An offer they can’t refuse?

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The government is proposing a deal with England’s cities that will devolve more powers but, in return, local authorities will need to show true leadership and help build an effective consensus

Deputy Prime Minister Nick Clegg has announced plans to ‘unleash’ the power of cities but he wants this to be a ‘genuine transaction… with both parties willing to offer up and demand things in return’.

Unlocking growth in cities, published yesterday by the Cabinet Office’s Cities Policy Unit outlines plans to work with the eight core city-regions (as defined by the boundaries of the Local Enterprise Partnerships) to create ‘bespoke’ deals in which powers will be devolved in return for changes in the way cities are governed.

Amongst the most significant powers featured on the ‘menu’ of those which will be considered for deals are:

  • Giving cities one consolidated capital pot for investment
  • Giving cities powers to create Business Improvement Partnerships
  • Access to new infrastructure funding through Tax Increment Financing
  • Devolving major local transport funding  and the power to commission local, or even regional, rail services, including managing franchises
  • Giving cities the power to consolidate local public sector property assets into a single local property company
  • Creating ‘City Skills Funds’ and ‘City Apprenticeship Hubs’

These proposals are welcome, especially the devolution of transport and skills, which was recommended in the Institute for Government report Big Shot or Long Shot.

In return, however, the government has a series of less specific ‘asks’. There appear to be two main requirements: the ‘governance test’ and the ‘geography test’.

The governance test requires that cities display strong, visible, accountable leadership, which can provide a vision and ‘deal with government from a position of influence and strength’. The paper recognises that it is possible to deliver this within any set of governance arrangements but also states outright that ‘cities with a directly elected mayor will meet this requirement’. In other words, saying ‘yes’ to a mayor in May guarantees that cities pass the first test for the devolution of power.

The geography test states that powers will only be devolved to bodies operating at the ‘appropriate geography’ because, as the paper puts it, ‘opportunities for growth do not stop at the boundaries of local authorities’. This is sensible. It would clearly be inappropriate to devolve control over the local train network to a single local authority – and Whitehall departments would also find it all too easy to resist devolving powers if the geography of governance doesn’t appear sensible.

Of course, both tests might have been met more easily if, as many recommended, the government had opted for city-region mayors to begin with.

Without city-region mayors in place, however, the geography test may be the hardest to meet. Local authorities find it notoriously difficult to act collectively, as evidenced by the inability of councils in the South West of England to put together an Integrated Transport Authority and by recent arguments in Merseyside over whether the local authorities should agglomerate along the lines proposed in Heseltine and Leahy’s report Rebalancing Britain: policy or slogan?.

In fact, the only place to have achieved significant bottom-up combination across the economic area is the Manchester Combined Authority, and that was 20 years in the making.

Just as the Prime Minister and Deputy Prime Minister will need to show real leadership to persuade individual government departments to devolve specific powers, local authority figures must lead the process of building consensus for their collective benefit.

Councils often justify their reluctance to establish formal collaboration on the grounds that peripheral areas ‘don’t want to be governed from’ big city centres, for example St. Helens and Liverpool. But with the approach proposed today, local areas will retain power over local issues, as is the case in London and Manchester, which makes these arguments look flimsy. Indeed, you could say: local authorities of England unite; you have nothing to lose but your chains.

Sam Simms is a researcher at the Institute for Government

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