Give cities more power over their destiny

The new City Deals are a step in the right direction

Throughout July and August all eyes will be on London. Whether it is the unveiling of the Shard or the opening ceremony of the Olympic Games, London is demanding the attention of the nation. It is therefore no surprise that last week’s announcement of new powers for England’s eight cities was met with little fanfare. Yet, these "City Deals" represent the most significant devolution of power from Whitehall in decades and are deserving of more attention. This is not just the summer of the capital; it is very much the summer of the cities.

England’s eight core cities and their surrounding areas are forecast to add £71bn to the economy over the next decade. But evidence suggests that they have the potential to achieve much more. That is why the City Deals, that include transport infrastructure funds, new investment for SMEs, and apprentice hubs to support NEETs, will play a crucial role in the nation’s future growth.

The first clear indication of a new relationship between central government and England’s cities was the creation of a Minister for Cities last year. Greg Clark was appointed to this role, with further support from Nick Clegg and ministers and officials in BIS, CLG and HMT. The Deals are the result of an almost year-long negotiation between Clark and his team in the Cabinet Office, Whitehall and the core cities.

Arguably of most significance are the new transport infrastructure funds. They have a combined value of over £5bn and should have significant impact on the ground. Transport has been the policy area that the Mayor of London has had most influence over; the congestion charge, tube upgrades, a bicycle hire scheme and even a cable car over the Thames, have been the result. Getting around the capital is now easier and the same could soon be true for England’s core city-regions.

Better connections will support economic growth. Leeds City Region, for example, hopes that its £1bn West Yorkshire "‘plus" Transport Fund will create a 2 per cent increase in the region’s economic output and 20,000 extra jobs. Strategic investment in new stations, roads and public transport networks could have a dramatic impact on the daily commute.

People’s daily lives and commutes do not reflect arbitrary council boundaries, so another positive to have emerged from the Deals has been councils which are increasingly willing to work together to make investments. Greater Manchester’s councils combined strategy for a new Metrolink is a demonstration of the benefits of this approach. Such collaborative governance arrangements will prevent the jam-spreading of funds that can harm local areas.

The next step for the core cities will be to ensure they deliver on the ground. There is more work for central government to do as well. Greg Clark has said that this is just round one of City Deals. 142 upper-tier councils don’t have a Deal. A devolution bill could package up some of the powers in the City Deals allowing all areas to invest for local growth.

Greg Clark, the minister in charge of City Deals. Photograph: Getty Images

Joe is a senior researcher at the New Local Government Network

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.