While productivity might seem an abstract concept, it has important consequences on people’s daily lives. The amount of output that workers are able to produce within a given time and with a given amount of resources is a critical determinant of the material well-being in a society. As resources are finite, productivity growth is the only way to increase living standards in the long term.

The level of productivity in a group of 11 large second-tier cities in the United Kingdom (Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield, hereafter, Core Cities) is low by national and international standards. Second-tier cities in most other large OECD countries have productivity levels that are as high as, or higher than, the national average. However, the gross value added (GVA) per worker in Core Cities is just 86% of the UK average in 2016 (latest available data). The gap between Core Cities and second-tier cities in other OECD countries is even larger. GVA per capita in second-tier cities in countries such as Australia, France, Germany, Italy and the Netherlands is approximately 20%-30% higher than in Core Cities.

Core Cities is an association of 11 large UK cities: Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. Altogether, Core Cities and their functional urban areas The OECD functional urban area definition is designed to provide an internationally comparable definition of urban areas (see Box 1.1). For this reason, it does not necessarily correspond to local definitions of city-regions, travel-work-areas and similar concepts. For instance, Core Cities’ city-regions are home to 20 million people and generate about 26% of GVA, in 2017 (ONS, NISRA). (FUA) account for 25% of the UK population (16.4 million people), 24% of its employment and 22% of its gross value added (GVA) in 2017.

This chapter provides an overview of the socioeconomic conditions in Core Cities and their surrounding regions. It shows that Core Cities face significant challenges in many policy areas, including public transport and social policy. Yet, it also documents important progress made in policy areas such as education and digitisation despite a challenging macroeconomic environment and severe fiscal constraints.

This chapter shows that productivity levels in Core Cities are low compared to the UK average and to other second-tier cities in OECD countries. Based on an analysis of more than 3.5 million records of workers, it identifies the factors responsible for lagging productivity. It finds that productivity would increase by 7.1 percentage points if the profile of the workforce and the sector composition were to adjust to the current UK average. If Core Cities were to generate agglomeration economies according to their potential, productivity would increase by another 4.1 percentage points.

This chapter focuses on the role of governance in building the framework conditions that are necessary to enhance productivity in Core Cities. First, it provides an overview of the current governance of Core Cities against a backdrop of asymmetric devolution in the UK. Second, it discusses the capacity of Core Cities to achieve policy goals that are critical for productivity, notably in terms of skills, transport and climate action. Finally, it proposes ways forward to make governance work for people, places and productivity in the Core Cities.