RE‐INVENTING AND RE‐IMAGINING THE CITY OF

Securing a world‐class city for all

Divergent Cities 16th and 17th July, 2015

Cambridge Political Economy Society McGrath Centre, St Catharine’s College University of Cambridge

Richard Kenny, Head of Strategic Development Securing a world class city for all • This session – underlying causes of divergence

• Importance of what works

• A Birmingham 'lens'

• Importance of cities and urban dynamics

•The Birmingham narrative

• Mobilising the Metropolis –the West Midlands Combined Authority

• Leapfrogging into the future – ambition, earned autonomy and devolution

• Birmingham as 'game‐changer' ‐ showcasing Future Cities Working Paper –Divergent Cities

Some observations on 'divergent cities' –a Birmingham 'lens'

1. What Works in LEG 2. Agglomeration and increasing returns (and size matters) v rebalancing 3. Economic structure and city growth – specialisation v diversification 4. Human capital 5. Institutions and governance 6. Path dependence and new path creation 7. Competitiveness – productivity, output and employment growth 8. Future city growth paths and sources of growth in post‐industrial society 9. Policy challenges Future is cities

Cities

•By 2050 the world’s urban skeleton will be set for generations •Over 75% of the world’s 10 billion people will live in cities ‐about half now and was 3% 1800 • Challenge for existing cities is new cities – already 1,000 cities with over 500k people • Cities are the new business sector: UK Government estimate UK market at £250 billion • Chancellor's Productivity Plan announced in Birmingham on Tuesday refers to 'resurgent cities'

But we need more than one to make a country !

• Look at world competitiveness map now only one dot in UK represented – • London –a giant multiple monopoly –centre of national, administrative, economic, financial and political power –overly dominates the mindset –the psychology • Prevailing view London at all costs – agglomeration –and £94 billion public expenditure to unlock diseconomies –£1.3 trillion for its 2050 infrastructure • Spreading ‘jam’ too thinly doesn’t work –concentrate on places that have biggest potential • Capital and labour flows to London ? •Heathrow decision

Time to think 'second tier' cities

• A 124 second tier cities contribute 80% of ’s metropolitan area and are fundamental to securing future sustained balanced economic performance for their nations (Parkinson, M. et al; 2012

• Our eight EnglishCore Cities in deliver 27% of the country’s economic output and contain conurbations of 16 million people

• Independent forecasts show the potential for these eight cities to deliver an additional £61 billion GVA and 1.3 million jobs above current expectations over the next two decades

• In Austria, Germany, Spain, Netherlands all second tier cities had higher growth rates than their capitals Three quarters in France Half in Belgium Third in Italy One in Ireland Nil in Greece, Portugal, Hungary, , Slovakia, Estonia, Lithuania & Bulgaria

• What is UK policy for second tier cities? Birmingham baseline: the foundations for a unique ‘game‐ changer’

•Single largest local authority in UK •1.1M pop, growing by 150,000 by 2031 • £94billion regional economy • 450,000 households, need extra 80,000 by 2031 • Youngest city – 40% of population under 25 •Multi‐cultural super‐diverse city – 53% white British • £7.5 billion public sector spend annually in city •Record exports, fdi, visitors per year • 42,000 businesses, c. 900 international firms • 160,000 commuters per day

A dynamic growing city Birmingham narrative – workshop of the world to engine of UK economy

•6th century one small settlement • 1086 a small hamlet worth 20 shillings • 1538 ‐ 1,500 people in 200 houses • English Civil War supplied arms – strong metal working centre •By 1731 pop 23,000 • 18th and 19th centuries industrial heartland and city forefathers and Chamberlain •By 1901 pop was over half a million •Centre of manufacturing excellence in 20th century • 400,000 engaged in war production during the wars •Post‐war regional policy restricted and displaced growth from the city •End of 1950s produced second largest number of cars outside USA From city of a thousand trades to the motor trade

• 1945‐75 Birmingham flourished

•End of 1950s 40% of automotive sector exports by value

• Mid‐1960s manufactoring employed over 250,000 people

• 1976 west midlands highest GDP outside the south east – within 5 years lowest

•Lost 200,000 jobs 1971‐81

•Lower growth 1990s and 2000s

• Currently record investment, fdi, visitors and exports Rotunda –the symbol of Birmingham transformation

• The Rotunda is perhaps the symbol of the Second City. This skinny — built in 1965 and shaped like a bin, or perhaps a beer can if we're being kinder —became shorthand for the redevelopment of Birmingham (more commonly known as Brum) in the 60s.Business embraced it. Lloyds Bank had faith in the work of local architect Jim Roberts and opened a branch at its base. All its floors were hired out as offices —Roberts' barnstorming architectural practice occupied the top two floors and Coca‐Cola had a huge illuminated advert on top.The Rotunda is Birmingham in a microcosm. It shows how cities are changing, how they constantly evolve and innovate. Because today it's still making money, but in more modern ways West Midlands Combined Authority LEP‐land, Combined Authority and Engine

•Engine • Statement of intent • £80bn GVA • 2012/13 ouput growth 4% •Home to strategic business – Cadbury, Deutsche Bank, JCB, JLR, SCC, MG Motors, ZF Lemforder, Hydraforce, IMI plc, Tata, Aston Martin, BMW, Rolls Royce, Alstrom, Ricardo, Lear Meggit, Unipart, Delphi, Bosch, Eon, GE Energy Power Conversion UK Ltd, International Automotive Components Group Ltd, Carillion Plc, Halfords Plc. •Home to fastest growing SMEs – In Touch Games Ltd, Select Health Care Ltd, Jerseytex Ltd, Fire Glass UK Ltd, G&P Group Holdings Ltd, Accura Group Ltd, Stoford Projects Ltd, Insurance Factory Ltd, E.sidwell, Norman Hay Plc, Elmdene Group Ltd, Convergence Group Ltd and Hardyman Group Ltd. •Renowned automotive & engineering prowess •Diversification specialisation into life sciences, financial & professional services, digital & creative sectors •Globalisation – 10.5% UK exports ‐ EU, China & US –FDI up 73% in last year – 10k jobs • Innovation – 10% of UK R&D –HE strengths in digital technology & computer science, healthcare, business administration, engineering & technology, & education. Research institutions in automotive design &development, , polymer research, ceramics & science & technology. •Reinvention –HS2, 2 world class stations, New Street redevelopment, Midland Metro Tram network, Upgrade & M42 Challenges and early response

Challenges • Globalisation – shift east and southwards – urbanisation – future cities • National rebalancing –not London is too big –second tier cities too small –not zero sum – right conditions for growth –if we grew at rate of London economy to 2030 – generate £24.6bn • Regional – skills deficit, a legacy of worklessness, public service reform, connectivity

Early response Single SEP Investment Vehicle Three Commissions • Productivity • Land • Mental Health and Public Services Metro devolution and going for 'growth' –the 'only show in town'

• Ambition –No uniform system or framework ‐ Ministers will match it • Earning autonomy ‐ take it on but must have capabilities to deliver •Long term planning – foresight work, infrastructure planning ‐ getting ahead of deal‐making • Functional devolution –other states , 800 + NDPBs –review of govt presumption of devolution – burden of proof on why it cannot be devolved • Fiscal devolution – becoming a financially sustainable city region ‐ current gap in Bham about £3billion (Centre for Cities) – offer revenue neutrality •Gain retention over the property taxes – stamp duty, land tax, business rates,, capital gains property development tax •Other taxes –tourism tax, congestion charge, environmental taxes eg waste • London, Wales, Scotland, European models –the tilting tables • Refurbishment/relocation of Parliament • London Birmingham Corridor – never mind powerhouses and engines •New model of government The Y “x” factor ‐ spatial rebalancing and city agglomeration: ‐ HS2

UK Central and the Interchange

• 100,000 jobs • £20 billion GVA • & Resorts World Opens 2015 Birmingham Airport: spatial and sectoral rebalancing

• Airport expansion worth 250,000 jobs • 36mppa, with single runway •70 mppa, with a second runway • 15 million people within an hour with HS2 •Advanced Manufacturing Hub proposal –UK Central beside the airport –M42 Gateway • £55 billion exports from catchment area 2011 –high value manufacturing sectors – transport, automotive, aerospace, machinery, military equipment •The catchment holds a competitive advantage for UK’s automotive industry with flagship brands on our doorstep • Relieve London –31 mins with HS2 • 80mppa within an hour within catchment using other airports • Birmingham Airport largest share of manufacturing activity out of any airport catchment in the UK. Current alignment of UK connectivity and productive sectors is not maximising economic activity •New route development with India and China and Brazil in train Giant site for HS2 College

•3.3 acre site • £2bn GVA per annum • 2017 ‐ first student cohort •Global hub for HS rail •Secure rail contracts • 2,000 apprenticeships • 400,000 jobs as HS2 evolves •Not just railway‐specific skills • Signalling skills similar to telecoms •Rail construction ‐ civil engineering Connected City 2035

• Three new tram lines • re-routed city centre motorway • "up to nine" rapid bus routes across the city. • £4 billion of investment • Improving rail links including re-opening and upgrading rail routes to city suburbs such as Moseley and Sutton Coldfield and Tamworth • £400 million upgrade for Snow Hill Rail Station • HS2 local connectivity • Low emissions zones in the city centre • Green Travel Districts

Big City Plan –the city centre as the engine of growth Development Plan and Big City Plan 2031

51,000 homes

150,000 people

100,000 new jobs

The city‐region intervention

Strategic Economic Plan £440M •An additional 50,000 jobs; •14,315 new homes; •1.7sqm of commercial floorspace; •£2.3bn GVA over ten years; and •£1,100m private sector leverage.

Through: •Greater Birmingham Growth Hub •Exploiting HS2Birmingham Curzon –UK Central and the Interchange –HS2 Connectivity Package •Birmingham Trained Me to Compete

Four Delivery Programmes •Growing Business •Enhancing the Regional Hub –city centre •UK Central, Enterprise Belt and the wider Birmingham area •Enhancing our Growth Sectors Strategy for Growth • £8.25bn GVA • 100, 000 jobs • Growing the number of successful businesses • Building on our sector strengths and opportunities • Stimulating innovation in products, processes, services and business structures • Improving our skills talent pool • Improving physical and digital connectivity • Optimising the economic value of the region’s assets Sector strengths and opportunities Importance of supply chains

•JLR spend per annum on UK‐based suppliers is £5 billion • IAC one of biggest suppliers to JLR – 100 UK based suppliers • 2,000 UK based suppliers • 235 production suppliers • 1,732 non‐production

£125M Advanced Manufacturing Supply Chain Initiative Prediction matters: Birmingham “hotspot” world city by 2025

Source: Economist Intelligence Unit (June,2013)