10 things you need to know about… City Deals

This article first appeared in the August edition of C’llr Magazine

Although each City Deal is different, they broadly cover key growth drivers such as transport and infrastructure, jobs and skills, economic development and business support, and funding and introduce considerable new innovations in approaches to local economic growth. The government has also made it clear that ‘Wave 1’ is only the start of this process. It will be deepened in the core cities and extended to other areas during 2012-13 and beyond.

1. In the beginning…

In September 2011 government accepted a Core Cities Group Amendment to the Localism Bill for the eight core cities to be given greater freedoms to drive economic growth in their areas/

2. Unlocking growth

In December 2011 the government announced ‘new city deals’ in its publication ‘Unlocking growth in cities ’. This argued the case that cities – with 74 per cent of population and 78 per cent of jobs – were the places where national growth would be focused, and that this required dynamic city leadership teams taking decisive action.

3. Powers and flexibilities

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.

4. Accountability

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.

5. The early winners

The deal was offered in the first instance to Core Cities – Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham, and Sheffield and their wider LEP areas.

6.Liverpool leads the way

On February 7 2012, government announced the first city deal – with Liverpool City Council. In return for Liverpool moving to elected mayor leadership, and the establishment of a Mayoral Development Corporation, the government agreed:-

• A reported £130m of funding.

• A ‘Youth Contract’.

• Mayoral oversight of HCA assets.

7. Manchester’s big deal

On 20 March 2012, the government announced a much larger deal with Greater Manchester Combined Authority (GMCA), “with the full support of the LEP”.  The deal includes:

• Establishment of a £1.2bn Infrastructure Fund with an ‘Earn Back’ mechanism of up to £30m pa over 30 years.

• A Business Growth Hub – with £4.4m transitional government funding.

• A City Apprenticeship and Skills Hub delivering 6000 new apprentices to SMEs over two years.

8. Six more deals

Deals with the remaining six ‘Wave 1’ cities and an extension of the Liverpool deal to the city region were announced on July 5 2012. With forecast benefits/results  of 175,000 jobs over 20 years and 37,000 new apprentices. The deals potentially cover a footprint of 14 million population, 6.2 million jobs, around £250bn a year. GVA, and over 350,000 VAT-registered businesses.

9. Deals for all?

City deals are not just for cities. Greg Clark has made it clear that he is open to other councils putting forward a case for similar deals involving extra powers and responsibilities and that each case will be considered on its merits.

10. The future

Understanding the city deal proposition – both its strengths and areas for further development – is extremely important. It is probably not an overstatement to suggest that making a success of city deals may hold the key to the local government sector achieving both enhanced devolution and to increasing local growth in our cities and communities over this parliament and in the longer term.