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

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?

Let’s begin with the positives. City Deals have provided a pathway to investment and to giving local authorities additional powers to drive local economic development. And they have proved a useful foundation for greater decentralisation. City Deals allow power and money to be passed from central government to local government in a way that has seemed acceptable to the centre.  They are specific and limited, they operate within the boundaries of place and they have accountability and shared risk built-in. All of these attributes mean that central government has been more comfortable with city deals than with more open-ended devolution.

The case against City Deals is essentially the flip side of this. They are too limited in scope, they tie funding to specific outcomes, they are focused on infrastructure at the expense of broader public policy goals and they leave central government firmly in control. It’s worth noting that neither devolution nor decentralisation challenge the fundamental assumption that power ‘belongs’ to central government to be distributed to local government and local communities on an earned basis. So are City Deals simply mechanisms for central government to move money around the system without ceding control or can they be more transformative? There are three tests we can apply.

Effectiveness – do City Deals work on their own terms? Are the aims clearly set out and is there enough funding to achieve them? What are the metrics through which this can be determined?

Democracy – are local citizens really engaged in the City Deals – either in determining its objectives or shaping its delivery? What are the governance and accountability mechanisms that link them to the needs and aspirations of the community?

Scope – do City Deals really face up to the scale of the public policy challenges we face as a society: climate change, care, housing, productivity?

City Deals in the UK have focused on infrastructure and economic development and have largely been assessed in terms of the first of these tests. That’s a good place to start but it only takes us so far. If we want to unblock the potential of local government and local communities to meet the broader challenges we face, we need now to explore the potential of placed based settlements that meet all of these tests.