Urban growth and recovery

The coronavirus crisis has amplified existing challenges and created new ones in our major cities and towns, according to research commissioned by the LGA from Cambridge Econometrics Ltd.

In 2020, one in 20 urban residents tested positive (compared to one in 30 elsewhere), and there were 80,700 COVID-19-related deaths − 66 per cent of the national total. 

Urban areas have higher risk factors for COVID-19, including lower health and a higher rate of pre-existing medical conditions, more at-risk jobs, higher public transport use, housing overcrowding, and larger black, Asian and minority ethnic (BAME) populations. 

Meanwhile, the renewal of our urban areas remains a work in progress and some remain significantly vulnerable to further economic changes, says the Cambridge Econometrics report. 

Problems include poor productivity growth, poor earnings growth, inequalities, and housing need, as well as the challenges of climate change, accelerating digital transformation of the workplace, and the contraction in physical retail. 

Urban areas will also have to deal with the recession and economic restructuring that will result from COVID-19 and the transition to new trade and customs arrangements now the UK has left the EU. 

All of these changes will have different spatial impacts – between cities, and within urban areas – and will also increase inequalities. 

The report sets out five main priorities facing urban economies in England and Wales: restructuring, functioning places; inequalities; environmental sustainability and climate change; and resources.

On restructuring, Cambridge Econometrics forecasts a loss of half a million jobs in urban areas between 2019 and 2021 because of COVID-19 and Brexit, with manufacturing, finance and insurance, hospitalities and leisure, retail and other services particularly affected. 

In respect of places, an estimated 25 to 30 per cent of retail floorspace is surplus to market requirements (15,000 stores closed in 2020), while house prices and affordability in urban areas continue to be a challenge.

Inequalities were high in urban areas before COVID-19 – 3.4 million households were in poverty in 2019, and BAME residents were twice as likely to be in poverty or unemployed – and these have worsened and deepened during the pandemic. 

And while many councils wish to pursue comprehensive carbon reduction policies and actions, urban areas are major sources of carbon emissions – presenting challenges ahead in terms of addressing climate change.

“The renewal of our urban areas remains a work in progress

Finally, while urban councils have the agility, integrated solutions, and democratic legitimacy to lead recovery, they need the resources to do this effectively. 

COVID-19 placed exceptional financial pressure on the whole public sector, impacting on local service delivery. The Government has provided significant financial support to meet these pressures, but they are likely to persist into the medium term, reducing the ability of urban councils to stimulate economic recovery, address inequalities and tackle climate change. 

Meanwhile, there has been a proliferation of uncoordinated national strategies, funding pots and delivery initiatives – in contrast to the integrated local plans that most of our urban areas have put in place to tackle these issues. 

What is needed is an integrated programme of urban recovery and growth that encourages local government, national government, the private sector and communities to work in partnership. Our vision is for a programme that delivers:

  • successful economic restructuring that mitigates against the worst impacts of structural unemployment and job loss
  • successful and relevant urban centres that meet the current and future needs of residents, businesses and workers
  • a step-change improvement in equalities that ensures communities benefit
  • sustainable solutions that make significant progress towards carbon emissions reductions
  • the agility and capacity to respond to further challenges and opportunities as they emerge. 

This would be underpinned by a £7 billion, 10-year ‘Sustainable Urban Futures Fund’, providing long-term, large-scale funding for integrated, place-based urban recovery programmes. 

Scaleable to each locality, the fund would provide a single pot for use on the priorities facing a particular urban area – whether the economy, inclusion, sustainability, housing or infrastructure.

It could incorporate funds and priorities set out in the Build Back Better plan for growth, and other government initiatives such as the Future High Streets Fund, Towns Fund, and Levelling Up Fund. 

An integrated, large-scale fund would also attract much higher levels of public and private match funding, with the potential to increase the overall spend to £31.9 billion in England and Wales’s urban areas over the next 10 years. 

This would make a serious impact on economic growth and recovery. 

Urban areas and partnerships have a track record of value-added growth and generating jobs – contributing 80 per cent of new growth and three out of four new jobs between 2011 and 2019. 

They can provide the strategic and integrated solutions to economic recovery, growth, inclusion and sustainability that the UK needs, and must be a central part of any national strategy for recovery.

‘A vision for urban growth and recovery’ was commissioned by the LGA’s City Regions Board from Cambridge Econometrics Ltd and is based on research conducted between November 2020 and January 2021. It draws on evidence, forecasts and interviews with urban councils to analyse the impacts of COVID-19, current economic challenges and opportunities. You can read the full Urban growth and recovery report on our website.

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