Andrew Carter: Hi I’m Andrew Carter from the Centre for Cities and today I’m joined by Dave Smith, Chief Executive from Sunderland City Council and Ray Mills, Partner from PwC. Many of our English midsized cities, the economies of those cities have performed very well over the last decade. Indeed the businesses in those cities have created thousands of jobs but, when we look at where those jobs are located many of them however were actually located on the edge of town, out of town locations, rather than in the city centre and we think over the longer term this will cause us some problems. Some recent research that we’ve been doing with Sunderland and PwC has begun to set out the case for midsized cities city investment fund to really help those cities to work with government and the private sector to reconfigure their city centres to make them more attractive to the businesses that Sunderland, Derby and Preston require. So, Ray, you’re experienced in dealing with these sorts of issues. Why do you think that mid sized cities require additional policy support from government and elsewhere?
Ray Mills: Well, I mean firstly Andrew I think you’re absolutely right. I mean a lot of the mid sized cities have performed very well in recent years. Sunderland my own home town, grew from 1998 to 2008 by 10½% the employment in the town, it’s a fantastic performance. Outstripped the national average. But, you know we’re talking about the future today, not the past and I think we’ve all seen the dislocation in the economy in the last few years and I think it’s true to say that its hit the midsized cities harder than it has a place like London and we’ve got to make sure that going into the future their resilient and their economies are sustainable. I mean again, you know, Preston, saw private sector jobs growth of 16% and it’s your point about the urban core, but a 3% decline in the urban core. Why is that? Well there’s a lot of reasons, from policies that have been adopted over the last 10 or 20 years but we can’t afford to do that, because as our urban core reduces in size and attractiveness to investors, it will have a knock-on effect to the job creators in the periphery so we have to do something about it.
Andrew Carter: And creating a midsized cities investment fund, a fund focussed on trying to help these cities reconfigure their urban core and improve their urban core what are the kind of challenges and benefits of doing that?
Ray Mills: I think, you know let’s start with challenges. There’s always a challenge when you are trying to create new investment vehicles to address long standing and pretty big issues for these cities. But, you know, we should be ambitious about this, the key thing about the proposition about a mid cities fund is bringing together demand from a number of places to create scale and anybody who deals in the financial markets as I do will realise that scale is important for a number of reasons – not least it attracts investors from a number of areas, but also because we get a variety of opportunities from Preston, Derby and Sunderland that they can invest in. So you spread the risk and you get a better portfolio return. The other point is that scale, that ambition also demonstrates to the government that we’re serious and we’re serious about trying to make something happen in our city centres in the mid sized cities and make sure that we’re punching our weight and when we see, you know, the new wave of European funding coming through in 2014, we’ve got to have our act together so we can access that, but not just take it as we used to as a grant, but as an investment in the sustainable future of our cities.
Andrew Carter: Great, Dave as Chief Executive of Sunderland, obviously many issues on your desk at any one time. Why is it that trying to renew and improve the city centre is so important for Sunderland’s’ economic future and the future of its residents?
Dave Smith: Because it’s about making the economy of Sunderland sustainable over the longer term. As the report indicates the growth in Sunderland, both up to 2008 and indeed the level of resilience in the city at the moment, is largely based on advanced manufacturing and the automotive sector which is highly productive and largely export based. However, the sort of commercial and support services to support those industries are simply not in Sunderland at the moment. We’d like the opportunity to attract those commercial industries into Sunderland to support that manufacturing base. Sunderland will always be a producer city, that’s the history of Sunderland it remains its core business, but we know we need to diversify the economy and bring in commercial consultancy, financial services that provide a greater prosperity level and diversify the economy and encourage business to business trade at a level that we’re not experiencing at the moment.
Andrew Carter: And in the report we’ve identified that the governments city deals process, which as you currently and as you are aware, is currently focussed on the core cities, but were about to go out to a second wave of cities beyond those larger ones. We’ve been quite explicit as saying that midsized cities such as Sunderland, as well as places like Derby and Coventry and cities like that should be part of that deal. But what kind of proposition will you be asking to on talking to government around in relation to the city deals process?
Dave Smith: Well the message for us to government is that there is much that we are doing for ourselves as a city between the public and the private sector so the investments we’ve made already in infrastructure related to technology, superfast broadband, cloud technology, it’s all about making the city as a whole and in particularly the inner urban core attractive to business. We need to extend that accessibility, we need to extend that infrastructure development to transport, to commercial property development, some of which we can and will do for ourselves. We’re in the middle of developing a local asset based vehicle that will unlock private investment alongside public investment of a scale that I don’t think is anywhere else in the UK. But it’s not enough, it’s not enough to deal even of itself with the, with this size of the problems that we’re facing in that city centre as so well articulated in the report. So what we want from government is some support with that to match what we’re doing, particularly around transport, particularly around skills development and particularly in support of the actions we’re already taking.
Andrew Carter: So Ray, when we looked at their work and we did the research we noticed that cities like Sunderland, Derby, Coventry, Preston, they had similar characteristics, both in the way that their economy was organised, but also some of the issues that they were facing and one of the things we talk about is actually encouraging those cities and others to work together. Why is that important when we think about going forward?
Ray Mills: I think it’s vitally important, because if the proposition here is to create a funded scale in the hundreds and millions to invest in the potential of these midsized cities, that’s going to involve some hard decisions about where you invest and when. If these cities can’t work together we’re going to a fund that never invests anywhere and nobody is going to get the benefit and let’s not forget the benefit here is for people and businesses, we’ve got to get everything right, we’ve got to create the infrastructure, whether it’s the build infrastructure or the funding, but then we’ve got to make sure we support our people through skills and education and businesses too, so we can link everything together with a new vision for the future.
Andrew Carter: Great. Thank you very much indeed Ray and Dave for your insights. You can get more of the research on our website it’s called “Hidden Potential” we’d be really keen to hear from you and in particularly how you think a midsized cities investment fund could operate and particularly how it operates in light of the city deals process. Thanks very much.