Will the spending round crush urban growth?

Alexandra Jones welcomes funding for skills, but worries that grants to pay for councils and growth have been wiped out.

Everyone knew there would be very little money to spare in Wednesday’s spending round and Thursday’s "growth statement". The economy’s poor performance has put paid to any attempts to move away from "austerity" government, so departmental cuts of up to 10 per cent came as no surprise. Yet the big question for me was whether the Review – which, it’s worth remembering, doesn’t even get put into practice until 2015 – would start to signal an alternation in the balance of power, away from most decisions being taken centrally about how money is spent and towards more local decision- about how best to deliver jobs, growth and better public services for much less money. So did it happen?

The honest, if unexciting, answer is that it’s a mixed picture – the rhetoric is going in the right direction but Government still lacks a "place" focus in its approach to national policy, and many of the the decisions about devolution were fairly timid, with too much emphasis on central government control rather than local autonomy.

Take Heseltine’s Single Local Growth Fund. Heseltine suggested it could be as much as £49bn over four years; it ended up being £2bn a year for five years. While it’s good news that a direction of travel has been established, creating some degree of certainty for local enterprise partnerships (LEPs) wishing to make investment decisions, £2bn is hardly a ringing endorsement for devolution to local areas. Digging beneath the detail, much of the money is not new – about £700m has already been allocated to local areas for transport or the New Homes Bonus – and when you divide it between 39 LEPs, it's not a great deal of money, roughly the same as the nine Regional Development Agencies had in the mid 2000s. 

It is good to see skills money in there, however, and now it’s been created it will be difficult to put the localism genie back in the bottle – provided local areas deliver. The challenge for Whitehall as it finalises guidance about how the money will be allocated is to ensure that, even if the amounts are smaller than I had hoped, there is devolution of decision-making and that access to the funds do not involve local areas jumping through a lot of Whitehall-devised hoops.

It’s also unclear whether the welcome announcements on affordable housing, super-fast broadband and transport will respond to the needs of different places. The £3bn of capital investment to build 165,000 affordable homes, along with the £250m announced for more super-fast broadband are welcome and will make a difference in cities across the country, as will the vast number of inter- and intra-city transport schemes that were announced. My concern is that as we move from policy announcements to prioritisation and implementation, the significance of the differences between places will be missed by Whitehall departments. 

Finally, it was not a surprise that local government has again been hit hard by cuts, receiving a 10 per cent cut that Stephanie Flanders of the BBC suggested would amount to a 35 per cent cut in real terms for local government since 2010 (although the Chancellor argued that other measures meant that the "true" cut for local government would be 2 per cent in 2015/16). Combined with cuts in welfare, which will affect some city economies significantly, it will be very tough for many cities to manage their budgets giving rising demands for their services. 

To help them manage cuts more effectively, more action is needed on innovative measures that increase local autonomy. It was good to see confirmation of Manchester's Earn Back deal, involving Manchester keeping a proportion of the benefits generated by increasing local economic growth. It was also good to see additional money for Troubled Families, but I would have liked to see more steps taken down the road of "Community Budgets", allowing local areas to pool budgets across silos in order to deliver more effective, efficient local services in a way already demonstrated in pilot areas such as Manchester and Essex. 

So where does this leave us? I’m an optimist, so I still hope that as the detail emerges over the next few weeks and months this will show that government is putting "place" at the heart of its policy-making. In the meantime, in the two years before these announcements kick in, there’s still more to do to give greater freedom to cities with the capacity to deliver and provide greater support to those cities struggling with capacity, decline or both.

Alexandra Jones is the director of the Centre for Cities

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage