City Deals: give and take?

9 July 2012

The Government has just announced the details of its first wave of city deals. Sam Sims assesses whether or not they were a genuine process of give and take.

In December last year the Cities Policy Unit announced a range of powers which they were considering giving away to cities. The Government was however, careful to explain that “the ‘deal’ must be a genuine transaction – with both parties willing to offer up and demand things in return.” Did the deals actually involve give and take?

The Government’s main demand was that cities sort out their governance arrangements: “Where cities want to take on significant new powers and funding streams, they will need to demonstrate strong, accountable leadership” and “effective decision-making structures… across the economic footprint of cities.”

The details of the City Deals have just been announced. Greg Clark has done a good job in securing cities some substantive new powers over revenue raising, pooling and retention, transport and infrastructure investment, and skills. This is a great start in the process of returning power to our cities.

The question remains however, did the cities which strengthened their governance arrangements get more powers given to them? Was it a genuine transaction or did cities call the Government’s bluff?

The table below shows all the areas in which cities have genuinely ‘extracted’ new powers or resources from central government. This inevitably involved some interpretation of the document and the adoption of some conventions, and is therefore open to challenge. Green cells represent a case were a city has secured the new power/funding and a yellow cell represents an area were there has been a weaker, or ambiguous devolution. The cities have been ranked by how successful they have been in drawing down new powers (green counts for one ‘point’, yellow for half a ‘point’.)

The table clearly shows that the city deals have indeed been a “genuine transaction.” The five most successful cities all have either a city-region authority or a directly-elected mayor. The three least successful cities have neither (though there is a vaguely worded aspiration for a North East Combined Authority.)

city deals assessment

Source: Institute for Government analysis of Unlocking growth
in cities – Cabinet Office

There are three big governance implications of the city deals. Thanks to Sheffield and its neighbours, there are now three city region authorities in the UK. This may prove the tipping point at which the other big cities can no longer afford to stick with the status quo. Bristol now has far more transport powers than Birmingham, for example, and will soon have a bus rapid transit system and suburban railway that will be the envy of most UK cities.

Secondly, due to the bespoke nature of the city deals, central government’s role in funding local government has just become a lot more complicated. Some of the cities have also gained the power to borrow against future increases in corporate tax revenue from specific areas which will likely lead to an increase in net public sector borrowing.

Thirdly, both local authority mayors and city region economies have their downsides as forms of governance. The city-region authorities, though an essential tool for devolution, currently have doubly-indirectly-elected leadership. Voters elect councillors, who elect a leader, who selects the city-region authority representative; making democratic accountability very weak. Local authority mayors on the other hand, though a powerful way of keeping local government accountable, cover too small an area. Liverpool’s city deal makes an ambiguous statement about transport devolution, the reason it only qualified for a yellow cell in our table.

One obvious answer is to establish city-regional mayors combining the strengths of the two models while avoiding their weaknesses. For more on how the transition might be achieved, see Ed Cox’s chapter in our publication What can Elected Mayors do for our Cities.

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One Response

  1. Peter Doyle on 9 July 2012 at 5:04 pm

    Greg Clark deserves credit for producing what looks to be that rare thing; a genuine game changing policy. I wouldn’t get hung up about the different models of local government leadership in these City Deal regions. Devolving power begats relevance begats voter interest. The democratic process will be revitalised in direct proportion to the amount of power it wields.
    Not surprisingly the big question for me for Mr Clark is “If City Deals are so good why no County Deals too?”

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