Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Memorandum by the Centre for Cities (RG 55)



  1.  The Centre for Cities is an independent urban policy unit, based at the Institute for Public Policy Research (ippr). It is taking a fresh look at how cities function, focusing on the economic drivers behind urban growth and change.

  2.  Dermot Finch is Director of the Centre—he was previously a senior policy adviser at HM Treasury (1994-2005). Tom Bloxham MBE (Chairman, Urban Splash Ltd) is Chair of the Centre's Steering Group. Lord Sainsbury of Turville is the founder of the Centre. The Centre's website is

  3.  The Centre is currently carrying out three research projects in Barnsley, Birmingham, Derby, Doncaster, Dundee, Liverpool, Manchester and Sunderland. They are:

    —  City People, on city-centre living in Liverpool, Manchester and Dundee (published 11 January).

    —  City Leadership, on financial devolution to city-regions (to be published on 24 February)—Sir Michael Lyons will speak at our launch event, in Birmingham.

    —  City Markets, on business location and growth in deprived areas (to be published in May).


  4.  Our response to the Committee's Inquiry is based on our City Leadership work. We will submit a full response by 7 February. This shorter, initial response sets out the key findings of our research. We would be very happy to deliver oral evidence to the Committee, if that were helpful.

The potential for increasing the accountability of decision-making at the regional and sub-regional level, and the need to simplify existing arrangements

  5.  The regional government experiment has failed. The "no" vote in the North East devolution referendum in November 2004 put an end to the prospect of accountable regional government in England. Further devolution to the regional level would be unwise, given the lack of accountability.

  6.  There is a strong economic case for devolving certain funding streams to the city-regional level. This fits with the vision of "variable geometry", where different places have different degrees of autonomy. In the first instance, we would recommend that regeneration, transport and skills funding should be devolved to the two biggest city-regions in England—Greater Manchester and Greater Birmingham. This would require the two relevant RDAs (NWDA and AWM) and the Learning & Skills Council to cede control over regeneration and skills funding, for example.

  7.  For this to work, Greater Manchester and Greater Birmingham should consider the case for directly elected mayors in their city-regions. These would provide the greatest degree of accountability, visibility and strategic decision-making across existing local authority boundaries.

The potential for devolution of powers from regional to local level

  8.  Devolution works best when political boundaries match functioning economic areas. City-regions are the most appropriate scale for economic development purposes. This is the basis of the economic case for devolving significant financial powers to our biggest city-regions—and also, to a lesser extent, to local authorities generally.

  9. As well as gaining control over funding for regeneration, transport and skills, city-regions should be able to raise their own revenues—for example, through a partial re-localisation of business rates. The local authorities within our two biggest city-regions should pool these revenues, which would be allocated strategically by a directly-elected city-regional mayor.

The effectiveness of current arrangements for managing services at the various levels, and their inter-relationships

  10.  Our research backs up years of findings from the Audit Commission: the current arrangements for public service delivery and economic development are too complex and involve too many layers of governance. Government needs to review what functions are best delivered at what level. For example, regeneration, transport and skills would best be delivered at the city-region level.

The potential for new arrangements, particularly the establishment of city regions

  11.  As a first step, our biggest city-regions should gain significant new financial powers and be run by directly-elected mayors.

  12.  City-regions are both economic and political entities. They already exist as economic areas, but they are politically difficult. They include a core city, as well as surrounding areas that have close economic relationships with that city. These relationships can be measured in a number of different ways, including labour markets, housing markets, retail catchment areas and business-to-business linkages.

  13.  If governance arrangements are imposed at a level that matches specific economic flows, city-regions become political entities, with administrative boundaries that broadly reflect an economic area. But the formal establishment of city-regions will not be easy. Existing local authority leaders, for example, strongly oppose the idea of directly-elected city-regional mayors. Nevertheless, we believe this is the right approach.

The impact which new regional and sub-regional arrangements, such as the city regions, might have upon peripheral towns and cities

  14.  Up until recently, the focus on Core Cities has tended to exclude smaller cities and towns. City-regions provide a clearer role for peripheral towns and cities. Barnsley, for example, is considering carefully its role as part of both the Sheffield and Leeds city-regions, and stands to benefit from the growth of both. However, there is a need to prioritise policy around our largest cities, as they can make the biggest contribution to national and regional economies.

The desirability of closer inter-regional co-operation (as in the Northern Way) to tackle economic disparities

  15.  Closer inter-regional co-operation is not a top priority. The Northern Way is a useful concept, but it contains too many city-regions and risks losing momentum. Almost two years since its establishment, the Northern Way has failed to prioritise on key investment priorities in the North's most important cities. It must recognise the primary importance of its biggest city-regions, especially Greater Manchester.

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