city leadership giving city regions the power to grow adam marshall and dermot finch with chris urwin
centreforcities Published by Centre for Cities 30-32 Southampton Street London WC2E 7RA www.ippr.org/centreforcities
© Centre for Cities 2006
About centreforcities
The Centre for Cities is an independent urban policy unit, based at the institute for public policy research (ippr). It is taking a fresh look at how cities function, focusing on the economic drivers behind urban growth and change.
About the authors
Dr Adam Marshall is a Researcher at the Centre for Cities.
Dermot Finch is Director of the Centre for Cities.
Chris Urwin is an Economist at the Centre for Cities.
Tony Travers is Director of the Greater London Group at the London School of Economics. contents
acknowledgements iv
executive summary v
foreword by Tony Travers vii
1 introduction 1
2 city leadership: who, what and where? 4
3 the case for devolution 11
4 money, power, freedom: the barriers to success 21
5 devolving to city regions: a new approach 37
6 more freedoms and flexibilities for all urban areas 56
7 conclusions: making financial devolution work 63
annex 1: devolving spending to city regions 66
list of web annexes 70
list of abbreviations 71
references 72
city leadership iv acknowledgements
A large number of people helped to make Thanks also to John Adams, Tim Gosling, City Leadership possible. The authors would Tony Grayling, Alan Harding, Paul Hildreth, especially like to thank everyone who took Ian Keating, Mark Kleinman, Liz Peace, part in the primary research process. These Nick Pearce, Howard Reed, Simon Ridley, people are too numerous to list here – but Peter Robinson, Ben Rogers, Katie please accept our gratitude. Schmuecker, Lucinda Turner, Anthony Vigor, and Emma Wild, as well as the Diputacíon Many thanks for facilitation and assistance Foral de Bizkaia. are due to: Special thanks to Tony Travers, for his invaluable Sandy Taylor, Stephen Hughes, Jerry advice; Georgina Kyriacou, ippr; and to Emma Blackett, Simon Murphy and Charlotte Sherlock, Meghan Benton, Tracy Kornblatt Ritchie in Birmingham; and Max Nathan of the Centre for Cities.
Catherine Garnell, John Kelly, Sophy Finally, we are indebted to interns Paul Krajewska, Neil Flenley, David Clark and McCarthy and Matthew Green for their Sara Williams in Liverpool; invaluable research and analysis at various stages of the project. David Kennedy, Gary Salter, Chris Wyatt, David Longley and Jemma Basham in All errors and omissions are entirely the Barnsley and South Yorkshire. authors’ own. v executive summary
City Leadership sets out the economic case for Key recommendations radical financial devolution to England’s Radical devolution to Birmingham and Manchester cities and towns. It argues that more financial city regions: powers and autonomy are essential for our 1. City-Region Contracts that devolve key economic urban areas to achieve their economic development powers and budgets to city regions potential. 2. Supplementary Business Rates, hypothecated But the scale of devolution is critical. City to key city regional infrastructure priorities Leadership recommends a priority focus on our largest city-regions, plus a set of general 3. A City-Region Growth Incentive to promote flexibilities for all areas: cross boundary collaboration and efforts to grow the business base z The two biggest city-regions outside 4. A clear policy framework with Whitehall London – Greater Birmingham and departments, Regional Development Agencies Greater Manchester – are ready for (RDAs) and other agencies sharing a common significant new powers over regeneration, focus on city regional growth transport and skills, including devolved 5. New city-regional governance structures, spending and revenue-raising. Other with directly elected mayors in the lead, large city-regions could follow. supported by existing local authorities z All areas need greater financial flexibility, building on existing policy initiatives. More freedoms for all cities and towns:
6. Economic Development Contracts within This is ‘asymmetric devolution’, with Local Area Agreements, giving local authorities different places having different degrees of greater discretion over regeneration spending autonomy, proportionate to their economic importance. 7. Enabling greater take-up of existing Over the next year, City Leadership’s powers, including prudential borrowing, Business findings will feed into the Lyons Inquiry, the Improvement Districts and user charging Local Government White Paper and the 8. Improving capacity and skills in local Comprehensive Spending Review. authorities, to further public private co operation and promote investment
city leadership vii foreword Tony Travers, London School of Economics
Centralisation and its discontents that central government enjoys. Britain is a centralised country. The Moreover, demands for good local concentration of resources and decision- governance have been particularly intense in making power that exists in Whitehall today British towns and cities because of the cannot be attributed to a single government profound de-industrialisation and economic or political party. Instead, it is a reflection of restructuring they have experienced. the way British democracy has evolved. The Exchequer collects all but a tiny fraction of the United Kingdom’s taxation. It wasn’t always this way Local government, which is responsible for When England’s cities originally 25 per cent of public expenditure, raises only industrialised in the mid-nineteenth century, one-quarter of the income needed to fund they petitioned Parliament to create this expenditure – and relies on tax powers corporations that had among their powers the that are subject to central capping. ability to set a local tax. This power, City Leadership asks how centralised public supported by municipal enterprise, allowed finance affects Britain’s cities. Critically, it civic leaders to institute improvements, concludes that the current level of including the introduction of water supplies, centralisation is holding cities back – with sewers, utilities and tramways. It was not consequences for the national economy as a necessary for every policy measure or civic whole. development to be approved and funded by National governments would find it hard central government. See Asa Briggs’s seminal to provide effective, successful political and book Victorian Cities for an account of the economic management if most of their tax golden age of nineteenth-century municipal take was determined by an external authority. power and entrepreneurial leadership. Yet cities and other local authorities are Then, as now, major cities produced large expected to achieve a huge range of objectives tax yields. However, since 1945 English local – including service delivery, community authorities have seen their dependence on leadership and, increasingly, economic central grants increased: the property tax was management – without the fiscal autonomy not able to sustain the wider range of
city leadership viii
services, particularly welfare provision, against the tax consequences for their local demanded of councils during the twentieth population will be more likely to use century. Grants have been reformed in order resources wisely and effectively than those to equalise variations in expenditure needs who simply beg for funding from the centre. and taxable capacity – thus achieving widely The academic literature suggests that desired social-democratic goals. The urban centres are highly productive, thanks to increasing sophistication of the grant system, the benefits of agglomeration economies. In coupled with growing use of specific-purpose England, however, around 40 per cent (on grants, has meant that Whitehall average) of cities’ GDP is taxed away and departments have assumed ever-greater then dribbled back to them in central responsibility for local authority funding, but government spending (Travers, 2004a). at a price for local autonomy. Even if this degree of centralisation could be shown to be the best way of managing the public finances (which it can’t), the Centralisation versus autonomy notoriously fragmented nature of Whitehall In short, Whitehall is now the origin of most means that city governance institutions are resources for both day-to-day and investment required to attempt to ‘join up’ dozens (if finance in English cities. Authority and not hundreds) of separate central policy-making capacity have, inevitably, government funding streams. For every one passed upwards. Local political life and civic pound spent by the public sector in leadership have diminished as a result. Birmingham and other cities today, less than City Leadership identifies greater financial five pence will be funded by local taxpayers. autonomy as a top priority, especially for our In the nineteenth century, the figure would biggest city-regions. Autonomy is clearly have been 95 pence. linked to the quality of government in cities and larger towns. The existing literature makes it hard to attribute a clear and direct The impact on leadership link between particular governance In a country where local political leaders arrangements and economic outcomes, yet must submit bids to central government for a there are good reasons to believe that share of their own residents’ tax payments, autonomy and choice produce more effective accountability for urban government has, results. City politicians who must balance the inevitably, become confused. This problem costs and benefits of their expenditures has been made worse by the extraordinary
www.ippr.org/centreforcities ix clutter of institutions created to co-ordinate individuals would be more likely to be spending programmes and to promote attracted to it. But there is a strong regeneration initiatives. Independent bodies perception that English local government is such as the Audit Commission have been permanently being reformed, and that it is clear that there are now so many partners becoming weaker and less capable. Geoff involved in the redevelopment of some cities Mulgan, until recently head of policy at 10 that paralysis is inevitable (Audit Downing Street, has stated that ‘local Commission, 2005a). government has been so squeezed, knocked Leadership of major urban centres has and drained of power that its impotence has evolved well away from the traditional ‘city become … a problem’. It is implausible to boss’ role. Complex local partnerships must imagine any but the most dedicated political be chaired, public and private resources must and managerial talent opting for a career in be sought, and time must be spent on trains such an institution. to and from the capital, since major spending decisions are made at the heart of government rather than city halls. Each time A universal problem? a tram scheme is rejected, the decision is Perhaps the decline of local political power and announced from the Department for leadership is an international phenomenon, Transport in London. As a result, cities with central governments drawing power to increasingly look to Brussels, rather than themselves in an era of globalisation. Whitehall, for financial assistance. Yet there is no international evidence that Yet, local authorities are judged – notably by power and resources are drifting away from the Comprehensive Performance Assessment city governments. Indeed, in the United regime – across a wide range of outputs and States, France, Spain, Italy and Germany there outcomes. Urban leaders are expected to have been moves to enhance the powers of produce results by the use of techniques such as regional, metropolitan and city governments. ‘commissioning’, ‘enabling’, ‘empowering’, and France introduced regions in the 1980s, and ‘partnership working’. This role is a long way beefed up city-regional structures in the 1990s. from the traditional one of raising resources Successive presidents have transferred from local taxpayers to deliver services and programmes from federal to state and local economic success locally. government in the United States. Spain’s If the new role of local political leadership nascent democracy has involved the creation of were well developed and understood, a series of powerful regional governments.
city leadership x
Italy has also devolved power to regions, while over-centralised. The Government has both it and Germany have introduced directly presented a number of ideas to transfer power elected mayors in some cities. Even the United to local institutions such as schools, hospital Kingdom has devolved powers to Scotland trusts, housing bodies, regeneration and Wales, while introducing a directly elected partnerships and other micro-bodies. This mayor for London. form of ‘new localism’ is certainly a step The continued top-down approach to towards greater local control, but does not urban local government in England appears always involve traditional city and local to be out of line with experience in a number governments. of other countries. Indeed, a number of Thus, in future, cities are likely to see more recent events suggest that effective city of their public service provision in the hands leadership is an essential element in good of new bodies outside of local government. government. The Giuliani/Bloomberg era in But this does not mean local leadership, New York City – now stretching to four especially in areas like economic consecutive terms in office – has shown how development, will be less necessary. Arguably, powerful leaders can provide cities with the very lack of certainty as to how these effective government during a crisis and ‘new localist’ institutions will operate suggests during the rebuilding phase that follows a new role for city and other urban serious urban problems. Here, ministers governments. Institutional machinery and publicly accept that Ken Livingstone’s financial support for economic development leadership was a key element in London can, realistically, come only from city and winning the 2012 Olympic Games. town halls. Britain is out of step with much overseas City government will have another key experience. City Leadership suggests that in a role. As urban centres redevelop, the process number of countries it is possible to find of continued regeneration and economic thriving urban leadership, with resources expansion will require infrastructure and derived locally, rather than drip-fed from the other public assets. As City Leadership national capital. suggests, transport facilities, affordable housing and many other community resources cannot be delivered without an We are where we are… effective city-regional entity. This entity also Virtually all politicians will admit – both needs the power to raise resources to publicly and privately – that England is now underpin continued expansion. Here, surely,
www.ippr.org/centreforcities city leadership xi lies the clue to what urban government will to develop. Rapid de-industrialisation and need to do in the years ahead. middle-class flight from many English cities has created a position where emergency action has been required. Successive national and local …But we can do better administrations have just about stabilised the City Leadership outlines a number of situation: the freefall economic and social pragmatic proposals that will enable city- decline of the 1970s and 1980s has been regions to lead the continued economic stopped, and cities are now experiencing revival of their component cities and towns. something of an economic recovery. But there However, to do this, their leaders will need is little room for complacency. Much more access to resources, derived from the growing action – with decision-making and resources at tax base in their area, that enable them to a local, not national, level – will be required if invest in the ‘hard’ and ‘soft’ infrastructure cities are to continue to expand and grow. that can facilitate economic expansion. Lyons will now report at the end of 2006. The search for additional resources for cities It is unlikely there will be any significant and other urban authorities cannot be divorced reform of local government finance before from the Lyons Inquiry’s work on the future of 2010 at the earliest. This City Leadership local government. But it is worth stating why report makes a strong case for devolving both cities need different – and possibly more resources and decision-making to urban areas immediate – treatment if they are to continue well before that date.
city leadership 1 1 introduction
Why bother? map. But ministerial rhetoric has not been After years of decline, the past decade has matched by policy action. Local Area seen an increase in investment, confidence Agreements, Local Authority Business and prosperity in England’s largest cities Growth Incentives, the Local Enterprise (ODPM, 2004d, 2004e; Labour Party, 2005). Growth Initiative and other programmes are Many towns are following suit, with only a small step in the right direction. ambitious strategies for recovery. This report examines the case for financial Policy-makers want to find more ways to devolution to towns, cities and city-regions. It strengthen urban economies – and are asking explores the distribution of resources and whether cities are run in a way that allows decision-making power, and uncovers barriers them to achieve their full potential. to success. Using original research in The UK is highly centralised, and its cities Birmingham, Liverpool and Barnsley, the do not have enough power. English city report asks whether specific policy changes councils want the sweeping financial powers could help cities and towns promote and political latitude enjoyed by European regeneration and economic growth. Finally, it and American city mayors, while Whitehall urges the Lyons Inquiry – and government has favoured a more cautious approach. ministers – to support significant financial Most policy-makers agree that English devolution, beginning with city-regions. cities need more power to make their own decisions, but there is no consensus on how, what or why to devolve. Despite years of Research questions debate and three major reforms of local City Leadership addresses three sets of government, our cities still lack the tools they questions: need to fulfil their economic potential. The Devolved Decision Making Review z First, finance. Do cities need additional (HMT et al, 2004a), Productivity in the UK fiscal powers to facilitate economic (HMT and ODPM, 2003) and the work of development and attract private the Core Cities Group (for example, investment? Is there a case for greater Parkinson et al, 2004) put this agenda on the financial devolution from the centre?
city leadership 2
z Second, co-ordination. How should City Leadership, by contrast, tackles the powers and funding be distributed issues around city governance from a different between local, regional and central perspective. The report: government? How can we co-ordinate functions, finance and skills most z Focuses on barriers to economic growth effectively? And how can we promote and regeneration cross-boundary co-operation, strategic z Develops the case for financial devolution decision-making and stronger economic to city-regional level outcomes? z Recommends specific changes to the z Third, governance. How do we apply financial tool-kit for city-regions, cities freedoms, flexibilities and growth and towns. incentives to different cities and towns? What scale is appropriate? And who The report starts from the premise that we should be in charge? need to consider functions and finance first, before addressing the question of structural Public- and private-sector stakeholders alike change. We need to identify the obstacles to say that English cities are handicapped by a regeneration and economic growth in urban complex, overly centralised public finance areas – and then develop finance and system. governance arrangements that can deliver Our research set out to examine these results. claims, and to investigate whether targeted devolution could help cities to do better. Why is this important now? There is currently a critical window of Why this report adds value opportunity to present arguments for For some observers, devolution is an financial devolution. ideological imperative, and the political First, the Lyons Inquiry into Local objective of ‘localism’ (for example, Stoker, Government – which is reviewing the 2005; Jenkins, 2004). Yet, too much of the functions, role and finance of local local governance debate is focused on local- government – is set to report in late 2006. authority structures and boundaries. This Second, the 2007 Comprehensive approach places too much emphasis on the Spending Review will have a substantial ‘container’ – and not enough on content. impact on the flow of funds from central 3 government to local authorities. The review is Exchequer, Gordon Brown, stated that expected to reduce growth in public Government faces: expenditure – meaning that all parts of government, including cities and towns, will a challenging agenda for modernisation and need to do more with less. Devolution and reform: more radical devolution of greater flexibility would help cities to use responsibilities from Whitehall as we give the limited resources more effectively and role of Whitehall a sharper focus; greater efficiently (OECD, 2001; Oates, 1999). attention to the conditions favouring a new Third, there is an increasing awareness localism in delivery with greater transparency, that city performance is important to the proper audit and new incentives.1 national economy, and to the achievement of central government’s key goals (Strategy So the local financial ‘tool-kit’ for cities is Unit, 2002). City economies will largely very much a matter of current debate. This determine whether the Government is to report provides decision-makers in meet ambitious economic targets, especially Whitehall, cities and towns with new its commitment to raise growth rates in evidence – and helps them to make a case for lagging regions so they catch up with greater devolution. London and the wider South East (HMT, 2002). This is confirmed by emerging evidence that suggests that large, well- The report connected urban areas offer the best The report is arranged as follows: Chapter 2 opportunity to boost regional growth and details the methodology and structure of the narrow the productivity gap (SURF, 2004; research; Chapter 3 explores evidence linking SURF and CUPS, 2006; HMT, 2004b; devolution, governance and city economies, Parkinson et al, 2005). and identifies a case for greater devolution to Whitehall has recognised that more the city-regional level; Chapter 4 details the regional and local flexibility is needed to findings of our primary research in drive growth over time (HMT et al, 2004b). Birmingham, Liverpool and Barnsley; Government has publicly acknowledged Chapters 5 and 6 lay out a range of policy 1 Rt Hon Gordon that local authorities need to be empowered recommendations that emerge from these Brown MP, speech if they are to help boost national economic findings; and Chapter 7 sets out conclusions to the Social Market performance (HMT and ODPM, 2003). and next steps. Foundation, 3 Speaking in 2003, the Chancellor of the February 2003.
city leadership 4 2 city leadership: who, what and where?
Introduction definition of city-regions explicitly excludes This chapter provides a brief outline of our small urban areas (for example, Stoke-on- research methodology, and introduces our Trent), polycentric city networks (for three case study areas: Birmingham, example, the Three Cities), and shire counties Liverpool and Barnsley. (for example, Kent). Two key concepts that feature throughout Economic development is the nurturing of the report are city-regions and economic economic and employment growth. It is a development. Both of these terms have a very broad area, including regeneration, number of definitions and meanings, and housing, planning, skills, labour markets, remain contested (SURF and CUPS, 2006). transport, enterprise and innovation policies. City-regions are both economic and This report focuses on three specific political entities (SURF, 2004; NLGN City- strands of economic development: Regions Commission, 2005). regeneration (including elements of housing), City-regions already exist as economic transport and skills. Our initial research areas. They include a core city, as well as found that the inability to initiate and deliver surrounding areas that have close economic large projects in these areas was a relationships with that city. These fundamental constraint on city-regional relationships can be measured in a number of economies. different ways, including labour markets, This report does not address area-based or housing markets, retail catchment areas and neighbourhood interventions, which are business-to-business links. undertaken at or below the local authority If governance arrangements are imposed at level. a level that matches specific economic flows, city-regions become political entities, with administrative boundaries that broadly reflect Project methodology an economic area. The research programme was designed to Chapter 5 sets out a methodology to draw address the questions around financial up city-regions that match the economic devolution, co-ordination, governance and realities of England’s largest urban areas. Our leadership introduced in Chapter 1. It is
www.ippr.org/centreforcities city leadership 5 based on a range of qualitative, quantitative www.ippr.org/centreforcities.2 and comparative evidence collected from: National stakeholder consultations z Desk-based research Consultation with a wide variety of national z Consultation with national stakeholders stakeholders from the public and private (for example, HMT, ODPM, CBI, sectors helped to uncover key policy and LGA) evidence gaps. z ‘Action research’ with city stakeholders in Additionally, the Centre for Cities held a Liverpool, Birmingham, Barnsley and number of events that yielded further Manchester. evidence on financial devolution and barriers to investment in cities and towns. These Desk-based research and primary research included a seminar on City Mayors,3 two were conducted between April and October Working Cities events,4 which focused on city 2005 by members of the Centre for Cities governance, and an international seminar on team, with assistance from our city partners. financial devolution held jointly with the Diputacíon of Bizkaia, Spain.5 Desk-based research Reports summarising these events are also A wide-ranging literature review examined: available as web-based annexes. 2 Web annexes 1, 2 and 3. z The links between city governance and City stakeholder consultations 3 Centre for Cities City city performance, including the Primary research was conducted during Mayors seminar, relationship between devolution and summer and autumn 2005 in Birmingham, London, 19 May 2005. effective governance Liverpool and Barnsley. This included: See web annex 4. 4 Held jointly with the z The existing financial powers of English Smith Institute and cities, and how they compare to the z Case studies of specific regeneration Inclusion at 11 Downing financial levers held by regional and projects, and the financial arrangements Street, 8 June 2005, central government required to achieve them; and the Labour Party Conference, Brighton, z Fiscal powers and governance structures z Semi-structured interviews with key city 27 September 2005. at city and city-regional level in other stakeholders, focused specifically on See web annex 5. countries, with specific emphasis on economic development powers and 5 Held in London with a delegation from Bizkaia France, Spain, Germany and the US. barriers to investment. and our three partner This research resulted in a number of z Business stakeholder groups, organised cities on 17 November literature review papers, which are available at jointly with local business organisations 2005. See web annex 6.
city leadership 6
in all three cities, which tested business z Liverpool – a large city-region focused on views on governance and financial a single centre devolution.6 z Barnsley – a town on the edge of two city-regions (Sheffield and Leeds). The report also draws on stakeholder interviews conducted in Manchester as part This range of case studies enabled City of the field research for our City People Leadership to look at how barriers to growth project (Nathan and Urwin, 2005). and investment vary from place to place. The Emerging conclusions were presented and case studies revealed a number of common refined during November and December 2005. themes – such as an acute desire for control This process involved our three case study over local transport investment – as well as cities, the Office of the Deputy Prime substantial differences. Minister, HM Treasury, the Local Government
6 The Centre for Cities Association’s Urban Commission and the Birmingham would particularly like to Confederation of British Industry.7 Birmingham is the largest local authority in thank Birmingham We have deliberately focused on local Britain (and Europe), with 992,000 Chamber of Commerce 8 and Industry, authorities and businesses to investigate inhabitants. It sits at the heart of the West 9 Birmingham Forward, barriers to economic development. Other Midlands conurbation (2.5 million people) , Liverpool City Growth, research, including work commissioned by and a wider city-region that takes in Liverpool Chamber and the Lyons Inquiry, is examining broader additional areas to the north and south. Barnsley Chamber of Commerce for their public attitudes toward the functions and The city-region is polycentric, with a assistance in convening funding of local government (GfK NOP number of different employment and retail and hosting Business Social Research, 2005). centres. Birmingham city centre is the largest Stakeholder Groups. This extensive evidence base is summarised employment and economic driver, but it is 7 The Centre for Cities would like to thank the in Chapter 4. supplemented by a range of smaller centres LGA and the CBI for with distinct economic profiles. The city- their assistance in region includes four travel-to-work areas organising respective Selecting case study areas sessions. (TTWAs), including two focused on the 8 Census mid year Detailed research was carried out in three Black Country to the west and one around estimates, 2004, from urban areas, selected deliberately for their Coventry in the east (ONS, 1998). www.nomisweb.co.uk differences: 9 Census mid year estimates, 2004, from z Birmingham – a large city-region with The Birmingham area performed well in the www.nomisweb.co.uk multiple urban centres immediate post-war era, but experienced
www.ippr.org/centreforcities city leadership 7
ranked as the fifteenth most deprived local Map 2.1 Birmingham and the West Midlands authority in the country, and both Sandwell (sixteenth) and Wolverhampton (thirty-fifth) also feature in the top fifty (ODPM, 2004b). Poor transport links and skills have been consistently identified in strategy documents as the key barriers presently facing the city- region and the West Midlands as a whole (West Midlands Joint Committee, 2005; AWM, 2004). For example, Birmingham is the largest European city without a metro system, and faces capacity bottlenecks at its airport and its principal railway station. The existing transport network fails to effectively connect people to jobs and employment massive economic decline in the 1970s and centres. 1980s with the collapse of the manufacturing base. Liverpool During the 1980s and 1990s, the city The city of Liverpool is substantially smaller responded to economic crisis by starting a than Birmingham, with an estimated comprehensive redevelopment of its city population of 444,500.10 It is the hub of the centre, fostering professional/business services Merseyside conurbation, which has jobs, and expanding the business tourism approximately 1.5 million residents, as well as sector. There has been a substantial a wider city-region that extends into West improvement in economic growth across the Lancashire, Cheshire and North Wales city-region in recent years, with gross value (Mersey Partnership, 2005a). added (GVA) growth outpacing that of the In economic terms, Liverpool city centre is West Midlands region as a whole (SURF, the principal driver and employment centre 2004). This has largely been led by the of the city-region, supplying some 230,000 of growth in high-value-added employment in the area’s 900,000 jobs (ibid).
Birmingham city centre. The decline of traditional manufacturing 10 Census mid year The city-region still faces substantial and port-related activity in Liverpool left the estimates, 2004, from socio-economic challenges. Birmingham is city searching for a new economic role in the www.nomisweb.co.uk
city leadership 8
Map 2.2 Liverpool and Merseyside Map 2.3 Barnsley and South Yorkshire
1970s and 1980s. Consistent population Merseyside also rank in the top fifty.11 This has decline was a hallmark not just of the city but made it difficult to build up the city-region’s of Merseyside as a whole. Recent efforts to economic base, and has left the area dependent revive the area’s economic fortunes have on regional, central and European Union centred on tourism, the city’s designation as Objective 1 funds for the lion’s share of European Capital of Culture for 2008, regeneration and economic development development of the city centre as a location for projects. business and services, and ‘strategic investment 11 This includes Knowsley (third), Halton (twenty areas’ across Merseyside. New public-sector Barnsley first), St Helens (thirty jobs have been the top driver of employment Barnsley is a metropolitan borough in South sixth) and the Wirral growth. Yorkshire with an urban core and a rural (forty eighth). 12 Census mid year Despite impressive strides in regeneration, hinterland. Its population is approximately 12 estimates, 2004, from Liverpool remains England’s most deprived 221,000. Uniquely, Barnsley is considered www.nomisweb.co.uk area, and four other local authorities on part of both the Leeds and Sheffield city-
www.ippr.org/centreforcities city leadership 9 regions as defined by the Northern Way area (Simpson and Lewis, 2003). (NWSG, 2004). Barnsley was chosen for this study for the Barnsley’s economy was severely damaged opportunity to examine the investment needs in the 1970s and 1980s by the collapse of the of large towns and small cities, as well as coal industry and the subsequent loss of their relationships with larger conurbations. thousands of jobs. It is the twenty-eighth most deprived local authority in England (ODPM, 2004b), and has struggled to find a Understanding the evidence base new economic role in the shadow of its more The next two chapters address the quantitative, successful neighbours, Sheffield and Leeds. qualitative and comparative evidence collected However, Barnsley is now attempting to over the course of our research. Chapter 3 deliver a much-publicised reinvention – and reviews the evidence on the economic merits of its political and business leaders are devolution, while Chapter 4 presents the key implementing an ambitious vision for messages of our primary research in regeneration focused on the town’s central Birmingham, Liverpool and Barnsley.
city leadership 11 3 the case for devolution
Introduction city-level autonomy in Britain – the most Drawing on international comparisons, centralised nation in the developed world – existing analysis and our own primary contrasts greatly with experiences in France, research, this chapter sets out the case for Germany, Spain and the US. Researchers and devolution of economic development government therefore started to ask if responsibilities to cities and city-regions. It is devolution could help boost city performance argued that cities would make a stronger in the UK (for example, Boddy and contribution to the national economy with Parkinson, 2004). more revenue-raising powers and spending Devolution became an important part of flexibilities. But devolution must be done at the Government’s public service reform the appropriate scale – and the evidence agenda when, in July 2003, the Chancellor of suggests this means empowered city-regions. the Exchequer announced the Devolved Decision Making Review to explore how best to achieve devolved delivery and responsive Policy context local and regional services in a way consistent When Labour came to power in 1997, it with equity and efficiency (HMT, 2004a, found regeneration and economic 2004b). development functions were controlled by a But Labour’s urban initiatives, starting ‘patchwork quilt’ of agencies, zones and with the 2000 White Paper (DTLR, 2000) quangos (Audit Commission, 1989). Reforms have complicated economic development of local government during the 1980s and policy-making. It remains the case that 1990s had left cities more fragmented and ‘Complex funding arrangements from a financially dependent than ever before. bewildering variety of sources result in ODPM-commissioned studies (Parkinson, excessive administrative costs and uncertainty 2003; Parkinson et al, 2004) have argued that about the sustainability of projects’ (Audit the UK cities are underperforming compared Commission, 2004). to their EU counterparts. They claim A change appears overdue. This chapter European cities’ greater control over revenue- examines the case for devolution of economic raising and expenditure are linked to stronger development responsibilities to cities and economic performance. Indeed, the lack of city-regions.
city leadership 12
Why cities? England’s largest urban areas devolution should take place. contain the highest concentrations of economic activity in the country (Simmie, 2001; Rice and Venables, 2004; Clark and International comparisons14 Hildreth, 2005). A growing base of research evidence suggests that strong city-regions are Cities in continental Europe and North key to improving wider regional performance America have a far wider degree of local and driving national economic growth autonomy than their counterparts in the UK. (SURF, 2004; SURF and CUPS, 2006; These cities can access a range of innovative HMT, 2004b; Parkinson, 2003; Parkinson et mechanisms to fund economic development al, 2004; Simmie, 2005; OECD, 2001). initiatives. They also have a greater degree of freedom when it comes to setting spending Why economic development? Our research has priorities. shown that it is lack of autonomy in the areas The evidence from France, for example, of physical regeneration, transport shows that financial instruments can be infrastructure and skills development that most deployed at the city-regional level to achieve constrains cities in their pursuit of growth. both service delivery and economic There would also be much value in assessing development goals. Grand Lyon is a good the case for devolution for other policy areas example of how much an empowered city- such as active labour market policies. region can achieve. An equivalent in Spain Cities are drivers of the national economy. would be Bilbao. With an exceptional level of Better economic development policies are autonomy, the city and its surrounding province what they need to fulfil their potential. So it have successfully re-invented themselves, is critical that they have the right level of following de-industrialisation.15 In Germany,
13 Many of these fiscal freedom to achieve their goals. too, sub-national governments have far more arguments are This chapter first reviews the level of spending freedom. In the US, city mayors have developed more fully in devolution in other countries. Second, it significant autonomy and financial powers, web annex 1. 14 See web annex 3 for a assesses arguments in favour of devolution which are conducive to policy innovation and longer appraisal of city and their applicability to economic strategic thinking (Travers, 2004b). spending and revenue development responsibilities.13 Third, it International evidence suggests that both raising powers in reviews cities’ existing powers to deliver over-centralisation and too much devolution France, Germany, Spain and the US. large-scale economic development projects. are bad for economic performance (Thiessen, 15 See web annex 6. Finally, it analyses the scale at which 2003). A balance is required. Intuitively, the
www.ippr.org/centreforcities city leadership 13 state of affairs in continental Europe and the that this was a key advantage of local US suggests England needs to move towards revenue-raising.16 greater power at the sub-national level to promote economic development. Centralist view: Tax collecting and policy- making at a national level deliver clear economies of scale. Central government can To devolve or not to devolve? develop expertise and apply lessons from one There are a number of pro-devolution city to another effectively. arguments, each countered by pro-centralist In some policy areas, the costs of devolution points. The evidence is imperfect, but (less efficient policymaking due to reduced strongly suggests a need for devolution. economies of scale) may outweigh the benefits (the application of local expertise) (Martinez- 1) Local expertise Vazquez and McNab, 2001). But in the field Devolutionist view: Devolution would allow of economic development, where a strong local expertise to be applied to local issues understanding of local issues is fundamental, (Cheshire and Magrini, 2002). With central this is rarely the case. control, the distance between the design and delivery of economic development 2) Internalising costs and benefits of policy policies means that decision-makers lack measures relevant local knowledge. City-level Devolutionist view: A key benefit of decisions should be taken by those who devolution is that it allows the costs and know and understand the city best, rather benefits of public services to be kept within than remote central government civil the same area (Oates, 1999; Fujita and servants. Each city has unique assets; a Thiesse, 2002). thorough understanding of those assets will Devolution can improve accountability. allow them to be put to best use. Who is responsible for what is more Furthermore, local decision-making can apparent. This allows voters at the ballot box be more effective in other ways, too. For to effectively reward politicians for strong example, proximity to agents can make local performance and punish them for poor fiscal authorities more efficient tax performance. Over time, this alone could collectors. Our work with the highly improve outcomes. autonomous provincial government of Secondly, devolution can ensure resources 16 See web annex 6 for Bilbao, the Diputacíon of Bizkaia, stressed are allocated to best reflect people’s tastes and more details.
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preferences. Desired levels of economic experimental. It allows them to devise and development activity vary from city to city. implement strategic plans in a way that Levels of expenditure should depend on how centralised public expenditure and decision- highly residents value economic development making make impossible (OECD, 2001). policies compared to other types of public expenditure, and the potential effectiveness of Centralist view: Within central government, such policies to make a difference to people’s there are concerns about the low level of lives. ability and capacity among decision-makers at Both of these are likely to vary from city to a local level. There are doubts that local leaders city. With appropriate devolution, cities have the ability to think strategically, or to would have the freedom to select a level of manage income and expenditure prudently. economic development expenditure best Such capacity concerns are linked to fears suited to their needs and their inhabitants’ over increased public sector spending. It is preferences. argued that the existing system allows Whitehall to maintain a hard budget Centralist view: As few public goods are purely constraint and a careful watch over local local by nature, local provision may fail to expenditure (Walker, 2002), and that internalise territorial spillover effects. Policies devolution can have a negative effect on can have impact beyond the political boundaries macroeconomic management objectives (see they are designed for ( Joumard and Kongsrud, Ter-Minassian, 1997; Tanzi, 1996). 2003). So a policy measure introduced using But a lack of capacity should be seen more devolved powers in one area could impact on as the result of the lack of power at the local another area, resulting in a democratic deficit. government level, rather than the cause of it. But this is why scale matters (Cheshire and Local government careers are unattractive to Gordon, 1998; Cheshire and Magrini, 2002). In very capable people, as proscribed powers the fields of regeneration and economic limit their ability to change outcomes. development, devolving power to the city- Strategic thinkers are unlikely to take up a region level would minimise spillover effects. job where no strategic thinking is involved. We return to this below. Through empowering local government, devolution will make it a more attractive 3) An impetus to strategic thinking career path for talented individuals. Devolutionist view: Devolution gives cities Concerns about public borrowing and the freedom to be innovative and budget constraints should not be seen as a
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Table 3.1 Spending flexibilities and limitations
Current spending flexibilities Limitations
General power of well-being z Powers effective across the UK since 2001 z New powers, but no new resources to fund them z Gives local authorities the ability to promote z Freedom limited by Secretary of State’s reserve social, economic and environmental well being of power to prevent specific actions their areas z Little evidence as yet ‘of any major effect of the changed powers on local economic development’ (ODPM, 2005a)
Local Area Agreements (LAAs) z Funding frameworks negotiated between central z As yet unproven government and local stakeholders z Primarily for service delivery expenditure, rather z Aim to simplify funding streams and increase than economic development expenditure flexibility to invest in local priorities z Limited coverage – not to be rolled out nationwide until 2007 z Exclude many capital streams z Freedom in expenditure constrained by resources
Local Enterprise Growth Initiative (LEGI) z First funding stream to flow through the z Complexity of negotiations can outweigh economic development ‘fourth block’ of LAAs positive impacts (see Chapter 4) z Fund of £300 million over three years z Extremely limited coverage z First successful bidders to expect funding from z Yet to be seen working in practice early 2006 z Requires huge effort for small financial gain z Local authorities will get significant discretion z Revenues of £2 million to £10 million per over the use of the fund (HMT, 2005) year per city highly unlikely to aid the funding of large scale economic development projects
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barrier to devolution. They simply mean that budgetary uncertainty; this is a critical barrier devolution has to be well executed – not for cities seeking to finance major economic ruled out. development projects. Whitehall has recognised that spending limitations are hampering cities’ ability to promote growth. The tools of economic development Currently, funding settlements are in English cities17 transitioning from a one-year to a three-year When it comes to economic development, cycle, which is intended to help local English cities have their hands tied. They authorities plan strategic expenditure better have some of the smallest local revenue- (ODPM, 2005d). raising powers in the developed world, and In recent years, local authorities have also face severe spending constraints (Owens, gained new powers, intended to increase 2003). Council tax – the only truly local tax – spending freedoms. These include a general raises only four per cent of the tax collected power of ‘well-being’ and Local Area in the UK, and this sum represents only 22 Agreements (LAAs). However, as Table 3.1 per cent of English local government indicates, these freedoms are very limited. spending ( Joumard and Kongsrud, 2003). England’s towns and cities are unable to use American cities, by contrast, raise 41 per cent spending flexibilities to drive economic of their spending through local taxes and development in the way Whitehall ministers charges (Katz, 2005), and French cities and claim. regions around 45 per cent (DGCL, 2005). The imbalance in central-local fiscal Current local revenue-raising powers relations has been highlighted recently by the Local spending powers are clearly limited. ODPM’s Balance of Funding Review Table 3.2 indicates that English cities have (ODPM, 2004a) and the Lyons Inquiry a wide range of fundraising tools, but their (Lyons, 2005). And there is a significant gap significance is generally small. between local powers of provision and powers With such limited revenue-raising tools,
17 See web annex 2 for a of taxation (Turok, 2005). Cities have been cities lack the freedom to fund large-scale detailed overview of granted some policy latitude – but lack the economic development projects. This spending, borrowing resources to make it work. contrasts with the situation in continental and revenue raising Europe and North America, where powers powers held by cities, regions and central Current spending freedoms and resources are more evenly distributed government in Britain. English local authorities face a high level of across government scales.
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Table 3.2 Revenue raising tools and limitations
Current revenue-raising tool Limitations
Council tax z Local authorities have discretion to vary council z Revenues are under immense pressure tax levels z Increases subject to capping by ODPM
Prudential borrowing
z Since 2004, local authorities can use the Public z Borrowing is restricted by the Prudential Code, Works Loan Board or borrow on the capital which sets guidelines for ‘reasonable and markets prudent’ borrowing levels (CIPFA, 2003b) z Local authorities’ relatively small revenue streams limit the amount they can borrow and interest charges could lead to capping
User charges/trading powers z Significant income source: charging – for z No discernible impact as yet example, rent for council properties, charges z Unclear whether new trading power will add on goods and services – accounted for 12 per significantly to local authority revenues (ODPM cent of local authority income in 2001 (Travers 2003, 2005c) and Esposito, 2004) z Local Government Act 2003 gave local authorities power to trade in activities related to their core functions, and to use surpluses as seen fit locally
Capital disposals z Local authorities can sell land or capital assets z Many places, including some big cities, have to raise economic development finance few assets to sell
cont. overleaf
city leadership 18 table 3.2 cont. Current revenue-raising tool Limitations
Section 106 agreements
z S106 agreements give local authorities the z Inefficient levy; involves costly negotiation chance to capture some of the increase in land z Considered unjust – equivalent outcomes for values created by the granting of planning different developers or from different authorities permissions are far from guaranteed z An important financial lever z Can become a barrier to private sector z Used to fund a wide array of development development – the British Property Foundation related costs including transport infrastructure, argues for the use of standardised local environment remediation, community needs development tariffs and a drastic reduction in and affordable housing the use of S106 (BPF, 2005) z Likely to be constrained by the proposed Planning Gain Supplement (HMT et al, 2005a; Maxwell and Vigor, 2005)
Local Area Business Growth Incentive (LABGI) z Allows local authorities to keep 70p in the z Unpredictable revenue source pound from relative growth in business rate z Revenue to be treated as a windfall gain by income local authorities, and is therefore unsuitable for z Local authorities free to decide how to spend strategic investments the money z Complicated rules and regulations mean LABGI z Reintroduces revenue link between local is difficult to use authorities and local businesses
Business Improvement Districts (BIDs) z Introduced in 2003 to allow local authorities, z Financial resources generated by BIDs are with the assent of businesses in targeted areas, usually extremely small to levy a supplement on business tenants for z Success dependent on the size and an initial period of five years engagement of local business communities z Potential revenue stream to market or provide public realm improvements in city centres and key business concentrations
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Where are the more important means that England lacks an elected and economic development tools held? accountable layer of sub-national government The Labour Government has taken steps to with significant powers to drive forward redeploy economic development tools – but has economic development. England needs concentrated them at the regional level. First, greater devolution if its cities are to fulfil Regional Development Agencies (RDAs) were their economic potential. created and given responsibility for regional economic and innovation strategies. They are unelected bodies, accountable primarily to How to devolve: scale matters central government. And second, Regional But we are not simply making a case for Funding Allocations for transport, housing and devolution – it has to be the right type of regeneration have been established. devolution. As has been mentioned above, Total regional budgets outside London are scale matters. Urban areas perform better expected to reach £4.34 billion by 2007/08 when administrative and economic areas (HMT et al, 2005b). RDAs have direct match up (Cheshire and Gordon, 1998; control of the economic development and Cheshire and Magrini, 2002; Marshall, regeneration pot, while Government Offices 2005). for the Regions (with partnership boards) run Aligning economic and political housing and transport allocations. These boundaries suggests that devolution will resources enable RDAs and Government require different models for different places. Offices to control substantial economic Where local authority boundaries cover a development funding, much of which is functioning economic area, devolution should deployed in cities. be to the local authority level. But in Britain’s Other unelected bodies with biggest urban areas, local authority responsibilities for economic development boundaries have little relation to economic include Learning and Skills Councils, which flows. Here, city-regional governance spent over £8 billion in 2003/04 (LSC, arrangements are required to maximise the 2005), and English Partnerships, the national effectiveness of devolution. regeneration agency, whose 2003/04 City-regions and metropolitan governance expenditure topped £485 million (English have been the focus of a lot of attention in Partnerships, 2004). recent years (OECD, 2001; Heinelt and These budgets are clearly significant – but Kuebler, 2005). Many observers argue that city they are all held by unelected bodies. This governance needs to be widened to cover larger
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geographical areas in order to be more effective. can generate economic success by determining Their conclusions have been bolstered by a and investing in local priorities. recent comparative OECD study, which argues that ‘the absence of a close match between local benefits and costs may result in a sub-optimal Conclusion provision of public services and goods’ The case for the devolution of economic ( Joumard and Kongsrud, 2003). development responsibilities to a lower tier of Generous boundaries that capture a large government is strong. And it is clear that proportion of an area’s economic activity city-regions are the most appropriate scale for would allow cities to implement economic radical financial devolution. development initiatives, plan effectively, and, Britain is one of the most centralised above all, to develop the capacity to enable nations in the developed world. Cities in growth (see, for example, Cheshire and particular are relatively powerless – they do not Magrini, 2002). Since city governments have at their disposal the spending or revenue- deliver public goods that are crucial to raising powers necessary for them to drive their success, ‘when there are several public goods, economies forward. And it is cities and city- the relevant decision-making entities should regions that power should be devolved to. be consolidated and incorporated into areas Devolution of economic development sufficiently large to allow them to internalise responsibilities offers opportunities to boost the effects of local public policies as much as city performance (and therefore national possible’ (Fujita and Thisse, 2002). performance). But it has to be done in the It is a city-regional approach that allows right way. Scale matters, and efficient and local public goods (such as economic accountable governance structures have to be development) to be provided at a scale that put in place. These requirements will be allows their impact to be contained (Oates, different in different places but will involve 1999). Wide-ranging powers at the Diputacíon city-regions in Britain’s largest urban areas. (provincial) level – which neatly matches a Devolution to cities should be from both functioning city-regional economy – have been central government and regional bodies. Placing crucial to Bilbao’s successful regeneration.18 powers at the most appropriate level will not City-regions with high levels of spending only correct the over-centralisation of fiscal flexibility are a feature of French governance powers: it will also rationalise the fragmented, arrangements. Places such as Lyons are clear disjointed and dysfunctional landscape of urban 18 See web annex 6. examples of how effective city-regional entities governance we now see in England.
www.ippr.org/centreforcities city leadership 21 4 money, power, freedom: the barriers to success
Introduction This chapter summarises stakeholder There is a strong case for financial opinions from Birmingham, Liverpool and devolution, especially to the city-regional Barnsley; extensive national consultation; and level. But what form should devolution case studies of selected regeneration projects, take? which highlight barriers to investment. Our primary research set out to answer this question. We found that cities have distinctive concerns and needs, reflecting National consultation variations in size, political history, financial Interviews with ministers, Whitehall civil position and administrative capacity. This servants and business interests yielded a variety corroborates recent research (Simmie, 2005) of messages – many of them surprisingly conducted for the State of the Cities Report favourable towards greater financial devolution.19 (forthcoming). A one-size-fits-all programme of devolution will simply not Interviews with central government officials work. Under-utilisation of existing powers Four key messages emerged from our z Cities are not doing enough to take up fieldwork: existing powers, such as well-being and prudential borrowing z Control over existing public spending is z Poor take-up prevents further devolution the biggest problem facing English cities – although it may be due to poor policy and towns design in Whitehall z There is strong interest in new revenue- z Cities need to do more to ‘bend’ raising powers in a few of the largest mainstream funding to their benefit cities – but not all of them z Large cities are too conservative and z City-regional working has wide rhetorical dependent on the centre. support, but requires political and financial incentives in order to proceed Cities need to make a case for control 19 This phase of consultation included z Capacity and skills are still below par in z Cities need to explain why they want approximately 40 urban local authorities. greater financial flexibility interviews.
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z Pragmatic moves towards greater local z Mixed views on whether businesses control can be accomplished now – should pay more tax in order to achieve using vehicles such as Local Area these priorities Agreements z Strong interest in hypothecation of z However, radical change to the financial revenue to strategic priorities tool-kit is unlikely before 2010 z Interest in further expansion of Business z Cities need good leaders who can be Improvement Districts and other trusted with more powers mechanisms that increase business input z Strong interest in financial incentives in for key spending decisions. return for good performance z England’s cities should see London as a Interviews with major property developers ‘trailblazer’ for devolution Cities need financial flexibility… z Relationship between cities and RDAs z Stronger tax-and-spend powers would needs to be rethought and reformed. help cities to pump-prime investment, spread risk, and maintain the public Interviews with national business interests realm Cities need leaders that can overcome z There are too many different urban- fragmentation policy initiatives, and there is too much z Cities need strategic focus and stronger bureaucracy surrounding them political leadership z Complexity enhances investment risk and z Engaging with cities is currently too uncertainty. time-consuming, problematic and slow z High level of ‘partnership fatigue’ among …And better local governance businesses z Elected mayors would improve decision- z Cities should have one leader with making, plan strategically, and catalyse discretion and power action z Fragmented institutions and agencies at z Local politicians and officers need greater local and regional level are a key barrier capacity and sharper skills to deliver to business participation and investment. large-scale regeneration z Investment could be increased by Investment and finance priorities reducing delays – and by bringing more z Transport infrastructure and skills are the people with private-sector experience into top investment priorities in cities city government.
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Messages from case study cities regions. There was substantial tension Primary research in Birmingham, Liverpool between the Regional Economic Strategy and and Barnsley was conducted during the Midlands Way (led by AWM) and the city- second half of 2005. Council leaders (one region proposals negotiated by the seven local Conservative, one Liberal Democrat, one authorities of the former West Midlands Labour) were interviewed in each of the three County. local authorities, alongside public officials Strategic investment priorities identified by and private-sector players from across each city-regional actors included: city-region. The findings strongly confirmed the need for variable devolution, with some z Transport infrastructure (New Street areas better prepared for change than others. Station, Birmingham International Airport, expansion of the Midland Metro, road improvements) Birmingham z Overcoming the ‘skills gap’ and Public-sector stakeholders promoting employment Funding streams and institutions are poorly aligned z Development of employment areas, for Local authority officers across the example, Eastside (see Case Study 1) Birmingham city-region expressed strong z Business tourism: renewal/expansion of concerns about the lack of integration the National Exhibition Centre in between local, regional and national Solihull. objectives – and the funding streams that support them. Stakeholders underlined that nearly all of Local authorities cited a poor relationship these strategic priorities – save the NEC with RDA Advantage West Midlands refurbishment – were out of reach without (AWM). AWM was accused of being financial assistance from Whitehall. They ‘extremely risk-averse’20 and bureaucratic, and argued that existing financial tools were being its investment decisions were described as exploited, and that more flexibility was slow, disjointed and poorly aligned with local needed to achieve results. priorities. As a result, local authorities tended to look to ‘easier’ funding sources before Strong interest in new financial powers 20 Stakeholder interview, approaching AWM. Birmingham has used prudential senior local authority AWM interviewees were critical of borrowing extensively to improve key assets, officer, Birmingham, 4 May 2005. Birmingham City Council and of city- such as the National Exhibition Centre
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Case study 1: Birmingham Eastside
Eastside is one of Birmingham City Council’s top regeneration initiatives. It expands the city centre, beginning with the demolition of the Inner Ring Road at Masshouse Circus. Projections suggest that the area could support up to £6 billion of investment, including new employment areas and public amenities.
The initiative to redevelop Eastside was launched as an informal public private partnership, led by Birmingham City Council, in 1999. The demolition and replacement of Masshouse Circus was completed in 2003, using £23 million from local resources, the West Midlands Local Transport Plan, and EU Objective 2.
Despite ‘breaking the concrete collar’ around the city centre, Eastside has not yet taken off. Birmingham City Council lacks the revenue streams needed to pump prime high levels of additional development. AWM participation has been hampered by Treasury ‘write down’ rules as well as the RDA’s own performance constraints, causing delays and even more complex financial arrangements.
Key lessons
z Spending constraints: with greater spending flexibility, the public sector could ‘do more’ to lever in/accelerate private investment in Eastside.
z Fragmentation: problems securing EU, RDA, DfT and local financing illustrate incompatible funding pots, objectives, accounting rules, and floor targets.
z Leadership: political instability and shifts in party control have led to concerns that investment in Eastside has slowed.
Potential solutions
z Greater spending flexibility, and control of regeneration funding at city regional level, would help focus public investment in Eastside.
z Stronger revenue raising powers could help to generate a pool of revenue to pump prime greater private investment.
These solutions will be explored further in Chapter 5, which proposes the devolution of economic development powers to the city regional level.
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(BCC, 2005a, 2005b). However, the design that local strategic priorities – the of the prudential framework has inhibited replacement of New Street Station, improved large-scale use in other parts of the city- transport links, and upgrades to key business- region – where small revenue streams have tourism infrastructure – were undermined by stopped local authorities from borrowing to central government departments, RDAs and invest. other agencies. The city-region needed more Interest in additional local revenue-raising local discretion over spending in order to powers was pronounced within the local invest in its key priorities, as well as the public sector. Partial control over business ability to use the uplift generated to invest rates, additional Business Improvement further. Districts (BIDs), and new value-capture mechanisms were mentioned as possible ways City-regional working requires incentives to boost revenue streams. Financial skills Business stakeholders strongly supported the need to be developed alongside new revenue- concept of devolution to the city-regional raising tools, to ensure take-up and use. level. They argued that local authorities in the area were not acting strategically to City-region: progress, but tensions remain promote economic development, but felt that Interviewees other than AWM were positive strong cross-boundary working would depend about the emerging city-regional agenda. on ‘fiscal blackmail’ by central government. However, Birmingham is seen as overly Two splits were identified: one between dominant by other local authorities, some of Birmingham and the other metropolitan whom would not recognise the ‘Greater councils, and another between the seven Birmingham’ name for the wider city-region. metropolitan councils and their hinterland. Many felt that a sustainable and dynamic city-region required Whitehall guidance to Conditional support for new local complement existing bottom-up efforts. revenue-raising powers Business interviewees in Birmingham were Business views21 receptive to the concept of stronger local Centralisation is undermining the city’s growth revenue-raising powers. Changes to business There was a near-unanimous feeling that taxation were regarded as a possibility, 21 Collected from private centralised policy and funding structures were provided that funds were clearly hypothecated sector interviewees and a Business Stakeholder holding back economic growth in greater to strategic economic priorities such as Group, Birmingham, 18 Birmingham. Frustration centred on the fact transport, and that business had a clear role in August 2005.
city leadership 27 prioritising and deploying these funds. with the right skills to lead the city-region if Frustrations over the lack of local control of a mayoral model were selected. existing funding streams, coupled with the positive experience of the Broad Street BID to date, were the principal motivations for this. Liverpool Public-sector stakeholders The city and city-region need stronger Lack of co-ordinated funding political leadership The lack of co-ordinated funding streams for Many business stakeholders expressed interest regeneration, infrastructure and economic in the concept of a directly elected mayor development was also the chief concern in with the power to develop strategic vision Liverpool. The area had done well out of and clarity, negotiate with central European, national and regional funding government, and produce results on key pots, but there was a great deal of concern infrastructure and skills priorities. that Liverpool and Merseyside had developed Council leaders in the city-region were an unsustainable ‘grant mentality’.22 The end thought to be parochial, and lacking the of EU Objective 1 and Single Regeneration strategic perspective needed to drive forward Budget funding programmes in 2006 was a the metropolitan economy. For this reason, significant worry. interviewees expressed a clear desire for stronger political leadership. However, they Tight local finances questioned whether there were candidates Shifting grant regimes were seen as a threat to the area’s relatively weak financial resource 22 One Liverpool official noted that ‘people only The Birmingham city region base. Tight revenue constraints across want [regeneration Merseyside limited local authorities’ ability to z One of England’s two largest city regions, with projects] if they are use fiscal flexibilities to best advantage: free,’ given the city's Manchester slim resource base. z Strong business interest in financial devolution Liverpool’s capacity to raise capital funding Stakeholder interview, (spending, revenue raising) senior official, Liverpool is constrained by a relatively weak asset base. City Council, 21 z Locally driven proposals to establish city The city has to be very good at marshalling September 2005. regional body and pool funds and attracting funds from outside…23 23 Stakeholder interview, Urban Regeneration Company project We will recommend Birmingham as a pilot area for Liverpool City Council had one large manager, Liverpool, 19 city regional devolution – see Chapter 5 for more. prudential borrowing scheme on its books, August 2005.
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Case study 2: Liverpool Kings Waterfront Kings Waterfront is a large scale mixed use development scheme, now moving ahead on a site that has been under utilised for over two decades. A public sector vehicle was deemed necessary to begin regeneration, after proposals for commercial and retail led development failed to materialise during the 1990s. The current development programme is based on the Strategic Regeneration Framework for the city centre, which was produced by urban regeneration company Liverpool Vision (2000).
The £145 million core scheme will provide Liverpool with a new arena and convention centre of international quality, plus waterside public realm improvements. It will have city regional economic impact: 2,700 new jobs are expected, plus £21 million in English Partnerships, EDAW additional visitor spend over the first three years (Liverpool Vision, 2004).
The scheme is being led by Liverpool Vision, in partnership with English Partnerships (who are contributing the land and £68 million), the Northwest Development Agency (NWDA, £15 million), Liverpool City Council (£12 million) and the Merseyside EU Objective 1 programme (£50 million). Early phases of private investment include nearly 500 residential units and a hotel development.
Lessons
z Complex funding mix, with too little local control: Funding from the EU and central government lies at the heart of the mix.
z Complex spending constraints: Whitehall approvals, conflicting objectives and ‘write down’ issues have threatened project viability.
z Take up of powers: Liverpool was unable to use existing powers to provide more finance for the project.
z Capacity: Interviewees stated that Liverpool City Council would have a hard time tackling a project of this size without the involvement of the other key partners.
Potential solutions
z Greater spending flexibility at the local authority level would facilitate wider use of Liverpool City Council’s existing economic development powers.
z Better capacity building initiatives that deliver skill sets specific to urban economic development. Liverpool City Council has driven forward a number of major city centre regeneration schemes in recent years, including the massive £920 million Paradise Street development, but some interviewees felt that the skills base could be further improved.
These solutions will be developed in further detail in Chapter 6.
www.ippr.org/centreforcities city leadership 29 contracted to pay for its share of the Kings that investment emphasis on the city-centre Waterfront development (see Case Study 2). was needed to create an economic driver with However, the city was unable to undertake ‘critical mass’ for the wider city-region. much further borrowing because it lacked the There was substantial concern over the revenue streams needed to service the capacity of councillors and officers, both in resulting debt. The take-up of prudential Liverpool and across the city-region. Some borrowing in other parts of Merseyside was stakeholders feared that capacity issues, hampered by similar constraints. coupled with well-publicised political feuds, could undermine investor confidence. Despite Little appetite for new revenue-raising powers this, there was praise for (then) Liverpool Given Liverpool’s narrow financial base, City Council leader Mike Storey and chief public-sector stakeholders did not express executive David Henshaw for their work on enthusiasm for new revenue-raising powers. city-centre regeneration and the Capital of There was a strong sense that the local tax Culture bid. base was too fragile (and too small) to support substantial new taxation or City-region: voluntary co-operation but borrowing, although there was interest in political tension small discretionary taxes, such as hotel taxes. City-regional co-operation was felt to be developing steadily, through existing joint Capacity concerns authorities, networks, and the business-led Public-sector stakeholders outside Liverpool Mersey Partnership. However, we detected City Council were concerned that the council political and competitive tensions between was trying to do too many projects at once, Liverpool and other local authorities, and a and that it had created too many partnerships sense that deeper co-operation would be and organisations to manage them. difficult at this stage. Additionally, there was concern that local and There was also concern that the boundaries regional resources were being concentrated on of Merseyside did not accurately reflect local city-centre priorities (Kings Waterfront, transport and labour markets, which spilled Paradise Street) at the expense of other parts beyond Merseyside into Cheshire, North of the city and city-region. The stalled Wales and the fringes of Greater Manchester. Merseytram scheme and the slow-moving Local authorities were working to address redevelopment of Edge Lane were cited as this problem, notably in the area of skills and examples. Liverpool City Council responded employment. However, there was no appetite
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for local government reorganisation or broad- Liverpool’s recovery, though the BID was based structural changes among interviewees in endorsed in a second vote in September the city-region. 2005. The uncertain relationship between the The fragmented governance of economic Northern Way Growth Strategy, the NWDA development in the city-region was a key source Regional Economic Strategy, sub-regional of confusion. Business interviewees disliked partnerships, the City-Regional Development current levels of fiscal centralisation, and were Plan (Mersey Partnership, 2005b) and local interested in devolving spending to authority economic development and capital Merseyside’s local authorities. The existence of strategies was brought up repeatedly. Many ‘too many initiatives with separate funding pots argued there were too many public-sector and audit trails’, with little relevance to local strategies, at too many levels, with too little real priorities, was roundly criticised. Merseyside focus. had too many partnerships, too much bureaucracy, and too many arms’-length Business views24 regeneration organisations. Opposition to new local revenue-raising powers Trust is a central issue for businesses in Lack of clarity over the city-regional agenda Liverpool. The legacy of the militant era of the There was also uncertainty over the city- 1980s makes businesses highly sceptical of regional agenda for Merseyside, and the roles Liverpool City Council and its ability to deliver. played by local authorities, the NWDA and Accordingly, there was no support for central government. The voluntary Mersey significant new revenue-raising powers. Given Partnership approach to cross-boundary the city’s narrow economic base, business working was cited as a positive factor. However, taxation already raises more than the council tax there was no agreement on how that in Liverpool. Congestion charging was opposed partnership might be deepened, and antipathy on the premise that it would hurt Merseyside’s to formal structural change. fragile economic recovery. Infighting within Liverpool City Council
24 Collected through However, there was support for more local was seen as a threat to the economic progress private sector control of existing tax revenues, as well as a of the city-region. Stakeholders felt that stakeholder interviews small hotel tax. The failure to approve a city- Liverpool had to play a leadership role for the and a Business Stakeholder Group, centre BID at the first ballot was thought to area, and that the poor tone of politics in the Liverpool, 19 August show the ambivalence of local businesses city over the past year was preventing this 2005. toward additional taxation at this stage of from happening.
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Liverpool and Merseyside resources needed to deliver projects on such a z Economic recovery moving ahead, but still fragile large scale. Delivery was the principal focus of z Political uncertainty within the city and the wider ongoing development efforts, with ‘cranes in the city region sky by 2006’ an overwhelming imperative. z Mixed feelings within the business community on devolution LAA frustrations Barnsley is a pilot Local Area Agreement For these reasons, we do not believe the Liverpool (LAA) authority, with £44.5 million of non- city region is currently ready for radical devolution – mainstream expenditure aligned and pooled but it does need more freedoms and flexibilities. over three blocks (ONE Barnsley, 2005). While Chapter 6 proposes an interim route forward. stakeholders expressed support for the principles behind LAAs, they were frustrated Barnsley by progress to date. One noted that ‘the Public sector stakeholders reporting regimes that the LAA was supposed Strong leadership has been key to replace are either still there or are more Barnsley’s key objective was to develop a new invasive than before’,25 while a second called the economic role, following the complete shutdown LAA ‘another set of rules to shackle us with’.26 of the mining industry in the town during the Additionally, the funding streams included in 1980s and 1990s. Leadership was seen by most the LAA were seen as a relatively small portion interviewees as the lynchpin of the town’s efforts of the overall borough budget. The flexibilities to accomplish this goal. Council leader Steve offered by the LAA were being outweighed by Houghton and key officers were widely praised the complexity of the negotiations. for their work in developing and driving the Interviewees underlined the fact ‘Remaking Barnsley’ strategy. that discussion around the Fourth Block However, there was concern that council remained in its infancy in both the council politics could prevent delivery by undermining and the Local Strategic Partnership. the confidence of the town’s investment Stakeholders were still trying to define what partners. There was a sense that council leaders the block meant for Barnsley, and how LEGI needed more time and more stability to deliver would fit in. In general terms, LEGI was not 25 Stakeholder interview, on regeneration priorities. prominent in local thinking or decision- director, Barnsley MBC, Barnsley’s economic development agenda was making, beyond an awareness that an 13 September 2005. 26 Stakeholder interview, described as ‘transformational’ and ‘ambitious’, application would need to be made to director, Barnsley MBC, but interviewees were very concerned about the ODPM in due course. 13 September 2005.
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New flexibilities helpful – but not enough to drive RDA Yorkshire Forward on the Barnsley change Markets project (see Case Study 3, opposite) Interviewees described Barnsley as a ‘historically was cited as critical to the town’s drive to low-spending authority’, but expressed develop a new economic role. frustration with the gap between the new power of well-being and the lack of financial resources Relating to larger cities to put that power into practice. Barnsley interviewees argued that they were Barnsley MBC had used prudential working hard to relate economic development borrowing powers more than similar-sized projects to emerging city-regional strategies councils. Stakeholders welcomed the new based around Leeds and Sheffield. Both public- flexibility afforded by the borrowing powers, but and private-sector stakeholders argued that stated that revenue constraints prevented their Barnsley’s short-term economic role was as a use for large-scale regeneration or infrastructure housing and commuter town for the two larger projects. Since the town lacked the revenue cities. In the medium to long term, they streams necessary to pump-prime large believed that Barnsley could develop a new developments, the borough was still dependent economic base around services and on regional, national and EU funding streams office/manufacturing overspill from elsewhere for the vast majority of regeneration and in Yorkshire. infrastructure investment. However, there was a strong feeling that Leeds and Sheffield were not doing enough to Little interest in additional revenue-raising powers engage the towns around them. This was Despite the clear funding gap, there was little echoed by public-sector interviewees from interest in additional revenue-raising powers outside the borough, who stated that there were because of the fragile state of the local tax base. serious divisions between the core cities and One interviewee noted that ‘you need surrounding areas, especially around areas like something to tax to introduce new levers’, and transport. 27 Stakeholder interview, that more power over existing funding streams politician, Barnsley 28 MBC, 24 May 2005. and programmes was more important to Business views 28 Collected from private tackling the town’s two top priorities: Need for a stronger policy focus on towns sector stakeholder joblessness and town-centre regeneration.27 There was a strong feeling that public policy interviews and a Business Stakeholder did not adequately address the issues faced by Group, Barnsley, 14 Strong council–RDA relationship seen as a model ex-industrial towns, and confusion over the way September 2005. The council’s close working relationship with that funding is distributed between various
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Case study 3: Barnsley Markets
The Markets project is the town centre flagship of the Remaking Barnsley initiative. A shopping centre, market hall, apartments and parking facilities are planned.
The total cost of the Markets project will exceed £222 million, of which £54 million is public sector pump priming. Barnsley MBC, like most councils of its size, lacks the financial resources to pump prime a project of this size using local resources. Yorkshire Forward committed £34 million towards site assembly, plus skills and expertise through its Urban Renaissance programme. Yorkshire Forward’s willingness to take a significant financial risk was critical to unlocking large private commitments to Barnsley’s economy.
Detailed financing and planning negotiations are now being undertaken by the 1249 Regeneration Partnership, including Ashcroft Estates, Wilson Bowden, Barnsley MBC and Yorkshire Forward. A start on site is expected in 2007.
Lessons
z Joint working between towns and RDAs can pay off. Joined up public sector intervention can help to reduce risk, market regeneration opportunities, and get private investors interested in marginal areas.
z Fiscal constraints limit public sector investment. Treasury ‘write down’ rules constrain the RDA investment needed to bring private sector players to the table (only overcome here by Barnsley’s ability to convince Yorkshire Forward to shoulder a high level of risk).
z Leadership. Consistent political and managerial leadership is critical to keeping a project of this scale on track. Private sector partners said the level of commitment in the town won them over.
Potential solutions
z More financial flexibility, using the Local Area Agreement as a vehicle to devolve control of more regeneration and capital funding.
z Mechanisms to help RDAs and towns work together to draw in transformative private investment, as this best practice example shows.
These ideas will be discussed further in Chapter 6.
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levels of government. Businesses also stated that Innovative approaches to local procurement and bigger cities were not doing enough to engage tendering were needed to provide a short-term with Barnsley and similar towns. economic boost to small businesses. Business interviewees supported the No additional local revenue-raising powers personal leadership of council leader Stephen Though there was a strong desire for more Houghton. However, there was a great deal devolved and accountable public spending, of concern that short-term political business representatives felt that there was no considerations within the council sometimes scope for additional revenue-raising powers in a trumped strategic decision-making. town with a small and fragile business base. ‘Entrepreneurial’ leadership in local Adequate public money was already present – government at both officer and political level but there was not enough local control or was thought to be lacking, and was needed discretion to make it work well. for the town to communicate a distinct offer.
Strong leadership, but more communication needed Control over regeneration spending: The ‘Remaking Barnsley’ plan for town centre a key barrier to success regeneration was lauded, but there was concern that the council needed to communicate more It never ceases to amaze me that projects do with businesses to see the plans through. happen, given the cocktail of funds and systems involved. [However] you can’t cut the Barnsley cloth according to the money that you have – z Making Local Area Agreement work is a key because you don’t know whether you have it!29 priority
z Being on the periphery of two city regions is an We have to beg, borrow and steal from opportunity and a challenge wherever we can to get the necessary 30 z How can it use this position to develop a new regeneration funding. 29 Stakeholder interview, economic role? politician, Liverpool City The key finding of our primary research in Council, 2 September Barnsley, like many big towns/small cities, needs Birmingham, Liverpool and Barnsley was 2005. that lack of local control over existing 30 Stakeholder interview, incremental devolution, and a stronger LAA, to politician, Barnsley build a new economic base (see Chapter 6). regeneration spending is the biggest problem MBC, 24 May 2005. facing cities and towns.
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Figure 4.1 Regeneration funding in Liverpool
DFES DFT ODPM Treasury Home Office • EAZ x 6 DWP • Surestart x 10 (to be Local Transport Plan • NRF • Capital • Safer Stronger • Action Team for Communities replaced by Children’s Homezones HMRI Modernisation Centres March 2006) Jobs • Drug Intervention • SRB • LEGI • Children’s Fund •Employment Action • Learning in Deprived • LABGI Programme • Special Education Needs Zones NWDA Communities • Young Persons and Disability • Welfare to Work • Single Community Partnership Grant • Aim Higher Programme • Single Pot Programme •Business Crime • Extended Schools • Mersey Wide • Local Government Direct • Building Schools for the Programmes Settlement future New Approaches •LAAs • Neighbourhood Nurseries Mersey Waterfront • LSPA 1 & 2 • Land Reclamation • Pathfinder –Low Programme DCMS Demand • Liverpool Economic • New Deal for Programme Communities • Capital of Culture (Kensington) Lottery • SSC • UNESCO World • Heritage Lottery Neighbourhood Heritage Site Big Lottery element • Youth Music Zones •Arts Council of England English • Sports England Partnerships Liverpool • Sports Action Zones •Positive Futures x 2
Urban Regeneration Companies 30+ Area Based Initiatives • Liverpool Vision <£300 million p.a. budget • Liverpool Land Development Company European Union • ESF •ERDF • Interreg • URBACT • Non – Structural DTI • Other Trans national • Greater Merseyside Enterprise D of H English Heritage • Entrepreneur Commission • Health Action Zone •Townscape • City Growth Strategy • Healthy Schools Heritage Initiative Programme • Surestart plus Source: Liverpool City Council
Resources are divided into too many pots, between public-sector bodies, and low investor and lack of direct control prevents cities and confidence are the symptoms of this problem. towns from regenerating town centres, And the uncertainty this generates leads private promoting business growth and improving investors to walk away from some major transport networks. As one interviewee economic development projects. noted: ‘Cities would feel more confident Take Liverpool as an example. The about planning, and developing approaches to complexity of economic development funding economic development, if funding were more in the city is immense. 31 Stakeholder interview, senior local authority 31 localised…’ As Figure 4.1 shows, dozens of departments officer, Birmingham, Fragmented funding pots, poor alignment and agencies are involved in decisions that 7 October 2005.
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Figure 4.2 The ‘catch 22’ of economic development in cities
There is a mismatch between regeneration (long timescales, significant resource commitment) and local financial powers (short timescales, limited resources).32
Cities therefore depend on money from other public bodies for economic development and infrastructure projects.
This means funding is fragmented and complex.
32 The Government has Alignment is a problem, Local Area Agreements aren’t yet committed to stretching slow because different partners have different economic helping – though there is wide local funding settlements over development three years, rather than objectives, restrictions, and targets. support for the principles behind them. one (ODPM, 2005d) but regeneration timescales are usually far longer. City Funding streams don’t target the appropriate geographical areas. Regions are too big, and local governments in Spain and France have five and six authorities are too small, in many areas. year settlements respectively, with far less central government oversight of spending decisions. This permits could be taken more efficiently and effectively development resources is still perceived as a more strategic if funding were rationalised and devolved. critical barrier to growth. regeneration investment These problems are not new. Government For England’s cities to perform better, public (Green and Marshall, 2005). There is a has recognised the problem of ‘funding silos’ resources supporting economic development precedent for longer and the difficulty cities and towns face when projects need to be rationalised, pooled and financial settlements in the seeking to assemble resources for economic devolved wherever possible. If control is the UK, such as Transport for London's exceptional five development (LGA, 2005b; ODPM, 2005b, problem, and fragmentation the symptom – year settlement (DfT, 2005d, 2004a; HMT, 2004a, 2004b; HMT then devolution is the cure. 2004). But most local and ODPM, 2003). Despite moves to The next two chapters develop this idea settlements remain annual co-ordinate and align central and regional more fully – proposing mechanisms for and align poorly with economic development funding in recent years, our city research devolution to selected city-regions (Chapter 5) needs. found that control over economic and to all urban areas (Chapter 6).
www.ippr.org/centreforcities city leadership 37 5 devolving to city regions: a new approach
Introduction Chapter 6 sets out policy recommendations The next two chapters outline policy for all urban areas outside the pilot city-regions. recommendations designed to tackle the barriers and obstacles identified in our primary research. Chapter 5 lays out proposals for devolution City-regions: from theory to reality to the Birmingham and Manchester city- Our primary research uncovered a great deal regions, including: of uncertainty about city-regions at the local, regional and national levels. Stakeholders still z City-Region Contracts: financial have a hazy understanding of what they are, frameworks for economic development leading to disagreement about what they that devolve over £600 million in annual should actually do. regeneration, transport and skills spending to each city-region City-regions are interesting – but we have z A city-regional revenue-raising power: the no idea how the Government wants them power to levy a small Supplementary to fit in with RDAs.33 Business Rate, delivering £35 million per year toward strategic infrastructure (for The city-regional agenda still lacks example, trams, rail services and airports) credibility. It’s unclear what it’s going to z Fiscal incentives from Whitehall, creating a result in – influence? Policy instruments?34 City-Region Growth Incentive that promotes cross-boundary working and A number of obstacles stand in the way of business growth meaningful devolution to city-regions. z An agreed Whitehall framework that gives 33 Stakeholder interview, z city-regions the financial and political First, a clear definition of a political city- senior RDA official, West support they need to succeed. region is needed. This chapter outlines a Midlands, 4 August definition that takes in political realities, 2005. We argue that directly elected city-region mayors economic flows and the need for a 34 Stakeholder interview, senior officer, Liverpool offer the best option to deliver the type of flexible, dynamic model. City Council, 11 May radical financial devolution proposed here. z Second, we need clear consensus on what 2005.
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city-regions are meant to do. City-regions new framework for incentivising the can be used to promote democratic development of city-regional partnership devolution, improve service delivery and and governance structures, through enhance economic performance (SURF interdepartmental single pot mechanisms and CUPS, 2006). All of these are that can only be drawn on if there is clear important – but we argue for an consensus on priorities across districts… economic performance focus. (SURF, 2004). z Third, we need a formal framework for city- regional devolution. City-regions need The Lyons Inquiry’s Interim Report, more than rhetorical recognition to tackle published in December 2005, also expressed economic development priorities. interest in using a ‘contractual approach’ to z Fourth, central government and RDAs must central-local relations to give local authorities embrace city-regions. Devolution could greater flexibility over decision-making and help Whitehall departments and RDAs funding (Lyons, 2005). deliver critical economic floor targets. Contractual approaches have helped to co-ordinate and devolve control of public The next section defines city-regions, and investment in other countries. In France, for explores how a contractual approach could example, contrats de ville (at city level) and devolve a range of spending and revenue- contrats d’agglomération (at city-regional level) raising powers. have marshalled central, regional and local resources for the achievement of economic development priorities.35 Recommendation 1: City-Region City-Region Contracts must be selective; they Contracts are meant for England’s biggest conurbations. We propose the creation of City-Region However, only two areas – Manchester and Contracts to co-ordinate and devolve funding Birmingham – are ready to try them out. for regeneration, transport and skills. Why these two city-regions? This approach builds on existing research as well as international experience. A recent z Size and geography. Manchester and ODPM-commissioned study noted that: Birmingham are England’s two largest provincial city-regions. They drive regional 35 See web annex 3. National government needs to develop a economies in the North and the Midlands.
www.ippr.org/centreforcities city leadership 39 z Tax base: Birmingham and Manchester 1) Defining city-regions – getting the scale right have tax bases that are robust enough to As Chapter 2 notes, city-regions already exist support additional revenue-raising powers. as economic entities (SURF and CUPS, z Maturity of joint working: local 2006), but need political boundaries in order governments in both areas have for City-Region Contracts to work. developed strong city-regional agendas, Boundaries will always be imperfect, as and have put forward proposals for closer administrative areas are not coterminous with co-operation and resource pooling.36 economic spaces. A pragmatic approach z Business buy-in: Business communities in would be to use existing local authority both areas agree that greater devolution districts as building blocks, and create an area from Whitehall is critical to local that broadly reflects economic flows. economic success. They also buy in to a ODPM should be involved in this process cross-boundary approach. to ensure that city-regions offer the best possible fit to economic realities, and to Five other city-regions – Liverpool, Newcastle, prevent the emergence of ‘cliff-edges’ Leeds, Sheffield and Bristol – could follow as between urban areas on either side of a city- they develop similar levels of political consensus, region boundary. business buy-in, and economic stability. We propose the adoption of pragmatic city-regional boundaries that reflect both How City-Region Contracts could work economic and political realities:
Six steps to a City Region Contract z Begin with the existing metropolitan scale. 1. Defining city regions – getting the scale right Cross-boundary proposals have already
2. Developing priorities for action at a city regional level been put forward for the former metropolitan counties around 3. Devolution and co ordination of relevant funding Birmingham (seven districts) and streams Manchester (ten districts). There is also 4. Setting targets and evaluating progress well-established functional co-operation 36 The West Midlands 5. New powers and incentives – unlocked by the across these areas, for example for metropolitan districts Contract approach passenger transport. have taken the lead on this with proposals for a z Add areas with strong economic links. 6. Three year implementation period, with renewal 'Metropolitan Area linked to delivery City-regions should reflect labour market Agreement' (LGC, 13 flows for the core city in question. Using October 2005).
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Map 5.1 West Midlands Conurbation 5.2 Birmingham travel to work area
5.3 ‘Best fit’ travel to work area 5.4 Birmingham City Region
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5.5 Greater Manchester Conurbation 5.6 Manchester travel to work area
5.7 ‘Best fit’ travel to work area 5.8 Manchester City Region
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travel-to-work areas (ONS, 1998), it is substantial funding from central37 and possible to identify additional areas that regional government. This could include: form part of the city-region economy. These are then ‘best fit’ to existing local Regeneration: authority boundaries. z City-regional share of RDA single-pot funding. RDAs should see City-Region 2) Developing priorities for action at city- Contracts as vehicles that can help to regional level deliver Regional Economic Strategies. Once geographies are set, public- and The devolution of single-pot funding private-sector leaders must set a succinct would allow RDAs to concentrate limited City-Region Economic Development staff and revenue resources on other Strategy. This blueprint would set out a small priority areas. number of strategic projects – such as public z City-regional share of Regional Funding transport infrastructure – and would identify Allocation for Housing. Devolution of the how devolved funding streams and financial Regional Housing Strategy and strategic powers would be used to pay for them. funding allocations is currently being These priorities need to be tightly focused, considered for London (ODPM, 2005f ). with demonstrable economic impacts. The It should also be devolved to areas where local business community should play a clear City-Region Contracts exist. role in selecting projects and in monitoring z English Partnerships funding. Where their implementation. City-Region Contracts exist, EP could 37 ODPM Minister David devolve resources and delivery to local Miliband has argued 3) Devolution and co-ordination of funding hands. that mainstream funds streams z EU Structural Funding should be need to be ‘bent’ to promote local Once a clear strategy is agreed, funding devolved from Government Office to economic objectives streams need to be identified and pooled so city-regional level, allowing city-regions (Miliband, 2005). that city-regions can deliver their priority to match EU funds with their own Ambitious city regions could try to include projects. The Core Cities Group has regeneration money. Many cities will additional funding suggested the concept of a city-regional continue to qualify for some form of EU streams when single pot, backed up with a statutory duty of assistance after 2006, under the negotiating their pooling and collaboration (Core Cities ‘Competitiveness and Employment’ contracts – especially if they can show they will Group, 2005). City-Region Contracts would stream (CEC, 2005). deliver better results. achieve both of these goals, and devolve z Elements of local authority regeneration
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budgets. Although individual local overseen by Government Office-led authorities must retain funding for Regional Transport Boards – but would micro-level regeneration and small capital be delivered more effectively through infrastructure works, they must also be city-regions. ready to commit revenue and capital z Passenger Transport Authority (PTA)/ resources to the achievement of city- PTE Local Transport Plan (LTP) funding, regional priorities as part of the Contract which is allocated to metropolitan PTAs approach. for rail and bus services. z City-regions are about strategic regeneration z Transport Innovation Fund bids. This funding, not local area-based initiatives. fund will offer substantial support for Local authorities should continue to lead schemes that can demonstrate benefits neighbourhood-level regeneration across functional economic areas (DfT, programmes, as they sit at the most 2005). This is ideal for city-regional appropriate scale to do so. implementation.
Transport: Skills: z City-regions need to control transport z Learning and Skills Council (LSC) provision and mechanisms for investment. funding. Through the Contract approach, City-regional transport agencies need city-regions could gain an element of powers similar to those of Transport for control over LSC funding for adult London (TfL) (control over rail, learning. This could help to tailor LSC metro/trams, strategic roads, funding of programmes to the city-regional level, local transport plans and, critically, bus and achieve key social and economic regulation) as well as financial flexibility regeneration goals without undermining (including control over fare-box income). national entitlements or floor targets. Devolved funding streams, integrated One way forward would be to create with existing Passenger Transport ‘dual key’ arrangements that give city- Executive (PTE) levies, will boost region authorities and the national LSC transport investment – and allow city- joint control over the post-19 skills regions to prioritise major capital budget for the city-region (see also projects such as tram systems. DeLorenzi and Robinson, 2005). z City-regional share of Regional Funding z This is the first step in devolving control Allocation for Transport. This is presently over skills and employment policies. Other
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areas could follow. deliver their Contracts. z Devolving skills and employment budgets to z Targets should be built around outcomes city-regions will be difficult. Government – not processes. is presently considering radical devolution z Assessment should be on a multi-annual of skills budgets to the Greater London basis, giving local leaders a more realistic Authority (ODPM, 2005f ), so there timeframe to deliver progress on should be room for debate in other city- objectives. regions too. Government departments need to accept that Devolving spending to the a light-touch targeting framework, with city regional level38 minimal negotiation, will give city-regions the time and the space they need to tackle If the funding streams above were devolved in full obstacles to regeneration and growth. during the 2005/06 financial year, we estimate the following city regional budgets: 5) New powers and incentives City-Region Contracts should include new Birmingham city-region: £675 million revenue-raising powers alongside spending Manchester city-region: £600 million freedoms. Forthcoming sections model a new revenue-raising power (City-Regional This would represent a radical shift in control and Supplementary Business Rates) and a fiscal accountability – and the concentration of economic incentive (City-Region Growth Incentive), development resources at a logical scale for which are designed to give city-regions delivery. additional tools to pump-prime investment and key infrastructure.
4) Setting targets and evaluating progress 6) Longer timeframes for delivery A small set of strategic targets would need to City-regions need spending stability over a be agreed between the city-region, regional period of time to deliver a step-change in agencies and central government. economic growth. Evidence from other These should be based on three general countries, such as France and Spain, shows principles: that local governments have been able to 38 See Annex 1 for a z City-regions need maximum discretion develop more innovative policies, and take more detailed analysis. over devolved funding streams in order to investment risks, because they have five-to-
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Figure 5.1 City Region Contracts
Outcome based targets for central and regional funding streams
Departmental funding Regeneration O U CITY T C REGION Transport O Regional and M quango funding CONTRACT E S Skills
CITY REGIONAL DELIVERY
Existing New city region local tools Fiscal resources (SBR, CRGI) ‘feedback loop’
New fiscal powers unlocked by Contract approach
six-year spending rounds (Borraz and Le Recommendation 2: City-Regional Galès, 2005; Farber, 2002). Supplementary Business Rates City-Region Contracts should build on Alongside the devolution of existing recent shifts towards three-year funding funding streams, we believe that city- settlements for English local government, regions should have some revenue-raising and should include options for extension and options. renewal. Sanctions – such as the loss of We propose a modest revenue-raising powers and flexibilities – could be applied in power for city-regions, based on a the event of non-delivery. Supplementary Business Rate (SBR). City- regions should be given discretion to raise
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39 Research and policy business rates by up to five per cent, with The Lyons Inquiry Interim Report noted papers have identified a additional revenues hypothecated directly to that there was interest in mechanisms that number of fiscal tools strategic transport priorities. devolve ‘some local discretion over that could be devolved downward from central Why five per cent? First, this minimises [business] rates in order to fund investment government (ODPM, the potential for cliff-edges and therefore in transport and road improvements and 2004a; McLean and distortions between city-regions and regeneration activity’ (2005). Our evidence Macmillan, 2003; London Assembly, 2004; neighbouring areas. Second, it limits the suggests this would be most effective at a Falk, 2004; Glaister, financial impact on business – with small city-regional – rather than a local-authority 2004; Stoker, 2005). businesses paying less than £150 per year. – level.40 40 The example of Walsall Although small next to devolved spending, an A city-regional SBR would be: illustrates this point. A two pence SBR in SBR of this size is not insignificant. It is a Walsall alone would raise step toward greater revenue-raising at the z at the correct economic scale approximately £1.1 appropriate economic scale. z hypothecated to specific priorities (for million per annum example, transport) between 2000/01 and 2004/05 – far too little to The business rate debate z collected at minimal extra cost address major As Chapter 3 notes, the existing balance of z buoyant (revenues grow alongside the economic development funding leaves cities with few revenue-raising city-regional economy) needs. z 41 These calculations use tools. The re-localisation or part-localisation highly predictable (useful for securing the city regions defined of business rates has been widely debated as a and servicing debt financing) above, with 13 local way to provide cities with additional revenue z an incentive to improve joint working authorities in the streams.39 across local authority boundaries. Birmingham City Region and 11 in the Council tax, for example, is overstretched, Manchester City Region. politically sensitive, and subject to capping. What would a city regional SBR raise?41 42 The figures for additional What’s more: revenue do not take account of potential A City Region SBR in Birmingham (2000/01–2004/05) revenue loss from other z Council tax grew 37.5 per cent in real A two pence (4.7 per cent) SBR would have raised sources of taxation, e.g. terms between 1993 and 2003, whereas £36 million per year, or £180 million over five Corporation Tax. New companies could reduce business rates grew only 5.4 per cent years.42 SBR take by locating (Travers and Esposito, 2004). outside the city region. z Business rates have declined from 29 per A City Region SBR in Manchester (2000/01–2004/05) However, the city regional scale minimises cent of local-authority expenditure in A two pence (4.7 per cent) SBR would have raised 1990/91 to only 19 per cent in 2004/05 spillover, cliff edges and £35 million per year, or £174 million over five years. opportunistic moves (Lyons, 2005). between areas.
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Figure 5.2 How would an SBR affect local businesses?
Business property SBR cost to business in 2005/06
Virgin Megastore, Walsall 16 18 Park Street, Walsall, West Midlands WS1 1NG £3,320
The Sony Shop, Birmingham 60 162 Corporation Street, Birmingham B4 6TB £485
Ben’s Cookies, Coventry Unit 2, Cathedral Lanes Shopping Centre, Broadgate, Coventry CV1 1LL £13844
The impact on local business Since the business rate is relatively stable and City-regional supplementary business rates predictable, city-regional SBR revenue could be would have a marginal impact on the overall used to underpin prudential borrowing and business tax burden. We randomly selected other forms of capital financing. three businesses around the Birmingham 43 Based on CBI (2005) city-region to test the impact of an SBR. To and HMT figures safeguard smaller businesses, reliefs and Recommendation 3: City-Region (www.hm Growth Incentive (CRGI) treasury.gov.uk). For exemptions are applied as in the existing the sake of providing system. In addition to new revenue-raising powers, a examples of the effect According to figures from the Treasury and clear fiscal incentive is needed to promote of the SBR on specific the CBI, the overall business tax burden in business growth across city-regions. businesses in 2005/6, the ratio of business 2004 was £109.6 billion, of which business Our research found that the existing Local rates to overall tax rates represent £19 billion, or 17.4 per cent. Authority Business Growth Incentive burden has been Using this ratio, it is possible to calculate the (LABGI): assumed constant impact of a two-pence SBR on overall between 2004/05 and 43 2005/06. business taxation: 0.82 per cent. z is complex and poorly understood 44 Ben's Cookies would As the above case studies show, a 2p city- z sits at the wrong scale to provide enjoy 17 per cent relief regional SBR would have a minimal impact substantial fiscal benefit on the SBR, reflecting z the fact that its rateable on local businesses – many of whom would contains too many floors, ceilings and value is below see a direct benefit from infrastructure equalisation mechanisms to provide a real £10,000. investment brought about by the SBR. incentive for business growth.
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Thanks to the scheme’s complexity, we found z a sizeable resource to focus on economic that local authorities preferred to use staff development. resources to pursue grant funding rather than to grow the business base, undermining In the short term, CRGI receipts would vary LABGI’s incentive value and impact. along with the regional economic cycle, as Yet the principle behind LABGI is a sound business growth rates mirror overall one. We recommend that LABGI be refocused performance. However, concerted city- at city-regional level in Birmingham and regional business growth efforts would result Manchester, which would enable the Incentive in clearer, more stable revenue streams over to promote cross-boundary working and time. City-regional economic development encourage business growth at a scale that activities could be judged by how much of matches up to market realities. the incentive pot they unlock for further investment. How would it work? City-regions could smooth the spending of A City-Region Growth Incentive (CRGI) CRGI receipts over a number of years, using would not create a new tax. Instead, it would economic forecasts to build up an even allow city-regions to retain increases in spending profile. This could help to reduce the business rate revenue resulting from growth. uncertainty problem that has stopped many Under CRGI, each city-region would be areas from aggressively pursuing LABGI. 45 All growth over an inflation indexed allowed to keep all growth in the local baseline, kept at city business rate take, up to £200 million, over a Paying for CRGI regional level. The period of five years.45 This money would be Under CRGI, the Manchester and baseline could be set at pooled and delivered through the City- Birmingham city-regions would retain funds the time of business property revaluation, Region Contract. Individual local authorities that would otherwise be put into the National and revised at the within the city-region would no longer Non-Domestic Rates (NNDR) pot – leaving following revaluation. participate in LABGI. less money for resource and needs equalisation. 46 This could be set at With a potential value of £200 million in By setting aside £400 million to compensate £100 million, using the relative weight of the each city-region, CRGI would create: the NNDR pot over five years, the Treasury two city regions, which could create an incentive without affecting the together account for 9.8 z a simple, properly scaled incentive for highly-contentious equalisation system. A per cent of rateable property in England business growth portion of this cost could be offset by moving a according to 2005 z a clear payoff for cross-boundary co- proportion of the £1 billion pot presently Valuation Office Agency operation earmarked for LABGI.46 data (www.voa.gov.uk).
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If the two city-regions are allowed to retain City regional governance: four key tests increases in business rate take without compensation to the NNDR pot, there would 1) Democratic legitimacy be a marginal effect on the equalisation of People making decisions that impact on a particular business rates, estimated at 0.42 per cent of area should be directly elected by the people of that the overall NNDR pot in 2005/06.47 area. Leaders will be taking on financial risks and Whether the Treasury chooses to pay for responsibilities on behalf of local residents. The use of CRGI, or whether it tweaks the equalisation powers and funding must reflect the values and system at the margin, CRGI would offers opinions of the electorate. city-regions an important fiscal incentive to promote business growth. 2) Clarity and visibility In order for voters to influence the use of funding and powers, they need a clear understanding of who is Recommendation 4: City-regional responsible for what. Simple arrangements with well governance to deliver growth defined lines of responsibility are essential to enable The devolution of economic development good leadership to be rewarded, and for poor budgets to city-regions requires a step-change performance to be punished at the ballot box. in accountability. City-Region Contracts offer a high level of financial freedom, including 3) Strategic vision devolved budgets and new tax levers. Given the To take advantage of the city regional approach size and scope of the resources concerned – over and increased powers and financial tools, a £600 million per annum in greater Birmingham governance format that facilitates strategic thinking alone – governance structures must be adequate is essential. City regional governance for the functions and financial tools being arrangements must prioritise investment, make devolved. difficult decisions, and avoid spreading limited If the Birmingham and Manchester city- financial resources too thinly. regions want the level of financial freedom proposed here, they will need a step-change in 47 If the two city regions 4) Delivery retained £80 million per accountability and leadership. We believe that City Region Contracts are focused on delivery as well annum (the maximum means a directly-elected city-region mayor, but as strategy. As a result, they require governance available under the recognise that there is huge opposition to this. scheme), based on a arrangements that can shepherd major projects from City-regional governance arrangements national business rate the planning stage through to completion. pot of £19 billion. should be judged against the tests in the box:
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Executive Boards co-ordination, and could help to sharpen up Several areas, including Greater Manchester economic development policies. Additionally, and the West Midlands, have developed Executive Boards could be put in place in proposals for ‘Executive Boards’ at conurbation selected city-regions with relative speed, and level, composed of the leaders of existing local could serve as transitional vehicles between the councils. The New Local Government Network status quo and directly elected mayors. (NLGN) City-Regions Commission recently But Executive Boards are not robust argued that city-regions should involve enough to take on the full range of spending voluntary association and ‘an executive and revenue-raising powers proposed in this committee of leaders drawn from local report. They perform poorly on all four of the authorities’ (2005). But are voluntary tests opposite, as described below: partnerships and Executive Boards the right structure to deliver functions and funding across Executive Boards a city-region? Or are there better alternatives? Democratic legitimacy: Executive Board ✗ The most advanced proposal, by the seven members would have only indirect and partial metropolitan councils of greater Birmingham 48 Businesses in democratic legitimacy. Council leaders lack a Birmingham, for (West Midlands Joint Committee, 2005), calls direct mandate at the city regional scale. example, are concerned for devolution of regeneration/housing, that ‘the political transport and skills powers through a Clarity/visibility: Executive Boards only slightly ✗ sensitivities between the Metropolitan Area Agreement, alongside a increase clarity of leadership. They make it metropolitan districts could be a barrier to difficult for local people to hold city regional City-Regional Development Fund. They have effective voluntary argued that the existing Joint Committee, or a decision making to account. co operation…’ voluntary authority, could be responsible for (Birmingham Chamber, Strategic vision: Council leaders have 2005). One stakeholder budgets at a city-regional level, with decisions ✗ different political needs and priorities, and may group expressed a fear taken by the seven local authority leaders. spread resources thinly across objectives rather that Executive Boards Manchester and Sheffield have also set out were creatures of local than target strategic goals.48 plans for executive boards, but have not yet authorities – and that central government made financial structures public. Delivery: Council leaders are elected to deliver ✗ would need to resort to Executive Boards would be an improvement resources and results within the boundaries of ‘fiscal blackmail’ and on existing cross-boundary collaboration, which their local authorities. Executive Board ‘bang heads together’ to make them work tends to be ad hoc and single-issue in nature members would be driven by their own local (Business Stakeholder (for example, police, fire, waste). They would considerations, and could ‘pass the buck’ on Group, Birmingham, 18 provide major city-regions with a forum for responsibility and financial risk. August 2005).
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City-regional ‘commissioners’ commissioners would fulfil two of the four Another governance proposal, examined governance tests set out on page 50. recently in the Newcastle city-region, is the This model would be harder to implement commissioner approach – whereby individuals than Executive Boards – but would offer a would be directly elected to deliver specific higher degree of accountability and portfolios at a city-regional level (Newcastle transparency. City Council, 2005). This would involve separate commissioners for regeneration, City-regional elected mayors transport, and skills, for example. The third model of city-regional governance This model has not been developed in centres on a directly elected city-regional great detail to date. However, as the box mayor (Stoker, 2005; NLGN City-Regions below shows, elected city-regional Commission, 2005; Core Cities Group, 2005). This is an ambitious and contested Elected city region commissioners idea. However, we believe it offers city- ✓ regions the best chance to deliver financial Democratic legitimacy: Elected devolution successfully. commissioners would satisfy this test, Greater London has had an elected mayor although the model lacks a single clear leader. for five years now – and the GLA model has been evaluated positively by academic Clarity/visibility: This model links ✓ observers (for example, Travers, 2004a), responsibilities to portfolios clearly, but again statutory evaluators (Audit Commission, lacks a single leadership figure. 2005b), and ministers, who are now consulting on expanded powers for the Strategic vision: Separation of powers ✗ Mayor of London (ODPM, 2005f ). While could prevent the emergence of a strategic London’s governance arrangements are vision for the city region. Rivalries between substantially different from our City-Region commissioners possible. Contract model, London’s experience does Delivery: Clear lines of policy accountability ? suggest mayors could work in other and financial responsibility, but there is the conurbations. potential for confusion because of overlapping But could directly elected city-regional competencies (for example, between mayors deliver economic development policy regeneration and transport). effectively in places like Manchester and Birmingham? Would mayors make City-
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Region Contracts, new tax-raising powers, quangos, and that existing bodies (such as and devolved funding streams work? They Passenger Transport Executives) be would meet all four of our governance tests, transferred to mayoral control. This package as shown in the box below. of powers could help to attract higher-calibre individuals to city politics, and deliver a step- Directly elected city regional mayors change in leadership. ✓ The Executive Boards proposed by Democratic legitimacy: Mayors would be Birmingham and Manchester could play a directly elected across a city region – critical scrutiny role under this model – with providing a clear democratic mandate for local authority, business and community spending and revenue raising decisions. representatives working to ensure transparent ✓ and accountable mayoral decision-making. Clarity/visibility: Mayors who cover a large With their democratic legitimacy and economic area can be highly visible, and broad strategic responsibilities, mayors could provide clear lines of accountability, as Ken work with stakeholders to marshal economic Livingstone has shown in London. development resources, deliver key infrastructure priorities and promote growth. Strategic vision: A mayor would be well ✓ We understand that this will not be placed to develop consensus around a popular with existing council leaders, and strategic vision, negotiate a City Region that voters do not yet identify with the Contract, and oversee implementation. concept of the city-region in the same way that they feel loyalty and belonging to the Delivery: City regional mayors would be ✓ city. But given the strength of the case for responsible for delivering economic directly elected mayors, we believe the option development and regeneration projects. should be pursued. They could also hold city regional budgets and be accountable for delivery and financial risk. Recommendation 5: A clear Whitehall framework to support city-regions City-region mayors would be responsible for City-regions remain a ‘hard sell’, both locally the delivery of substantial budgets. We are and in Whitehall. If government wants to use recommending that they take over substantial the city-regional scale to deliver economic responsibilities from RDAs and other regeneration and growth, it must first
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promote a shared vision of what city-regions and interest in the Department for Transport, are, and what they are for. the Department for Education and Skills, and Building on the case for devolution the Department for Work and Pensions. presented in Chapter 3, we believe that a The best way for the Treasury and ODPM shared vision for city-regions should include to promote city-regional working is to set out the following key principles: what city-regions are for, how they can promote economic performance, and how Key principles for city regions they will help other departments to deliver their objectives. A clear policy statement, z Purpose: enhancing economic performance with the backing of the Treasury, would boost (SURF & CUPS, 2005) the case for city-regional devolution across
z Policy areas: regeneration/housing, transport, Whitehall. skills (to start with) City-regions can help to address regional disparities and boost growth. The existing z Boundaries: to be based on existing local Regional Economic Performance PSA target – authority districts and travel to work areas, currently shared by HMT, ODPM, and DTI – agreed by ODPM and local stakeholders should be strengthened. Extending the target z Funding streams: negotiated through City to cover the DfES, DfT and DWP would Region Contracts bring all the major ‘economic development’ z Selectivity: restricted to the biggest urban departments within the target’s ambit. areas, starting with Manchester and Birmingham. New tasking frameworks for RDAs and quangos These adjustments need to go hand-in-hand with a radical change in the relationship Building commitment to city-regions between RDAs, Government Offices and Some departments buy in to the city-region city-regions. Our research identified existing concept – but others are sceptical. ODPM and regional grant and oversight regimes as a key the Treasury have expressed an active interest obstacle to regeneration, investment and in city-regions as a means of boosting growth. economic performance and delivering 49 Stakeholder interview, regeneration (Clark and Hildreth, 2005). But A shift in the RDA’s sense of accountability politician, West Midlands, 7 October we found scepticism in the Department of is needed. They are here to help the region, 2005. Trade and Industry, and low levels of awareness not to tell us what to do…49
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The RDA approach is not yet coherent. We cross-boundary collaboration until the still have a lack of understanding of city- legislative framework for city-regions is fit for regions and what they need.50 purpose.
National and regional quangos will need to Main points for decision makers let go of certain functions, starting with regeneration, transport and skills in our two z City regions need to be carefully defined – with largest city-regions. This will be complex and clear objectives and agreed geographies difficult – and will require sponsoring departments to set new tasking frameworks z HM Treasury must ensure that other Whitehall for RDAs (DTI), English Partnerships spending departments buy in to the city (ODPM), and the Learning and Skills regional agenda Council (DfES). z Devolution to city regions should be selective – Birmingham and Manchester for now
The legislative framework z City Region Contracts can be used as flexible Radical financial devolution along these lines vehicles to devolve spending, create revenue will require legislation that enables ministers raising tools, and incentivise growth to set up city-regional entities. This will take z Devolution at city regional level requires some time. We urge Birmingham, stronger accountability – and elected city region 50 Stakeholder interview, Manchester and other major urban areas to mayors are best suited to the job. RDA officer, North West, press ahead with bottom-up initiatives for 20 September 2005.
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Introduction z Promote the use of existing financial We are recommending asymmetric devolution, powers and flexibilities with the Birmingham and Manchester city- z Develop stronger capacity and skills at regions leading the way. A small number of the urban level. other big city-regions could follow. However, other cities and towns also need greater financial flexibility to unlock their Recommendation 6: Economic economic potential. The Government has Development Contracts made important commitments to devolved LAAs are designed to bring together funding decision-making and Local Area Agreements pots and boost local flexibility. However, they (HMT et al, 2004a, 2004b; ODPM, 2005b). do not presently provide a strong enough However, more needs to be done to enhance framework to join up and devolve funding for local autonomy and simplify funding streams. local economic development. In places like Barnsley and Liverpool, The Fourth Block for Economic greater local control over regeneration spending Development and Enterprise was tacked on would promote more creative and effective use to LAAs late, as a home for the new Local of existing resources. It would also incentivise Enterprise Growth Initiative (HMT, 2005). risk-taking, improve accountability and ODPM’s guidance for Local Area responsibility, and enable greater take-up of Agreements states that: existing local authority powers. This chapter suggests three pragmatic ways The Economic Development and to devolve additional freedoms and Enterprise Block gives areas the flexibilities to cities and towns across opportunity to improve the economic England: growth and productivity of a locality, addressing market failures that prevent z Expand the Economic Development and sustainable economic development, Enterprise component of LAAs (the regeneration and business growth… ‘Fourth Block’) (ODPM, 2005b)
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However, this gives little sense of how the Cities and towns also need to develop block could operate – leaving many local more aggressive Fourth Block proposals – authorities wondering what to do next. and argue for the freedoms and flexibilities Our consultation found that there was a they need to address key economic priorities. great deal of confusion around the Fourth Block. LAA pilot authorities – including Economic Development Contracts Barnsley and Derby – told us that they were We recommend: not really sure what it meant for them. One senior official in Barnsley noted that ‘there z Rebranding the Fourth Block as a clear, have been many fine words – but evidence of wide-ranging Economic Development true flexibility has yet to be established.’51 Contract (EDC) z The rollout of EDCs in towns and cities Why the Fourth Block is a major opportunity across England.52
A strong Fourth Block would help towns and 51 Stakeholder interview, cities to join up regeneration and economic EDCs would be clear statements of economic director, Barnsley MBC, development funding, and result in greater development goals – prepared locally – which 13 September 2005. 52 Except for those areas local prioritisation and decision-making. At businesses, community groups and citizens that have taken up the the same time, it could promote capacity could also use to scrutinise local government City Region Contract improvements within local authorities, by and build pressure for delivery. They should approach. linking greater freedoms and flexibilities to be used in single-pot areas53 as well as 53 Despite the fact that they have greater visible economic outcomes. conventional LAAs to focus and devolve flexibility, local authorities The Government has failed to communicate economic development funding streams. with ‘single pot’ LAA the potential of the Fourth Block as a vehicle EDCs would thus help local authorities arrangements need to organise funding around for strategic economic development to local further develop their economic role. economic development authorities and other stakeholders. Ministerial Every EDC should articulate a limited and enterprise much in speeches (for example, Miliband, 2005) and number of strategic priorities – forcing local the same way as guidance (ODPM, 2005b) have so far placed stakeholders to take tough decisions on what conventional LAA areas. The alignment and the wrong emphasis on the Fourth Block, to fund using limited public resources. This pooling of funding describing it as a vehicle for area-based will help to counter the ‘shopping lists’ that around a small group of initiatives focused on deprived areas. The block have often characterised local authority strategic objectives – in needs to be recast with a wider, more strategic resource bids in the past (Glaister, 2004). areas like regeneration, transport and skills – is remit – and as a vehicle for greater local The development of EDCs should be led critical to unlocking flexibility. by local authorities, not Local Strategic economic growth.
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Partnerships (LSPs). LSPs are relatively new Key strengths of EDCs organisations, and their progress to date has been variable (ODPM and DfT, 2005). 1) Reduce the number of external funding streams. EDCs would greatly reduce the Economic Development Contracts number of external funding streams involved in many economic development Why? projects – and streamline the onerous, To join up existing economic development funding burdensome reporting requirements that streams, and devolve greater control over often drive away private investors. Local spending decisions and outcomes to the local discretion over existing public funding level. would be greatly enhanced as Contracts were implemented. What? An agreed set of clear objectives for economic 2) Allow local authorities’ performance to be development, allowing funding streams from judged locally. EDCs would set clear, central, regional and local government bodies to simple targets – around outputs and be pooled. RDA funding, the Local Transport Plan, outcomes, not processes – so that Single Regeneration Budget (and successors), performance in achieving key economic European Union, LEGI (for those areas that get it), development priorities can be judged. LABGI, and local authority capital and revenue funding should be included. A ‘duty to collaborate’ 3) Allow towns to develop roles in relation to placed on all public sector organisations operating larger economic hotspots. Contracts should at the local level (ODPM, 2005e). In bigger urban emphasise local and regional connectivity, areas, this duty could include a cross boundary which would unlock new synergies element. between towns and more dynamic markets nearby. The EDC process could Who? help town authorities to select economic Led and delivered by local authorities, with regard development priorities that play to their to LSP led Community Strategies. geographical and physical strengths, as well as their future aspirations. How long? Updated as part of LAAs every three years – but 4) Could transform the Fourth Block into a with a longer term delivery focus. more effective framework for economic
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development in a relatively short period of for the introduction of ‘marginal’ taxes is time. EDCs would not require primary weak. legislation. Local authorities already have the legal capacity (as accountable bodies) Taxes/charges and revenue impacts and powers (for example, the power of well-being) needed to deliver resources. Hotel taxes EDCs could be introduced in 2007, Minimal revenue impacts alongside the third and final round of A flat rate, £1 levy across Merseyside would raise Local Area Agreements. ODPM and £3.3 million per annum.54 This is marginal DTI could promote delivery by directing compared to other funding streams – and could RDAs to respond positively to the have high collection costs. strategic economic priorities of cities and towns, as expressed in their Contracts. Plastic-bag charges This would help to overcome the Minimal revenue impacts confidence and trust barriers that presently In Ireland, a 15c national bag charge resulted in a affect regional-local funding relationships. 95 per cent decrease in use within one year of introduction. A 10p tax applied in England would raise £800m nationally if consumption remained Recommendation 7: Making existing unchanged, but would decrease to a mere £40 powers work better million annually if consumption declined as it did in Alongside simpler, more devolved funding Ireland (LGA, 2004d). streams, many cities have expressed interest in a range of smaller taxes to boost their revenue-raising potential (ODPM, 2004a; England’s cities and towns should have the LGA 2004b, 2005a; Travers and Esposito, right to experiment with marginal taxes if 2004; ODPM Select Committee, 2004). they wish. However, we recommend that they focus their efforts on making better use of How useful are small revenue-raising levers? existing charging and borrowing powers.
Many of the proposed tax levers – especially 54 Figures based on 2004 ‘green’ taxes and congestion charging – can Existing powers UK Tourism Survey play an important role in influencing Charging and trading (UKTS) statistics. See www.staruk.org.uk//def behaviour and promoting more sustainable Local authorities have gained a number of ault.asp?ID=738&parent outcomes. However, the financial argument additional powers in the last five years – id=469.
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including expanded powers to charge for £100 million over ten years if put into action discretionary services, and to set up profit- (CfIT, 2005). The revenue generated by making trading companies.55 workplace parking charges would be These powers are both new and unclear. For hypothecated directly to the expansion of the example, the guidance on charging (ODPM, city’s tram network. 2003) does not set out whether local authorities Local congestion charging (road pricing) can profit from the charging regime (ODPM, could also generate significant revenue for 2005a). With respect to trading, local transport projects. London’s charge brought authorities are explicitly allowed to profit, approximately £100 million in net revenue into though there is little evidence that the power the Transport for London budget in 2004/05 has been taken up to date. (TfL, 2005). A number of areas, including the Cities and towns could generate significant Birmingham city-region, are currently debating new revenue streams for economic the potential merits of local schemes. development by making better use of charging and trading powers. Michael Lyons recognised Business Improvement Districts this in his interim report, and is actively Business Improvement Districts (BIDs) also exploring new ways to use charging in local offer towns and cities a way to generate new finance (Lyons, 2005). Central government revenue streams for economic development in should promote greater take-up of local co-operation with local businesses. Yet only 20 charging and trading powers by making them BIDs have been approved through business clearer and easier to use. ballots since their introduction in England. This is a surprisingly small number, given experience Workplace parking charges in other countries.56 The 2000 Transport Act gave local authorities There is a strong correlation between the the power to introduce a variety of transport- level of public-private co-operation in a city and related charges, including workplace parking a BID proposal’s chances of success. England’s 55 In the Local levies and congestion charging (DfT, 2002). cities and towns need to work harder to Government Act 2003. 56 By way of contrast, While the primary aim of such schemes is to promote the take-up of BIDs in areas where there are 51 BIDs in change behaviour, and to shift motorists they could improve the investment New York City alone. toward public transport, they have the potential environment. Though they provide only small www.nyc.gov/html/sbs/ to generate revenue streams for transport revenue streams, these are directly targeted on html/bid.html (last accessed December improvements. For example, a scheme devised promotion of investment and visitor spend – 2005). for Nottingham’s city centre would generate making a big difference to local outcomes.
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Prudential borrowing Two variants – King Sturge Property As noted in Chapter 3, cities and towns have Regeneration Partnerships (King Sturge, 2005) gained new flexibilities on capital finance with and PricewaterhouseCoopers’ Local the introduction of the prudential framework Regeneration Partnerships (Mills and Atherton, (CIPFA, 2003b). While prudential borrowing is 2005) – offer a route to lever development being used to support projects in all three of our finance and private-sector skills into major case-study cities (see Chapter 4), the finance infrastructure projects. officers we interviewed argued that more flexible However, regeneration PPPs are relatively revenue streams were needed in order to use the rare; few cities and towns have used them to borrowing powers at a more substantial scale. date. The model should be encouraged more Yet there is evidence that prudential strongly. borrowing can provide cities with substantial leverage if local authorities are able to find innovative ways to make it work. Birmingham Recommendation 8: Boosting capacity City Council, for example, is using the power to and skills borrow £215 million in 2005/06 to refinance Our research found that central government the National Exhibition Centre (BCC, 2005b). doesn’t want to devolve until the capacity of Under the EDC approach, the importance of local government improves, but local prudential borrowing would grow, as greater government won’t improve without devolution. spending flexibility would allow local authorities Geoff Mulgan of the Young Foundation has to commit to more ambitious prudential recently referred to this as local government’s schemes for major economic development and ‘catch-22’ (Guardian, 16 December 2005). We infrastructure projects. need to find a way through this impasse. Our primary research in Birmingham, Maximising strategic use of assets Barnsley and Liverpool confirmed many of the Cities and towns could also leverage substantial findings of the Egan Review (Egan, 2004). investment by using their land and property When it comes to attracting investment and assets more strategically, for example by pooling promoting regeneration initiatives, English public-sector property resources and cities and towns face a number of ‘skills gaps’ 57 This was first aggregating buying power (Carter, 2005). One that need to be addressed. recommended by the way to do this is through the formation of Businesses told us that public-sector bodies Urban Task Force (1999), and remains of regeneration-focused public-private are unresponsive to their needs – and local interest to the Treasury partnerships (PPPs).57 authorities say that the private sector doesn’t (HMT, 2003).
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understand the constraints and centralised tandem, will help cities and towns to do better. reporting requirements they face. At times, Currently, local government fails to attract business and local government speak different strong politicians and officers because it lacks languages. For this reason, more public-private power. Our recommendations for greater exchange, job-sharing, and secondments should financial freedoms and flexibilities would help be encouraged. cities to attract more motivated, talented As one interviewee remarked: economic development staff.
There’s a lack of experience and knowledge of Main points for decision makers the business environment. Skilled regeneration personnel aren’t around. The local public sector z The LAA Fourth Block is a major opportunity to often has an insufficient understanding of how devolve power and funding to cities and towns to deliver regeneration projects.58 – but it isn’t working.
Existing skills initiatives need to be refocused to z The Fourth Block should be rebranded and up bridge the public-private divide, by: scaled – as an Economic Development Contract between Whitehall, RDAs and local stakeholders. z boosting local authority capacity in areas z A contractual approach will provide a clearer, such as planning, site assembly and stronger framework for the devolution of compulsory purchase existing funding to cities and towns. z improving understanding of the risk issues z It will also help local authorities to take up faced by public- and private-sector partners existing powers better. z tackling information and data issues that z Cities and towns need specialised economic hamper inward investment and business development and regeneration skills training. growth. z More public private exchange and secondments will help. Big cities like Liverpool need highly-skilled personnel in-house. In towns, however, RDAs z Improved local skills will help cities and towns and Regional Centres of Excellence can help to attract investment and regenerate. plug regeneration skills gaps – as evidenced by z Urban authorities need to work with the private 58 Stakeholder interview, the close working relationship between Barnsley and third sectors to identify and plug skills chief executive, shortages that slow down or stop local regeneration company, MBC and Yorkshire Forward. Liverpool, 14 June Capacity-building needs to occur alongside regeneration priorities. 2005. devolution, not before it. The two processes, in
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While all governments have proved to be as the best governance model for economic cautious in devolving power … this development purposes. Government has done more to devolve City-regions make good economic sense. power than any other. But we must now There is strong evidence to support the look to further devolution of power away devolution of funding for regeneration, City-regions from Westminster, particularly to a transport and skills to the city-regional level. “ reinvigoration of local government. Scale matters to the performance of urban make good Rt Hon Gordon Brown MP, Chancellor of the economies, and it is all too clear that the economic sense. Exchequer, 14 January 2006 boundaries of England’s cities do not match There is strong up to functional economic areas. Our biggest evidence to Leadership and power go hand in hand. But cities should be incentivised to work across our major cities – the drivers of regional and boundaries with surrounding areas to support the national growth – do not have enough power. promote economic development. devolution of Greater financial powers and autonomy But city-regions are a ‘hard sell’ – a funding for would improve their economic performance difficult economic concept, and a political and their leadership. London’s mayor is minefield. Financial devolution to city- regeneration, already proving this to voters, businesses and regions is a huge economic challenge, with transport and Whitehall. Our other big cities should watch downside risks as well as positive potential. skills to the city- and learn. Directly elected city-regional mayors are regional level This report calls for radical new financial bound to provoke a political outcry, and ” devolution, with a priority focus on city- voters do not readily identify with city- regions. We propose new City-Region regions. Contracts for Greater Manchester and So how do we get there? Birmingham, with devolved control over economic development funding and revenue- First, we need to build a consensus around raising powers to promote business growth. city-regions, starting with the biggest. This step-change in fiscal powers requires Central government must focus on city- a similar step-change in accountability. So we regions, and set out the case for them more identify directly elected city-regional mayors proactively. Following the ‘no’ vote in the
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North East in 2004, there is now no prospect core cities at the centre to work with of meaningful, accountable regional surrounding towns and cities. For example, government in England. Whitehall needs to Walsall and Coventry would benefit from accept that and move on. better cross-boundary connections and “ We believe in Our proposals spell out the implications of strategic city-regional investments. For towns selective city- ‘variable geometry’, where different places and smaller cities outside the largest city- will have different degrees of autonomy. We regions, we are proposing a range of fiscal regions, starting believe in selective city-regions, starting with flexibilities that would allow them to carve with the biggest the biggest first. We say very clearly that, as a out a clearer economic role for themselves. first. We say very first step, city-regional devolution should Voters do not currently identify with city- focus on Greater Manchester and Greater regions. That is a problem. Voter apathy clearly that, as a Birmingham. What will this mean for RDAs, presents a serious barrier to the development first step, city- local authorities, towns and voters? of accountable city-regions. The benefits of regional RDAs and other unelected quangos need city-regional governance need to be devolution to understand that city-regions are the drivers promoted: more investment, more jobs, of regional and national growth. They will transport improvements, and better service should focus on each need to respond to their own economic delivery. Greater geographies. In the North West, the NWDA Manchester and should ultimately cede control over economic Second, we need to give city-regions the development to Greater Manchester, and powers they need to succeed. London’s mayor Greater later Merseyside, but retain that control over has more powers than any English city Birmingham” the rest of the North West. Advantage West council. And the current GLA Review will Midlands will face a similar transition with give him even more. If our biggest city- Greater Birmingham. regions outside London had a similar set of Local authorities must accept that certain powers, they would be able to perform better. functions – such as transport and skills – are Central government should initiate a fresh best delivered across boundaries, not in round of devolution by giving Greater isolation. Within city-regions, local Manchester and Greater Birmingham the authorities should pool resources and lead over key economic development revenues, and work with city-regional entities functions such as transport, regeneration and on strategic investment decisions. skills – where the case is strongest for Towns and smaller cities have a lot to gain devolution. These city-regions (and London) from city-regions. But this will require the should also be equipped with new revenue-
www.ippr.org/centreforcities city leadership 65 raising powers to promote business growth quangos making decisions in and around our and encourage cross-boundary working. cities. This is becoming increasingly untenable. Central government has taken some We need to draw together decision-making We believe tentative first steps on the road to financial powers and budgets at the city-regional scale to “ devolution: the RDA single-pot and regional cut through the confusion. Executive Boards the case for funding allocations; Local Area Agreements, could be a step in the right direction, and mayors can be LEGI and LABGI; Business Improvement might usefully serve as transitional vehicles on made, if they are Districts and prudential borrowing. These are the way towards directly accountable city- given the power all useful, but they lack ambition and their regional entities. Directly elected implementation is proving problematic. commissioners for regeneration, skills and to make a real Our proposed new fiscal incentives build transport are another possible route forward. difference – to on these existing schemes, but offer much Ultimately, though, directly elected mayors fund major greater autonomy and flexibility. Financial would provide the best governance devolution is of course risky, and would framework for city-regions. We fully realise infrastructure present new fiscal challenges for the Treasury, that existing city leaders dislike the idea, and projects, grow not least on the public sector borrowing that voters are sceptical. But meaningful the business base requirement (PSBR). But the potential devolution demands clear and visible and attract jobs. rewards – better-informed investment, more accountability, as London’s example clearly efficient delivery and improved economic shows. Whitehall is unlikely to devolve Our cities performance – are great too. substantial powers and budgets without an deserve no elected mayor in place. less Third, we need to make city-regions We believe the case for mayors can be ” accountable to their residents and businesses. made, if they are given the power to make a If we are to empower city-regions, they need real difference – to fund major infrastructure to be made accountable and transparent. projects, grow the business base and foster Currently, there are too many unelected job creation. Our cities deserve no less.
city leadership 66 annex 1: devolving spending to city regions
This annex estimates the size of Map A.1 Birmingham city region regeneration, transport and skills spending pots which could be devolved using the City-Region Contract mechanism introduced in Chapter 5. It uses the financial year 2005/06 as a hypothetical case, and concludes that the Birmingham and Manchester City-Regions would have budgets of £675 million and £600 million respectively.
1. Defining city-regions We use the model put forward in Chapter 5, which marries existing political realities with travel-to-work areas. 2003 mid-year population estimates (MYEs) are used to ensure data consistency.
Birmingham city-region: Birmingham, Solihull, Sandwell, Walsall, Wolverhampton, Dudley, Coventry, City region as a percentage of total West Bromsgrove, Redditch, North Warwickshire, Midlands population: 57.71% (2003 MYE) Tamworth, Lichfield, Cannock Chase Manchester city-region: Total city-region population: Manchester, Salford, Trafford, Stockport, 3,070,300 (2003 MYE) Tameside, Oldham, Rochdale, Bury, Bolton, Total West Midlands population: Wigan, Salford, Trafford, Macclesfield 5,319,900 (2003 MYE)
www.ippr.org/centreforcities city leadership 67
Map A.2 Manchester city region the devolution of a share of Regional Funding Allocations from RDAs and Government Offices (which control funding for Regional Housing Boards and Regional Transport Partnerships) to the city-region level. Using the ratio of city-region population to total regional population, we arrived at the following shares of the 2005/06 Regional Funding Allocations:
Birmingham city region Funding Regional City region block total (£m) share (£m) Economic development 272 157 Housing 182 105 Transport 88 51 Total city region share 313
Manchester city region Funding Regional City region Total city-region population: block total (£m) share (£m) 2,893,000 (2003 MYE) Economic Total North West population: development 382 165 6,700,000 (2003 MYE) Housing 250 108 City region as a percentage of total North West Transport 113 49 population: 43.18% (2003 MYE) Total city region share 322
Source: HMT et al (2005b) 2. Regional funding allocations This report focuses on the use of the city- regional scale to promote economic 3. Learning and Skills Council funding development – especially regeneration, To derive an approximate city-regional share transport and skills. In Chapter 5, we propose of LSC funding, we applied the city-region
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to region population ratio to regional LSC regeneration spending (a key obstacle which funding allocations. We then estimated the has affected EU Structural Funds in the UK share of adult (post-19) spending for each city- over the past two decades). region – the portion of current LSC In 2005/06, this would mean expenditure recommended for partial or full approximately £85m in the Birmingham city- devolution in Chapter 5. region59, and £68.3m in the Manchester city- region.60 Birmingham city region From 2007, EU Structural Fund grants to West Midlands LSC total £978m the UK will tail off dramatically, as resources Gross estimated city region share £564.4m are shifted to new member-states. However, Minus pre 19 spend £355.6m city-regions could serve as accountable bodies Birmingham city-region skills share £208.8m for transitional resources, which are expected between 2007 and 2013. This is in line with Manchester city region the European Commission’s interest in North West LSC total £1,180m subsidiarity and devolved implementation Gross estimated city region share £509.5m (CEC, 2005). Minus pre 19 spend £321m Manchester city-region skills share £188.5m 5. Spending from the Department for Source: HMT et al (2005b); LSC (2005) Transport In Chapter 5, we propose that city-regions gain control of Passenger Transport 59 Estimate supplied by 4. EU Structural Funding Authorities/Executives and strategic Birmingham City Council Regional, European and Objective 2 programmes – which cover much transport functions. This would require the International Division. of the Birmingham and Manchester city- DfT to devolve: 60 Given a total spend of regions during the 2000-2006 programming £409.5 million in Greater period – are presently administered by the z PTA shares of Local Transport Plan Manchester 2000 2006. Source: GONW. Government Offices for the Regions. (LTP) funding 61 Funding for major We propose that city-regional shares of z Funding for major schemes61 schemes is included this funding be administered and under the Regional implemented at city-regional level. This The bulk of PTE operating budgets derive Funding Allocation for transport, calculated in would enable city-regions to match EU from annual levies placed on the council tax section 2 above. resources with devolved domestic in metropolitan districts. This report does not
www.ippr.org/centreforcities city leadership 69 propose changes to the council tax – but funding should also be devolved to this level argues that the budget for the regional wherever possible – and grants from the transport authority should be controlled at forthcoming Transport Innovation Fund city-regional level, alongside budgets for should be vired to city-regions for strategic regeneration and skills. The adoption of a projects. Transport for London-type model, with Local authorities within city-regions should mayoral control and the right to fare-box also give strong consideration to pooling some incomes, could result in city-regional of their own economic development resources transport authorities with far more resources within City-Region Contracts. Our research to underpin capital investment. suggests that this would help to progress or We have not included LTP allocations to unlock infrastructure projects of key strategic individual local authorities – but believe that interest. some of these allocations should be pooled within the City-Region Contract as well. 7. Approximate city-regional budgets Birmingham city region Taking the basic figures in sections 2-5 PTA/PTE LTP grant 2005/06: £69.1m together, the approximate level of spend Manchester city region devolved from Whitehall departments and PTA/PTE LTP grant 2005/06: £18m agencies to our proposed city-regions would be as follows for the financial year 2005/06: 6. Other potential devolved funding This annex is indicative rather than Approximate city region budgets exhaustive. It does not include all of the funding streams that would be best devolved, Birmingham city region £675m allocated and implemented at city-regional Manchester city region £600m level. For example, English Partnerships
city leadership 70 List of web annexes
All available at www.ippr.org/centreforcities
WEB ANNEX 1: WEB ANNEX 4: Linking governance and performance: ‘City Mayors’ event report, a review of the evidence base 19 May 2005
WEB ANNEX 2: WEB ANNEX 5: Economic development in Britain: policy, ‘Working Cities’ events report, powers, funding September/October 2005
WEB ANNEX 3: WEB ANNEX 6: Economic development tools: international ‘City Leadership and Financial Devolution’ comparisons event report, 17 November 2005
www.ippr.org/centreforcities city leadership 71 List of abbreviations
AWM Advantage West Midlands LABGI Local Authority Business BCC Birmingham City Council Growth Incentive BID Business Improvement District LCC Liverpool City Council BPF British Property Federation LEGI Local Enterprise Growth CBI Confederation of British Industry Initiative CEC Commission of the European LGA Local Government Association Communities LSC Learning and Skills Council CIPFA Chartered Institute of Public LSP Local Strategy Partnership Finance and Accountancy LTP Local Transport Plan CRGI City-Region Growth Incentive MBC Metropolitan Borough Council CUPS Centre for Urban and MYE Mid-year estimate Community Studies NLGN New Local Government Network DCMS Department of Culture, Media NNDR National non-domestic rates and Sport NWDA North West Development DfES Department for Education and Agency Skills NWSG Northern Way Steering Group DfT Department for Transport ODPM Office of the Deputy Prime DTLR Department for Transport, Minister Local Government and the OECD Organisation for Economic Regions Co-operation and Development DGCL Direction Générale des ONS Office of National Statistics Collectivités Locales PPP Public-private partnership DTI Department of Trade and Industry PSA Public Service Agreement DWP Department for Work and PTA Passenger Transport Authority Pensions PTE Passenger Transport Executive EDC Economic Development Contract RDA Regional Development Agency GDP Gross domestic product SBR Supplementary Business Rate GLA Greater London Authority SURF Centre for Sustainable Urban GVA Gross value added and Regional Futures HMT HM Treasury TfL Transport for London LAA Local Area Agreement TTWA Travel-to-work area
city leadership 72 references
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