By Rebecca Riley, Business Development Director of the City Region Economic and Development Institute (City REDI).
To say we are in interesting times would be an understatement, the recent general election has plunged us further into uncertainty. Putting aside the rights and wrongs of holding the election and the unfolding political alliances it’s important to remember that on the ground people and businesses are struggling to keep up with the changes and the potential impact. Most of us get on with our lives despite the national turmoil. But the effect of that turmoil is to dampen investment and decision making; which slows growth. Latest research by the Institute of Directors highlights that 92% of respondents see current uncertainty over the make-up of the government as a concern. There has been a negative swing of 34 points in confidence in the UK economy from their last survey in May. This has serious implications for business growth, as how we interpret and perceive our future, our risk aversion and our need to have good information to make decisions can stifle our ability to act.
The national situation we are seeing unfold, in terms of lack of clear majority for either side, and regardless of eventual party outcome, will be a government relying on a brokered deal to get things through parliament which will exacerbate this uncertainty and the impact of Brexit fears.
So where can we look to for leadership?
A recent blog by the World Economic Forum has highlighted that in many places the nation state is looking outdated, and even dangerous. Where power is too centralised and focussed on national interests, policy is disengaged from the local, from the day to day lives of people and businesses. The populist movement we are seeing globally is a reaction to this; dissatisfaction with the way countries are governed creates turbulence in the current way of thinking and doing, and challenges political structures. Shifting of decision making to a more local level eases tensions as people see change locally and impact can be seen quicker. Cities are therefore emerging as key leadership nodes, galvanising action and responding to local need. Focussing on regional economic growth and giving powers and funding to local delivery structures to improve growth can help alleviate the social and political tensions that have led us down this unfortunate path to instability.
Half of humanity lives in cities and urbanization is set to grow with 2/3 of the world’s population will be urban by 2030 and even now they power 2/3 of the world’s GDP. By their very nature cities can foster more open, plural and cosmopolitan environments and in the West Midlands with its 3 cities and highly diverse population, where 17% of adults are from an ethnic minority, and 20% are under 16, and investment is seeing early signs of growth, the city region is ready for growth. City regions and states are finding their feet against turbulent national structures and the West Midlands need to be ready to seize this. The latest example of this stance can be seen in Hawaii which has legally committed to supporting the Paris Agreement on Climate change, going against their national policy from President Trump.
Many international cities are facing economic change and are positioning for a new urban agenda, where leaders commit to good basic services; equal opportunities; respect for migrants; cleaner safer environments; resilience; housing; living wage; connectivity and innovation. Within this context it’s important the West Midlands and the emerging mayoral combined authority steps up within the national picture. At a city level there is greater ability to understand and make trade-offs across this agenda to suit the specific circumstances of the place, people and businesses.
City plans and strategies developed under mayors are by definition, closer to the needs of those they represent and better able to deliver local needs, but we are in the process of devolution, and current instability could threaten devolution as national issues take precedent. Emerging deals being brokered to gain a majority government could also shift the focus back to nation devolution rather than English devolution and this puts more pressure on new mayors to ensure city region investment is high on the government’s agenda regardless of party colour.
Internationally mayors provide a strong focus for places, driving investment and promoting a good image that increases business and individual investment despite external change. Fledgling English mayors can gain from global experience through networks such as Global Parliament of Mayors and action on climate change through C40 Cities.
There is an opportunity within the instability for Mayors to steel a march and ask for more powers leaving national government to deal with national issues, showing clear leadership in policy and strategy development is key to the region weathering the storm. The lack of clarity and consistency at national level provides not just an opportunity, but an imperative, for regional governance structures to step up their game.
This article was originally published in the City REDI blog.