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It's time to empower cities to drive the national recovery

27th March 2014

In order to make the most of the existing Greater Manchester Combined Authority and the four forthcoming “super councils” in Merseyside, West Yorkshire, South Yorkshire and Tyne & Wear, the Government should look to arm them – as well as future combined authorities - with the range of powers currently only available to London's Mayor and the Greater London Authority. That is the message from a new report published today (27 March) by leading economic think tank Centre for Cities.

Research has shown that the largest cities in the UK continue to lag behind the national average on wages, productivity and skills, in part because they can’t prioritise the investments that would make the biggest difference to their economies. With local government budgets facing further cuts in the years ahead, individual councils could find themselves in a position where they have too little resource and too few powers to boost their economy, support business, and help residents get into work.

By working together on the issues that affect the performance of their local economies - transport, skills, housing and planning - councils can do more to support local business and residents than they can on their own. But to be truly effective, such partnerships must be underpinned by the power to take the big decisions that drive local economic growth.

The report, sponsored by Capita, identifies the benefits to Government and local communities of stronger financial incentives and decision making powers for local authorities to make the most of working together. Councils moving to having combined authorities or having directly elected mayors need access to the kinds of powers and freedoms that currently only the Mayor of London and Greater London Authority benefit from, which include the ability of Combined Authorities to:

  • Set levies to raise additional funding for economic growth projects;
  • Intervene in ‘strategically important planning issues’ and direct local authorities to conform with an agreed Strategic Plan;
  • Establish a Transport for London (TfL) equivalent body which would control modes of transport and the freedom to control and manage fare-box income;
  • Take control of HCA assets, be able to acquire land for housing and regeneration purposes and to set affordable housing targets; and,
  • Establish Development Corporations (DCs) for regeneration purposes covering a specified area or areas of land.

For cities unwilling or unable to move to combined authorities, incentives – such as the introduction of integrated multi-year budgets – could be offered in exchange for working together more closely through Economic Prosperity Boards and Joint Management Teams that cover their functional economic areas. And for counties that are also functional economic areas, the Government could incentivise the transfer of strategic planning powers to the county.  This new ‘strategic county’ structure would then allow the county to coordinate housing, transport, regeneration and skills budgets and strategies (with other powers remaining at district level).

The UK remains one of the most centralised countries in the developed world.  The Government has a big opportunity to support devolution to cities and city regions within England, ensuring that they can effectively drive growth in the years ahead. 

Alexandra Jones, chief executive of Centre for Cities, said: “Our cities will struggle to realise their economic potential, particularly in an era of reduced public spending, unless our over-centralised local government funding system changes.

“Government should build on City Deals and the recently announced Combined Authorities to create a framework for ‘tailored devolution’, with more powers and autonomy going to places willing to work more closely together. Local areas also need to be bold and come together to transform the way they support businesses, invest in transport and provide the services people use every day.”

Richard McCarthy, executive director at Capita's property and infrastructure business said: “This is relevant not only to cities but to all economic regions across the country. Putting the mechanisms and decision making powers in place to allow local councils to work together effectively should enable greater economic growth in their area. The private sector can play a key role in helping councils to adopt commercial thinking and innovation to support the development of vital revenue generating initiatives and release resources and efficiency gains back into supporting the local economy.”


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