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Review of Scotland's Cities - The Analysis

3 CITIES AS PLACES TO WORK

3.1 CITIES AND ECONOMIC PROGRESS

Cities are major locations for the core activities of the economy. They are a milieu for the development of new ideas, products and technologies. They are a major locus of consumer spending, involving shopping, leisure and recreation. They are major locations for the production of services and manufactured goods. They are diverse, complex economies. Above all, they are widely open to competition, in different ways for different activities, from adjacent towns, other UK cities and the wider world.

Economic activities within a city can be divided between those that meet local demands and others that export goods and services. Exports include attracting non-locals to wine and dine in the city core as well as sending manufactured goods abroad. The critical issue is that a city cannot thrive as an economy simply by providing services to its own residents, by taking in its own washing. It has to have an export base as an economic raison d'être. Cities that do not compete in the short to medium term do not thrive, and those that do not compete in the longer term do not survive.

The economic base of cities has changed over time, with these changes often reflected in the inherited cityscapes of today. Prior to the industrial revolution, towns and cities were centres of defence and religion, ports and markets for the hinterland. The Castle, St. Giles, the Shore and the Grassmarket remain as echoes of these past uses in Edinburgh. After the middle of the eighteenth century a great deal of the template for the economic base of the typical industrial city was first stamped out in Central Scotland. ¹ The successive waves of innovation in textiles, steam engines, ships, railway engines and the commercial infrastructure required to support such massive, early global efforts dominated the character of our main cities until after the Second World War. Glasgow, in particular, but then the other main cities truly were, to paraphrase Paul Krugman, 'booms in space'. ² These booms have left their marks on our landscape, not always for the better. The Clyde docks and yards bereft of ships and noise, vacant land where steelworks belched till three decades ago, smoke blackened tenements remain as marks and symbols of the boom the cities have left behind.

The economic and physical structures with which Scotland's cities entered the 1950's have been subject to half a century of major changes which have eroded their old economic bases, limited their growth for long periods and, in some instances, left them as centres of poverty rather than prosperity. Times have changed again for Scotland's cities. The image of economic decline, physical decay and social disadvantage associated with cities for the last 50 years is no longer generally appropriate. The changing processes of population and household changes described previously have their parallels in changes in the relative competitiveness of towns and cities. The economic competitiveness of core cities was, for two hundred years, driven by a range of locational advantages. Cities were always the key places for the generation of innovations (though we have ignored that important issue for too long). They were also locations where their sheer scale and diversity provided economies of scope and scale to producers. For example, new firms could quickly find a ready supply of diverse labour. And of course with pre-modern methods of travel, high transport costs and the production and export of goods that were often bulky and heavy in relation to their value, cities provided points of peak accessibility not only to other producers but to customers. Their 'centrality' was seen as the basis for the industrial city boom.

The transport revolutions, which fuelled the suburbanisation of population also, weakened the cost competitiveness of cities in industrial production. As the lorry replaced water-based and rail freight, firms, often in cramped, older city centre property, decentralised in droves from core city locations. Labour supply, particularly the growing number of female workers, and services also decentralised. The suburban 'edge' often became semi-detached from the core city. This process, which had particular intensity from the 1950's to the start of the 1980's, was particularly marked in Glasgow but it was evident in the other cities too. ³ In the late 1960's, immediately prior to the announcement of the discovery of North Sea oil, Aberdeen's economic base was declining. ⁴

Just as the impacts of decentralisation had begun to slow, after the middle of the 1970's, the vulnerability of the traditional economic base to low labour cost competition from overseas became more and more evident. Glasgow had incurred these effects from the 1950's onwards but in the last two decades of the last millennium, Scotland's other towns and cities saw more rapid and large scale industrial closures than at any period in our history. This is the economic inheritance which cities have had to struggle against over recent decades and which fashioned their decline and decay image.

It is arguable, at least, that over long periods policy has not been helpful to our cities. There is a convincing case that a significant share of the decentralisation of jobs and homes from city core to peripheral estate, to new town and beyond was as much driven by planning, housing and industrial policies as by market influences, at least until the middle 1970's. And for the period after 1980, until recently, there was a confused mixture of economic policy signals for our cities. For almost two decades, economic policy was often driven by the view that it was for firms to decide where they located. Of course regional policies, now reflected in regional selective assistance, were targeted towards poorer regions, though until recently they were strongly suburban in the specific locations they supported. At the same time there were urban regeneration and employment programmes, often on a quite massive scale (such as the GEAR programme), but it can be argued that they did not do enough to re-shape city economies.

This uncomfortable disjuncture between economic and social policy has, until very recently, run through official thinking for Scotland's cities. Arguably this has underestimated the extent of positive change that was occurring in our cities and until the last few years perpetuated a decline in expectation and understanding in ways that have undermined the potential of the substantial and relevant assets of our cities. There are different views emerging about new possibilities for old cities. This is partly changes in economic thinking. Some of these new economic ideas (or more accurately return to old economic ideas) stress the distinctive economic role of cities as innovative centres. Just as cities appeared to be threatened by the prospect of the 'weightless world' the reality is that their role as innovation systems has become more apparent. And this has salience for our economic thinking when skills and science, investment in ideas and human capital, have become the core of the strategy for 'A Smart, Successful Scotland'. In addition, as outlined in the introduction, the recognition of the interconnection of social and economic change, the emerging emphasis on more developmental views of economic growth, the recognition of the importance of subtle change reinforcing mechanisms and the importance of geography have all pointed to new approaches to city development.

But it is the actual experience of places as much as new ideas, which suggest something has changed. The revitalisation of down-towns in US cities has been evident in many places over the last two decades. The European experience has been deeper, wider and more important. At the end of the 1990's it was apparent that more than half the city-regions in the EU were showing signs of economic recovery and increases in their relative shares of population. ⁵

Cities were recovering and acting as economic motors. This does not mean that cities have solved all their problems, because low income concentrations were simultaneously expanding in many cities. Nor does it imply that city growth has to be at the expense of smaller towns and rural areas - indeed with growing household numbers and economies, cities can recover whilst they still play a relatively declining role within a nation. But what it does mean is that we have to look again at cities as centres of growth, and that look has to take a linked social and economic perspective, identify the city effects and explore policy that promotes the creative and not just the palliative.

One approach is simply to ignore these issues and possibilities and fashion a spatially disorganised economy. The other is to do our best to have an informed backcloth of vision, and information so that we can set out the future with some coherence, in the full knowledge that change and adjustment will be inevitable. The attainment of the goals of 'A Smart, Successful Scotland' requires us to be better informed about the geographies that are emerging in Scotland and those which we should support to achieve our wider aims. What we have to grasp is that the economic challenges that Scotland faces may be global in origin and intensely competitive in nature and that they require, in part, strategic responses from firms and government. But it also has to be recognised that responses are, in part, fashioned locally, from the bottom-up and from particular places. Looking to the future there has to be a clearer articulation between understanding what makes places competitive and major strategic choices for Scotland's economy.

There is then, a growing global awareness that cities, and city-regions, have increasing salience for framing the local responses to global competition because they are a key level at which economic, social and environmental systems cohere and interface. It is imperative then to establish how Scotland's cities have been changing, in terms of their economic structures and fortunes, and to identify challenges for the future. The next section of this chapter describes recent patterns of change and section three examines evidence of their competitiveness and identifies local constraints on better economic performance. The following three sections then examine in more detail key issues identified, namely city skills, innovation and property/land issues. Transport issues are discussed in Chapter 5.

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