Super-sized cities must get real powers

Author: Hannah Brown
Date: 07/05/2009
Publication: The Municipal Journal

So what does chancellor Alistair Darling's recent Budget mean for UK cities? The newspaper headlines focused on a bleak outlook for the UK economy and for public finances. Further efficiency savings were included in the Budget, with £600m extra savings required from local government.

What's clear is that the UK will be paying for the financial crisis for some time, and there will have to be real cuts in public services and public sector jobs in our major cities - whoever wins next year's election.

But, despite the doom and gloom, and the impending years of austerity, there were positive measures in the Budget that will help cities survive recession, and grow in the recovery.

We saw progress in a key area which the Centre for Cities has been pushing for some time - the devolution of statutory powers to our city-regions. 

Buried in Chapter four - after announcements on the vehicle scrapping scheme and commitments to universal broadband access - the Budget announced that two pilot city-regions would be launched in Greater Manchester and Leeds. This is a formal recognition that devolution of powers to the real economy level will help support local economic growth. 

At Centre for Cities, we have long championed city-regional governance, for policies to be implemented at a level which spans the real city economy, not limited by arbitrary administrative borders.

And we publicly called for Britain's largest cities to be first in line for statutory city-region status in our Budget submission to the chancellor.

It is the largest cities, such as Leeds, Manchester and Birmingham which have the greatest potential, outside London, to drive future economic growth. Statutory city-region status, with new powers over skills, job training and employment is a real step forward for Greater Leeds and Manchester - the lynchpins of the Northern economy.

But what does it all mean, and why do city-regions matter? It's vital that we do not get lost in a maze of technical governance jargon from ‘multi-area agreements' to ‘economic prosperity boards'.

The bottom line is that devolving powers to city-region level will help UK cities fulfill their potential as economic drivers of the national economy. Why? Simply because it makes sense to make decisions about transport, housing, planning and skills at the level at which the impact of these decisions play out. The Government needs to do more to put this message out strongly and clearly. If the local authorities involved in the Greater Manchester and Leeds pilots can effectively pool and co-ordinate their powers and resources across areas that make sense to real people and local businesses, these two Northern heartlands will be much better placed to support an economic recovery - when it comes.

But we're not there yet. The Budget commitment cannot flounder in ‘agreements to work with' and ‘pledges to consult'. It has to be followed by significant devolution of real control over crucial areas of spending. 

We now want to see real powers flow from Whitehall to these two forerunner city-regions. Leeds City Region needs the powers to deliver better local outcomes in housing, regeneration, innovation support and higher skills. And the Greater Manchester authorities must be given the tools they need to support growth in key sectors, such as life sciences, digital industries, and new media.

Building on the experience of these two pilots, we want to see more devolution in the near future - to other city-regions that can drive growth in the UK, including Birmingham. The extent to which Whitehall is ready to let go of powers will be a test of ministers' commitment to devolution.

City-regions were not the only step forward we called for in the Budget. Over the past decade, we have seen an urban renaissance in UK cities, with high-profile urban regeneration schemes transforming the centres of our major cities. But financial turmoil and falling confidence have stalled projects across the country. In future, cities will need to look for new tools to finance city development - in particular, for the major projects which can make a real difference but require significant upfront finance.

As such, we were happy to see the tentative acceptance in the Budget of the potential for accelerated development zones to help kick-start city development. Interested local authorities and city-regions will now be allowed to look at innovative ways to push forward development by financing the infrastructure that their city needs from the uplift the improvements will bring to the business tax base.

At Centre for Cities, we want to see this taken forward with real urgency, and we believe any pilot should be focused on cities in the North and the Midlands, where regeneration investment has been hardest hit.

The Birmingham city-region has been pushing for an accelerated development zone in Eastside which could bring more than £1bn  of upfront investment in transport and regeneration, and create thousands of additional jobs. 
In Leeds, there are plans for a similar programme in the Aire Valley that, with an accelerated development zone, could deliver an additional 14,000 jobs.

Legislating to enable cities to use these financial tools could help create more sustainable growth and jobs in the future, with minimum burden on the tightly-constrained public finances.

The Budget was not a good news story for UK cities.

Despite Mr Darling's growth projections, the recession is very much still with us, and there will be real and painful adjustments over the years to come. 

But alongside this, we've seen a tentative step forward for UK cities, and signs of acceptance that the way forward is local control. The Government now needs to deliver on these commitments, working with Greater Manchester, Leeds and other cities to devolve the powers and resources needed to lift their economies out of recession and into growth in the years ahead.

A version of this article first appeared in The Municipal Journal.