Centre for Cities tips Reading to benefit from localist approach

In their report, Cities Outlook 2011 the Centre for Cities has identified Reading as one of five cities to watch. OK, so technically Reading isn't a city...yet. But the conclusions of this report are interesting.
It concludes:

"Five cities to watch: Milton Keynes, Reading, Aberdeen, Leeds and Bristol.  These places will be better-insulated from the economic impact of the spending squeeze, and have high potential to create private sector jobs. They have lower vulnerability to public sector job losses and spending cuts, and given the right powers and freedoms could make an even bigger contribution to the national economic recovery."

The conclusions here are very welcome but generally speaking pretty non-controversial. The Centre for Cities and others have been saying for a number of years that Reading has all the right ingredients to prosper for a whole range of reasons - not least excellent transport links, a number of blue-chip and high-tech employers, as well as a World class University on our doorstep.

In the past I have pointed out that this narrative while compelling has a tendency to ignore other less rosy realities about Reading - that of a widening health and skills gap and pockets of real poverty. Sadly these problems still exist and is one of the reasons I work the hours as I do as a councillor.

As an administration it is encouraging to hear positive things about Reading but we are in no way complacent about the role the Council and others needs to play to support economic recovery and growth and to support individuals who find themselves in difficulty.

The final part of the paragraph above is the bit that interests me in particular: the suggestion that with greater freedoms and responsibilities Reading could not only become more independent but also make an enhanced contribution towards the national economic recovery.

For many years Reading has been described as the economic powerhouse of the Thames Valley by commentators both local and national:

• In 2009 Reading was selected by the same think tank as second in UK in the Centre for Cities Economic Prosperity Index.
• In 2008 the Centre for Cities noted that 40% of Reading's workforce is employed in the top twenty exporting sectors, nearly double the proportion in Stoke and Doncaster.

Last May in the Coalition Agreement the government a commitment to devolving more power and responsibility to local councils:

'We will promote the radical devolution of power and greater financial autonomy to local government and community groups. This will include a review of local government finance.'

This policy shift follows a 13 year period of unprecedented centralisation by the previous Labour government which forced councils like Reading to follow central diktats not only in relation to particular policies but also in relation to things like council housing rent - millions of pounds of which was diverted back to Whitehall each year.

A hangover of this is that like other councils Reading is also unable to set business rates. I raised this last point with Danny Alexander, when he visited Reading as part of the Spending Review consultation last summer and he made positive noises. More recently Nick Clegg has argued for more powers for councils over raising and spending revenue.

Plans to reform business rates were included in the Liberal Democrat Manifesto in 2010 and I am pleased to see it continue in Coalition Government policy. The Centre for Cities in their manifesto in 2010 argued strongly for the re-localisation of business rates, the benefits of which they suggested were as follows:-

• The UK is one of the most highly centralised states in the developed world. Currently, the only source of local tax revenue is Council Tax. Local government raises 17 percent of its income from local taxation, compared to the OECD average of 55 percent.
• Giving local authorities more control of the business rate provides them with a stronger incentive to support the right local conditions for economic and jobs growth because councils themselves will reap more of the financial benefits. For example, this should make Councils more pro-growth in their approach to dealing with planning decisions. Businesses regularly identify delays in the planning system as a major barrier to their growth.
• More control over the way business rates are raised means more freedom over how funds are spent locally – with less reliance on centrally distributed grants, with strings attached.

I hope Nick Clegg makes progress on this issue in Cabinet as I think the benefits to Reading could be substantial.