but that work was carried forward to a considerable degree in the early part of this century with a report published by the then Deputy Prime Minister's Office—in the time of the noble Lord, Lord Prescott—called Competitive European Cities: Where do the Core Cities Stand? That was led by research from Professor Michael Parkinson at Liverpool John Moores University. Among his co-authors was Greg Clark—I rather excitedly thought that this might be the Minister in the Department for Communities and Local Government, but on chasing him up further, I discovered that it was not the same person, although the name is the same.

The Competitive European Cities report picks up some of the points made by my noble friend Lord Storey. It is a rather depressing story. The report was written in 2004 so it does not reflect the continuing growth in our core cities that took place from 2004 to 2008 and their continuing renaissance, which my noble friend Lord Storey talked about. It showed that Britain's core cities in the late 1990s and the early years of this century, while going through something of a renaissance, nevertheless in general lagged behind their European competitors in terms of productivity, GDP per capita, innovation, education levels, connectivity—the transport and communication routes, both electronic and physical —social cohesion, quality of life, political capacity and connections with their broader sub-regions. The only exception to that was Bristol, which in GDP terms was actually above the national average rather than below. With the exception of Bristol, all the major cities in GDP per capita terms fell below the national average.

Equally, the very positive message from the study was that the situation can be turned around, albeit over time. It instanced the very positive stories of cities such as Barcelona and Helsinki, which I have already mentioned, which over the previous 20 to 25 years have transformed themselves and their regions from being backwaters into being leading global players.

The factors that were listed as contributing to success were interesting. One was economic diversity—not being too dependent on a single sector of the economy but having a range of sectors, all of which contributed to their success. Connectivity, the physical and electronic capacity to move goods and services and people quickly and efficiently, was important. In that sense, airports played an important part. Barcelona, for example, has a splendid new airport that was built for the Olympics and it has made a great deal of difference to the city. Again, in Spain, the linking up of all the Spanish cities by the TGV-type fast train has made an enormous difference.

Other important factors included strategic decision-making capacities, the significance of networks and the relationship between key players in public and private sectors to get things done and get them decided. Networks are extraordinarily important—I want to come back to that point because that links up with the work that I was doing on colleges in their communities.

Innovation and investment in knowledge-based industries, combined with research education capacity, are also vital. That is something that one sees so strongly in countries such as the United States. I remember back in the 1970s being very impressed with the degree to which a group of universities in North Carolina had created a hub of growth within what had been a very backward state. One sees this very much in the United States, where the links between university and research have carried many states and regions within states forward.

Decentralisation and access to a skilled workforce are also very important. I want to pick up both of those issues and talk a little bit more about them. Decentralisation is very interesting and was an issue that hit me in my own research. The Competitive European Cities report said:

“Although it is not a straightforward relationship the evidence does suggest that where cities are given more freedom and autonomy they have responded by being more proactive, entrepreneurial and successful. Decentralisation in France has invigorated provincial cities during the past 20 years. The most successful cities in Europe have been German, which is the most decentralised country in Europe. The renaissance of Barcelona in part stems from the move towards regionalisation and the lessening of the grip of … Madrid”.

The question arises as to whether the new powers we are proposing to give to our core cities are sufficient in this respect. My noble friend Lord Storey has been quite optimistic, but others have been much more critical about how much real economic decentralisation is proposed. In looking at the list of new freedoms that were being given, it seemed to me that it was again—one has seen this before—a list of pots for funding for this initiative and that initiative. Such funds are of vital importance, but the only new money seems to be the degree to which these cities are able to control business rates. Indeed, all they seem to be getting is the right to access any money from the growth in business rates—yet I think it was perhaps the noble Baroness, Lady Eaton, who said that this is now being constrained as the Treasury is holding it back.

England remains the most fiscally centralised country in Europe and, probably, in the world. In the week in December in which this announcement was made, the Secretary of State for the Department for Communities and Local Government announced that, after a two-year freeze on council tax, he will intervene if any council raises its council tax by more than 3.5 per cent this coming year. Such intervention would, in most countries, be regarded as quite untenable. Most of these successful cities in Europe have the discretion not only to set their own tax rates but often to develop new forms of tax, such as local sales taxes, local property taxes and so forth. They also have—and this is very important—freedom to go to the market to raise capital. One looks at German cities and the importance of the links they have with the local Landesbanks, with which they are often in partnership in new projects and developments. That seems so important.

However, in this country, if you want to raise money, you go cap in hand to the Treasury and say, “Please sir, can we raise the money for this? Can we have the money for that?”. The Treasury controls absolutely everything. You can devolve political leadership—we have seen that and we have some very fine local leaders—but as long as the Treasury is not prepared to devolve in economic terms, and unless those leaders have the tools to do the things they want to do, I am not confident that we will see this turning around that one has seen in some of these European cities.

I will just spend a little time talking about colleges in their communities. My remit was to look at the role that colleges can and do play within their communities and the value that they might add as potential leaders. That led me to visit a great many colleges. If you are talking about the role and levels of education and so forth, a lot of emphasis is put on universities and the development of graduate education and research, which is absolutely important, but the majority of those at the local level—if one is talking about skill levels—are trained by the colleges rather than by the universities. Where Britain really lacks capabilities is in the intermediate and technician-level skills, where colleges can potentially play a very important part. The skill profile in many of these cities is below the average; they have a disproportionate number of those completely lacking higher-level skills such as Level 2 or 3 and a disproportionate number with very low-level skills.

I was very encouraged by what some colleges are doing in reaching out, for example, to work with local employers. I am thinking of a college such as Birmingham Metropolitan College, which has worked with the BBC to train technicians for the digital switchover and with Samsung to train electronics technicians. The college has also developed a new link with Caterpillar and its supply chain and developed lots of apprenticeships. However, I also think of a college such as Barnsley College, which is facing very different conditions. Most of the local employers are small and medium-sized enterprises, which are loath to take on apprenticeships. Barnsley College has set up a separate company to employ apprentices off their own bat, whom they then hire out to small and medium-sized businesses. Some 99 per cent of these young people fulfil their apprenticeships and there are no problems, but the college acts as a guarantor and will always take them back if it does not work out.

It is so important that colleges link up in partnership, not only with employers but also, for example, with the police and local youth offending teams to bring the NEETs into college and give them experience and that they link up with community groups and ethnic minorities. All of this is happening as best practice in the best of our colleges, but one just needs to see it happen far more widely. This whole issue of upgrading the skill levels of people generally is an absolutely vital one if our cities are to succeed.

My Lords, on behalf of the Opposition, we welcome this debate about cities and thank the noble Lord, Lord Storey, for tabling this Motion. It is a tribute to the Lords that in this short debate we have had very informative contributions from former leaders of three great northern cities—Bradford, Liverpool and Newcastle. We have also had very good contributions from the noble Baroness, Lady Randerson, with her deep experience of circumstances in Wales, and Cardiff in particular; and the noble Baroness, Lady Sharp, with her great knowledge of universities, and of the knowledge economy and its relationship to economic development. We also welcome the government paper published in December, Unlocking Growth in Cities, which I think is a response to cross-party pressure from all sides of this House and elsewhere suggesting that our great urban centres need more power to shape their own destinies.

This has never been more needed. I have welcomed the fact that the Liberal Democrats chose this subject for debate. However, on this side of the House we have to put on record that our big English provincial cities in particular need these powers to facilitate growth and to generate dynamism and momentum because the current austerity programme, which the coalition is pushing through too far and too fast, is hitting disproportionately hard those very English provincial cities that the Liberal Democrats have been speaking of so eloquently today. It hits them hardest in terms of public sector jobs cut, in youth employment and in welfare cuts that will cause real social misery and pain. We are facing this challenge because of that austerity programme.

That has to be said, but there is here a bigger and longer-running issue which has nothing to do with party politics. Given the intense feeling that a lot of people have that we are as a country too centralised and need to be more localist, why has that not happened? I have just a few thoughts on that. I have been a localist all my life—I have spent 10 years in local government—but my thinking on the role of the city in localism was greatly affected when I did an exercise for the president of the European Commission in Brussels, looking at the social challenges facing Europe. I came across the work of a US urban theorist called Richard Florida, who had written a very good book called The Rise of the Creative Class. The core proposition in that book is that metropolitan regions with high concentrations of technology workers, artists, musicians and lesbians and gay men exhibit a higher level of economic development than do other places. You could say that this is a flawed piece of academic punditry, and certainly some of it goes a bit over the top. Professor Florida, for instance, produced an index of what he called “high bohemian” cities. But it does to an extent at least accord with the reality of what is happening on the ground. I saw this when I came back from Brussels in 2007 and became chair of Cumbria Vision and involved in regional development. Our great northern cities were undergoing a remarkable renaissance. They had been devastated by the austerity of the 1980s, although they were rescued in part by the great vision of the noble Lord, Lord Heseltine. But our cities have had to spend the last quarter century finding new drivers of economic activity. To an extent, those have been found. Look at higher education and the contribution made to Tyneside, for example, by the expansion of universities in Newcastle, with the new Northumbria university. Look at how the UCLan, in a much smaller city space, has made a big contribution in Preston. Look at the explosion of sport as a driver of economic activity and how important it is, particularly to Manchester and Liverpool. Look at culture, with the Tate in Liverpool, the Lowry in Salford and the Sage in Gateshead. It is a great flourishing of culture, a celebration of diversity and a triumph of the creative spirit, acting as a magnet for sources of dynamism in our society.

I am really proud of what the Labour Government contributed to the transformation of our cities in the past 15 years. It has become the stock in trade to knock the regional development agencies and what they did. Of course, they had their faults; everything does. They were over-bureaucratic, and the regional political dimension to complement them was never put in place. But what they did and contributed to makes me immensely proud of what my party did in its period of government, including the regeneration of Liverpool Docks, Media City at Salford Quays, the bringing together of the new university at Manchester, which will be world class, and the Daresbury science complex—as well as a new university with a campus even in a place like Burnley. This is the fantastic urban development that took place.

The coalition chose to toss away the achievements of the regional development agencies, which was a wilful destruction of the capacity for economic regeneration at the time when that capacity was never needed more. Therefore, the coalition will have a heavy price to pay for job losses and increasing regional equalities—I say to the noble Lord, Lord Henley—that are occurring in this country under his Government’s stewardship.

What are we to make of the latest initiative to fill this gap? As I have said, we have seen lots of initiatives in the past for greater localism. When I was first a special adviser working for the noble Lord, Lord Rodgers of Quarry Bank, in the Callaghan Government in the 1970s, I remember writing lots of memos for him on the work of the Layfield report and how it was going to introduce more decentralised local government. Well, that did not come to pass.

It is tempting to blame the Civil Service for seeing off localism and local government, and I know from personal experience that there is deep-seated control- freakery in parts of Whitehall departments. I see quite a bit of this lurking in the language of the December paper. But our politics is also responsible for the centralisation of our country. In sections of my own party, people are deeply committed to Fabian centralisation, and in the Conservative Party you have Mr Eric Pickles proclaiming his commitment to localism. As one of the noble Baronesses opposite pointed out, he is introducing the fiercest regime of rate-capping and control of council budgets that has ever been in place. It is not just on the central issue of finance that he is controlling; he deems it proper to decide how often councils should collect their bins. There is no consistency. What you do not have is genuine commitment to local decentralisation. What you have there is commitment, frankly, to populism.

When I look at the latest paper, published in December, my fear is that it is ersatz decentralisation. Anyone who has served government knows the tell-tale signs of these things. The paper is very good on symbols; a Minister for the Communities is being created, the excellent Mr Greg Clark, for whom I have great admiration—he is an excellent Minister. A new unit has been established in the Cabinet Office, the Cities Policy Unit. We have had a lot of Cabinet Office units of various types in the past. There is a new ministerial group under the Deputy Prime Minister to drive the agenda forward—very good, three cheers for that. It is excellent, if I might say so, that the noble Lord, Lord Shipley, has been recruited as an adviser in this latest drive for greater localism.

There are, however, important gaps in the prospectus, and I would be grateful if the Minister could explain how the Government propose to deal with them. If she is not able to do it in her speech, I very much hope that she will be able to send me a detailed reply. First, we are talking not about full-scale decentralisation but about decentralisation by exception to a limited number of cities. That is clear from paragraph 1.12 of the paper, which declares clearly,

“we are not looking to dismantle national policy frameworks”.

I dare say that Whitehall departments were very insistent on getting that sentence in.

Secondly, while I welcome measures such as the introduction of a single capital pot for participating cities, to an extent that was what the RDAs had as well. Some government departments look as if they are not going to play ball with this decentralisation; for instance, the Department for Work and Pensions, where the business of active labour polices to get people into jobs is so important for city development, is keeping its distance, as is BIS on skills. The example of the noble Lord, Lord Shipley, of the experience in the north-east shows how, when you have a nationally run target programme of skills training, it just does not work in terms of regional skill needs.

To me, there is an obscurity about the financing aspects of these proposals. What is the Treasury’s position on business rates and tax increment financing? There also seems to be confusion about governance. There are going to be referenda for elected mayors in a lot of these cities—at least we think there are. At the same time, there is a lot of talk in this paper about the role of the local economic partnerships, which are wider than cities. What is the relationship between the LEPs and the mayor? Where is the idea of the “metro mayor”—the mayor for Newcastle or for Greater Manchester, not just for the city, which is a tiny part of the area? There are real questions about how this is going to work and whether it is real decentralisation.

One of the most revealing bits of the paper is figure 1 on page 12, a graph that shows how cities do according to the national income of their countries. The country that has by far the most prosperous cities is Germany, and second is Italy. Why is that? It is because, particularly in Germany, there is a real political decentralisation of power.

We welcome this initiative but we want to know what it really represents. We wish the noble Lord, Lord Shipley, well, but I think he is going to have a mountain to climb if he is going to succeed in his ambitions.

My Lords, I am delighted to congratulate my noble friend Lord Storey on securing this debate. He started us off with a wonderful picture of his Liverpool—its past, its present and what I know will be its great future. As I read up on his biog, I see that he served that city for many years as lord mayor and as a councillor for 37 years. It was a hugely successful capital of culture, as we have heard from Cardiff, a city that also bid for that role. So who better to speak for Liverpool than the noble Lord?

I hope to answer as many questions as I can. If I am not able to do so, I hope the noble Lord will understand if I have to write. Many people have spoken and, as I go through, I will mention as much as I can. I always have a sharp intake of breath when the noble Baroness, Lady Sharp, stands up to speak because she is so well informed and I learn so much from her. I can never answer all her questions so I know for sure that I will miss out some of hers, but I thank her very much.

England’s cities have always been centres of drive, creativity and initiative. One has to think only of Chamberlain’s pioneering leadership in Birmingham or Brunel’s vision in transforming the landscape of Bristol. As we have heard so often today, England’s cities showcase some of our best talent and innovative thinking. We have made a very good start with centres of expertise such as the new MediaCityUK in Greater Manchester, which will promote the growth of the media sector, and Sheffield’s centre for advanced manufacturing, where such world-leading firms as Boeing and Rolls-Royce are carrying out cutting edge research. I am sure that it is an ambition shared on all sides of the House that we should work together to give our major cities the best possible opportunities to thrive and gain international significance as economic powerhouses in their own right and their own unique way.

My noble friend Lord Shipley spoke of comparisons with the cities of Germany and France. It is always very useful to look at the cities of Europe in particular to see what we can learn from them. The noble Lord spoke of the core cities amendment, which is now part of the Localism Act, and its creation of a historic opportunity.

The Government’s policy towards cities builds on several initiatives already under way to promote local economic growth. Local enterprise partnerships enable civic and private sector leaders to work together to boost local economies, and I acknowledge the excellent work of my colleague in another place, the Minister for Business and Enterprise, Mark Prisk, in driving this agenda forward. Some £765 million has been invested in urban areas through the regional growth fund. Enterprise zones have been created in 24 cities and their wider LEPs, which will generate jobs by reducing barriers to enterprise and providing new fiscal incentives. I am sure we all recognise that the promotion of local economic growth is a fundamental priority at this difficult time.

With 58 per cent of England’s population living in cities—74 per cent if you include the wider commuting area—and 61 per cent of jobs based in cities, or 80 per cent including the wider commuting area, our cities are crucial to driving local growth and have tremendous economic potential. All our cities have their individual strengths, which have enabled them to build strong and proud international reputations over the years. The Minister for Cities and my colleague in another place, the right honourable Greg Clark, has shown his appreciation of local concerns and priorities in the way that he has pursued the cities agenda.

My noble friend Lady Randerson spoke of rebalancing our declining cities and asked what we are doing for them. The Government believe that all cities can improve their local environment for growth. The Government’s approach focuses on three key themes: shifting power to local communities and businesses; promoting efficient and dynamic markets; and focused investment through the regional growth fund and enterprise zones. The Government’s approach to cities will allow local leaders to identify their own priorities and grant them the powers to drive local economic growth in the way that they think best. As my noble friend Lord Storey said, this will be based on unlocking investment and funding, devolving power—yes, certainly that—and good city government.

On business rates, I agree with my noble friends Lady Eaton and Lord Shipley that the Government’s plans to localise business rate revenue create a strong incentive for growth. We are committed to making this incentive as strong as possible, while ensuring fiscal sustainability.

We can expect to see a fundamental shift in the relationship between national government and the cities, starting with a genuine transfer of power. The provisions set out in the Localism Act provide a concrete example of the Government’s commitment to transferring power to the local level.

Let me respond here to my noble friend Lady Randerson on the green investment bank. It was a good try, I thought. As I am sure she will be aware, a clear process has been set out for bidding for the green investment bank location. Cardiff will be able to apply to host it. I am sure other noble Lords will be keen for their local cities to apply, too. However, I commend her for taking the opportunity today to have a go for Cardiff. Someone should open a bottle for her when she gets home tonight.

As my noble friend Lady Sharp noted, evidence suggests that successful decentralisation will be a route towards local economic growth. We share her concern to see a radical change in the power held at local level. My right honourable friend the Minister for Cities and the Deputy Prime Minister launched the document, Unlocking Growth in Cities, on 8 December. The Deputy Prime Minister spoke on this occasion to encourage cities to be as ambitious as possible in engaging with this agenda. City region leaders will negotiate bespoke deals with the Government, which will give them the capability to do the things they want to do in their own way.

As has been referred to by many noble Lords, we are starting with the eight core cities—the largest cities outside London—and their surrounding areas as represented by the local enterprise partnerships because they have great economic potential which has yet to be fully realised. I say in response to the question asked by the noble Lord, Lord Storey, that deals will be made available to further cities in due course. I can say no more than “in due course” at this stage.

I reassure my noble friend Lady Eaton that our work with Leeds city region includes Bradford and, of course, other towns and cities in that region. I say to the noble Baroness, Lady Randerson, that Cardiff’s policy is a devolved matter. As she well knows, it is for the Welsh Assembly to take forward policies to boost growth in Welsh cities, including Cardiff. I strongly support that. I agree that it is important for this Government to ensure that they engage with the devolved Administrations. I know that my right honourable friend in another place, the Secretary of State for Business, met his Welsh counterpart in December to discuss these very issues.

As a result of the deals, cities will have greater freedoms to invest in growth, the power to drive critical infrastructure development and new tools to help people in their area get the skills and jobs that they need. My noble friend Lady Eaton talked about skills and transport in cities. I reassure her that all our discussions with cities include new measures in relation to skills and transport.

After all, a deal is a two-way process. In return for granting cities new powers and freedoms, we expect them to demonstrate strong, visible and accountable leadership and effective decision-making structures. City leaders will need to work across their economic footprint with representatives of the local enterprise partnerships to attract skilled workers, build infrastructure and boost innovation in order to create vibrant urban environments that people want to work and live in. The Government are committed to working closely with cities in the months and years ahead to help them achieve these goals.

The noble Baroness, Lady Sharp, referred to apprenticeships. We share the interest in increasing apprenticeships. As she will have seen, the Government have put city apprenticeship hubs on the menu of options for cities to consider, as set out in the Unlocking Growth in Cities document that we brought out on 8 December.

The noble Lord, Lord Liddle, talked about austerity and the RDAs. I note his concern. The coalition is working to get the entire UK economy back on track. These measures show that the Government are committed to rebalancing the economy and ensuring that all cities and, indeed, the whole country, can fulfil their potential. The noble Lord also asked about the missing bits of the menu. The menu is illustrative, as the Deputy Prime Minister made clear. We are ready to match the ambition of the “asks” that cities put to us, but it is up to them to decide what their priorities are. This is what this is all about—making sure that the cities themselves will be able to do deals which allow them to run themselves as they see fit to help them become more successful.

The noble Lord, Lord Liddle, also asked about mayors, LEPs and metro mayors. The Government have set out their position on elected mayors. They offer an opportunity for stronger localised governance, but it is for local areas to decide on the governance structure that best suits them. That is something I am sure the Opposition will gradually get used to—the amount of times that this coalition Government will devolve power down to the people who we feel are best suited to deal with local issues.

Success in all this will mean empowered local leaders able to drive real change by looking outwards to the private sector rather than upwards to the Government. Success will mean new partnerships between civic leaders, businesses and local communities, creating further opportunities for investment and growth, and enabling cities to shape their own economic destinies. Success will mean more jobs, better services and an improved quality of life for local people.

In the words of my colleague in another place, the right honourable Greg Clark, in the document Unlocking Growth in Cities, we,

“look forward to helping our cities forge a bright future even greater than their proud histories, matching their proud heritage with a busy and prosperous future”.

My Lords, I thank noble Lords. During the course of this debate, I have been struck by how many common themes there have been. We almost put our finger on the issues and problems that need to be addressed. Literally every speaker has raised the same issue.

I should of course have congratulated the noble Baroness, Lady Eaton, on her job as chair of the Local Government Association when there was a real focus on the importance of cities and the shifting of work she was able to do. She rightly said that power should be decentralised to the lowest possible level, and I entirely agree with that.

The noble Lord, Lord Shipley, made an important point about the mismatch of what the private sector needs and how we needed to unlock local skills.

I was shocked at the figure given by the noble Baroness, Lady Randerson—that for every 10 jobs created in London and the south-east, only one is created elsewhere. That is an alarming statistic. I equally agreed with her valid point that it was all very well one city crowing that it has won new inward investment, but that might have been taken from somewhere else. That has often been the story of the past couple of decades. I know that in Liverpool, when we were lucky enough to secure Jaguar, the inward investment moved from the Birmingham area. There have been lots of examples of cities, with government help, having been able to get inward investment but at the expense of other parts of the UK. It was right and important to raise that issue. I am sorry she was disappointed that Liverpool was made the European capital of culture, but I should tell her that we still regard ourselves as the capital of north Wales. We tried to get the Eisteddfod to come to Liverpool but were not successful.

The noble Baroness, Lady Sharp, talked powerfully about the lessons that can be learnt from European cities. Again, we should look closely at that. Those lessons are very plain for us all to see.

I come to the noble Lord, Lord Liddle, and his almost political tour de force. It made me think of when I was first elected as leader of Liverpool City Council and I went to my first core city leaders’ meeting in Birmingham—I was the only non-Labour leader there. As I listened to noble Lords’ speeches, I thought that those Labour leaders would be shocked that it has taken a coalition Government, 12 years later, to introduce most of the policies they were asking for.

When the noble Lord, Lord Liddle, raises those issues, it gives rise to the question: where was he when the Labour Government did not ensure that decisions were devolved locally but had stringent bidding rounds and ensured competition all the time between local authorities? I must say that I thought that some of the points he made were fair and equitable.

Finally, I thank the noble Baroness, Lady Wilcox, for her response. I am delighted that deals will be made for further cities to take part.

A couple of Members made a point about core cities. The core cities used to have the view that they were self-selecting, which I thought was very unfair. They often turned down the likes of Bradford, perhaps because they see them as competition. Perhaps we should have a campaign to stop that self-selection and have a genuine partnership of cities of the United Kingdom.

I thank all Members of the House for their contributions.

Motion agreed.