Nick Clegg this morning announced the Government will be striking a series of "City Deals" with the eight core cities over the next few months. The deals are designed to give the cities and their Local Enterprise Partnerships (LEPs) new powers to support growth.
Funding and decision-making power has slowly been devolved to LEPs through the Enterprise Zones (23 of the 38 LEPs have Enterprise Zones) and the Growing Places Fund over the past few months. Now it seems the Coalition are going further and faster. Clegg views these new deals as an unprecedented step change in fiscal devolution.
According to the Government, cities are being placed at the heart of the economic growth agenda. This is very positive news - Great Britain’s cities account for 60% of jobs and 52% of businesses. The deals are also designed with the recognition that different cities have different needs. As the DPM stated, some cities - Birmingham included - saw declining private sectors in economically buoyant times. Birmingham's priorities will be different to Bristol's.
The document published today sets out a menu of options for cities. But cities are not supposed to be bounded by these, in Clegg's words "nothing is off the table". The deals are anticipated to fall into 3 categories:
1. Consolidated capital pots (NB. capital as opposed to revenue);
2. Infrastructure, including planning and housing;
3. Skills and jobs, and New Apprenticeship Hubs.
The Government will offer cities greater economic and political freedom. In return, cities will need to demonstrate that initiatives are achievable and efficient, and contribute to economic growth. Cities will also need to shoulder some of the risk - the Government will not do all of the underwriting.
Clegg was also clear that it’s not just about deals with cities; it's about deals with Whitehall. Clegg's test of real devolution from the centre and step change is "making Whitehall feeling uncomfortable". It will require a significant culture change on all sides if these deals are to result in real devolution and effective decision-making over the longer term.
Greg Clark and Nick Clegg will continue to lead negotiations with city leaders and Whitehall departments with the aim of striking deals in time for the 2012 March budget. Whilst there is a general feeling of positivity over the city deals, big questions remain. And, of course, the devil is in the detail.
It does raise issues about the institutional structures and capabilities to deliver a new form of devolved decision-making and investment. One of the biggest opportunities is for cities to prioritise and coordinate funding more effectively across policy areas in ways that respond to their unique circumstances.
Finally, the soon to be published legislation to allow local authorities to retain a proportion of business rates taxes needs to ensure that cities are sufficiently incentivised to prioritise development that will create jobs and growth.
Cities - and the Centre for Cities - have been arguing for more powers for years. Cities now need to seize the opportunity and prove they can deliver. And the Government needs to prove that it can let go of power and enable cities to drive the economic recovery.