House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Fourth Report

5 City-Regions

THE RATIONALE FOR CITY-REGIONAL POLICY AND GOVERNANCE

128. The concept of the 'city-region', even for its proponents, is a 'fuzzy' one. Recent work completed for DCLG suggests that various definitions of the term exist but they are not mutually consistent and none are easily translatable into clear, hard and unambiguous lines on maps.[193] The reason that the term has come back into vogue is less to do with the precision with which it can be applied but more a recognition of the fact that current administrative boundaries—be they based on districts, counties or regions—do not capture the complex geographies of urban development very effectively. Neither do they relate to the way modern life is lived and the tendency of a significant proportion of the population to cross boundaries on a regular basis as they travel to work, shop, travel, be entertained and be educated. The term city-region is used in an attempt to depict the functional areas within which the bulk of these day-to-day movements take place.

129. The advantages of the notion of the city-region in distinguishing complex, functional areas from more standard, administrative definitions of cities and metropolitan areas were described to us by Mark Kleinman, Director of Urban Policy at ODPM, as follows:

"[W]e have a very clear idea of what we mean by a city region, and our thinking is to separate at least three distinct meanings of the word "city". One is what you might call the municipal city, which is the local authority boundary, so in the case of Manchester that would be Manchester City Council which is clearly only a part of the built-up area. We would then talk about the metropolitan city, which is the built-up boundary, the area covered in the case of Manchester by the Association of Greater Manchester Authorities, and then a third concept, the city region, which is the economic footprint, if you like, of the city which is much larger, and which in the case of Sheffield spreads out into Derbyshire and in the case of Manchester spreads out into Cheshire".[194]

130. Interest in the notion of city-regions has recently been re-awakened by a series of reports, some of them commissioned by DCLG and its predecessors, arguing that the Government should consider developing a city-regional policy framework and/or encouraging forms of city-regional governance. These reports continued to emerge throughout the course of our inquiry.[195]

131. There are a number of arguments for taking the city-region seriously as an instrument for policy-formation, delivery and governance. The first focuses on subsidiarity and includes a recognition that the prospect of further moves towards directly elected regional government receded following the 'no' vote in the North East referendum. On this view, the Government's interest in devolution in England and its commitment to better strategic policy-making at the most appropriate geographical scale can now be most realistically taken forward by the creation of directly elected city-regional authorities.[196] The perceived success of the new London governance arrangements, which currently provide the UK's only model of a directly elected strategic authority for a complex, cross-district urban area, has added impetus to the argument that city-regions provide a potential solution to the English devolution dilemma. This argument gathered further strength last year when DCLG agreed to give additional powers to London's Mayor.[197]

132. Another, more technocratic, case for city-regions builds upon arguments rehearsed in the 1970s at the time of the last major structural re-organisation of local government.[198] Essentially, this argument is that existing, administratively fragmented arrangements for strategic policy-making are inefficient and that governance and policy co-ordination at the city-regional scale would enable some of the inefficiencies to be overcome. In contrast to the case for city-regional 'devolution', this rationale for city-regions is not necessarily associated with a call for new, directly elected authorities, given that greater co-ordination could feasibly be achieved through other means. Nor, given that it is possible to consider not only London but also the other larger and more complex urban areas in England as 'special cases', does it assume that all areas of the country would necessarily need to be covered by new arrangements.

133. A third argument for city-regions is economic. According to this perspective, England's largest urban centres and their hinterlands have been the key driving forces in the UK's adjustment to a more globally integrated, knowledge-rich economy. Hence, they make increasingly important contributions to regional and national economic prosperity. The implication of this, for some, is that better co-ordination of policies that impact upon economic change at the city-regional scale would maximise the chances of delivering the Government's commitment, set out in the Regional Economic Performance (REP) PSA, to 'make sustainable improvements in the economic performance of all English regions.'

134. Proponents of the economic advantages of city-regional policy frameworks and governing arrangements placed particular emphasis on their potential to improve the economic performance of the northern and midland regions. This, they argued, would also ensure the greatest feasible progress towards the longer term goal of the REP PSA which is to 'reduce the persistent gap in growth rates between the regions'. For example, the Leeds city-region partner authorities argued that:

"If the Leeds city region fails to achieve its full potential, there is little prospect of achieving local, regional or national job and wealth creation targets, and just as crucially there is no serious and sustainable counterbalance in England to London and the South East".[199]

135. Economic arguments for city-regions again entail no assumption that directly elected city-regional authorities are the only way forward, or that city-regional arrangements are needed in all areas of the country.

136. In practice, different versions of these justifications were bundled together in different ways in the evidence we received. What united most of the proponents was a belief that the city-region represents a more appropriate scale at which to 'join up' strategic policy-making than the territories covered either by current local authorities or the standard administrative regions. The former are invariably smaller than the 'functional economic areas' at which labour and housing markets and transport systems operate, which means that decisions taken at the local authority scale can fail to fully appreciate the larger context within which a particular authority's area sits. Reading Borough Council argued, for example, that:

"Reading has the sixth highest Gross Added Value per head in the UK. It is the economic driver for growth in the South-East region, with an impact that is national and international. However, because of the current local government boundary arrangements it is unable to take the strategic infrastructure decisions which are necessary to underpin and support this key role".[200]

137. In her oral evidence, the council's Chief Executive described how the different priorities pursued by Reading and neighbouring authorities in areas such as transport and housing prevented the broader area from addressing key problems and reaching its full economic potential:

"The concerns are around two specific things, and they both relate to economic growth: for those on the outside ring of a city region gaining the benefit from economic growth without having to carry many of the costs of it; and those on the inside of the city region carrying many of the costs and having to bear them disproportionately. The voluntary arrangements around things like key-worker housing, the voluntary sector, et cetera are not a problem because everybody thinks those are a good thing to do. As soon as it comes to crucial things like housing numbers to facilitate economic growth or road-building schemes or other transport infrastructure arrangements that might lead to more congestion, or traffic being routed differently, then each authority looks to the interests of its own local area, quite legitimately obviously. What we have not got is a view across that wider region that transcends administrative boundaries. It is stifling strategic planning".[201]

138. A similar argument can be applied, at a larger scale, in the case of the London, South East and East of England regions where the core functional economic area centred upon the capital is effectively 'carved up' between three administrative regions. Elsewhere, the standard regions tend to contain a number of distinct functional economic areas rather than comprise, or be contained by, a single one. While we heard little to suggest that, in southern England, there has been outright conflict between regional agencies, it is clear that attempts to address cross-regional issues, for example the shortage of affordable housing that has resulted from sustained economic growth in the south of England, have been led primarily by national departments rather than the regions or local authorities. Similarly, in the north of England it has taken what some critics perceive to be a 'top down' initiative—the Northern Way—to promote greater recognition of the importance of key northern cities and their hinterlands and the relationships between them, across regional boundaries, to future prosperity and quality of life.

139. Over the course of our inquiry it became evident that there was increasing, if still somewhat patchy, interest on the part of local authorities and regional agencies in exploring the city-regional approach as advocated by a variety of pressure groups, think tanks and academics. We noted a growing consensus among local and regional agencies that more could be achieved by understanding the relationships between key cities and their hinterlands, within and across regional boundaries, and by employing such knowledge for the purposes of policy-making and delivery. However, while understanding of these inter-relationships may be increasing, it would appear that further progress on delivery under current arrangements is likely to be slow: greater freedom and flexibility to act 'city-regionally' may be needed. The key questions on which we sought to form a view were:

on what grounds, and in what circumstances, the development of city-regions would be sensible, and
if city-regions are to develop, what incentives and mechanisms may be instrumental in making them effective.

The case for developing city-regions

140. On the first of these questions, whilst the rationales for city-regions set out within the evidence varied in their emphases, the economic case was clearly dominant. It was particularly apparent that the economic argument for city-regions was seen as central within Government. Thus Mark Kleinman of DCLG told the Committee that:

"[W]e are responding both to the developments which have occurred from the RDAs and […] from the cities themselves, and also from the overwhelming bulk of the academic and research evidence".

Neil Kinghan, also of DCLG, added that "We start from the premise that city regions are an essentially economic proposition".[202]

141. The evidence base to which Mr. Kleinman referred includes three key pieces of Government-supported research whose results were reported in 2006: the State of the English Cities report, the Framework for City Regions study, and the joint-HMT, DTI and ODPM paper on 'the importance of cities to regional growth' which was published alongside the 2006 budget statement. Taken together, these documents demonstrate:

The crucial role that large metropolitan areas in England have played within the recent, sustained period of national economic growth;
Fluctuations in the economic cycle notwithstanding, the growing dominance, overall, of the 'super-region' centred upon London,[203] and
The importance of accelerated economic growth in key city-regions beyond southern England to any reduction in the gap in growth rates between regions.

142. There were other views. The Centre for Rural Economy (CRE) at the University of Newcastle argued that:

"The idea that city regions are at the cutting edge of a new age of urban economic competitiveness in a globalising world is open to question, not least because the technologies that are playing such a key role in current socio-economic changes can be seen as fundamentally decentering technologies. ICT allows people to live, work and run businesses in polymorphic urban forms".[204]

143. We also heard from the Minister for Local Government and Community Cohesion, Phil Woolas MP, that the economic performance of key urban areas is seen as critical to realisation of the longer term aspiration set out in the Regional Economic Performance PSA target. When we asked him how important cities were in reducing inequalities in regional economic performance he confirmed that:

"The answer to that question is very. The policy that we are pursuing is based on two underlying principles. The first is that it is desirable for local authorities and their partners to have a greater role in economic leadership and economic regeneration and obviously because economies do not follow local authority boundaries, the multi-area arrangements around what have come to be known as city regions obviously become important […] The second principle […] is that the city region's potential to maximise growth through collaboration on those matters which are clearly economic—skills and transport are two examples that come to mind—are the second pillar of our policy".[205]

144. The Minister's position was subsequently reinforced within the Local Government White Paper, which noted that:

"City regions have generally led regional growth in the last decade […] it is city regions that have delivered the greatest increase in productivity and Gross Value Added […] The growth of the knowledge economy will increase the importance of cities and wider city-regions still further […] It is only through collaboration across boundaries that places can realize their economic potential […] Further devolution needs to encourage and reinforce […] co-ordination and collaboration and so ensure maximum impact by better aligning decision making with real economic geographies such as city regions… as we address the performance of city regions it is important to do so in a way that minimizes the risks of greater disparities between… regions.[206]

145. Our consideration of the arguments in favour of city-regions leads us to agree with the Minister that the economic case for city-regions is the most compelling. Further, we believe that the role which could be played by city-regions as drivers of economic growth can be achieved without the need for wholesale re-organisation of existing administrative structures, which would be both costly and slow.

146. Whilst we see the economic case for city-regions as being the most compelling of the arguments put to us, we also recognise that related proposals for the future development of city-regional policy and governance—and the lack of clarity in the Government's emerging policy in this regard—cause significant concern for sceptics and critics. Such concerns were reflected in the different views offered to us about how city-regions are or might be defined, what powers and resources might be devolved to—or co-ordinated at—the city-regional scale, what governance models are most appropriate for city-regions, and what impact a focus upon city-regions might have upon 'peripheral' urban and rural areas.

DEFINING CITY-REGIONS IN PRACTICE

147. Definitions of city-regions, appear to depend upon whether the primary purpose of those using the term has been to understand the inter-relationship between urban centres and their hinterlands, to mobilise (or at least identify) stakeholders within a particular territory with a view to pursuing common 'city-regional' purposes, or to find a workable balance between these two goals.

148. A key concept commonly employed for analytical purposes was the 'urban footprint'. This was used to describe an area containing one or more urban centres together with the surrounding areas over which they have significant influence. A number of witnesses confirmed that the size and shape of 'urban footprints' can vary significantly, depending upon what sort of relationship between urban centres and surrounding areas are analysed. The English RDAs, for example, reported that:

"The term city-region refers to a recognition that the functioning geographies of city economies and societies, including travel-to-work areas, retail catchment areas, housing market areas, global markets and strategic transport links, are not constrained by local administrative boundaries".[207]

149. Similarly, in its written evidence, the Northern Way noted that:

"Our employment of the concept looks at 'real-world' economic geographies that operate outside neatly drawn administrative boundaries. The interface between economic flows—including travel-to-work areas, retail catchment areas, housing and labour markets, etc.—provides the spatial analysis that helps decision-makers target delivery programmes in ways which accelerate growth […] In this context, the boundaries of [our] city regions can change depending on what issue is under scrutiny, and the corresponding datasets. Different issues have different parameters and the way we use city region analysis needs to be flexible enough to embrace these variable geographies. For example, an analysis of travel to work data overlaid with retail catchments might have a different boundary and tell you something different about economic opportunity than, say, an overlay of housing markets and labour markets".[208]

150. The Leeds City Region Partner Authorities told us that the extent of their city region, encompassing ten local authority districts, was "defined following extensive research carried out over the last five years".[209] The Leeds city region area they have identified differs substantially from that covered by the former West Yorkshire County Council and extends into parts of north and south Yorkshire. In the case of other large cities, however, we heard of much closer correspondence between the geography of city regions—at least in terms of their local authority 'membership'—and former metropolitan county council areas.

151. The Birmingham, Coventry and Black Country city region, for example, covers the seven local authority districts that made up the area served by the former West Midlands County Council along with Telford and Wrekin, an area dominated by the former New Town originally created to cater for population overspill from Birmingham. Similarly, even though the relevant 'urban footprint' area is acknowledged to be more extensive, the core local authority 'membership' of the Manchester city-region is limited to the ten districts that made up the former Greater Manchester County Council area. In these cases there is evidence of the influence of city-regional partners who already have experience of working together in a variety of joint-boards and co-operative arrangements. Potential city-regions appear to be as much 'coalitions of the willing' as coherent economic or social entities.

152. Outside of those areas that are linked most closely to the larger cities, however, concerns were expressed about the way city regions are being defined. First, there were worries about the potential implications of city-regional policies or governance arrangements for areas that appear to fall between or on the fringes of city-regions. Durham County Council, for example, could see "no case for an assumption that a city region driven approach is necessarily appropriate in all regions of England": the Council argued that County Durham's important role as a 'bridge' between the Tyne- and Tees-focused city-regions in the North East, defined as part of the Northern Way initiative, risked being ignored or marginalised if attention was focused primarily upon the two city-regions as currently understood.[210] Similarly, we received representations from Crewe and Nantwich Borough Council whose area, according to evidence assembled by consultants, has strong labour market links with the 'footprint' area focused upon Manchester and should therefore, in its view, "be integrated into the Manchester City Region" .[211]

153. Concerns were also expressed that smaller, freestanding towns and cities which could be argued to have economic 'footprints' similar in type, if not in size, to those of the bigger cities, were being bypassed by the city-region debate. The Chief Executive of Carlisle City Council, for example, argued that:

"To some extent we believe we are already a small city region. We are the principal city in Cumbria. We would see ourselves, and so would most of Cumbria, and south-west Scotland, as the principal commercial admin, retail and cultural centre for the sub-region. That, together with Carlisle Renaissance—we believe we can start pushing for city region status for Cumbria".[212]

154. It was also argued that the city-region concept was not relevant to those areas of the country in which there is no obvious dominant urban centre: at the very least, it needed to be substantially re-interpreted if it were to 'fit' their circumstances. The East of England Regional Assembly, for example, noted that:

"In the particular circumstances of the East of England the City Region model would need very careful adaptation, both in concept and scale. While we have a number of small and medium sized urban settlements in the 80,000 - 120,000 population range none are in the same league as say Manchester, Newcastle, Leeds or Birmingham. However […] we are supportive of initiatives which maximise the importance of such urban centres within their natural footprint […] In many ways the East of England is a region of shire sub-regions rather than natural city regions, and of course in many parts of the East of England the only city which really matters is London".[213]

155. Similarly, we heard from the Cornish Constitutional Convention about efforts made to adapt the notion of the city-region to Cornwall's particular characteristics:

Whilst Cornwall and the IoS [Isles of Scilly] includes a large component of rurality it is far more complex than that. Sectoral benchmarking shows that manufacturing, knowledge-based SMEs, aspects of niche tourism .. and a strong media base all resemble a more metropolitan profile. The scattered settlement pattern and sparse population spread, mixed with the spread of small, economically driving towns, offer a spatial and cosmopolitan enigma which might be characterised as a "distributed city".[214]

However we also learned of the irritation that the process of 'bending' a concept that was assumed to be attracting interest within Government can cause:

"We have got five Cornish towns […] being lumped together as an urban unit in order to fit into a model of how to make policy that Cornwall does not quite fit into […] Sometimes it is seven, sometimes it is 15, sometimes it is 18 […] What it means is we have artificially created a principal urban area in order to fit in with a model that has got nothing whatsoever to do with us […] we are being moulded like plasticine to fit into a standard model that does not apply to us".[215]

156. This dispute amongst Cornish stakeholders provides an important insight into the progress that has been made with defining city-regions so far. We can see value in both the analytical and pragmatic approaches. An analytical approach potentially brings benefits in terms of understanding inter-relationships between areas and improving the quality of evidence that can underpin strategic decision-making related to economic development. A pragmatic approach, on the other hand, can help encourage closer relationships between stakeholders who are committed to working together for the greater economic good of an area that is not defined administratively. The danger that can be detected in the 'border disputes' put to us, however, is that the time and energy that is being spent in determining a definition of city-region which works locally—in the hope that by doing so the area may receive additional Government support—could be better spent in making sense of how to run those areas most effectively and efficiently.

157. In an early piece of written evidence, the Department told us that "the boundaries of city-regional areas are fluid, and will evolve through a 'bottom-up' process of discussion […] It is not for ODPM to impose city-regional boundaries".[216] However, when subsequently questioned on the particular issue of how the boundaries of city-regions might be decided formally, and how any disputes might be resolved, the Minister for Local Government and Community Cohesion noted that:

"Ultimately, of course, the Government makes the decision. That is one of the squares that you have to circle in this whole debate".[217]

He then later qualified this statement when, in response to a hypothetical question, he added that:

"I would guess that if Cheltenham were to propose that it wanted to be part of the city region of Birmingham and the authorities of Birmingham and the surrounding area said they did not want Cheltenham then I guess that view would prevail".[218]

158. From one perspective, the Government's stance on the development of city-regions might be described as encouraging and permissive: the success of this approach is illustrated by the number of submissions which we received from authorities in developing city-regions outside the 'Core Cities'; these included Stoke-on-Trent, Carlisle, and Hull and the Humber Ports (one of the eight city-regions linked by the Northern Way).[219] However, this encouragement has yet to be matched by the specification of powers or resources which will enable city-regions to act corporately in new and more effective ways. In his oral evidence the Minister for Local Government and Community Cohesion was asked when the Government would provide clarity about its preferred approach to city-regions. He replied:

"The answer […] will in large part be in the Local Government White Paper which will be published in the next few weeks […] The policy that we are pursuing is one to ask the areas themselves what powers and what proposals they think they can best take forward. What is very, very clear […] is the policy of not having one-size-fits-all is very, very necessary. It is difficult to answer the question in advance of the areas themselves coming forward with the proposals and, of course, the criteria that they will be judged by will be a part of the White Paper".[220]

159. The White Paper did not provide the answer. Instead, it sets out a permissive framework which appears to extend further the possibility of dialogue with Government to any area of the country in which local authorities and other stakeholders signal an interest in working together across geographical boundaries in pursuit of economic benefits. This approach risks confusion. The Government needs to be much more explicit about where, and in what circumstances, it considers the development of city-regions would be valuable and about how the boundaries of city-regions are to be determined.

MODELS OF CITY-REGIONAL GOVERNANCE

160. Clarity about boundaries becomes more necessary once issues relating to city-regional governance—the powers, resources and accountability arrangements which are required—need settling. The evidence we received on these themes was less developed, largely because there are still relatively few areas of the country in which specific models of city-regional governance are actively being explored, and because proposals were still being developed during the period of our inquiry pending the further guidance that was expected in the Local Government White Paper. This rather uncertain situation was seen as unsatisfactory by some critics. The Centre for Rural Economy, for example, argued that "city regions currently have the air of a poorly thought-through fad".[221] The North West Regional Assembly also urged caution and called for further clarity about purpose as well as structure if the sorts of difficulties that were seen as having beset the stalled move towards elected regional assemblies were not to be repeated:

"[T]he experience of the North West provides important lessons on the dangers of proceeding at pace towards a policy goal that is not clear as was the case with Elected Regional Assembly (ERA) powers. The lack of clarity on the Government's part hindered the development of substantive debate on the issues. As opinion differed both within and between political parties, the combined result was that the facts about ERAs were difficult to communicate to the public, something which is unlikely to have helped foster a positive public attitude to devolution and sub-national governance in the longer term. The NWRA takes the view that it would be regrettable indeed if the Government failed to learn the lessons from this policy".[222]

Others, however, were more comfortable with the idea that proposals for city-regional models of governance were developing incrementally and at different paces in different places. In its evidence, for example, Hull City Council reported that:

"Partners and stakeholders in the Hull and Humber Ports City Region are aware that a typology or hierarchy of city regions is developing in England. Major city regions such as Leeds and Manchester may well want (and need) to explore more formal arrangements for city region working. Hull City Council would be relaxed about the development of any such asymmetrical sub regional governance arrangements […] One size really does not fit all."[223]

161. The developing consensus seems to be that new, formal models of city-regional governance would be appropriate in those areas where there is both significant 'bottom-up' interest in creating them and congruity with Government aspirations, but that in others there were no compelling arguments to force the pace of change.

162. On the issue of powers and resources, evidence from proponents and sceptics alike suggested, overall, that new models of city-regional governance should concentrate upon economic development and related issues and make strategic choices and investments rather than engage in routine service delivery. For example, Lancashire County Council argued that:

"A distinction needs to be made between the effective delivery of services and the co-ordination of strategic decision making. The two are not the same although they are inter related, and the same boundaries will not always be appropriate. Trying to develop a model that fits all circumstances and geographies will not necessarily be possible and would not reflect the diversity and needs of different areas".[224]

Bolton Council suggested that:

"The benefit of the city region approach is a stronger identity to promote to inward investment and compete within the European and global market. Other benefits of the city region are to provide a strategic overview of transport, spatial planning and housing. This is the principle benefit of the city region—a city region can look at the bigger picture yet with its partner organisations understand the priorities needed on the ground; a powerful and representative city region can make a stronger case for essential schemes or areas in need of investment. A city region approach is also appropriate in spatial planning where there is the challenge of preventing urban sprawl and utilising greater proportions of previously developed land. With housing new guidance states that authorities should work together to examine needs and demand. This is necessary as housing markets do not follow local authority boundaries; there are a number of flows throughout the city region; so joined up working is already seen as best practice".[225]

163. Yorkshire Forward, the regional development agency for Yorkshire and the Humber, broadly agreed:

"We are in favour of city regional work to bring together a wide range of issues. At the very least they should cover the economy, skills, transport, planning and housing, but would also advocate the inclusion of health, culture and the environment".[226]

164. The Centre for Cities at ippr, similarly, argued that regeneration, transport and skills should be the main functional responsibilities of city-regions and calculated that, in the cases of Birmingham and Manchester, the pooling of existing budgets in these policy areas would create an investment 'pot' of around £600m per annum. This could be spent most effectively if it supported a limited number of priorities across the city-region rather than the larger set currently being pursued by individual local authorities and other public bodies. The Centre went further, however, in arguing that certain city-regions should have their own, independent sources of funding:

"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 relocalisation of business rates […] The revenues would be ring-fenced for investment in strategic infrastructure projects […] Financial devolution should be selective. We recommend "asymmetric devolution" with different places having different degrees of financial autonomy, proportionate to their economic importance […] We propose a priority focus on our biggest city-regions, with substantial new spending and revenue-raising powers for Greater Manchester and Greater Birmingham […] Only they have the scale, tax base, maturity of joint working and business buy-in to take on radical financial devolution. Over time 5 other city-regions could follow—Liverpool, Newcastle, Leeds, Sheffield and Bristol".[227]

GOVERNANCE

165. Proposals such as those made by the Centre for Cities, which anticipate city-regional bodies being made responsible for sizeable pooled budgets and receiving independent revenue-raising powers, inevitably raise the issue of accountability for the use of public money. The Centre's view on this was clear: there should ideally be elected city-regional mayors along the lines of the London model. Significantly this proposal was not popular with existing authorities in those areas where support for city-regional arrangements was highest. In such areas, executive boards, with members drawn from constituent local authorities, other public bodies and the private sector, were the favoured option. For example, Mr Hawkins, from the Association of Greater Manchester Authorities, told us that:

"It is not only in the North West where there does not seem to be much appetite for elected mayors. The experience within Greater Manchester has been that we have had an association AGMA, which has been operating for twenty years, with some degree of success. I would not pretend it is perfect, but the view of the leaders has been that we should build on that structure for two or three reasons. First, if you can develop city regions without having primary legislation, which you would need for a city region mayor, then that ought to have some attraction in Whitehall. Second, the ten local authorities within Greater Manchester are still going to be the statutory bodies with responsibility for delivering and commissioning services in their area; and the view of the leaders within Greater Manchester has been that they do not want to lose that direct link and democratic accountability between what we develop at city regional level and what will still happen at local authority level".[228]

166. We also heard mixed messages from witnesses familiar with the new London governance arrangements about whether 'the London model' was entirely appropriate for other major urban areas. Mr. Lunts from the Greater London Authority told us, on the one hand, that those elements of the London governance arrangements that had worked best were consistent with the idea of a strategic and economic development-focused model for city-regions:

The clarity and distinction in terms of roles within the governance structure is one reason why it has been successful. I think another is that the GLA has been correctly set up as a strategy body. Compared with the old GLC, for instance, its role, remit and responsibilities are at a much more strategic level. By and large it does not get involved in detailed matters of service delivery. I think a third reason it has been successful is that there has been a strong demarcation line between the GLA itself based at City Hall and the functional bodies which the Mayor is responsible for, particularly Transport for London and the London Development Agency…. [T]hey are at arms' length, they are not part and parcel of the corporate body called the GLA. I think the roles are clear.[229]

At the same time, however, he noted that:

The circumstances in London are quite different in many respects from the circumstances in other cities […] London has a very specific identity and […] that is why Londoners by and large welcomed their own city government. Some of the factors that I have mentioned are factors in other cities, but many of them are not. London has 32, and if you include the City of London 33, separate boroughs. There is no other city in England that has a comparable arrangement of really quite small scale boroughs. There are issues in other cities about neighbouring authorities beyond the major component part—Manchester, Birmingham and other places—but I think the parallels are by no means exact.[230]

167. The Government's position on models of governance and, specifically, leadership, has changed in the course of our inquiry. In June 2006 the Secretary of State made a speech at the Core Cities summit in which she attributed London's successfulness to its directly elected mayor; at the time of the Labour party conference in September, however, the Secretary of State was reported to have said that the Government recognised the difficulty in gaining acceptance for directly elected mayors, although it still sought some kind of formal leadership as part of city-region development proposals.[231] The Minister for Local Government told us in October that:

"We see the hierarchy between powers being linked to accountability. You have to have clear strategic leadership if you are to devolve power, particularly over significant sums of public money. We believe that the accountability arrangements for that executive power are as important as the executive power itself. Therefore, we will be waiting for proposals from areas themselves and we will link the devolution of powers to the strength of the accountability. […] We see this as an evolution and a debate that will have conclusions drawn in the White Paper. […] Crudely put, the greater the direct accountability, the greater the powers that will be available".[232]

While accountability should be a fundamental part of any new governance arrangements, any formal requirement for city-regions to be governed by directly-elected mayors would require enacting legislation, which can take years to achieve. For this reason, we welcome the softening of the Government's stance on directly elected mayors and its new willingness to build on existing governance arrangements.

168. The White Paper on Local Government was, however, no more illuminating on the favoured models for city-regional governance than it was on the problems of how they might be defined. It contains no blueprint for city-regional governance and neither any commitment to devolve significant new sums of public money to city-regions nor any statement of the specific arrangements which would be required for such devolution to take place in the future.

169. Instead, it sets out a number of ways in which city-regional arrangements can be forged from the bottom up. Principally these are: 'multi-area agreements', whereby co-operation between adjacent local authorities on key economic development issues is expected to involve the pooling of resources, to be managed by a single accountable body nominated by the relevant partners; City Development Companies, which are intended to bring together market intelligence, economic strategy and analytical and co-ordination functions at either the city or city-regional scale; and skills and employment boards, which are intended to assess current and future skills needs across local labour market areas and enable relevant partners to plan more effectively to meet them.

170. The lack of clear detail in the Local Government White Paper on the future development of city-regions was disappointing. While the Government's determination to allow governance models to evolve from the 'bottom up' is, in one sense, laudable, it has failed either to set clear parameters for, or to express a specific vision of, what is achievable within the constraints of national policy and available resources. This failure is impeding realisation of the policy. Unless further statements clarifying the potential for, and limits on, city-regions are made soon, the city-region movement will again lose momentum.

THE ROLE OF GOVERNMENT

171. The proposals set out in the White Paper are permissive rather than prescriptive. They appear to leave the next stage in the development of city-regional policy and models of governance largely in the hands of those groups of local authorities that wish to take city-regional and other cross-district strategy-development and governing arrangements forward. This stance, eschewing commitments to explicit devolution of powers or models of governance is unlikely to satisfy the stronger proponents of city-regions. In particular, it appears to fall short of the hopes expressed by some of our witnesses that city-regional policy and governance would have clear implications for the behaviour of Government departments and place more exacting expectations upon them.

172. These concerns were expressed particularly strongly by the partners involved in what has since been titled the Birmingham, Coventry and Black Country City-Region. They argued that:

"Our local authority capital programmes are small compared with those in some similar sized city regions in Western Europe. Yet it is capital investment in particular that will enable us to provide the infrastructure to attract investment and workers in the knowledge economy […] The progress we have made together since 2003 shows that we have the commitment and capacity to take the City Region forward, provided we have sufficient powers and resources, and have the support of national and regional programmes that are explicitly aligned to our City Region Development Plan […] This alignment of national and regional funding streams must cover the key competitiveness issues that we still need to address—regional airports policy, strategic road and rail infrastructure, integrated transport within the City Region itself, innovation strategy and the Science City initiative, skills development, major facilities, City Region housing strategy, etc. National investment criteria—for example on transport infrastructure and the location of public R&D—often focus upon responding to existing demand or centres of excellence. They fail to give sufficient weight to the role of public investment in influencing the location of future demand and excellence by stimulating economic growth, development and modernisation".[233]

173. Bolton at Home put these concerns in different way when it argued that:

City Regions should not be an excuse for cost cutting and starving the region of national funds. Some of the rationalisation created as a dynamic of forming a City region may result in savings due to eradicating waste and duplication; but this should not overshadow the need for resourcing support to enable ambitious programmes to prosper. Greater efficiencies in line with Gershon recommendations should be an achievable long term outcome but resources are needed now to ensure that the City Region establishes deep roots at a local level in the manner previously outlined".[234]

174. Bolton Council, similarly, argued that:

"If there is to be a change to a new style of sub regional working there needs to be an awareness of the shortcomings of the Metropolitan Counties that were abolished in 1986 so that they are not repeated. If city regions are to be successful they need to be well resourced otherwise it will be difficult to foresee any benefits that will be derived from forming them; if the rationale is to cut costs by sub regional working then city regions will fail to deliver any additional benefits causing cynicism with the process and local leadership in general. City regions should be about better use of resources and Gershon efficiencies not cuts".[235]

175. Our visit to Lille allowed us to explore the benefits of a strong but voluntary amalgamation of 85 local authorities covering a major industrial city and its hinterland. We were struck by the way in which the French national government appeared to have been able to create incentives that enabled greater collaboration between a host of local authority partners across the broader metropolitan area, the development of significant strategic and executive capacity, and significant funding to be channelled into key economic development and related projects. It is also arguable that our own Government is taking an active and co-ordinated approach to the development of the London super-region, for example through support for the 2012 Olympics, emerging plans for Crossrail, and investment in the Thames Gateway and other growth areas. It is unlikely that the proposals set out in the White Paper will have a similar, galvanising effect if emphasis continues to be placed upon the devolving of responsibility to city-regional partners rather than the creation of more effective partnerships between national government and sub-national authorities.

The development of city regions. Example 4: Lille Metropole
Lille is the fourth largest metropolitan area in France. It has a population of 1.2 million and geographically is the closest foreign city to the UK. It is the capital of the Nord Pas-de-Calais (NPDC) region which contains 6.6% of the French population (4 million).
The area's main industries were formerly coal-mining and steel-making. Over the last 30 years restructuring of the regional economy has resulted in a wide mix of industrial activity including engineering, vehicles, electronics, printing and food processing. Lille is a hub for mail order distribution. The development of services has been stimulated by the opening in 1993 of the hub station for the Eurostar service linking London, Paris and Brussels. Lille also constructed the world's first fully automatic underground railway system, which came into operation in 1983.
The Lille city-region (Lille Metropole) was created under laws passed in 1966 to enable joint working of communes (municipal councils) in metropolitan areas. It brings together 85 such communes. Prime Minister Mauroy, president of the Communaute Urbaine and former Prime Minister of France (1981-1984), told the Committee that he had been working on the development of the Lille Metropole area since the early 1990s. The decentralisation of powers in France had begun in the 1980s and it had taken twenty years to achieve the merging of communes. Decentralisation therefore needed to be viewed as a process rather than as an event.
In 2007 the city-region has a budget of €1,489 million. The strategic priorities for the city-region are regeneration, economic development, the promotion of a sustainable transport strategy, improvements to the local environment and quality of life for Lille's inhabitants and the development of the social and cultural life of the region.
Improvements to the area's transportation and communications links - including success in winning the competition for a Eurostar terminal - have been particularly significant in making the area attractive to industry and have enabled the creation of a number of jobs. It is hoped that in future there will be increased co-operation with those parts of the metropolitan area under Belgian governance.
Source: Information gathered during Committee visit; www.lillemetropole.fr

CITY-REGIONS AND 'PERIPHERAL' AREAS

176. The Local Government White Paper notes that the economic development of cities and city-regions risks the creation of greater disparities both within and between regions. At the same time, however, it recognises that the interdependence of rural areas and/or small towns on the edges of our larger conurbations means that an acceleration of economic growth in the latter should lead to greater prosperity in the former.[236] This certainly appears to be true in the case of London, whose area of influence has expanded consistently over the years, spreading economic benefits over a steadily enlarged geographical area.

177. Nonetheless a number of witnesses remained to be convinced that they would, in the longer term, benefit from a new (and, some feared, exclusive) focus on economic development within major cities. These were both witnesses representing predominantly rural areas, such as Cornwall, and in one very particular case—Crewe and Nantwich—a smaller conurbation which believed it had been unjustly excluded from developing arrangements and feared the long-term consequences for Government investment of becoming an "isolated policy island" unwanted by the city-regions of Manchester, Liverpool and central Lancashire.[237] The Centre for the Rural Economy argued that:

Any potential that the concept [of city-regions] may have for delivering improvements in local and sub-regional development is likely to be undermined unless a much clearer and stronger statement about how the risks of marginalising what have been cast as peripheral areas and their problems accompanies the city region approach".[238]

The continuing lack of clarity about the extent to which the Government is prepared to go, both in terms of numbers of city-regions and in terms of the powers they may hold, has done little to assuage concerns about marginalisation.

178. In Councillor Chris Foote-Wood's view, the critical issue for peripheral areas was the distribution of public funding and the need, at the very least, to retain current allocation methods and spending patterns. He told us that:

"Cities already have a built-in advantage through having concentrated populations and the consequent economies of scale, as opposed to the difficulties of sparsely-populated areas […] With most funding being on a "per capita" basis, the rural and semi-rural areas need their own additional dedicated sources of funding".[239]

179. A quite different perspective was offered by Mr Crawford of the Mersey Partnership. He argued that the guiding principle for the allocation of scarce resources which aim to improve economic performance should be the potential return on public investment and the contribution made to achievement of the Government's growth targets. Using the North West as an example, he told us that:

"[I]f you align an arc through the [region], [it] would run through Merseyside, especially the City of Liverpool, through the area around Preston and back into Manchester. The key issue is that private sector capital mobilisation is occurring within that arc, and the simple challenge in the North West, and for that matter in all the regions of the United Kingdom is how you mobilise capital at a faster rate, private capital, than we have been able to do for a generation? [...] [T]he long-run challenge, which is probably overdue, is how you get more private capital. Private capital typically migrates into city regional areas".[240]

He went on to argue that, following the next spending review:

"There will be a limited amount of public capital going into these areas. It should go to those areas where it is more likely to lead to mobilisation of private capital; and that requires a significant degree of specific investment around productivity drivers from the physical in the form of infrastructure, through to skills drivers, through to mobilisation of things like technology centres built around universities and so on. […] [C]ity regions, almost regardless of what government does—but it can happen faster with particular kinds of government intervention—will be core economic drivers for the United Kingdom as they are for every other developing country. The danger is that one ignores that reality by seeking to diversify and spread resources too thinly across wider areas. However laudable and understandable that is, it will not work".[241]

It would appear that the multi-area agreement (mentioned in paragraph 169 above) is perceived by Government as the main instrument which will enable areas unsuited for or unwilling to adopt city-regions to achieve similarly effective collaborative approaches. The Government has stated clearly on a number of occasions that, in its view, a 'one-size-fits-all' approach to sub-regional governance will not work. The emerging city-regions policy is an attempt to tailor arrangements to meet specific sub-regional requirements. Having got this far, however, it is essential that the Government should give real assurances to those for whom a city-regional style of governance is inappropriate that the development of the policy will not result in a reduction of support for other areas.

193 Harding, A., Marvin, S. and Robson, B.; A Framework for City-Regions (London:ODPM) www.odpm.gov.uk/index.asp?id=1163665 Back

194 Q57 Back

195 See for example HMT/DTI/ODPM Devolving decision making: 3: meeting the regional economic challenge: the importance of cities to regional growth, March 2006; NLGN, Seeing the Light? Next steps for City Regions (London, December 2005); Adam Marshall and Dermot Finch with Chris Urwin, City Leadership: Giving city-regions the power to grow, (ippr Centre for Cities, London; February 2006) Back

196 Ev 153, HC 977-II Back

197 The Greater London Authority: The Government's Final Proposals for Additional Powers and Responsibilities for the Mayor and Assembly, at www.communities.gov.uk/index.asp?id=1500896 Back

198 Ev 90, HC 977-II Back

199 Ev 185, HC 977-II Back

200 Ev 123, HC 977-II Back

201 Q169 Back

202 Q45, 46, 47 Back

203 HMT/DTI/DCLG, Regional Economic Performance: progress to date, December 2006, p5 Back

204 Ev 90-91, HC 977-II Back