1. Governance
May 11, 2015

London and Manchester can control their own destinies – but only one more city looks likely to join them

By Andrew Carter

After five years during which the urban policy agenda has ebbed and flowed, a hierarchy of UK cities – organised according to the range of powers and funding options that cities now have – is reasonably clear.

In Tier 1 we have London (although some say it hasn’t been able to extract many additional powers or money from this government) and Greater Manchester. The latter confirmed its position alongside London in the top tier as a result of the Devo Deal struck in November 2014, and the follow up deal on health in February 2015. There is now clear blue water between these two cities and the rest, with one caveat: the Greater Manchester Deal still needs to be nailed down in legislation in the new government’s first Queen’s Speech.

The Tier 2 cities are Leeds and Sheffield, both of which were able to strike Devo Deals with the coalition through their respective combined authorities – albeit much weaker ones than that of Manchester. I’d also include Cambridge in this tier, because of its recent deal on business rates growth retention (this isn’t much money, but is important symbolically), and its earlier earnback-style infrastructure city deal.

The Tier 3 cities are Liverpool, Newcastle and Glasgow. Both Liverpool and Newcastle have a combined authority with their neighbouring authorities, but haven’t been able to extract any more powers from government since their original City Deals. Glasgow agreed a significant City Deal just before the Scottish Independence Referendum, but at the moment lacks the robust governance structures to make decisions at the city-region level.

In Tier 4 are Bristol and Birmingham and all other cities, big and small. Both Bristol and Birmingham, despite good progress, still lack the robust city region governance institutions and investment frameworks, and as a result haven’t been able to strike any further devo deals, beyond their initial City Deal, with Government.

How might this hierarchy change over the next five years? Reading the Conservative manifesto, and talking with Whitehall insiders, I think there is an opportunity for one more city to join London and Greater Manchester in Tier 1.

Why only one? Firstly, because the law of diminishing returns kicks in the more times the government, or more accurately the Chancellor, does the sort of deal he did with Greater Manchester. It consumes considerable amounts of the political capital he has with his political colleagues. Secondly, because the Whitehall machinery, having been surprised once, won’t be so easily blind-sided the next time.

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Now if I’m right, this begs the question: which city and under what circumstances? First, it is certain that city would need to introduce a metro mayor. This is the price that a Conservative-led government would expect a city to pay for the powers and money that Greater Manchester and London have. This non-negotiable condition will present serious challenges to the politicians in many, if not all, of the prospective cities. Putting this aside for a moment and assuming that city politicians, MPs and councillors would be able to pay this price, what other factors would come into play?

Reflecting on the Greater Manchester process I think there are four:

1.   Politics: a city and city-region where there are possibilities for the Conservatives to increase their share of the national vote, and ultimately get more MPs.

2.   Finances: a city and city-region where there is realisable potential to achieve significant efficiency savings in public service delivery through integration, innovation and co-ordination – in other words, doing more with less.

3.   Risk: a city-region where, if the power and money is devolved, collectively the local authorities (and other parts of the public sector) have the capacity, resources, quality control procedures, and robust decision-making systems in place to manage the risks – or, in the words of one Whitehall insider “not to mess it up and then expect us to get them out of the hole”.

4.   Economy: a city-region big enough in terms of its economy and its share of public expenditure that improvements (more growth and less spending) would have an impact that would be felt at the national level, as well as the city level.

These four factors, separately and certainly when combined, present challenges for all of the cities in Tiers 2 and 3, as they did for a long time for Greater Manchester. And this is without reintroducing the metro mayor condition.

What is increasingly clear is that, if those cities are not able or willing to address these factors, then, under the new government, the differences between them and London and Greater Manchester – on economic and public service issues – will continue to grow.

Andrew Carter is acting chief executive of the Centre for Cities.

This is an edited version of an article first posted on the think tank’s blog

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