Tuesday, 19 Oct 2021  |  Reading time:  13 mins  | Read online

City deals: unlocking local government potential

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As rapid urbanisation continues globally, cities and city regions are emerging as popular scales for subnational investment and innovation. Forming something of a global trend, 'city deals' and similar initiatives have been implemented in countries including the UK, France, the Philippines, Australia and the Netherlands.

So, what are city deals? A city or growth deal is a bespoke package of funding and decision-making powers negotiated between central governments and local authorities. The deals bring together separate powers, responsibilities, funds, programmes and expertise into set of policies designed to reflect place-based conditions and priorities.

What's in it for local authorities? City deals can provide an investment pathway, giving local authorities more powers to drive local economic development. By moving away from one-size-fits-all national policies, cities can negotiate funding directly for where it is needed or would benefit most locally, creating more impactful investment.

Why would central governments agree? City deals allow funding to be directed towards projects that are considered to be mutually beneficial by national and subnational governments, such as major infrastructure or local economic development projects with visible benefits for central government. City deals are a form of devolution but maintain central power and scrutiny.

Are there any limitations? Deals-based urban policy can potentially lead to a set of fragmented, varying schemes in different cities that fit vaguely under national policy ‘pillars’ but aren’t driven by a systematic framework for how to improve cities. With funding tied to specific outcomes, they may be limited in scope and overly-focused on infrastructure at the expense of broader policy goals – and central government is still in control.

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This week's featured content

Reflecting on UK City Deals: Unlocking local government potential or maintaining the status quo?

By Jonathan Carr-West, Chief Executive, LGIU

City Deals have been part of the UK policy landscape since the government agreed the first set of deals with eight core cites in July 2012.

Although each deal was different, they broadly covered key growth drivers such as transport and infrastructure, jobs and skills, economic development and business support, and funding and introduced some new innovations in approaches to local economic growth. The Government offered the core cities a ‘deal’. They set out a menu of powers, flexibilities and resources on which they would be prepared to empower cities to lead:

  • Freedoms to invest in growth – including a single capital pot, the prospect of Tax Increment Financing (TIF) schemes, business rate discount and pooled business rate retention, and increased influence over future RGF and EU Structural Funds.
  • Powers to drive critical infrastructure
  • Enabling cities to boost skills and jobs – including increased influence over employment and skills.

This offer, however, was a two-way deal – requiring cities to demonstrate ‘strong, visible and accountable leadership and effective decision-making’, and taking on some of the risk. Over the following years, some of these deals were built upon with more complete devolution arrangements, beginning in Manchester in 2014, which established elected mayors for city regions with increased powers over transport, infrastructure, skills (and in some places police and fire services). A decade on, how successful have these deals been? What can we learn from them?

How can we assess the success of city deals?

LGIU Global Local Highlights


Shaping a just and fair transition: city centrism

This briefing will discuss how cities and city regions are emerging as popular scales for subnational investment and innovation, including but not limited to climate action. 
Read our content here.

Swift Read: North and West Melbourne's City Deal Plan, Australia

This briefing looks at the North and West Melbourne City Deal Plan 2020-2040, which was officially launched in August 2021. The Plan sets out the investment priorities for the North and West of Melbourne as determined by the region’s thirteen local governments. 
Read our content here.

Shaping a just and fair transition through UK City Deals: best practice and future opportunities for place-based climate mitigation

Through engaging with new original work exploring the climate action credentials of the City and City Region Deals, this briefing will seek to highlight key trends, best practice and future opportunities for place-based climate change mitigation.
Read our content here

Innovation & Inspiration

Curated case studies and news from around the globe

Wales: Energy efficient design planned for 10,000 homes in Swansea Bay City Region

At least 7,000 homes will be retrofitted to become more energy efficient and support the integration of renewable technology through a £505 million Swansea Bay City Deal project. A further 3,300 new homes will be built through the Homes as Power Stations project, which seeks to reduce residents’ carbon emissions and fuel costs. The project will start small within the public sector before being scaled up across the region to test the concept’s viability for the rest of the UK. A regional supply chain will be developed and learning will be shared on an open access knowledge hub.
BusinessLive / Sion Barry

Related: Climate adaptation strategy identifies 11 crucial strategic interventions needed for Glasgow City Region to thrive in 2050Find out more in this LGIU blog.

The Netherlands: Municipalities join forces to improve healthy and sustainable food access

A new City Deal seeking to make it easier for residents to access healthy, plant-based and locally-grown food was signed on 16 October to mark World Food Day. Amsterdam and Rotterdam were among the eight municipalities to sign, along with government ministries and health organisations. The City Deal will include pilots to increase the availability of healthy food near schools and vulnerable communities, working with supermarkets and catering companies. Legal mechanisms will also be investigated, including denying permits for new snack bars, in a bid to reduce rising obesity.
Municipality of Rotterdam
Het Parool / David Hielkema & Laura Obdeijn
Related: Circular economy best practices shared on digital platform as part of Netherlands City Deal City Deal Circular City

Global: Cooperative approach supports inclusive and sustainable growth in rapidly urbanising cities

A five-year programme aims to build the capacity, coordination, technical processes and skills of local governments in six cities experiencing rapid growth across the globe. The DEALS programme targets specific challenges faced by municipalities through a collaborative approach involving local authorities, private companies, educational institutions, charities and funding partners. Led by the Association of Netherlands Municipalities (VNG), the cities involved are: Kusami (Ghana), Sèmè-Podji (Benin), Pathein (Myanmar), Pereira (Colombia), Beira (Mozambique) and Manila (Philippines).
VNG International

Related: DEALS project helps Manila Bay local authorities bring their voices to Sustainable Development Master Plan VNG International

Australia: Innovation hub central to 10-year Adelaide City Deal

A new hub for technology, entrepreneurship, research and culture is being developed in stages as a key part of the $550 million Adelaide City Deal, agreed by the City of Adelaide, Government of South Australia and Australian Government in 2019. The Lot Fourteen precinct will include a hub for First Nations entrepreneurs and an Aboriginal Art and Cultures Centre. The precinct will also be home to global technology companies including Amazon and Google, as well as national centres for cyber collaboration, machine learning and space activities.
Lot Fourteen

Related: Darwin Living Lab explores how to make tropical cities more liveable and resilient as part of City DealCSIRO

Policy & Resources

Research, analysis and examples of policy in practice from leading institutes and places like yours.

Context: This Australian Housing and Urban Research Institute (AHURI) brief compares international place-based deals in the UK, France, Canada and the US and identifies lessons for Australia. The Australian Government outlines the eight Australian City Deals agreed so far and provides guidance about its City Deal principles and processes.

Analysis: A Centre for London report by two Greg Clarks argues that national governments’ roles in urban policy will “increasingly be about supporting cities, not running them.” This report examines ways to strengthen cities’ powers and resources, including through City Deals. A report prepared for Hamilton City Council, Partnering to Prosper, explores the potential benefits of intergovernmental partnerships for New Zealand, learning from UK and Australian City Deals.

Research: This Barcelona Centre of International Affairs monograph offers varied perspectives on the changing role and powers of international city networks in the context of increasing urbanisation.

Evaluation: Audit Scotland considered the effectiveness of Scotland’s City Region and Growth Deals in 2020, finding that they have facilitated economic growth projects but there need to be better measures for their long-term success. A 2017 evaluation of Dutch City Deals found that they helped to create new channels of communication, but more work was still needed to encourage and share innovation and experimentation.

Interested in other LGIU Global content?

Event: Innovative approaches to addressing the housing crisis

Our next Global Local Executive Panel event takes place this Thursday 21 October, featuring high-level speakers from England, Ireland and Australia.
Find out more and sign up for the event here.

New Zealand’s wellbeing budget: a good PR story or a contributor to improved wellbeing?

The New Zealand Government made a commitment to adopting a wellbeing budget in the 2018 budget speech, and many are now feeling impatient with the lack of change, but perhaps there is more behind the delay? Read our content here.

Thanks for reading!

Next week, we'll consider what a just transition to net zero means for local authorities in the third edition of our monthly COP26 newsletter. In two weeks' time, we'll look at how local governments can best support people involved in the justice system, highlighting innovative approaches and international examples.

If you would like to share your story, you can fill in this simple form or drop me a line at ingrid.koehler@lgiu.org. Please forward this free newsletter to a colleague or share it on social media to help us reach even more people who value local government globally. We tweet from @GlobalLocalLGIU.

Want more content? Visit our website to access our Global Local briefings, blogs, podcast and more.

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