Independent report

​​Liverpool Strategic Futures Advisory Panel: Interim report​

Published 28 November 2023

Applies to England

Foreword

Liverpool is a city of nearly half a million people and is a globally recognised brand. Its history is well known, and it possesses established and strategically important infrastructure such as its river, docks, canals, railways, and its airport – although its most important asset is its people.

However, it is to the future that this report looks by both recognising recent turbulent events and highlighting the enormous opportunities that lie ahead.

Just over 12 months ago I met with the then Secretary of State for Levelling Up, Housing and Communities, the Rt Hon Greg Clark MP. He explained the concerns he had regarding Liverpool City Council, and the progress required to fully respond to the Caller Report into Best Value, and the work being carried out by commissioners sent in to oversee several of the council’s functions. He floated the idea of commissioning a Panel to be tasked with outlining the city of Liverpool’s long-term future, beyond the government’s temporary intervention measures.

From the outset, there was an understanding that such a role would demand significant time, dedication, and expertise to fulfil the remit and to ensure that a large body of stakeholders were consulted. It was explained that a small number of panel members would be recruited to provide oversight and an external perspective.

Following consultation with DLUHC and colleagues at Liverpool City Council, we established the Liverpool Strategic Futures Advisory Panel – and Sir Howard Bernstein and Baroness Judith Blake agreed to become panel members. I would like to state on record how grateful I am to both of them for their time and insight, which has been invaluable in pulling together this report. I would also like to thank Rt Hon Michael Gove MP for his, and his department’s support in helping to facilitate the work of the Panel.

Since I was elected Mayor of the Liverpool City Region, my number one priority has been working to build a stronger, fairer and better future for our whole area.

As someone born and bred in this wonderful place, I care deeply about how as a city and a city region we take the steps necessary to maximise future opportunities and to articulate a clear vision to reach our full potential. As the hub of economic and cultural activity we need Liverpool to be firing on all cylinders with a clear strategy to unleash the enormous latent potential of the area.

Collaboration with Liverpool City Council is therefore essential if we are to achieve the progress we all desire. To that end, I have been delighted at the immediate progress the new city council leadership has demonstrated. Both the newly-elected Leader of the Council and newly-appointed Chief Executive, have shown a willingness to collaborate on the Panel’s work and are making enormous strides in advancing the improvements necessary to address the shortcomings identified by the Caller Report.

Working together with the Liverpool City Region Combined Authority, Liverpool City Council, external experts, and stakeholders, our mission has been to support the council to build long-term resilience. Earlier this year, we reached the next stage on that journey after completing a series of roundtables and evidence gathering sessions with key public, private and third sector representatives from across the city and region.

By opening up the conversation to local voices, we have started to paint a clearer picture of the challenges and opportunities that lie ahead for the city – and  ensure  that  it  is  equipped  to  deal  with  them. Crucially, this has meant that the strategic plans and priorities for our area are  set  locally  and  not  in  Whitehall  or  Westminster. This report is a product of hard work, passion and dedication by everyone involved.

I truly believe that with the right direction and strong leadership, some of Liverpool’s best days still lie ahead. Working alongside Cllr Liam Robinson and Andrew Lewis, I have been encouraged by the steps taken, even in a relatively short space of time and the manner of cooperative working.

Our collective priority remains, in ensuring that the commissioners leave on schedule, and the city continues on its long-term trajectory to sustained success. Our journey is not over yet.

I look forward to continuing work with our Panel, the city leadership and central government to map out a path to help build a better, stronger future for our city and the region beyond – and the 1.6 million people who call it home – where no one is left behind.

Mayor Steve Rotheram
Liverpool City Region Mayor

Introduction

This is the interim report of the Liverpool Strategic Futures Advisory Panel.

The Strategic Futures Advisory Panel was established in 2022 by the Secretary of State for Levelling Up, Housing and Communities. Chaired by Mayor Steve Rotheram and supported by Baroness Judith Blake (Leader of Leeds City Council, 2015-2021) and Sir Howard Bernstein (Chief Executive of Manchester City Council, 1998-2017), the Panel’s remit is to support the development of a long-term economic strategy which shapes the future of Liverpool and supports the city on its improvement journey out of statutory government intervention.

The Panel’s work is separated into two phases: a diagnostic on the state of Liverpool today, working closely with Liverpool City Council, in addition to external experts and place leaders from across the region; and a strategy and delivery phase in which, using this evidence base, detailed proposals will be developed to level up the city.

This document reports on the diagnostic phase of the Panel’s work. It puts the city of Liverpool in socio-economic context, describes key themes from the Panel’s evidence collection to date, and develops the outlines of a reform agenda to accelerate Liverpool’s progress towards stronger and sustained economic growth over the next 10 years. Further detail on this reform agenda, and accompanying delivery milestones, will be the focus of the Panel’s final report in 2024.

Recent years have coincided with a tumultuous period of change in Liverpool which have exposed weaknesses in the leadership of the city council and in the foundations of the local economy. The Panel’s job is not to re-examine this period, but to look to the future and instead ask how Liverpool can go further as a thriving, confident and outward looking city, supporting a high quality of life for those who live and work there.

The city we have heard described during the Panel’s evidence collection is one of many strengths and talents, whose potential is constrained by stubborn weaknesses and some missed opportunities. Underlying this is a legacy of underdeveloped place leadership – the capability of democratically elected leaders to utilise their convening powers to establish an agreed vision for change in the city and secure wider institutional and stakeholder support in the delivery of that vision.

Looking forward, there are strong grounds for optimism. A new leadership team at the city council is in place with a clear mandate for change, and reforms at the political and organisational levels are underway. The reforms which are needed to drive a sustained, inclusive growth agenda will not happen overnight. But the city is at a turning point, in which local and national institutions are aligned on the appropriate direction of travel and there is shared willingness to support change over the long term.

This is an opportunity which Liverpool cannot afford to miss, and as a Panel we are confident that with the right institutional reforms and support Liverpool can realise its significant contribution to local and national growth over the coming years. Section 3 of this report develops a blueprint for this reform agenda, recognising that the specific trajectory and priorities of this agenda must be locally owned by Liverpool City Council, working closely with the Combined Authority and external stakeholders from across the city region.

The Panel’s Terms of Reference is focused on Liverpool. But in practice ‘Liverpool’ is much broader than the city’s administrative boundaries, as economic activity spills out across the broader region through commuter flows, local supply chains and the innovation eco-system. Some of this wider functional footprint is reflected in the report’s recommendations, and a key conclusion of the Panel is that, in the future, the city of Liverpool needs to adopt a more visible leadership role in the functional economic area covered by the Combined Authority, working in close collaboration with the Mayor and constituent councils.

Liverpool today is at such a turning point, and that with the right support, leadership, and resource – it can continue its upward economic trajectory, creating prosperity for the people of Liverpool and contributing to the UK economy.

Section 1. Liverpool today – challenges and opportunities

This section describes the socio-economic backdrop of Liverpool. Liverpool has a context, but in recent years has also gained a foothold in higher value- added sectors of the economy. The challenge is to scale these as part of an overarching strategy to strengthen the private sector and generate higher skill, higher productivity employment.

Liverpool is rightly regarded as one of Britain’s most dynamic and distinctive cities. Its scale and urban form are unique, reflecting a rich commercial heritage, openness to trade and history of innovation. Liverpool’s special character and place quality are apparent across the city: from St George’s Hall when stepping off the train at Lime Street, to the high-density 19th and 20th century architecture of the commercial quarter, and the waterfront’s varied and eclectic streetscape. Liverpool’s distinctive culture, particularly its unique role in the history of modern music, has a global reach; most recently celebrated by successfully hosting the Eurovision song contest on behalf of Ukraine.

Today Liverpool is among the UK’s most significant tourist destinations, with tens of millions of people visiting every year to enjoy its retail and leisure offer. The city’s student population is large and growing, attracted by leading teaching universities and research institutions at the forefront of sectors which are shaping the new economy. Combined Authority, City Council and recent central government investment, including the Freeport and Investment Zone, two policies that have been pursued with a local flavour, has strengthened Liverpool’s (and the wider city region’s) inward investment offer and status as a place to do business in the northwest. The distinctive Liverpool brand reflects the city’s long history of cultural innovation and sporting dynamism, which underpins a soft influence at home and abroad.

Put simply, Liverpool has many of the ingredients of the most vibrant and dynamic global cities. Yet economically, the city punches below its weight. Liverpool’s productivity, measured by output per hour worked, is (13%) below the national average.^{[footnote 1]} A similar picture holds looking internationally: Liverpool is less productive than similar-sized western European comparators, such as Lille, Bordeaux or Rotterdam.^{[footnote 2]}

This is reflected in Liverpool’s industrial structure. Despite the recent growth of more knowledge intensive activities, the city’s economic base is still skewed towards lower productivity sectors, such as accommodation and food services, health and retail and the Panel recognises the need to address this over-reliance on lower productivity sectors. Liverpool’s share of jobs in human health and social work activities is over 5 percentage points above the national average. Average weekly earnings in the city are around £25 below the national average, leading to lower living standards, greater levels of deprivation, and a weaker tax base.^{[footnote 3]}

Liverpool’s challenge is that a city with so much to offer nevertheless falls short of its economic potential. The answer matters locally and regionally. Raising Liverpool’s productivity to match the national average would increase total GVA by up to £4.5 billion each year, securing better outcomes for residents, through higher earnings and revenue to invest in core services.^{[footnote 4]} While continuing the development of the city’s knowledge intensive industries will be vital to the city’s future and ability to capitalise on future opportunities, the largest increases in GVA are to be found by increasing productivity within the existing city’s sectoral composition.

The response to this challenge is also significant for the country as a whole. The OECD estimates that the productivity of the UK’s major cities outside of London equates to 86% of the UK average ― the lowest level relative to the national average among second-tier cities in large OECD countries.^{[footnote 5]} Unlocking the potential of cities like Liverpool offers a credible pathway to stronger and more balanced national growth, reducing pressure on London and the southeast, while supporting the prosperity of their regional hinterlands.^{[footnote 6]} Devolution and targeted investment has started to reverse this trend but there is more to do.

Since March, the Panel has worked with DLUHC, LCC, Combined Authority and local stakeholders to analyse this productivity challenge, and uncover its sources, to better understand the future direction for Liverpool’s economy. To make this assessment the Panel has adopted the capitals framework set out in the Levelling Up White Paper.

Assessment against the Levelling Up capitals framework

The framework helps diagnose how Liverpool’s stock of physical, intangible, human, financial, social and institutional capital shapes the city’s economic trajectory, and in aggregate support a ‘cycle of success’ which reinforces outcomes and prosperity over time.

The presence or absence of the capitals, and their role in shaping the growth trajectory of places, is rooted in economic history. Like many of the UK’s core cities, Liverpool has emerged out of the shadow of deindustrialisation only relatively recently. Once the gateway to world trade via its vast western facing port, a changing international division of labour from the late-19th century disrupted the city’s economic rationale. Between 1966 and the beginning of the 1980s around a fifth of Liverpool’s jobs were lost, the city’s core population having halved from its 1930s peak to around 500,000.^{[footnote 7]}

This difficult period of structural change led to social, political and economic dislocation, the legacy of which can still be observed in Liverpool’s socio- economic and industrial profile. But despite its significant setbacks, Liverpool has also demonstrated a remarkable capacity to bounce back from adversity and from the late-1990s begun to close the gap with its peers, developing a new confidence and sense of momentum reflected in the award of European Capital of Culture in 2008.

More recently, in parallel with the 2016 devolution deal which established fresh powers across the City Region, Liverpool has started to carve out new economic niches, for example health and life sciences, digital and creative sectors and increase competitiveness by building on globally significant research and development assets. These strengths are perhaps best symbolised by Liverpool’s distinctive Knowledge Quarter, the city centre district of universities, research institutions and industry bodies clustered around key sectoral strengths in life sciences, infectious disease and advanced manufacturing.

In the field of materials chemistry, the University of Liverpool’s world- leading research has attracted partnerships with multinationals, including Unilever, and led to state-of-the-art facilities such as the Materials Innovation Factory, a world-leader in computer and robotics-assisted discovery and design of materials. The Liverpool School of Tropical Medicine (LSTM), University of Liverpool and neighbouring areas have delivered £2bn annually of infectious disease R&D, making the region one of the UK and Europe’s biggest concentration of infectious disease R&D centres.^{[footnote 8]} Likewise, in the field of AI and emerging technologies, the STFC Hartree Centre at Sci-Tech Daresbury, in collaboration with IBM Research, is home to the world’s most powerful supercomputer, dedicated to applying high performance and cognitive computing to solve real world challenges.

As a result of these world leading assets, Liverpool has successfully grown its stock of intangible capital, a key mechanism in unlocking higher and more sustainable growth. Private sector R&D as a proportion of total economic output (R&D intensity) in Merseyside has been higher than the Northwest and UK average since 2016 and the city region has a target to invest 5% of GVA in innovation by 2030.^{[footnote 9]}

The Panel’s discussions with industry stakeholders have underlined the highly competitive environment in which intangible capital is developed, retained, and grown, especially when it comes to attracting the highest quality researchers and firms to Liverpool. Clearly, remaining competitive in these sectors will require a holistic plan, blending continued investment in the facilities that underpin high-tech research like lab space, with measures to ensure that Liverpool is as attractive as possible a place for high-skilled workers to live.

In recent years the city region’s science and innovation offer has been a foundation for the city to grow its financial capital – the investment and other resources supporting the creation and growth of local companies. Between 2021 and 2022 the Local Enterprise Partnership (LEP) received 18 single-site foreign direct investment (FDI) projects, creating 575 jobs in the region. The Northwest region as a whole received 145 FDI projects in this period, placing it second only to the Southeast (excluding London) with 149 FDI projects.^{[footnote 10]}

The Panel’s discussions with businesses have demonstrated, however, that Liverpool is not yet maximising its full potential in this space. We have heard that too often investment decisions are being made in favour of alternative locations. Liverpool needs to re-invigorate its investment brand, building on the success of initiatives such as the LCR Freeport and the local innovation offer, if a durable pipeline of financial capital is to be secured.

The success of Liverpool’s science and innovation proposition is driving strong demand for physical capital, particularly lab space for maturing businesses seeking investment, although stakeholders have indicated to the Panel that supply of high-spec facilities has been hindered by market failures which stem from the cost and complexity of developing this infrastructure.

Public transport remains an issue across the city region, where the fragmented, deregulated nature of the network means that too many people lack a quality, clean and affordable alternative to the car and, as a result, face being left behind. This is compounded by low car ownership across the city region – 40% of households do not own a car in Liverpool, compared to 22% nationally.^{[footnote 11]}

Locally, decisive action is being taken to challenge this head on. With a core commitment to build a London-style transport system, which is properly integrated, bringing all forms of public transport and tickets together under a single network that will make getting around the region quicker, cheaper, greener, more reliable and accessible for local residents.

Parts of Liverpool benefit from an effective local rail system, known as the Merseyrail network, commissioned by the Combined Authority, and is one of the best-performing rail services in the country. The service is in the process of rolling out a £500m fleet of brand new, publicly owned trains, and plans are underway to extend the network to previously underserved communities within the city region as part of the Merseyrail for All programme.

The Combined Authority is also bringing forward plans take back control of the region’s buses using the powers granted to Mayors in the Bus Services Act 2017 to reregulate local bus markets under a franchising model. This will deliver much greater public control over the way buses are run, including changes to routes, fares and timetables. It will also make it much simpler to integrate bus services into the wider transport network; modernising the fleet, reducing emissions and accelerating the transition to net zero; and over time opening up new routes, prioritising connections between the most deprived communities and areas of economic opportunity and, ultimately, provide a better service for residents.

Liverpool’s existing housing stock is relatively old and inefficient, with one third of houses in the city built before 1919.^{[footnote 12]} This is a key priority in the years ahead, given the country’s decarbonisation challenge, and the link between housing and wider socio-economic outcomes. In the north of the city, regeneration of traditionally deprived areas around Everton and Anfield has stalled, leaving areas of overcrowded and outdated housing that would benefit from substantial and sustained additional investment. Rebuilding communities through housing renewal ― as has been successfully delivered, for example, in Toxteth ― offers potential to deliver new jobs while raising quality of life for all residents.

In addition to the regeneration of existing properties, Liverpool also has an opportunity to develop new housing markets, particularly high-quality residential development which supports city centre population growth and densification, establishing an offer for new residents seeking employment, such as in Liverpool’s nascent knowledge economy. There is no shortage of opportunities to seize in the heart of the city: the Waterfront north of Albert Dock has the potential to be one of the country’s finest urban locations, while brownfield opportunities for more homes exist at Paddington Village (in the heart of Liverpool’s Knowledge Quarter), Peel’s Liverpool Waters development, as well as on the site of Michael Heseltine’s 1984 International Garden Festival.

Improvements in intangible, financial and physical capital speak to Liverpool’s growth as a regional economy over the last 2 decades and increasing dynamism in sectors which will shape the future economy. At present, however, these assets are not sufficiently strong to secure the prosperity of the entire city and anchor the city region’s economic offer – to catalyse this cycle of success, improvements to the three other capitals, which currently limit the Liverpool’s potential, are needed.

The most urgent improvement required is to Liverpool’s stock of human capital – the skills, health, experience and aspiration of residents – which, while improving on some measures thanks to committed efforts by local agencies, remains weak.

Traditionally Liverpool has had more adults with no qualifications, and fewer adults with high level qualifications, than the UK average, but the gap is steadily closing. The rate of adults with no qualifications has reduced by 57% over the last decade, and Liverpool now has a greater proportion of people with high level (NVQ4+) qualifications compared to the UK average (44.1 vs 43.6%)^{[footnote 13]} and is only one percentage point behind the UK average for those with no qualifications.

However, school performance, particularly at primary, remains below the rest of England, with Liverpool ranked the 14th lowest local authority that has the percentage of pupils meeting the expected standard in reading, writing and maths at Key Stage 2^{[footnote 14]}. Some 1 in 13 young people are not in education, employment or training which gives a rate 62% higher than the national average^{[footnote 15]}. Many stakeholders who have spoken to the Panel agree that low aspirations play a role in these outcomes and is an area that requires early intervention to shift, alongside a gap in soft skills in young peoples’ transition from education to the workplace. Local leaders are cognisant of this issue ― the Combined Authority are, for example, rolling out the pilot “Cradle to Career” programme to all their boroughs ― but stakeholders we have spoken to are clear that individual initiatives will perform to their potential only if they are underpinned by a wider strategy that targets the roots of poverty.

On many metrics Liverpool’s health profile is significantly worse than the national average. Given its links to the dynamics of productivity growth, health-related inactivity represents a clear constraint on the city’s economic potential. Rates of long-term sickness are particularly high in Liverpool and a key factor limiting workforce participation: of the 92,300 residents in the city who are economically inactive some 38% are long-term sick (GB=27%)^{[footnote 16]}. Healthy life expectancy in Liverpool is significantly lower than the national average; males can expect to live 58.3 years in good health, and females 57.9 years^{[footnote 17]}, and the city also fares worse for subjective measures of wellbeing (1 in 7 adults are on a GP register for depression^{[footnote 18]}) than the country as a whole. Behavioural factors are a significant cause of poor health locally, with adult smoking prevalence almost 4 percentage points higher in Liverpool than the England average and higher levels of alcohol- related hospital admissions. Health inequalities have widened in recent years both between Liverpool and the rest of the country, and also within the city. Across Liverpool’s 64 electoral wards the life expectancy gap now stands at 14.6 years (85.8 years compared with 71.1 years).^{[footnote 19]} This was starkly manifested during the COVID 19 pandemic with greater infection rates, deaths and pressure on services.

Developing social capital can amplify the direct drivers of local economic growth by making places more attractive, through strong social relationships, safer neighbourhoods and trusting communities. Liverpool is one of the most visited cities in the country thanks to its rich culture, sporting heritage and distinctive built environment, but there are significant challenges for the city in maximising its attractiveness as a place to live and work.

Following national trends, incidents of crime in the Liverpool City Region have increased over the last year and modestly over the last 12 years. However, in comparison to other UK city regions – the crime rate still remains low, and the Liverpool City Region is the third safest metropolitan region in England.

• In 2022, the 170,980 incidents of crime in LCR are equivalent to 3.7% of England’s 4,661,500 total crime incidents in the year.
• Crime incidents in LCR have increased by 32,600 when compared to the previous year (increase of 23.6%).^{[footnote 20]}
• Between 2011 and 2021, crime incidents on average grew by 4.7% per year in the Liverpool City Region.^{[footnote 21]}
• According to the latest UK police data from the last three months, 40% of crimes are violent crimes (this includes crimes with use of firearms), 13% are public order offences and 9% are criminal damages and arson crimes.^{[footnote 22]}

Local, regional, and national institutions recognise the need to work together to address this trend and improve confidence in institutions to address the issue of crime and safety.

Institutional capital underpins all of the other ingredients for growth set out above in the capital framework. Well-functioning institutions provide the leadership vision, stability and continuity of decision making necessary for a successful business environment and sustained growth.

Evidently, recent years have been difficult for some of Liverpool’s civic institutions, with LCC embarking on a long-term improvement journey following the findings of the 2021 Best Value inspection. While the Panel are clear, in line with the most recent report of the Best Value commissioners, that significant ongoing improvements are required at LCC, we are also optimistic that the seeds of future progress are in place in the city.

New leaders at LCC are committed to change, while the city region’s devolution deal presents a clear opportunity to foster a city region-wide vision for the future, with a strong voice to central government. Perhaps as importantly, as a Panel we been impressed throughout our consultations in the number of place leaders in Liverpool beyond the public sector who are committed to contributing to the growth of the city. Institutional arrangements which facilitate these leaders to realise their ambitions, and providing the additional capacity needed to support the City Council’s journey of recovery and transformation, is therefore central to our assessment of how growth can be unlocked moving forward, and is reflected in the recommendations set out in Section 3 of this report.

Section 2. Liverpool’s reform agenda

The Panel has undertaken a wide-ranging process of stakeholder engagement across the Liverpool City Region to inform the principles of a reform agenda to increase growth and prosperity, using one-to-one interviews, thematic evidence sessions, polling surveys and community engagement. This section outlines the key messages from this process.

This section considers the focus of a future reform agenda for Liverpool, using the analysis set out in Section 1 and the Panel’s local stakeholder engagement as a guide. The trajectory of this reform agenda, the specific priorities within it, and delivery arrangements will rightly be determined by Liverpool’s democratically elected leaders in collaboration with local stakeholders. Here the Panel offers a roadmap for change.

As the previous section of the report set out, the successful delivery of this strategy will involve strengthening multiple capitals simultaneously and nurturing the necessary place leadership to exploit the interdependencies between these drivers of growth over time. To this end, the Panel has identified three broad priorities for Liverpool in the coming decade, reflecting the need to strengthen the foundation of productivity while promoting opportunities and life chances for all.

Restarting physical regeneration following a hiatus due to events that led to the 2021 Best Value intervention and inspection will be a cornerstone of Liverpool’s future growth.

Many stakeholders acknowledge that some of Liverpool’s recent developments have fallen short in terms of coherence, and that a more sensitive approach is needed which plays to Liverpool’s place-quality, rather than simple development-led growth. Schemes like the Baltic Triangle and opportunities in the Ten Streets and Kings Dock areas illustrate the potential for quality-led regeneration which drives city centre density and enables Liverpool to compete for outside talent based on quality of life. While affordability is less of an issue compared to other cities, there are also significant opportunities to improve housing quality in Liverpool’s more deprived neighbourhoods.

Aligning the city centre’s residential offer with an overarching strategy to increase productivity and skills underpins the Panel’s second long-term economic priority for Liverpool – expanding the share of higher-value added jobs by turbocharging science, R&D and higher education.

The Panel has heard loud and clear that a higher share of STEM skills and more research facilities, particularly new lab space, are needed to strengthen Liverpool’s R&D offer. At the same time, enterprise and competitiveness policies, which stimulate demand for higher skills by nurturing knowledge-intensive firms and supporting the diffusion of R&D, would complement this supply-side focus over the medium to long term.

A strategy focused on unique strengths in science and R&D, anchored by a flourishing city centre, would underpin productivity growth, but the benefits of higher growth in Liverpool need to be accessible to all. This points to the Panel’s final priority – expanding access to opportunities through a renewed focus on the skills, health and life chances of Liverpool’s population.

Although the link between human capital, public service improvements and productivity is widely acknowledged it has not featured prominently enough in recent strategies for Liverpool’s economic development. Health and wellbeing of local residents is a particularly clear opportunity to make gains locally, alongside continued progress supporting those with no or low qualifications to access and progress in employment. This will involve slow and incremental reform, but it is what will make the strategy broad based and ensure the upward cycle of success can be sustained over time.

Strong leadership and effective partnerships are the institutional foundations of a growth strategy of this kind. It is no coincidence that these qualities have been front and centre of past turnaround periods in Liverpool’s history, namely:

• In the early 1980s, when the Merseyside Development Corporation (1981-1998), established by Michael Heseltine as Secretary of State for the Environment, crafted a strong direction in collaboration with the private sector, and catalysed the regeneration of derelict and disused parts of Liverpool, including now iconic sites such as the Albert Docks complex.
• The investment in Liverpool and the surrounding region made possible by Objective 1 of the European Structural Funds, delivered through a comprehensive partnership.
• Liverpool Vision (1999-2018), spearheaded by Sir Terry Leahy during the 2000s, paved the way for higher growth through the renaissance of the city centre, providing a strategic framework in which the public and private partners could work together to realise shared aims.
• The Speke Garston Development Company (1996-2003), formed of Liverpool City Council and English Partnerships, worked in close partnership with the Single Regeneration Budget project established in Speke in 1995 (the Speke Garston Partnership) and the private sector to regenerate the deprived southern tip of the city centre.
• The transformational impact of European Capital of Culture 2008 led by a strong multi agency partnership revitalising the city’s reputation as an international visitor and cultural destination.
• More recently, during the Covid-19 pandemic, partners from across the city collaborated to roll out a mass testing pilot which became recognised nationally for its efficiency and multi-agency approach.

The shared vision, energy and collaboration which characterised previous turnaround moments in the city’s history need to become the norm in Liverpool, with good practice scaled up and systematised by the civic leaders. The examples above illustrate the importance of what the Panel identifies as ‘place leadership’ – the capacity of civic institutions to set a strong vision for the type of place Liverpool wants to become and shape plans by acting in concert with other actors so that activities and investments across the city are working towards common outcomes. Following a challenging period in the city’s recent history, the partnerships and networks that characterise strong place leadership are demonstrably less developed in Liverpool than is desirable, although the Panel of course recognises the significant steps forward have been made in recent months. This is a priority for Liverpool’s future development and is reflected in the design of the recommendations set out in the next section of this report.

To understand the institutional priorities for delivering a new economic strategy, the Panel gathered a range of insights from internal and external stakeholders on Liverpool’s place leadership. In the course of its engagement on this issue the Panel heard that:

• Liverpool has a vision of the economy it wants to become, but this needs to be more clearly and consistently articulated: In a changing economy, modern cities need to be able to articulate their core purpose or ‘offer’ to investors, government and residents. This not only helps secure resources but helps manage priorities and trade-offs in key policy areas and sets the direction for private and third sector leaders to play a full role in economic development. Many stakeholders engaged through the Panel’s work felt that while Liverpool’s core assets (in R&D, higher education, and culture) were strong and distinct enough to drive future growth, how these factors add up to an economic vision could be crystalised and articulated more consistently.

• Coordination and collaboration need to become the norm: Many of the most challenging issues facing local government, from demographic change, to multiple complex needs, to social mobility cut across traditional services boundaries and require joined up solutions. There are instances of effective collaboration in Liverpool within the public sector and between sectors, often in response to crises, but this is not the norm. Stakeholders the Panel spoke to felt that there is a particularly strong opportunity to reorganise Liverpool’s public service delivery models to reflect the reality of people’s lives and empower communities.

• More effective partnership working can drive improvements: Bringing together the relevant actors with a stake in Liverpool’s future, under a shared vision is a key function of economic place leadership. This involves leaders being open to challenge and inviting feedback on plans to establish city-wide ownership and buy-in. Stakeholders the Panel spoke to felt that external engagement should be consistent and routine and that this would strengthen place leadership across the city.

• Set up institutions to deliver on well made plans: Delivery, and the value it creates for the place and its residents, is ultimately what matters and is the test that places should be judged on. Plans and prospectuses, while helpful, are only as strong as the capacity to deliver their vision and external perceptions of this capability matter, not least for investment. Liverpool’s delivery capacity is currently below where it needs to be, and organisational changes are being implemented locally to rebuild this. Developing frameworks and institutions which strengthen long term delivery apparatus, and by extension the credibility of plans, can support these welcome developments.

Section 3. Roadmap for change

Section 2 set out the characteristics of a strategy which can support growth in Liverpool and increase prosperity over the coming decade. This section sets out three practical policy programmes where the Panel considers reform necessary to kickstart growth, as a downpayment on its longer-term strategy.

The priority elements which the Panel believes should form Liverpool’s economic strategy in the coming decade, and the outcomes used to measure the success of this improvement journey, will be set out in the Panel’s final report, in close collaboration with the City Council. This will be:

• grounded in a vision of the city Liverpool wants to become over the next 10-15 years, with clearly communicated outcomes and priorities around which partners from the public, private and third sectors can frame their individual contributions
• underpinned by a clear theory of change – the empirical logic, policy mechanisms and inputs from the public, private and third sectors, which taken together, can deliver the local vision
• supported by robust frameworks and institutions which offer stability, guide consistent and transparent decision making, and support meaningful and effective partnership working between civic and place leaders across the city and wider region

Building on the insights set out in Section 2 of this report, this section sets out recommended actions in three key areas which the Panel consider early priorities to catalyse a cycle of success in Liverpool.

These are not intended to be an exhaustive list of proposals to increase prosperity in Liverpool. Instead, they provide a roadmap for a longer-term strategy by setting out the Panel’s view on the desired direction of travel in three key areas, incorporating physical, intangible, human, financial and social capital.

In each case, the proposals set out below seek to strengthen Liverpool’s institutions, embedding effective partnerships and securing city-wide ownership, to ensure that reform can be sustained over time.

Priority 1: Rebooting Liverpool’s regeneration

Liverpool needs sustained regeneration to increase the productivity of the city centre and create new housing markets aligned to its long-term economic objectives, and these benefits need to be felt across the city’s communities. The fall in investor activity prompted by the results of the 2021 Best Value inspection had a chilling effect on development, with a handful of notable exceptions. While many investors recognise the scale of the potential to bring forward unique urban developments in Liverpool, many lack the necessary assurances to have confidence over whether and how re-engage with this market. Liverpool is starting to regain attention from those willing and able to bring private sector capital to support the city’s future, as the City Council undertakes its improvement journey, but there is much more work to do.

The Panel recommends the establishment of a new regeneration partnership to bring this critical dimension of Liverpool’s growth back to life and oversee a holistic plan to rejuvenate the city’s regeneration. The partnership’s mission would be simple – to unlock regeneration opportunities in partnership with the council. It would work to enhance and amplify the local authority vision, with LCC setting the strategic planning context through existing governance, with input from the partnership and suitably resourced.

The formal responsibilities of the partnership will be set out in the Panel’s final report, but it is anticipated that these could include: creating an over- arching masterplan for the city centre, leveraging existing opportunities and creating links into nearby economic assets such as the Knowledge Quarter; developing and marketing a pipeline of high quality development opportunities to investors, providing a point of contact private sector and landowners; providing commercial and delivery assurance as part of an overarching plan to restore market confidence in the city, aligned to long- term economic outcomes and; assuring the delivery of the vision, land acquisition and remediation activities.

A strong governance framework, building on best practice, would secure the necessary skills and leadership required to turbocharge Liverpool’s regeneration opportunity  and provide assurance to the  investment community. In the Panel’s view the most effective structure would incorporate dynamic private sector leadership, with proven experience and understanding of Liverpool’s economic environment; civic leadership of the LCC and LCRCA, bringing local expertise and democratic approval; and central government leadership, delivering effective regeneration levers held by Homes England and DLUHC.

The Panel is confident that this tripartite composition would secure the necessary long-term backing, commercial capability and skills and local knowledge relationships to drive a coherent, joined up approach to regeneration in Liverpool over the coming decade. On the basis of engagement conducted to date, as a Panel we are clear in our initial view that such a structure in addition to the city’s existing regeneration arrangements, with a legal basis, is needed to overcome the legacy of past development practice and deliver with the pace and scale needed to support Liverpool’s economic renaissance. The appropriate institutional vehicle to realise this vision will be considered in the Panel’s final report, following the completion of a thorough options analysis by local partners led by LCC and LCRCA.

The partnership’s initial focus would be Liverpool’s city centre and the Waterfront, specifically the arc linking Bramley Moore Dock to the Knowledge Quarter, incorporating key development sites including Pall Mall, Liverpool Waters and London Road, capitalising on the Investment Zone status being established at Paddington Village. Delivery of key sites across this footprint, utilising LCC’s existing work in this area, provides an opportunity to demonstrate the potential of the model while unlocking delivery in a high impact area of the city.

Over time, this approach could be replicated elsewhere in priority areas of the city, subject to evaluation of its initial area of focus. There is a strong case for regeneration and housing upgrades across north Liverpool, such as at Goodison Park and Anfield, and the Panel would also anticipate exploration of opportunities to collaborate with neighbouring local authorities in time.

Priority 2: 21st century public service reform

All councils are on a service improvement journey in response to rising demand, demographic change and the fiscal outlook which are rendering business as usual unsustainable. But the scale of the transformation required to improve socio-economic outcomes in Liverpool means this challenge is steeper and demands innovations in delivery models which bring services closer to people and the communities in which they live.

A radical programme of public service reform is therefore a cornerstone Liverpool’s future economic development. This should be based on a holistic understanding of the drivers of poor socio-economic outcomes and underpinned by a place-based delivery approach rooted in neighbourhoods.

Moving towards this model from the existing design of Liverpool’s services implies 5 interlinked priorities:

• One is ensuring that how and where services are delivered is informed by high quality evidence and data on the determinants of socio-economic outcomes. In too many areas, services are designed to respond to the most obvious, and often the costliest, manifestations of problems rather than the deeper drivers of need. There is an urgent need to move towards a system which can better identify risk factors affecting people and communities and invest in protective factors which reduce future harm. This will involve difficult decisions over resource allocation, so it is essential that any new interventions are underpinned by high quality empirical evidence on what works, rather than institutional path dependency. As a Panel we think strengthening this capability for evidence-based decision making is a top priority for Liverpool.

• The second priority involves strengthening collaboration between delivery partners to act meaningfully on analytical insights on the determinates of local outcomes. This implies moving away from addressing needs through a traditional service lens and towards reconfiguring service delivery according to citizens’ needs and the way they are manifested in communities. Further devolution is an opportunity to support this reconfiguration of services as is the ongoing development of LCC’s neighbourhood model providing an opportunity to pioneer this place-based approach to public service reform.

• Underpinning both is of these priorities is a third challenge for leaders to broker new partnerships to ensure services and employers across the city are aligned. This needs buy-in from all levels, meaning Liverpool City Council, the Combined Authority and other partners like the NHS and voluntary sector need to coalesce around the agenda.

• Fourthly, and as a critical component of any successful delivery of public service reform, local communities themselves need to determine their own priorities. Top-down imposition, however well informed, cannot succeed without the meaningful and sustained support of the individuals and communities most affected. Solutions need to be co-designed with them and embedded in their communities’ assets and lived experience.

• And finally, the Panel recognise that meaningful change is only possible with sustained resources. While many public service partners are constrained in their ability to direct additional funding, we welcome the adoption of innovative ways to resource this change, including working with central government, alongside exploring options to secure new and long-term commitments for additional external investment.

Over time, the Panel sees a strong opportunity to establish an Office for Public Service Innovation – a best in class data and evidence platform to support local authority service improvement and decision making. The platform, and the associated multi-agency governance it supports, would establish pathways for reform in neighbourhoods by enabling local authorities to access high quality data, intelligence and evaluation on what works in changing socio-economic outcomes. This would be established ‘once for all’ at Combined Authority level, building on the strong data assets that already exist in the city region (notably the Civic Data Cooperative and Mersey Care NHS Trust’s CIPHA platform) but owned in practice by councils and key services.

Moving towards this whole place, citizen-centred model will involve scaling up best practice and embedding a culture shift across the whole public sector. As a first step towards a more holistic, city region-wide approach, the Panel asks that Liverpool City Council, the Combined Authority and key public service partners including the NHS and Police scope and undertake a prototype project to demonstrate what can be achieved by re-imagining the delivery of services along neighbourhood focused, multi-agency lines.

In this work, service partners in Liverpool will undertake a prototype project to test the impact of a data-led, multi-agency intervention approach to supporting residents in North Liverpool who experience multiple complex needs (MCN).

MCN refers to adults who have complex health and social needs that bring them into contact with different elements of the public service system, such as health, criminal justice, employment and housing. It is an appropriate test case for innovation in service delivery because: MCN is an issue that disproportionately affects the city; residents with multiple complex needs are high demand service users, with resulting high cost to the local authority and other public service organisations; and it is a ‘wicked issue’ – a challenge with several inter-linked causes that resists traditional solutions (in this case traditionally organised and ‘siloed’ public services).

Priority 3: Turbocharging the innovation economy

The productivity improvements that will underpin better jobs and wages in Liverpool will be driven by innovation. As noted in section 1, Liverpool and the wider City Region has a strong cluster of innovation-focussed industries, but a particularly strong advantage in health and life sciences, building on the Liverpool’s nationally important hospitals and world-leading universities. LCRCA have identified a number of constraints on the growth of this sector, however, particularly focussed on viability gaps for new developments, a shortage of lab space, and a lack of sufficient skilled workers for the sector. Ensuring this cluster meets its full potential, will therefore require concerted intervention to unlock these growth barriers and ensure Liverpool can compete nationally and internationally.

Liverpool City Region’s Investment Zone programme presents an opportunity to start this process, by building links between the Knowledge Quarter’s recognised research strengths and future job creation beyond the city’s recent growth concentration in low paying, low value-added sectors. The Investment Zone can accelerate the growth of Liverpool’s recognised scientific strengths in the Knowledge Quarter while spreading their benefits more inclusively across communities, capitalising on the strong engagement of partners from the private and higher education sectors.

The Investment Zone programme is backed by £80 million of government funding, subject to successful final agreement of its mix of interventions with government, which could leverage private investment of up to £320 million across the wider City Region. The LCRCA, in partnership with its constituent local authorities, is co-developing proposals for the Investment Zone at pace alongside government, and have provisionally agreed a Zone focussed on life sciences at key sites across the city region.

The Panel are strongly supportive of this work, and we are clear that successful final agreement of the IZ is a priority for Liverpool in planting the seeds of future growth in health and life sciences, and the wider innovation economy. We will champion the IZ’s integration into Liverpool’s economy, particularly ensuring that strong synergies are realised between the expected growth spurred by the IZ in the Knowledge Quarter and the focus of the regeneration partnership set out above. Ensuring that the skilled jobs delivered by the IZ can be accessed by all will be crucial to ensuring the growth it delivers benefits all in Liverpool, and we will support the LCRCA in developing wider skills and opportunity plan for the IZ to deliver this.

Next steps

This report reflects the Panel’s initial assessment of Liverpool’s constraints and opportunities following six months of engagement across the city. It does not mark the end of our work, nor is it intended to be a detailed blueprint for how growth will be taken forward.

The projects we have set out in section 3 are only part of the solution to the puzzle of boosting Liverpool’s productivity and ensuring all the city’s residents can share in the benefits that will stem from that. Solving that puzzle will take long-term commitment. At this stage, we are focussed on planting the seeds of effective place leadership, and building the institutions that will support sustainable growth for the long term. We have prioritised these areas because they will be the most impactful, at this stage of Liverpool’s growth cycle, in supporting the development of the institutional capital from which other aspects of economic growth flow.

It will ultimately be up to Liverpool’s democratically elected leaders to set the course for Liverpool’s growth, and determine the support that will be required. We will continue to support that process over the coming months, bringing together Liverpool’s political leadership with government, businesses, charities, public services and residents. To date we have directly engaged over 300 stakeholders city-wide, alongside intensive work with local civic institutions and DLUHC, and plan to sustain that engagement over the coming months, as we move towards agreeing our recommended growth strategy in spring 2024. We are confident in the necessity of our initial recommendations only because of the depth of critical engagement we have undertaken across Liverpool, and continuing that partnership will be vital to the future success of the city’s growth journey.

Alongside that work, we will be expecting to see the projects we detail above be operationalised, and developed into permanent proposals, by the spring. Central to our assessment of progress will be clear evidence of strong collaboration between LCC, LCRCA, partners in central government, and more widely across the city. For each of the projects detailed in section 3, we will expect to see a strong governance structure, a clear set of priorities and functions, and evidence of integration to the priorities of businesses, other public services, and residents. We think this is vital to ensuring these projects deliver for the people of Liverpool.

While the Panel is grateful for DLUHC’s support for operationalising the initial proposals, we recognise that any further assistance will be forthcoming only if local leaders can rise to the challenge of implementing them. We will continue to provide guidance and support in that process, but expect the day-to-day management of this process to be led by the senior officers of the LCRCA and LCC. This will be a key test of local capacity to build on Liverpool’s evident opportunities and move the city forward. For LCC, this will be an important means of demonstrating progress against the tests set out by the Best Value commissioners to determine the outcome of that intervention.

We ask that LCRCA and LCC jointly report to us in March 2024 with a progress report on the projects outlined here, alongside any further recommendations for promoting growth under the framework we have set out. This report will form the basis of our final strategy, which will be submitted to the Secretary of State shortly thereafter.

1. ONS, Sub-Regional productivity, 2021 ↩

2. OECD, Eurostat, 2018/19 ↩

3. ONS, Earnings and working hours, 2021– Residence-based measure earnings; workplace based measures which account for in-commuting effect are slightly higher ↩

4. DBT/DLUHC Analysis of GVA and BRES data (2023) – This is Liverpool defined by its commuting or ‘Travel to Work’ area. ↩

5. OECD (2020), Enhancing Productivity in UK Core Cities: Connecting Local and Regional growth ↩

6. Centre for Cities (2018) Talk of the Town ↩

7. ONS census data ↩

8. LCRCA Science and Innovation Audit Refresh, 2022 ↩

9. LCRCA Science and Innovation Audit Refresh, 2022 ↩

10. Department for International Trade Inward Investment Results 2021-22 ↩

11. ONS 2021 census data ↩

12. Valuation Office Agency, 2021 ↩

13. Office for National Statistics, Annual Population Survey ↩

14. Department for Education, Key Stage 2 Attainment (2021/22) ↩

15. Department for Education (2021) ↩

16. Office for National Statistics, Annual Population Survey (2022/23) ↩

17. Office for National Statistics, Healthy Life Expectancy (2017-19) ↩

18. NHS Digital, Quality and Outcomes Framework (2021/22) ↩

19. Liverpool City Council, Corporate Intelligence Team (2022) ↩

20. UK Police Data, 2023 Own Calculations. ↩

21. UK Police Data, 2023 Own Calculations. ↩

22. UK Police Data, 2023 Own Calculations. ↩