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    UK can drive real economic growth by budgeting for devolution.

    With three quarters of our population living in cities, it comes as no surprise that more than three quarters of UK jobs are in within cities – clearly showing us that it’s cities and regions, not countries and national governments, which drive economic growth.

    For over 30 years, London has transformed from a tired, worn-out city with a falling population, into a global economic and cultural powerhouse. Our great provincial cities need to emulate London’s success by retaining talented graduates, encouraging local startup businesses, and providing an attractive environment for later-life living.

    There are three pre-requisites for success. ‘Critical mass’ (the minimal amount of resources required to start or maintain success) enables a city to think seriously about accelerating growth. That growth, in turn, requires productive capital investment: in infrastructure, housing, local businesses, and by committing to long-term investments into startups.

    £12bn in UK assets

    What is often forgotten or overlooked is that many of our towns and cities already have the necessary ‘critical mass’ - Manchester, Birmingham, Cardiff, Edinburgh, Glasgow, Newcastle, Leeds, Sheffield, Liverpool, and Bristol – all packed with the potential to be powerful ‘second cities’, and rival other similar cities such as Munich, Frankfurt, Boston or Austin (Texas).  

    City regeneration provides positive long term returns and should work in positive, constructive collaboration with civic authorities and leaders.

    This is the basis on which we at Legal & General have invested over £12bn in UK real assets, and are well-advanced towards our goal of having £500m-£1bn invested in the UK’s major cities outside London.

    Newcastle’s economic growth is running at around 4.5% each year – among the highest in the UK. Cardiff city centre is undergoing a stunning £400m regeneration, and Manchester’s relative prosperity is spreading to Salford. It won’t be long until places such as Leeds and other areas in the north-east combine in a host of projects and further spread productive growth.

    Devolution – with local empowerment – is a powerful catalyst to further progress and prosperity, with three successive mayors of London (of different political stripes) having each made a difference. The government’s programme of city and city region devolution deals is a powerful spur to progress. New metro-mayors, like Andy Street in Birmingham, Andy Burnham in Manchester, Steve Rotheram in Liverpool and Ben Houchen in Teesside, will be largely judged on what they can deliver, much less on their ideology. 

    Devolution creates prosperity

    City devolution deals are good value for the government, financially and politically. 

    Since 2011, over 30 deals have been granted. These deals are real evidence that ‘the man from the ministry’ no longer knows best. Passing control from Whitehall to the town hall, spending political capital on giving back political power makes sense.  

    For Philip Hammond, a Budget with limited room for manoeuvre is the perfect opportunity to announce progress on further city deals. 

    Newcastle is showing recovered dynamism under its current civic leadership, and it has the potential to grow further in science, engineering, and in the nascent industry of North Sea decommissioning. In conjunction with Northumberland, it can make real progress, and quickly.  

    Sheffield, meanwhile, needs to capitalise on its huge expertise in advanced manufacturing and engineering, including for the nuclear sector, and on leveraging the strength of its universities. The £900m devolution deal was first proposed in 2015 and it needs to move forward – and at pace. 

    Devolution creates real winners. A decisive but modest injection of investment from government can restore and revive a local economy, deliver a vision for the region and, married with institutional capital, achieve a major multiplier effect.

    The Budget needs to have devolution in mind – for Newcastle, Sheffield, Teesside and Bristol. That is a Budget for real growth and empowerment.

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