Reviving our cities

One of Britain’s great problems is the extent to which it is governed from the centre. Money and power have, over the decades, leached away from local communities towards Whitehall. The result has been a lopsided development model in which London has thrived, but many of our other great cities have found it harder to attract investment and enterprise.

Now, a commission led by the economist Jim O’Neill has calculated the potential benefits of a revival of urban government – and the results are impressive. Its report suggests that £79 billion could be added to the economy by 2030 if cities such as Manchester and Birmingham were allowed to keep control of the money they raise. The idea is not to revive the one-party mini-states of the Seventies and Eighties (which led to cities being stripped of their powers in the first place) but to stoke competition for investment between urban areas – and co-operation, too, not least in the creation of a joined-up transport network across the North of England.

This is an agenda with which the Government is sympathetic: as we reported yesterday, the Chancellor is already looking at ways to enable local authorities to keep more of their revenue from business rates. Plans for a “Northern Powerhouse” as a counterbalance to London are expected to play a significant part in Mr Osborne’s Autumn Statement in December.

Such moves deserve to win broad support. Rather than the ersatz devolution promoted by the last government, based around regional assemblies, this new urban localism proceeds from a clear commercial and economic rationale. It would spur local decision-making, without cutting across the wider devolution agenda, in terms of the need for English votes for English laws. Our cities were once the envy of the world. With the right incentives, they can be again.