The notion that national governments have become inert and dysfunctional while cities power the global economy has become a bit of a mantra among urbanists: Why not let mayors rule the world? Yet for all the talk, even the largest cities and most powerful urban leaders in the United States and around the world remain highly dependent upon higher levels of government.
But in the United Kingdom, at least, the scales may finally be tipping in favor of cities. Spurred on by the ill-fated Scottish independence movement, Labour Party leaders in the cities of Birmingham, Bristol, Liverpool, Leeds, Manchester, Newcastle, Nottingham, Sheffield, Cardiff and Glasgow began agitating for greater powers. Prime Minister David Cameron has promised “wider civic engagement about [how] to improve governance in our United Kingdom, including how to empower our great cities.” In early November, 10 regional councils decided to allow Greater Manchester to elect its first metro mayor, who will oversee the area's transportation, social welfare, housing and police budgets.
The effort has been given a boost by the findings of the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) City Growth Commission, a year-long independent effort by a team of leading government officials, economists and urbanists who identified the most practical strategies for empowering the U.K.’s cities and metro areas.
The movement gained additional momentum earlier this month, when Ed Miliband, the leader of Britain's center-left opposition, called for nothing less than a Senate of Cities to replace the U.K. Parliament’s second chamber, the traditional House of Lords, which is made up of appointed, ecclesiastical and (a small number of) hereditary members. “We will make the second chamber of parliament truly a senate of the regions and nations of our whole country,” he said. Miliband pointed out that nation’s northwest region, which has nearly the same population as London, has “only a small fraction of London’s number of peers.”
While Miliband makes a high-profile case for a Senate of Cities, and particularly one that balances resources between large and mid-size cities, the RSA report zeroes in on how power could be shifted away from the national government and toward cities. The commission understands that it is not simply cities but broader metro areas that are the key units in today’s economy, an argument made in the context of long-standing British arguments for decentralization of power (the Scottish independence vote being just the latest skirmish). The commissioners dub this process “metro devolution.”
Indeed, 61 percent of U.K. growth is generated by city regions. But the nation is not fully realizing its cities' potential. Metros, “with their concentration of labor, capital and information flows, are stifled by the overt centralization of policy decision-making,” the commission writes. “While global competitors are free to invest in their major cities, U.K. metros are at the mercy of the central government, permanently bidding for a share of a fixed pot of national expenditure.”
The solution, the commissioners argue, is to grant U.K. cities “sufficient decision-making powers and financial flexibilities to become financially self-sustainable.” The report urges national policymakers to recognize that cities are the “appropriate scale” for making localized and strategic policy decisions to promote economic growth. This is not, the commission says, “a top-down blanket policy of devolution,” but instead a move towards local independence that hinges upon “effective governance and accountability structures.” This means city-region devolution cannot be for everyone—“or at least not immediately,” as they write.
The report offers four key recommendations:
Shift decision-making authority to the metro level
The commission recommends a complete overhaul of the “design, delivery and decision-making of policy and finance” at the metro-level rather than the federal one. Such a move, the commission argues, would allow leaders to come up with more specific and place-based budget and investment strategies; tailor policy decisions based on local and data and evidence; and work with other metropolitan areas to integrate public service reforms and economic development strategies into a regional network.
Transfer tax revenue or fiscal power to cities and metros
Here the report recommends giving cities and metros more power over their revenue and spending. It notes that many cities have proved their financial capability already by balancing local governments, and should thus be given the "freedom to explore alternative borrowing options,” the commissioners write.
Part of such an increased local authority would be retaining a suite of regional taxes and generating flexible capital reserves and borrowing flexibility by allowing city regions to borrow from sources like open markets.
Establish national representation for cities
The commission suggests cities and metros be given new mechanisms for representation at the national level. These are not as dramatic as Miliband’s Senate of Cities, but still significant. The commissioners propose additional metro representation “via special attendance or even a permanent seat at cabinet and sub-committee meetings.” This sort of regional metropolitan representation is urgently needed in national infrastructure decisions, the commission argues, and having a special space for city-region voices would allow metros to make decisions in a cooperative, rather than top-down, manner.
Greater coordination of economic investments at the metro level
The report calls for much more coordination of key economic investments in innovation, infrastructure and skills development. This could be accomplished in several ways. Coordinated investment in transportation could cut down on the time it takes to conceptualize and then complete larger-scale transit projects. (“In the U.K. there are certain rail journeys that take longer to complete now than they did during the Victorian era,” the commissioners point out.)
Large-scale metropolitan investment in housing could help solve many regional housing problems, too. London, for example, suffers from severe housing shortages, while other city-regions have not yet found the balance between housing type, tenure and industry to attract workers. Organized investment could help one metro solve shortages while giving another a much-needed shot of funds.
Finally, coordination could be brought to bear upon education (particularly higher education) and to develop and retain talent. The report calls for wide regional coordination to connect education and skills training with available jobs, based on local data collected across entire metros.
As “Senate for Cities”-like ideas gain steam in the U.K., we’ve heard nary a peep from U.S. lawmakers. But cities are key to America’s economic growth as well. As the Brookings Institution’s Bruce Katz (an RSA growth commissioner) has long noted, metros account for nearly 75 percent of U.S. economic output. Katz points out that metropolitan areas generate the majority of GDP in 47 of the 50 states, including rural states such as Nebraska, Iowa, Kansas and Arkansas. I have argued that the American economy is composed of roughly a dozen mega-regions, or networks of metros, including the Boston-Washington corridor (56.5 million people, with $3.75 trillion in economic output); Char-lanta (45 Southeastern metros, including Atlanta, Raleigh, and Birmingham, Alabama, with 22 million people and about $1 trillion in economic output); So-Cal (from L.A. through San Diego and into Tijuana, Mexico, with 21.8 million people and more than a trillion in economic output); and Dal-Austin (including Dallas, Austin and San Antonio, with just under 12 million people and $700 billion in economic output).
Today’s knowledge economy turns on these metros areas, which cluster talent and skill. The key to future competitiveness and raising living standards will be empowering those cities and metro areas to band together to invest in their future and build the infrastructure and talent bases they need.
The U.K. may be moving forward, but the U.S. has an advantage in its historically flexible federalist system, which can balance and re-balance power among the federal government, states and cities. During the New Deal, Franklin D. Roosevelt forged a new kind of partnership between the federal government and the cities. As the economic transformation to an urban-led, metro-led knowledge economy continues, it is now time for the U.S. to once again adjust and restructure its federalism, shifting more power to its cities and metro areas.