Centre for Cities

Creating a system of city-region governance one place at a time

In the furore associated with the Government’s response to the Heseltine Review another highly significant announcement regarding the North East has been overlooked.

Last Friday, the leaders of the seven councils that make up the North Eastern LEP (Newcastle, Gateshead, North & South Tyneside, Sunderland, Northumberland and Durham) voted to give their collaboration on economic development and transport legal status by becoming a Combined Authority.

They join a growing group that includes not only the Greater Manchester Combined Authority but also West Yorkshire (Leeds City Region) and South Yorkshire (Sheffield City Region), both of which declared their intention in their City Deals of forming combined authorities.

For those that want to know a bit more about Combined Authorities we published a briefing on them a while back looking at their powers, funding and potential advantages.

Coupled with yesterday’s announcement at the launch of the Greater Birmingham Project: the Path to Local Growth that Greater Birmingham and Solihull LEP will set up a ‘supervisory board’ to manage and “provide political accountability” for single pot growth funding means that a system of city-region governance for England at least is beginning to take shape.

Once the Combined Authorities are in place then the appetite to revisit the merits of Metro-Mayors, which we’ve been advocates for since our 2006 City Leadership report, will grow.

Directly-elected Metro-Mayors overseeing strategically focused city-region authorities. Now that really would be a significant step towards ‘real’ devolution.

 

Early indications about Heseltine response

As the Budget gets gradually leaked in time honoured fashion (although much less than last year), today is ‘growth’ day, with the focus on the Government’s response to Heseltine, to be published later today.

We haven’t seen the detail yet but press coverage (particularly good, as usual, in the FT) so far suggests: 

i) 81 out of 89 recommendations have been accepted, including: the government drawing up a national growth strategy; seconding more civil servants to the private sector; civil servants being in local growth teams; and more business engagement in the school curriculum.

ii) Recommendations that haven’t been accepted include: setting up unitary authorities; setting out plans for new airport capacity in the south of England before 2015; and beefing up the legal powers of chambers of commerce. The recommendation for a national growth council has been accepted ‘in part’ which means it hasn’t really been accepted; it’s regarded as existing already. 

iii) The single pot will be implemented, but it’s likely to be much smaller than Lord Heseltine recommended. It will include skills (but not apprenticeships), housing and transport, and the exact amount is being debated in Whitehall at the moment (for which read there’s a big battle going on, and Whitehall departments are trying to make this as small as possible). The exact amount will be decided on in the Spending Review.

iv) Much of the money will be channelled through LEPs. Each will negotiate a local growth deal, presumably along the lines of City Deals, with the funding allocated depending on the quality of the bid.  It will be interesting to see how this fits with what’s in the core package.

I’ll blog again once I’ve seen the detail. But there’s a missed opportunity if the single pot is so small that no meaningful work can be done, if everything is channelled through LEPs and combined authorities are to be ignored (the latest one is in the North East, announced on Friday – a significant achievement) or if local areas get a few more instruments to play with but Whitehall still gets to call the tune. More on this later.

 

Wave 1 City Deal insights

With confirmation that 2013 will see a further 20 City Deals, it is a good time to reflect on what has been learned so far.  There are currently eight City Deals with the cities belonging to the Core Cities Group.  In preparation Wave 2 Deals announcement, Centre for Cities asked each of the Wave 1 cities about the successes from and the challenges of negotiating their own Deals. We have reflected on their views in a short report - City Deals: Insights from the Core Cities. 

Perhaps the most significant achievement of City Deals to date is to have opened up a new dialogue between cities and government.  Nick Clegg’s acknowledgement that government has become too centralised, and that local economic growth requires local solutions, has set a new agenda.  The Government has issued a challenge to cities, asking “How would you do it better than us?”  A fast-paced process has pressed cities into action, requiring them to clarify their economic strengths and weaknesses, identify priorities and develop credible policy requests for central government.  Ministers have judged the results, with an unusual level of direct contact between the Cabinet and local authorities.  This has created some genuinely ground-breaking proposals of which the Manchester Earn Back scheme, returning £30 million per annum of central taxation to the city, is the poster child. 

A great deal of ground has been covered in a short space of time, but there is still much more to be done.  Cities need to up their game with more consistently ambitious policy asks that prove too good for the Government to refuse.  There should be more collaboration between cities and the Government to devise joint solutions to common problems.  The process of considering place as a matter of course when devising central government policy, and lining up Whitehall departments behind a collective agenda to empower places, has only just begun.  And the Government needs to connect the City Deals agenda, including Core Package policies, with its response to the Heseltine review to avoid policy confusion.

However, some essential lessons are already clear for the Wave 2 cities.  Above all they need to know their local economies better than ministers and civil servants, and have the evidence to back up their alternative growth proposals.  If they can do this, they should stick to their guns and back the policies that can really make a difference to their place.  And there is no reward without risk, so it is clear that Wave 2 cities will need to back up their ideas with political commitment.  City Deals have great potential, and we will know by the end of 2013 whether they can fulfil it.

City Deals - which sectors are most popular?

Using the press release on the annoucement of Wave 2 City Deals we've pulled the words used to describe the sectoral focus of each deal into a word cloud. As the graphic below shows, the words 'advanced' and 'manufacturing' are by far the most popular, although I must note that they are not always paired together.

It's a Deal

Last night Nick Clegg announced that another 20 cities will be given additional economic powers as part of the City Deals programme. As this press release sets out, each city has its own distinctive focus, whether manufacturing or maritime, the knowledge economy or green technologies. Having said it would be a competition without any limit on who gets through, the Government has been true to its word – but the Deals will be developed in phases. The ‘flotilla’ of Deals (apparently how it’s being described) will involve the first few Deals being developed in the next few months, the next phase being completed in Autumn, and the final phase of Deals being signed off towards the end of the year or early next year.

Overall it’s a welcome announcement and good to see that the Government is pushing ahead with devolution – you wouldn’t expect the Centre for Cities to say anything else – but it raises a number of interesting questions about what next, not only for City Deals, but for the Heseltine Review recommendations and for devolution as a whole. Five key questions spring to mind for me.

First, does Whitehall have the capacity to deliver the Deals? This is a lot of Deals for a relatively small Cities Unit, which will be going out to bat against some heavy-hitting Whitehall departments. The Unit not only needs to support these 20 cities, but also the original eight core cities (which are hoping to extend their Deals further). A lot of the Deals are also very big asks for departments traditionally very sceptical about the need for or desirability of any devolution. Nick Clegg and Greg Clark have been instrumental in pushing through a lot of change; they and other senior ministers and officials will need to work very hard to ensure Whitehall is ambitious, open to change and able to deliver.

Second, do cities have the capacity to deliver the Deals? A lot of work will be needed to turn the expressions of interest into the level of detailed policy that will get through Whitehall, and all areas are facing the strain of reduced budgets and reduced staff. If Deals are to be successful then cities will need to ensure they invest in the appropriate levels of resource to shape the Deal, that they are both ambitious and realistic about what their city can achieve, and that they are astute in the way they ‘sell’ their Deal to national officials and to ministers. 

Third, will the core package deliver? The menu of additional options that places can draw on once they have signed a bespoke Deal – due to be announced in March – matters, as many cities were encouraged to focus on just one issue relevant to their local economy in their bespoke Deal, and told that other policy options would be in the core package. From my perspective, this core package should also be a trailblazer for other places, whether cities or not, to access powers, given they can satisfy some basic criteria such as strong governance and accountability.

And that’s my fourth question: is enough being done to ensure that local governance is strong enough? With Local Enterprise Partnerships, Combined Authorities, Joint Boards and an array of options in-between, governance is always going to be diverse. Yet, given that City Deals are partly about ensuring economic development takes place at a more practical level – i.e. the level of the functional economy – it will be important to ensure that governance is sufficiently strong to encourage places to take the tough decisions required in a climate of limited spending.

And that brings me on to my final question, what about Heseltine? Are City Deals laying the ground for Heseltine, or something separate? We would argue that there needs to be links made across these two agendas, so that City Deals can help to pave the way for Heseltine but also encourage further ambition in how Heseltine’s recommendations, particularly around the single pot, are implemented. We’ll be writing more on this in the run-up to the Budget.

Maintaining the golden glow

After six months of relative silence, the debate about the Olympic Legacy reappeared on front pages yesterday with a joint article by David Cameron and Boris Johnson. And it appears that they have been reading our report “A Marathon, not a Sprint” that we published in September. 

In our report we looked at the experiences of past Olympic cities to see what London can learn from them.  In their article the PM and the Mayor used the same approach to show that London is already taking lessons on board and to restate their commitment to the 2012 Olympic legacy.

Here are some of the recommendations we made and how they have been reflected in Cameron’s and Johnson’s article:

1. Use the success of the Games to help business grow. The agreement announced yesterday between the British Olympic Association (BOA) and International Olympic Committee (IOC) to allow businesses to promote their Olympic experiences will benefit suppliers across the country and is likely to unlock more export-led growth.  The fact that the Prime Minister is engaged in conversations about getting British firms involved with future Olympics is also a sign of the Government’s commitment to making the most of business opportunities created by the Games.
2. Develop a clear legacy vision for the Olympic park. The speed with which the conversion of the Olympic Park and venues is progressing is also good news. With a number of venues reopening this summer and several events already scheduled, the threat of these venues becoming white elephants appears to be receding.
3. Use the Games to deliver a social legacy for east London. The commitment to deliver more jobs and apprenticeships, housing and social infrastructure as part of the legacy is welcome.  Yet it is still unclear whether any of the new development will be located outside the Olympic Park, and whether local communities will benefit from new developments. In our report we showed that most of the direct Olympic interventions were limited to the Olympic Park and its immediate boundaries. East London remains one of the most deprived areas in the country. The challenges of low skills, unemployment and poverty are deep rooted and can’t be resolved through developing the Olympic Park alone. The Host Borough Unit is committed to narrowing the gap between Olympic Boroughs and the rest of London, and has seen some success. But broader initiatives focused on addressing deprivation are still missing from the Olympic legacy framework.
4. Be patient and be ready to invest more. A long term plan for legacy development outside the Olympic Park needs to be put in place, and the Government needs to commit to it and be ready to invest more to make it happen. It remains unclear whether any progress has been made in this regard. It took Barcelona’s Olympics over a decade to be recognised as a legacy success, and that was based on considerable political commitment and more investment. There is no reason to believe that it will take less than that in London.

The Olympics produced a once in a lifetime summer of sport.  Its legacy is likely to take more than a lifetime to realise.  

Related articles

East London leads the way on business base growth in the Capital

2012 was a big year for UK cities; now 2013 is all about delivery

David Cameron and Boris Johnson: Six months on, we won't let the Olympic Games legacy die

The Olympic legacy has failed to bring jobs to London's East End | Rushanara Ali

The new Mayor of Bristol - top economic priorities

While voting for Police and Crime Commissioners has taken most of the attention today, the people of Bristol are also currently taking to the polls to vote for their new mayor.

The referenda on mayors held back in May were a bit of a damp squib – Bristol was the only city of those polled on the issue of introducing a mayor to vote yes. But despite going against the crowd, the significant improvement in strategic leadership that the mayoralty is likely to provide will be a very good thing.

So how should the winner of today’s vote put these freedoms to good use? Here are three suggestions:

1. Make sure Bristol’s City Deal is a success. The recent negotiation that the city entered into with Whitehall has given it an excellent opportunity to tailor economic policy for its area. In the short term delivering on this Deal should be the number one economic priority for the new mayor.
2. Play a co-ordinating role between policy areas and act as a figurehead. The Mayor of London is a good example of what can be achieved here.  He chairs multiple London-wide boards that are responsible for economic development, such as Transport for London and the Local Enterprise Partnership. He sets the London Plan, which sets out a city wide strategy to support economic growth. And most clearly of all, he acts as a figurehead for the capital, not just for the rest of the UK but around the world. Investors know who to speak to; citizens know who to hold accountable. When asked to name the leader of London, surely few would struggle to answer.
3. Self-define the role. Lack of clarity around what extra a mayoralty would do is likely to have been one of the main reasons for the resounding 'no to mayors' vote in most cities back in May. But this presents a real opportunity for the Bristol mayor. The appetite shown by Government to devolve power through City Deals gives scope for further requests from the mayor’s office. Again, London acts as the case in point – the remit of the Mayor of London is much wider now than when the position was created in 2000, a remit that has been expanded incrementally over the last 12 years.

Of course, the Mayor of London covers 33 local authorities, rather than the one that the Mayor of Bristol will represent. This is a key problem of the type of mayoralty that was offered to our cities outside of London.

So over the longer term, as the mayor demonstrates the impact that they can have on the city economy, he or she should also seek to work with neighbours to augment the mayor's political coverage to one that matches the economy of the city, not an artificial boundary on a map. For those outer areas worried that this will mean too much focus on the city at the expense of more rural areas, it may be worth remembering that the first time Boris Johnson was elected mayor of London, it was on the basis of votes in the suburbs rather than the city centre.

Bristol is a vital cog in UK plc. With the strong stewardship of its new mayor it could cement its position as England's strongest performing big city outside of London. Today marks an important juncture in the city's history. Whoever is elected, the mayoralty is likely to provide significant scope to support the city and its residents to prosper in the future.

Follow Paul on twitter @Paul_Swinney

No stone unturned – Heseltine’s economic plan for the UK

With 89 recommendations, comprehensive is certainly one word you might use to describe Lord Heseltine’s Review launched today in Birmingham. Others may view it as an attack on Government. But Heseltine claims to be a “glass half full” man who sees his Review as an opportunity to rise to the challenge.

Heseltine points to the UK’s world class businesses and internationally renowned universities but urges “these are standards to achieve not grounds for complacency”. Jerry Blackett from the Birmingham Chamber of Commerce was clear in his introduction that “no one thinks the status quo is an option for the UK economy”.

Heseltine’s view is there is a better way. That way centres on reinvigorating local leadership across England – something Centre for Cities has long been calling for.

What’s included in the Review?

It’s difficult to summarise all of the Review’s recommendations in a short blog. Heseltine himself is reluctant to prioritise out of the 89 recommendations for fear of people losing sight of the others. His view is that every single one is a “contributor to growth”. If he did have one priority though, it would be to build a “universal understanding that the responsibility for growth lies with every individual”.

There are several key themes running through the report, along with some stand out recommendations:

• PM-led National Growth Council – An overarching long term strategy should be underpinned by a strong governance structure. The Growth Council should drive the implementation of the Growth Strategy across all departments.

• A Single Funding Pot – A single funding pot for local areas to include significant parts of budgets held by central government that would be ‘more effectively managed by local leaders’ (including skills, housing, infrastructure and employment support). This goes with the grain of developments around City Deals and Community Budgets but would give city leaders much more discretion over how funds are spent locally.

• Putting local partners at the heart of economic policy – Local Enterprise Partnerships should be given resources (with the allocation of £250,000 new public funding) to develop local economic plans. LEPs should then bid for funding from the single pot. Where LEPs lack capacity they should be given support.

• Functional economic areas – Emphasis is also placed on LEPs ensuring their boundaries match functional economic areas – the most effective level for urban economic decision making and implementation. Heseltine also believes a more simple structure for local government should be created: all two-tier authorities outside London are encouraged to move towards unitary status.

• Public-private partnerships – Central to the Review is partnership between the public and private sectors. Recommendations around broadening the role of the private sector include the Chambers of Commerce receiving enhanced legal status to provide access to business support and local authorities building stronger relationships with private sector partners.

So where next?

There is a lot of support for Heseltine’s recommendations. As always there is also some scepticism, some surrounding the ability of Chambers of Commerce to provide effective business support and mechanisms for fair allocation from a single funding pot. A real shift of power to LEPs will bring with it more experimentation too. With experimentation comes the need for proper evaluation of what works.

What really matters now is the reaction from Government, and what we see in terms of action and implementation.

Heseltine acknowledges that many of his recommendations are not new. There are lots of references back to past initiatives and reviews. In some ways this is reflective of the lack of implementation and consistency. For Heseltine “inertia forms a substantial part of the blockage” when it comes to policy implementation. For those who think there’s merit in his plans, Heseltine urges people to “stand up and be counted” in order to drive change.

Follow Naomi on Twitter @Naomi_Cities

City Matters - my weekly cities reading list

I hope you enjoyed some, if not all, of my reading suggestions from last week.  I received some great suggestions via Twitter and email from fellow city geeks, which are much appreciated.

This week I’ve gone for a mix of the current, the old and the classic.  I hope you enjoy these and please continue to suggest others that I should read and recommend. 

• ‘Homeownership and Entrepreneurship’ by Philippe Bracke, Christian Hilber & Olmo Silva (2012) - highly relevant analysis of how buying a house influences whether someone is likely to start their own business.
• ‘Regional Economic Resilience, Hysteresis and Recessionary Shocks’ by Ron Martin (2011) - provides substance to the widely used notion of resilience and explores how places can and do respond to economic shocks and what this means for their long-term success.  
• ‘Abundance of land, shortage of housing’ by Kristian Niemitz (2012) – critiques some of the reasons offered to explain why UK housing costs have increased over the last decade before calling for a more ‘liberal’ planning system.  
• ‘Contrasts in Agglomeration: New York and Pittsburgh’ by Benjamin Chinitz (1961) - all I can say is read this and enjoy.  10 pages of great insight into how industry dynamics affect city success.
• ‘Soft City’ by Jonathan Raban (1974) – a travel writer’s perspective on what makes cities so appealing and revolting.  Includes a great chapter on anonymity in crowds that reminds me of travelling on the tube every day.

Follow @AndrewCities on Twitter

City matters - my recommended reading list

One of the many joys of working at the Centre is having the opportunity to read and think about some of the great research that is undertaken across the globe looking at cities, their economies and why they matter to the future wellbeing of individuals, businesses and communities (however you define it). 

Also if you’re like me, you rely on a very wide range of sources and contacts to alert you to all this great work.    

So in my very humble way I thought I’d start a weekly blog highlighting my recommended reading list of research on cities that I’ve come across that week.  My recommendations whilst obviously personal and subject to all my biases and judgment errors, will be guided by the following criteria: a) those I’ve actually read; b) contains or is based on research; c) is accessible to a wider readership; and d) I enjoyed reading them.

So my initial list is:

• ‘Education or Creativity: What matters most for economic performance?’ by Emanuela Marrocu & Raffaele Paci - combines Glaeser’s ‘human capital’ and Florida’s ‘creative class’ ideas into three separate groups – creative  graduates,  bohemians and non-creative graduates – and looks at the effect of these groups on the economic performance of 257 regions across the Europe.
• ‘Defining a Great Street’ by Kaid Benfield - photo-based consideration of what makes a great street drawing on city streets from across the US and Europe.
• ‘When Migrants Rule: the legacy of mass migration on economic development in the US’ by Andrés Rodríguez-Pose & Viola von Berlepsch – fascinating analysis showing the lasting effects of migration in the late 19th and early 20th century on the current economic performance of US counties. History matters!
• ‘Great Britain’s Second-Order City Regions in Recessions, 1978-2010’ by Tony Champion and Alan Townsend – compares the jobs performance of UK’s big city regions in the current recession to show how much ground cities have lost  and how this differed from previous recessions.
• ‘New Geography of Jobs’ by Enrico Moretti – brilliant rich and insightful exposition of why and how the modern economy benefits certain people and places more than others.  He also has some interesting things to say about urban manufacturing.

I hope you like them.  Please feel free to add to my list and let me know other research that I should be reading.

Follow @AndrewCities on Twitter