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Devolution can deliver

January 28, 2014

Thanks to Centre for Cities for this event, and congratulations on the publication of Cities Outlook 2014. 

There’s always a risk with this publication that it’s caricatured as a “league table of cities”, and with the emphasis on what we’re doing badly, rather than well.  And your analysis of course brings out the dominant impact of Greater London within the UK economy.

But, for me, this sort of evidence of performance has to be a spur for improvement.  For Newcastle for example it reinforces the challenges where our own city lags behind – to address the deep-seated inequalities we face as a city, to deliver on our plans for housing growth, and grow our private sector business base.  But I also take heart from the positive opportunities we’re providing from growth, investment and jobs – which I’ll say a bit more about in a moment. 

For the core cities as a group, it’s a reminder of our potential.

The core cities together with their surrounding urban areas:

  • Are home to 16 million  people – a third of the population of England
  • Generate 27% of England’s wealth (that’s more than London)
  • House half  the country’s leading universities
  • Contain 28% of highly skilled workers (graduates and above)

We are a vital delivery partner for a Government seeking to accelerate economic growth, and we are already making a significant contribution. But with the right freedoms and flexibilities we could do a lot more.

There is a strong relationship between the ability of cities to drive growth and their levels of local financial control and ability to make policies that match the needs of places.  Financial independence lets cities join things together on the ground to deliver better results, in a way that cannot be matched by doing things by remote control from Whitehall.

The international evidence is very clear. In England 95 percent of all taxes raised in a city go back to the Government, and most of the funding that comes back to us does so with strings attached. This is stifling local innovation and hampering the ability local decision makers to pursue local priorities.

In Canada, cities control ten times more of the tax they raise, in the USA its 7 times and in Germany it is 6 times more. In these countries it is the norm for cities to outperform the national economy. In England only London does this consistently.  English cities lack the level of financial control enjoyed by our international competitors and we are not competing on a level playing field.  Whilst we welcome continued devolution to Scotland and Wales, this does create the risk of a constitutional imbalance which needs to be addressed to free English cities to deliver their plans for jobs and growth.

The core cities group have put forward an ambitious prospectus for growth with clear recommendations for greater devolution and fiscal control.   We’ve seen leadership from Greg Clark, Michael Heseltine and others from within government – matched by the commitment of Richard Lease, Nick Forbes and the other core city leaders.

The wave 1 city deals represent a big step forward in devolution.  We’re looking forward to that same radicalism and commitment to new ideas through the Single Growth Plan process.

I want to mention 3 specific areas:

  • Firstly,  Tax Increment Finance Scheme (TIF), which the Centre for Cities has championed, and is now being delivered as part of Newcastle’s City Deal.  This has allowed us to rapidly speed up delivery plans and construction in our Accelerated Development Zone. For the first time Newcastle Council and our close partners in Gateshead  can keep all of the business rates generated in our Accelerated Development Zone, initiating over £90m of investment, and more over the next 25 years – creating 13,000 jobs,  transforming our city.  Freed up to take the initiative we are not scratching our heads about our economic future, we are on site right now delivering the infrastructure, opportunity and jobs that our city needs.  And Manchester have shown how it’s possible to deliver TIF principles across a wider city region, through their innovative “earn back” agreement.
  • Secondly, through a new more local approach to employment, skills and welfare to work.  The nationally led Work Programme has so far struggled to meet the needs of job seekers in our core cities.  Around half a million people in our cities will complete the programme without finding work.  In stark contrast, locally delivered programmes are delivering better far results. Whilst the national Youth Contract programme is underperforming, the locally delivered pilots in Leeds, Newcastle and Gateshead are delivering results that are nearly twice as effective.
  • And third, by delegating substantial additional investment to local areas, to deliver infrastructure over a much longer-term period, breaking the silos of Whitehall to integrate transport, housing, business support, inward investment, culture and broadband infrastructure. National funding and investment programmes are often cumbersome and inflexible – with a long time lag from bids being invited to benefits being achieved. Local schemes are quicker to deliver and more attuned to the needs of the economy.  Through the Local Enterprise Partnerships, we can bring together commercial expertise and democratic engagement – for the long term future of our cities.

This isn’t about a power grab from Whitehall for its own sake.  It’s about taking responsibility for delivery.  A new approach to city governance, to combined authorities – to both growth and reform of the public sector. 

The Core Cities of England, working alongside the Mayor of London, want the freedom and flexibility to be a good partner to the Government – to help it to deliver the growth and the jobs that we all need. Our ‘City Centred’ campaign makes a series of constructive proposals designed to set cities free to boost skills and jobs,  grow business and innovation, build more houses, strengthen transport networks, increase investment, speed up broadband, purchase cheaper energy, and to join up services to make people’s lives better.

All of these things will feature heavily in party manifestos of every hue ahead of the next election. Delivering on promises and priorities is always more difficult. The Core Cities are convinced that radical devolution can empower us to deliver economic growth, the best outcomes for our communities, and a brighter future for our country. Trust us and we will deliver.

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