Deal or no deal for England’s cities

Ed Cox is the director of IPPR North, IPPR’s dedicated think tank for the North of England

Nick Clegg announced yesterday the government’s intention to strike a series of ‘tailored city deals’, starting with England’s eight core cities: Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield.

Speaking at an IPPR North conference in Leeds, the deputy prime minister spoke about “an unprecedented transfer of power” to cities through specific deals rather than blanket policy prescriptions.

The accompanying publication – Unlocking Growth in Cities (pdf) – contains an “illustrative menu of bold options” garnered through initial conversations with core cities and some early brokerage between the Cities Policy Unit and government departments.

It includes 21 possibilities including some eye-catching possibilities such as:

• A single capital pot for local infrastructure schemes

• Devolution of local major transport funding and housing (HCA) funding

• Business rate discounts for local businesses

• Increased control over local and regional bus services

• The formation of ‘apprenticeship hubs’ and a ‘City Skills Fund’ for better tailored skills support

However, much emphasis is placed on devising bespoke deals according to each city’s particular needs and demands, with the deputy PM promising that “nothing is off the table” and that cities will be able to come back for more as part of a “long-term relationship”.

The tailoring and specificity clearly reflects the importance of the need for different solutions in different cities but it also betrays a nervousness within government departments to truly let go. Officials were keen to point out that a concession made to one city did not mean the same concession would be granted elsewhere: there is no a la carte option. There is also a clear reluctance to facilitate too much city collusion.

This is another government policy published without all the t’s crossed and the i’s dotted. It is not at all clear who deals will be struck with.

Whilst much emphasis is placed on the importance of functional economic areas or city-regions, most clearly manifested by local enterprise partnerships (LEPs), and the menu of powers clearly has LEPs in mind, these lack formal governance and accountability and it is hard to see what status they will have to inherit public funding.

Neither is there a very clear framework by which cities will be measured against the ‘government asks’ of leadership and accountability, innovation and creativity, risk and reward etc.

Clegg ruled out the idea that powers would be conditional on successful mayoral referenda, but speaking later in the day Greg Clark, minister for cities, was unequivocal in his desire to see city mayors at the heart of the process. The fuzzy nature of the guidance will frustrate some but it has to be an opportunity to be seized by cities and government must be applauded for the openness with which it is entering into negotiations.

The last thing we need is for a smorgasbord approach to descend into local bun-fights.

Core city local authorities will need to move swiftly to persuade the Bradfords, Sunderlands and Barnsleys that their interests lie in LEP-wide powers within a first wave of deals rather than hanging back for a second wave of negotiations. A business rate discount across the North East, for example, may well be the region’s best bet to maintain competitiveness with Scotland than any single city trying to raise funds through a small-scale tax increment finance arrangement.

Indeed, many of the powers on offer will operate best when developed at scale. Manchester and Leeds, for example, would do well to broker a deal which unites the two LEPs in taking responsibility for trans-pennine rail services and there must be a strong argument for a consortium of LEPs to demand a fair slice of the regional growth fund as a single block grant.

Many will criticise this latest initiative as being a cover for cuts, a recipe for division and another piecemeal project that comes nowhere near a coherent strategy for growth. In practice those concerns may well prove to be true if government departments don’t make good ministerial promises to transfer powers.

But if taken at their word, Clegg and Clark may well have opened Pandora’s box for Whitehall mandarins and our great cities may once again find the freedom to drive the nation’s return to prosperity. The bigger question is whether our cities and their hinterlands can now step up to the plate.

See also:

• Latest high street gloom shows urgent need for new planning system – Jonathan Schifferes, September 20th 2011

• Our summer of strife is a degenerated, cracked-mirror image of the Arab Spring – Kevin Meagher, August 10th 2011

• Cameron’s Britain: Where the most deprived are left behind – Katie Schmuecker, April 7th 2011

• UK’s urban sprawl needs to be binned – Mark Anderson, April 1st 2011

• D-Day for councils as Pickles wields the axe – Sam Bacon, December 13th 2010