2023: The Big Issues for UK Towns and Cities

2022 was another tumultuous year for UK towns and cities. We emerged from the pandemic with a changed relationship between where some people live and where they work, inflation, and public services and the public finances under strain. War in Ukraine and political and economic turmoil in the UK have heightened the challenges. Other issues have included the crisis in the NHS, a record-breaking heatwave, and significant skills gaps as a result of a shrinking workforce. These issues will shape the agenda for UK towns and cities in 2023, which I predict will be dominated by six main issues.

1.????Energy and Climate resilience

Efforts to achieve domestic retrofit at scale will gather pace. Fuel poverty is a huge issue for our towns and cities, contributing to a wider poverty crisis as a result in the huge increases in the cost of living. A recent Joseph Rowntree Foundation survey found over 3 million households cannot been keep their homes warm this winter. We have been working with cities, energy providers and financial institutions on new retrofit products and services for home-owners. Local authorities and housing associations will continue to invest in the energy efficiency and condition of their own stock. Tackling the issues with poor stock in the private rented sector is a huge challenge, which may lead to councils taking a more strategic and ambitious approach to regeneration, stock replacement, and acquisitions. Expect to also see more comprehensive urban energy investment programmes around renewables and decentralised energy.

Decarbonisation of offices will be an increasing focus as occupiers rightly demand higher sustainability standards as part of a more general flight to quality. New developments are setting the standards, with accreditation schemes such as NABERS covering the whole-life performance and operation of buildings. There will be significant investment in repurposing and improving the energy efficiency of existing office buildings because of construction price-inflation, a focus on embodied carbon, and the risk of stranded assets.

Large scale transformation of carbon-intensive energy and industrial processes will continue to be a huge priority for some parts of the UK. We are working in places such as Tees Valley and the Humber where local leaders see this as a huge economic opportunity.

Heat-proofing cities will go up the agenda globally, including in the UK following the record summer temperatures. Athens has appointed a Chief Heat Officer to develop integrated responses across topics such as green and blue infrastructure, fire risk and health and well being. Expect places in the UK to start to take similar approaches, encompassing other climate risks, such as flooding.?

2. The Participation Puzzle (and Health)

The UK has a shrinking workforce; around 9 million working-aged people are economically inactive, and the number is rising. At the same time we face severe skills shortages, and wage inflation. The causes of this trend - "The Participation Puzzle" have led to much commentary. As the IFS have shown the main cause is people leaving the workforce by choice, mainly through early retirement (not, as others have suggested, due to ill-health). Early retirement has increased because of the pandemic, part of the "great resignation".

Another cause of economic inactivity is the UK's high childcare costs. Childcare in the UK is the most expensive in the world according to the OECD, and availability for childcare is shrinking.?I have written previously about the impact of the pandemic on the previous economic progress for women.

Tackling skills shortages should be a priority for efforts to boost the economic performance of towns and cities. Local Skills Improvement Plans will have an important role to play. Initiatives could include creating more non-graduate pathways into into growth sectors, efforts to attract people in their 50s and 60s back into the workforce, improvements to local childcare provision and returners schemes for parents, and in-work progression initiatives.

While ill-health is not the primary cause of economic inactivity (in fact the evidence suggest that economic inactivity is a cause of ill-health), the issues of health and wealth are inextricably linked. Of course there are lots of other good reasons for tackling ill-health beyond the economy. There is a huge imperative with the NHS under strain, social care pressures impacting severely on council budgets, and our widening health inequalities which were laid bare by the pandemic. Expect to see a real focus on making the local Integrated Care Systems work, and places seeking to innovate to reform and improve social care.

3. More for Less

Fiscal and economic pressures will have big implications for local investment in regeneration and infrastructure. At a time when council staff and the communities they serve are under strain, there is already concern about further spending cuts, as well as inflationary pressures and higher borrowing costs. This follows years of restricted public spending that has hit councils harder than other parts of the public sector, in addition to the impact of the pandemic. In the private sector a combination of further construction price increases (as a result of a weaker pound) and higher financing costs could affect the viability of projects.

I set out recently five calls to action for places. They should ensure that they continue to invest in and support growth building broad-based coalitions for growth, working with and through the private sector. They should act strategically by setting out long-term investment plans for their areas. They should build stronger, more strategic partnerships with private sector investors of patient capital. Net Zero and social value need to be placed at the heart of their plans. Devolution needs to go further and faster.

4. City centres, science parks, Investment Zones 2.0 and innovation

We will see a strong policy focus on reshaping city centres and business parks as engines of innovation and productivity. This is because they bring together knowledge intensive firms, skilled workers, knowledge producing institutions such as universities, hospitals and government, investors and entrepreneurs to maximise knowledge-spillovers and the relationships and networks needed to drive productivity. Centre for Cities have rightly highlighted the importance of building more office and commercial space in city centres.

I have been advocating the role and potential of innovation districts for some time. Government has announced that the Investment Zones initiative will now be focused on city centres and (as I suggested back in September) areas of innovation (see this excellent article by Neil Lee and Max Herbertson). I also hope to see the innovation accelerators initiative extended to more places. The Government is developing its proposals to build the UK into a science superpower, and Labour has highlighted the role that place-based clusters can play. The US, through the CHIPS and Science act is leading the way. As the UK responds to big societal challenges such as improving health, tackling climate change, and building our domestic space and semi-conductor capabilities, innovation districts and innovation accelerators have a role to play.

These may be linked to the 20 Kings Cross style regeneration projects that Government has proposed in towns and cities, and around major stations. This agenda has huge potential, but significant and coordinated public sector investment will be needed, along with flexibility and creativity in approaches to project appraisal.

With WFH / hybrid working persisting, planners, developers and managers of city centres, business parks and commercial office schemes are going to have to work hard to attract people back, as Julia Hobsbawm has argued. Better quality schemes, collaborative spaces and curation of networks all have a role to play. This is important because the evidence shows that face-t-face collaboration is still the best way of driving the innovation and productivity growth we desperately need.

5. Urban Green Space

There is increasing recognition of the role that enhanced green and blue (water) infrastructure can play in helping towns and cities address agendas around health and well-being, heat resilience, flood-risk management, bio-diversity and carbon sequestration. New parks, urban tree-cover, and enhanced waterways also make places nicer, enhancing quality of life, improving place brand and image, and can help places respond to economic change as demand for uses such as retail reduce. Projects such as Castlefield Viaduct in Manchester, Belfast's One Million Trees, the proposed reconfiguration of Stockton Town Centre to create a waterfront park, or Mansfield’s rain gardens are capturing the imagination. Several organisations, including the National Trust, are undertaking important work on urban nature. In 2023 I predict (and I hope) we will move on to an agenda where nature and good quality green space becomes an integral part of plans for regeneration, development, place-shaping and infrastructure.

6. Reconnecting people and places with the growth agenda

As we look to a general election in 2024 or 2025, the issues facing UK towns and cities will become more political. Many people feel disconnected from and disenfranchised by the patterns of economic and urban change. At the same time we urgently need to make tough decisions to increase growth and productivity. Reconnecting people to the agenda for town and city growth will be an imperative.

Levelling-up will be a major policy battleground, as Government seeks to build on the progress with the Towns Fund and Levelling-Up Fund, and to take forward the ideas in the Levelling-Up White Paper. A challenge for Labour and other political parties is to respond with policies to get all parts and places in the UK firing on all cylinders, in a way which resonates with people.

The reform of the planning system in England, moving away from nationally imposed housing targets, aims to focus growth where there is local support for it. Whether it achieves this remains to be seen; I have big concerns, particularly at a time of such acute housing shortage. What is clear is that those advocating a step change in housing and commercial development have to win the argument and public support. There is a big inter-generational fairness issue here, and it is time for more younger people to speak up (and for politicians to listen to them) on this issue.

Finally, we will see more devolution with new county and metro-mayor deals, and existing metro area deals being strengthened, starting with Greater Manchester and the West Midlands. Labour also recently announced proposals for more devolution to help local areas address their economic challenges. Further devolution can help integrate policy, deliver efficiencies, and make a difference, in rebuilding local engagement in politics and policy around the issues facing our towns and cities ?