How will the government's "city deals" work?

A tale of eight cities.

The Government’s announcement about "City Deals" has thrown open debate about the balance of power between central, regional and local government. Nick Clegg and Greg Clark have signalled that these "ground breaking deals represent a dramatic power shift, freeing cities from Whitehall control". 

The Coalition has set out a challenge for eight of England’s cities – if they can deliver more effective and accountable local government, then central government will transfer more powers and provide incentives for cities to apply their own solutions. Cities are keen to be in control of their own growth agendas and these deals represent the government’s biggest commitment yet to fulfilling its localism policy.

The proposals put forward by the eight cities show interesting differences in definition and priority. Alongside the areas you’d expect cities to focus on, such as housing and regeneration of specific districts, several cities propose focusing on areas such as physical and virtual connectivity, with powers on transport and superfast broadband. Birmingham has identified life sciences as a potential and exciting growth opportunity. 

The role of the private sector also varies from city to city. For example, Birmingham’s Local Education Partnership (LEP) looks set to play a significant role. In Liverpool, the city has looked at the transition from Council leader to mayor and how this can effectively engage the private sector. There are a number of major corporate players involved in the development of Liverpool’s future and, if successful, this could become a model for other locations. 

Each city has defined the geographical boundary between the city and surrounding region differently.  Manchester, Leeds and Bristol have taken the most regional strategies, with Greater Manchester in particular having the benefit of building on a number of years of collaborative working with different agencies and groups within the area.  Bristol’s deal also establishes "enterprise areas" outside the city boundaries and areas such as Bath, where full retention of business rate growth will apply. 

There is also considerable variation in how the low carbon agenda is incorporated. Six cities refer to it, with Manchester, Liverpool, Birmingham and Newcastle placing it prominently in their proposals.

These variations will help trial different models for devolving authority to regional, city and local authorities and it will be interesting to see how they progress. 

Despite the variations in approach, there are two factors which will shape the practical and commercial success of these schemes. For the City Deals policy to be transformative, the detailed powers transferred must be embedded in a robust governance framework, underpinned by access to sustainable finance for investment in projects.  These two key pillars are critical determinants of success or failure. 

As well as providing governance, the city authority should be a catalyst for change and provide for an effective working relationship between local and national government, business and communities. It needs to allow the clear space to be created where trust can be nurtured and the alignment of objectives achieved.

Delivery should be at arms' length from policy, so cities will need robust region-wide economic and financial assessment frameworks to appraise and prioritise projects.

Considering both governance and financing frameworks, Manchester's deal is particularly distinctive. Founded on the long-established governance framework of AGMA (Association of Greater Manchester Authorities) its 'earn-back model' aligns investment resources and economic development returns for reinvestment in strategic priorities. The model allows retention of additional business rates over and above that allowed by the forthcoming reform of local government finance, benefiting the city region to the tune of £30m per year. Not that substantial in isolation, but bigger ambitions underpin this and, used effectively as enabling finance, this could unlock substantially more private investment.

The "earn-back model" could offer a genuinely sustainable source of finance through which Greater Manchester is rewarded for good investment decisions made locally. Being region wide and non-sector specific, it is broader in scope and potential than those funding elements more narrowly defined and tied to specific spatial (enterprise zones) or economic policy areas such as skills or apprenticeships, and to that end it marks a more substantive devolution of powers and resource.

UK cities are at the beginning of the journey towards devolution and there is potential for significant change.  Could cities take a share of local collected corporation tax or secure powers to vary national policy in other areas of the public sector? This is an exciting opportunity, but to capitalise on it cities need to think, plan and govern differently and, for the long term, sustainability and flexibility needs to be built in at the outset.

Philip Woolley is a partner in Grant Thornton’s Government & Infrastructure Advisory team.

The city deals will

Philip Woolley is a partner in Grant Thornton’s Government & Infrastructure Advisory team.

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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