Can Transport Help Cities in the Fight for Economic Growth?

The recent economic downturn has focussed attention on the role of city policies in generating growth. In January 2012 the Centre for Cities published updated statistics showing that unemployment is a particular problem in urban areas. Whilst in general towns and cities in the north have performed worse than those in the south, the pattern is uneven. Why has Bradford performed worse than the rest of the Leeds city region and why has central Manchester fared better than Leeds? Does transport policy have any impact on this?

The evidence is not as strong on this as it could be. Work in the US suggests that transport is one of a series of factors which can influence the relative growth of cities. Certainly the UK government sees transport infrastructure as one of the main means of bolstering growth, underlined by the Chancellor’s major new road, rail and local public transport investment plans announced in late 2011. In addition Mary Portas’ report on the future of the high street for the Department of Communities and Local Government highlighted how sensitive high streets are to parking pricing policies.

So, does what types of transport projects and policies should cities adopt to give themselves the edge? Should they, as Portas argues, eschew more significant demand management policies or should they, as Stockholm and London have done, adopt major new charging schemes and trade on the dual benefits of an innovative image and a revenue stream for future investments? These questions are part of a multi-disciplinary project on ‘Competitive Cities’ being led by Dr Simon Shepherd at the Institute for Transport Studies.

Early work has looked at the motivations of decision-makers in local government in different towns and cities of four major city regions in England. It showed that towns and cities both compete and collaborate to maximise their own competitive position. The major cities are seen as the main powerhouses of growth, with other towns and cities trading on particular distinctive skills sets or tourist offers and spill over effects from the major cities. Working together they can act as a more powerful voice to argue for investment from central government.

Underneath this collaborative veneer however exists a series of strong competitive forces which clearly influence the policies adopted.

  • For parking policy, the principal concern is over the strength of the retail offer. Whilst major cities typically have a strong and distinctive offer which can compete with out of town centres they still price to limit the loss of trade to these malls. For smaller towns the potential loss of trade to other towns and sub-regional shopping centres has a major impact on pricing. Here, Portas’ analysis seems to overlook the limited role that towns and cities often have over parking policy, with much being held in part or in full by the private sector.
  • For potential congestion charging policies the main cities will be the leaders with the minor towns and cities acting as a potential second tier of follower cities. It appears that the main rationale for major cities to consider adoption is the step-change in government investment in alternatives to the car prior to the scheme opening as well as the on-going revenue stream to fund future investments. The major cities here seem to focus on investment packages that work for them rather than worrying about the price in other major cities – at least within limits.

Whilst much of the competition focuses on economic growth and attracting high value GVA jobs to their areas, the environment remains an important concern in what makes a city attractive. Similarly, the types of investment that are felt likely to attract new jobs are not the same as those that will get the long-term unemployed back to work.

Whilst this snapshot of the early findings is interesting in its own right, it is only one part of the research programme. The remainder of the work is trying to understand how we can predict the likely responses of cities and towns to different potential future scenarios where there is increased use of parking charging or congestion pricing. Work by Andrew Koh, David Watling and Simon Shepherd has begun to flesh out the likely responses of local authorities if charging is adopted. Consider for example if Nottingham adopted a congestion charge – what might Leicester and Derby do? Would they be able to get more out of jointly planning an approach to charging or should they act in isolation? Who wins and who loses? This work is adopting game theoretic techniques to look at the bi-level problem of leader and follower cities and it is extending existing understandings by allowing for the potential for the interaction between several leaders. This work is complex but could provide an understanding of the strategies that might unfold between cities. There is then a question as to how these strategies might play out if we allow the transport and land-use system to adapt over time also – a further stage in the project.

It is too early to provide definitive answers to how cities might behave and what the impacts of working in collaboration or in isolation might be. It does seem clear however that city decision-makers see themselves as acting in competition and they see transport investments and transport demand management as important tools in that competition. Given this, we need to move beyond existing transport modelling approaches. We can no longer treat the decision-maker as an isolated individual seeking to optimise some kind of welfare function for the citizens of the city. The decision-making criteria vary significantly with different policy decisions and there is clear evidence that decisions are not being taken in isolation from those in other towns and cities – even those at some distance.

There simply isn’t enough evidence to inform city decision-makers about how best to set their policies for economic advantage so much of the current decision-making must be viewed as experimental. What we can say from the work to date is that competition between cities does matter to decision-makers and to the decisions they are taking – this work should open the door as to how to ensure that this leads to the best possible outcomes.

If you are interested in further findings on the Competitive Cities project please contact Dr Simon Shepherd (S.P.Shepherd@its.leeds.ac.uk). The research is funded by the Engineering and Physical Sciences Research Council.

This is part of a monthly blog on research projects at the Institute for Transport Studies by the Director, Dr Greg Marsden (G.R.Marsden@its.leeds.ac.uk)

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