England & Wales Democracy, devolution and governance

Urban autonomy? ‘City deals’ and elected mayors – part 2


Part 2: How much new power is being devolved and what strings are attached?

This is part of two of this post on city deals and elected mayors. The first post can be found here.

In many ways the ‘city deals’, and the accompanying emphasis on elected mayors, give a solid and welcome geographic focus to many pre-existing and pending government policies and initiatives. However, the overlapping of initiatives and funding streams represented by city deals calls for an examination of which aspects of the programme represent genuinely new transfers of money and power. Also, as touched on above, there is a need for clarity over the conditions – such as the apparent dependence, in practice, of city deals on cities agreeing to move to an elected mayoral model – that may be placed explicitly or implicitly on these transfers of power.

A key question is the source of the government money accompanying city deals – quoted at £130 million in Liverpool’s case. It is unclear how much of this is ‘new’ money and how much is projected as accruing to Liverpool from existing funding pots and initiatives. The fund to support the rollout of superfast broadband is again a good example of this lack of clarity, as it has effectively been ‘sold’ as part of three overlapping but distinct government initiatives: a standalone competition administered by the Department of Culture, Media and Sport to help support economic growth; a feature of Enterprise Zones; and a feature of city deals as outlined in ‘Unlocking growth in cities’. This raises the question of whether, and how, entering into a city deal affects the way in which a city’s bids to funding pots are judged, raising serious concerns over fairness for other cities.

Similarly, the transparency and impartiality of the Regional Growth Fund allocation process has been called into question (see, e.g. here and here) in recent months and it is not necessarily clear yet how much of the £75 million of economic development money cited in Liverpool’s city deal agreement will originate from new sources, after the Treasury has exercised its signoff powers. Additionally, as noted above, money generated by Enterprise Zones will need to be shared in some way between city councils and LEPs. These questions have fuelled debate in some quarters, reflecting discussion over the wider localism agenda, on whether city deals are a ‘smokescreen for cuts’.

The omission of provisions for a single capital funding pot from Liverpool’s city deal raises the question of the level of financial autonomy likely to be available to cities. London has often been invoked as an aspirational example for other large English cities, but in addition to a specific framework for holding the Mayor to account (see above) a key power open to the Mayor of London is the ability to raise a precept collected at the borough level as an addition to council tax. This possibility has not been prominently discussed in the context of city deals, partly reflecting the fact that London is an aggregation of boroughs in a city-region rather than a single entity, but also reflecting a broader trend in government. More radical proposals for local revenue raising powers – such as those proposed by Nick Clegg and rejected by the Conservatives – have also not featured in the discourse over city deals thus far, while the Local Government Finance Bill has raised alarm from councils over the complexity of its mechanism for business rate retention, potential unfairness – identified by councils both at the richer and at the poorer end of the spectrum – and the levers it appears to give to the Secretary of State to decide on the extent and use of central appropriations from locally collected business rate revenues. Local authorities are able to request new revenue-raising powers through the Sustainable Communities Act 2007, though debate is still ongoing over the adequacy of regulations governing councils’ engagement with communities and the government’s response to proposals put forward. However, given the high profile of the ‘city deals’ process and the way in which it symbolises and aggregates a range of key initiatives across multiple government departments, the inclusion of revenue-raising capabilities in cities’ proposals for new powers may be a good way to provoke a productive discussion with government on the issue.

Similarly, it is unclear whether ‘city deals’ will free councils from the need to seek permission from the Secretary of State to carry out particular actions. The government is already removing several such requirements, particularly in the area of transport, and consistently refers to the general power of competence outlined in the Localism Act – giving councils the ability to undertake any general action legal for an individual, as long as it is not specifically ruled out in legislation – as an existing measure which could help empower cities. There is no indication, however, that councils will be able to push through measures – particularly controversial ones such as a congestion charge, put to a referendum in Manchester in 2008, or a workplace parking levy – with a mandate from local people, as opposed to from national government. Potentially, this could somewhat undermine the strong (Mayoral) leadership on which government has placed a premium.

Other powers are conspicuously absent. The liberal economist and commentator Tim Leunig has identified education as a major omission from the move to empower cities, citing poor academic achievement in many of the core cities – after adjusting for socioeconomic factors – and linking this to the level of skilled workers as a key determinant of an area’s average income. The stipulation in Liverpool that at least half of the new schools built with investment channelled through the ‘city deal’ arrangement should be academies means that, as noted in the letterfrom government to the Chief Executive of Liverpool City Council, ‘the Council will not be part of their ongoing governance or financial management’. This disconnection between council and school may undermine the council’s ability to ‘be proactive’, as the letter immediately goes on to say, ‘and work with the schools, the private sector and the universities in Liverpool to help them develop specialisms and identify and attract appropriate sponsors’. Recent context, including the intervention of the Education Secretary Michael Gove in attempting to compel Downhills School in the London Borough of Haringey to become an academy, suggests that this issue may continue to prove prominent in future city deals.

However, in some areas the new powers open to councils potentially fit very well with other moves from government. For example, the opportunities arising from the government’s planned reforms to public health commissioning and delivery – currently being taken forward as part of the Health and Social Care Bill – have considerable relevance to the new cities agenda. Under the proposed changes, local authorities would have responsibilities (currently envisaged to be a joint responsibility with clinical commissioning groups) for preparing Joint Strategic Needs Assessments, developing joint health and wellbeing strategies to respond to the needs identified and commissioning public health interventions. Approximately £2.2 billion of public health funding will be available across all local authorities. Decisions on how to spend this money, and strategic responsibilities, would be discharged through health and wellbeing boards comprising local healthcare commissioners and local representatives with public health interests across disciplines. The wide-ranging capabilities of the powerful cities envisaged in the city deals model would in theory be an ideal basis for effective work across disciplines to bring together public health and other objectives relating to transport, planning, housing and related issues in order to address the wider determinants of public health and ensure that resources were used as efficiently as possible. For example, Liverpool Primary Care Trust identified road safety as a key public health issue and agreed to put funding towards extending 20 mph speed limits in the city. The move will save an estimated 140 children per year from death or serious injury, taking considerable pressure off acute healthcare services. The possibilities for building on this joined-up approach in a city combining public health responsibilities with a Mayoral Development Corporation and (potentially) greater planning, housing and transport responsibilities are considerable. Ensuring that a broad base of expertise is represented on health and wellbeing boards will be essential to making the most of these opportunities.

This post is based upon an LGiU member briefing by Majeed Neky. For more information about LGiU membership, please contact chris.naylor@lgiu.org.