EMPOWERINGENGLISH CITIES

MICHAEL HESELTINE

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A special report into the present powers and functions of England’s Combined Authorities and the steps necessary to enable them to compete on fair terms with similar cities across the world.

EMPOWERINGENGLISH CITIES

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Contents

1. Introduction by The Rt Hon the Lord Heseltine of Thenford CH

2. The development of local and city government in Britain

3. Mea Culpa: my role in the current settlement

4. English devolution: the Combined Authority model

5. UK devolution: replicating Whitehall

6. Global devolution: our international competitors

7. Talking to the mayors

8. The way forward

9. My proposals

10. Conclusion

Annex: the Combined Authorities

Cambridgeshire and Peterborough

Greater Manchester

Liverpool City Region

Tees Valley

West of England

West Midlands

Published for the six English Mayoral Combined Authorities (Cambridgeshire and Peterborough, Greater Manchester, Liverpool City Region, Tees Valley, West of England and West Midlands) by the Haymarket Media Group on behalf of the The Rt Hon the Lord Heseltine of Thenford CH.Funded by the West Midlands Combined Authority.

Editorial Research Aled JonesEditor Mel NicholsDesigner Paul HarpinAdministrator Tracy Rodger

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1. Introduction by The Rt Hon the Lord Heseltine of Thenford CHIt is an unacceptable consequence of the devolution of powers to Scotland, Wales and Northern Ireland that much of England itself remains constrained by Whitehall’s dead hand of centralism.

The cities that laid the foundations of our imperial past – many of them the equal in population and resource to the devolved authorities – are denied the freedom enjoyed by their international peers to compete in a world changing at a pace unprecedented in history.

The United Kingdom spends too much time glorying in the nostalgia of the past and patching the institutions of yesteryear. A new world order, huge unprecedented challenges and the availability of technology unimagined by earlier generations compel us to empower, enthuse and invigorate with all the strength we possess.

We must start with our great cities, the engines of our growth, the rocks upon which our prosperity stands.

The historic towns that make up those conurbations, our freestanding cities and our proud counties, they too must be rewarded to join the front line of our endeavour.

Recent reforms have furthered this agenda, but progress has stalled in the last two years. As my conversations with the mayors show, the powers and resources that our conurbations have are uneven and bespoke.

My recommendations are set out at the end of this report. They are a route map for the reform needed in Whitehall and in our conurbations to truly empower our English cities.

2. THE DEVELOPMENT OF LOCAL AND CITY GOVERNMENT IN BRITAIN

Professor Tony Travers, Director,

London School of Economics

“Those ancient local institutions by which we have been trained to self-government” Sir Erskine May

There have been forms of sub-national government within Britain since the evolution of Anglo-Saxon England as a single country. The Kingdom of Wessex had been sub-divided into ‘shires’ since the 8th century. As Wessex absorbed other kingdoms such as Mercia and East Anglia, eventually creating Anglo-Saxon England, the practice of creating shire sub-divisions was extended. Contemporary county councils can trace their origins to this period. Shires were governed by noblemen appointed by the monarch. Sheriffs (‘shire-reeves’) were also appointed, with responsibilities for upholding the law and operating courts. Shires were divided into ‘hundreds’ or equivalent areas which had duties in relation to the administration of justice and raising local taxation.

The Norman Conquest brought changes to the Anglo-Saxon model of local government. Shires became less important as William the Conqueror appointed a number of his followers to positions as feudal lords. The Normans did, however, retain the shires, although they used the term ‘counties’ for them. As the new rulers extended their control of England, new counties were created in the north. Hundreds were retained, though their effectiveness diminished because their role in relation to law enforcement declined. Towns and parishes developed in importance, while justice was increasingly

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a county matter. In Scotland, analogous systems emerged, with sheriffs, shires and burghs. Wales was treated very similarly to England until the 1990s. Devolution in 1999 passed control over local government, including structures, to the Scottish Parliament and Welsh Assembly.

London was given a charter of self-government in 1067, allowing it freedoms and privileges. The city’s vast population and mercantile power were seen as politically important and a source of tax revenue. Soon after, Henry I granted charters to a number of other larger towns, and Henry II increased them significantly. These chartered towns and cities were called ‘boroughs’. Charters required payments to the monarch, but also offered the freedom to undertake a number of functions and to levy taxes. Boroughs were controlled by town ‘elders’ or aldermen. A mayor was often a feature of borough government. Over time, a number of boroughs successfully petitioned for complete independence from the counties within which they stood, assuming responsibilities over the administration of justice.

In the rural parts of counties, ecclesiastical parishes gradually assumed powers where a local area needed them, though only on a modest scale.

In the late 13th century, it was decided that the House of Commons would be constituted from members (two each) derived from counties and boroughs. This model, interestingly, created a link between local and national representation that would only be broken by the 1832 Reform Act, which required direct elections to choose Members of Parliament.

During the 16th century, county responsibilities grew. Highways, bridges, prisons, asylums, licensing and other public functions were handled by Lord Lieutenants appointed by the Crown. A local tax could be levied and officials such as surveyors and treasurers appointed. Parishes also expanded their activities during the 16th and 17th century. Famously, in 1601 the Elizabethan Poor Law gave parishes statutory duties in relation to poor relief and allowed them to set a local tax. This moment is widely seen as the start of property

taxation as the basis of local government funding. Other laws were passed giving parishes duties such as the maintenance of highways.

The Industrial Revolution, which started in the later 18th century, created a number of pressures for political and democratic reform. In parallel, the development of great manufacturing and port cities such as Manchester, Liverpool, Birmingham, Leeds, Sheffield and Newcastle-upon-Tyne generated demands for better and more comprehensive local government. Many of these cities were at the centre of a large metropolitan hinterland of smaller cities and towns.

Major democratic reforms took place in 1832 and 1835. The 1832 Reform Act required the House of Commons to be elected on the basis of new constituencies and a widened electorate. Former corrupt practices were abolished. The Municipal Corporations Act 1835 stipulated that members of town councils should be elected. Boroughs now had to hold elections. Some older ones disappeared, while new ones could petition to be incorporated as boroughs. The rapidly growing industrial cities such as Manchester, Birmingham, Liverpool and Leeds immediately took advantage of the new law, gaining powers and the right to set local property tax. During the 19th century, reforms were also made to the administration of the Elizabethan Poor Law and to improve public health, though these functions were undertaken by separate administrative institutions.

By 1888, cities had well-developed local government, although county areas were still governed by unelected officials and parishes were generally undemocratic and under-powered. The Local Government Act 1888 created administrative counties, broadly based on the historic ones which had their origins in Anglo-Saxon England. Larger borough councils were allowed to continue to be self-governing, thus creating different arrangements for urban and more rural areas. In 1894, a second tier of ‘district’ councils was created to take over and expand former parish duties. In London, the 1888 reform created a single, city-wide, county, while an 1899 law created a second tier of metropolitan boroughs. Elected school boards were also created towards the end of the 19th century.

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This system remained in place until the middle of the 20th century. In 1965, London government was reformed, creating a ‘city region’ for the capital with a ‘strategic’ city-wide authority and 32 local councils (plus the City of London). A Royal Commission on Local Government in England proposed (Redcliffe-Maud Report) in 1969 that existing councils in England be abolished and replaced by new ‘unitary’ (i.e., all-purpose) authorities based on larger towns. In three areas (Merseyside, South East Lancashire/North East Cheshire and the West Midlands/Birmingham) there would be metropolitan authorities plus unitaries. A dissenting memorandum was published by Derek Senior, a Commission member, proposing a two-tier system of provinces, city-regions and districts.

The Conservative government that took office in 1970 decided not to go ahead with either the Redcliffe-Maud or the Senior proposals, but with a two-tier system for the whole of England. The reform included metropolitan counties for Merseyside, Greater Manchester, West Yorkshire, South Yorkshire, Tyne & Wear and the West Midlands. Reforms to the structure of local government took place in the rest of England and Wales in 1974 and, separately, in Scotland in 1975.

From this point on, there have been a series of changes which amount to a rolling reform of local and city government in England. Labour’s ‘organic change’ policy allowed a number of former county boroughs to become all-purpose authorities during the later 1970s. The Conservatives then abolished the metropolitan counties and the Greater London Council in 1986. During the 1990s, the Conservative government initiated a process whereby new authorities could be created by breaking up former county/district areas into a series of unitary councils. This process is still ongoing. Scotland and Wales moved to full unitary council systems. Northern Ireland cut the number of district councils from 26 to 11 in 2015. From 1997 onwards, Labour introduced devolution to Scotland and Wales, while creating the mayor and Assembly in London. Mayors were also introduced, following local referendums, in a number of other towns and cities. Towards the end of Labour’s term of office, legislation was introduced to allow the creation of statutory Combined Authorities outside London.

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Greater Manchester and a number of other areas have subsequently formed Combined Authorities. The Coalition government then announced the creation of a mayor of Greater Manchester. The Conservatives subsequently legislated (in 2016) to allow mayors to be adopted by Combined Authority areas. Today there are Combined Authorities with directly elected mayors in Greater Manchester, Liverpool City Region, Tees Valley, the West Midlands (Birmingham), Cambridgeshire and Peterborough, the West of England (Bristol), North of Tyne (Newcastle) and Sheffield City Region, the first six of whom commissioned this report.

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3. MEA CULPA: MY ROLE IN THE CURRENT SETTLEMENT

There is no easy way to plan a political career. The options before you are so often chosen by others. Reflecting now on the events that followed my election to the House of Commons as the Member for Tavistock in 1966, it is a matter of great satisfaction for me that the opportunities with which I was presented developed a consistency of experience unusually available in a career where the nature of preferment is lateral from department to department, rather than upward in a specialist field.

Time and again I was responsible for the challenges of urban politics and usually the associated subject of industrial strategy, but often not in the way that one might expect.

As a constituency MP in 1966, I would have been aware of the Redcliffe-Maud proposals to replace England’s 1400 multi-tiered local authorities with some 60 unitaries.

However, my preoccupation in the late 1960s was concentrated on my job as assistant to Peter Walker in fighting Barbara Castle’s transport legislation. As junior minister in the Ministry of Transport for the first few months of Ted Heath’s government, I got on with the job. This is what ministers do. Projects included electrification schemes for the railways, motorway lighting systems that worked, and dualling the A38 from the Midlands to the West Country.

Within months of the 1970 election, Ted Heath merged the Department of Transport, the Ministry of Housing and the Ministry of Public Building Works into the newly created Department of the Environment. I moved from Transport under John Peyton Local Government and Planning under Graham Page. By that time, Peter Walker had already secured the government’s support for his response to Redcliffe-Maud.

The real politics were simple. His colleagues in the House of Commons, backed by an army of local Conservative councillors, were motivated by interwoven loyalties defined by constituency boundaries. The parliamentary arithmetic was clearly unwilling to accept Redcliffe-Maud. In addition, there were the deeply held fears of high spending, urban local Labour governments with their insatiable appetite for enhancing urban boundaries to build council homes which they would fill with Labour voters. There was, however, another imperative. To do nothing left Redcliffe-Maud to be implemented by a subsequent Labour government. Action was therefore needed and the Walker plan was a skilful halfway house that removed more than 1000 authorities and left the country with a two-tier county system and with six metropolitan large conurbation authorities, totalling some 400. I played a full role in helping to steer the legislation to the statute book. although at the time I was increasingly aware that this was not the end of the road.

It is not the job of the opposition to run the country. As Shadow Secretary of State for the Environment in the years up to the 1979 election, I was the titular spearhead for the Tory local government’s assault on the Wilson and then Callaghan governments. It was heady stuff. By the time of the election, local government was a sea of blue. We controlled all the local government associations and every county except Durham. Firm friendships had been built between council leaders and shadow ministers. The winter of discontent heralded the widely anticipated arrival of the Tory spring.

My three years as Secretary of State for the Environment were the most transformative of my time in government. Three factors were at work. I was among the forefront of a new generation of cost-cutting, quango-hunting, civil service reducing ministers in the government. No minister reduced his department faster. I exceeded even Sir Keith Joseph in culling quangos. I persuaded my colleagues to get rid of the GLC and ILEA and to abolish the giant metro authorities I had myself helped to create only a few years before.

In no small measure this was facilitated by the coup with which Ken Livingstone replaced Andrew McIntosh as Labour leader after the

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London council elections of 1981. The conurbation authorities had proved unpopular with the Tory party. They were easily characterised as part of the wasteful and bureaucratic world we had been elected to change.

I now believe I was wrong. I should have recognised the fundamental need to reflect economic and spatial reality. I could have reformed rather than abolished and thus accelerated the process I was later to champion.

My judgement at that time can be explained only by the much wider political divisions that existed then. In addition, in office I came face to face with the complexities of the process by which central government underpinned local government expenditure. The process starts with the annual public expenditure survey. Each department receives its budget. All the budgets, in that they relate to local expenditure, are aggregated by the Department of the Environment and then distributed to each local authority depending on sets of statistics relevant to each authority. These will include road mileage, school children, elderly people and many more. The process is not only complicated but throws up unpredictable anomalies. At its simplest, you try to help rural poverty, but the complications of the system result in one of the most hard-pressed Conservative districts coming out worst.

These are damping mechanisms to curb the worst extremes. Years of wrestling with the labyrinthine mechanism of these support systems persuaded me that a more balanced approach to local government expenditure was needed to explain expenditure patterns and changes in the levels of the rates – the then local tax system. And that was before the Treasury’s preference to cut the grant level itself.

Two experiences in those early years of the Thatcher government were transformational.

As Prime Minister, Margaret Thatcher had backed me against the opposition of Geoffrey Howe, who was concerned about expenditure risks, and Keith Joseph, who did not like interventional politics,

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when I proposed creating development corporations in the East End of London and on the banks of the Mersey.

Effectively, they were coordinating bodies with the resources and powers to make and enable the public and private sectors to work together for economic and social gain. Old enmities faded in the face of human relationships and problems shared. Both achieved significant investment in excess of the public contribution. I learnt important lessons.

Even more important and influential was my three-year relationship with the City of Liverpool and, particularly, the 18 months I spent in a role that became known as the Minister for Merseyside.

Peter Shore, the Labour minister I replaced as Secretary of State for the Environment, had introduced a partnership arrangement wherein each of his department colleagues entered into a partnership arrangement with a city with urban stress. He chose Liverpool. I agreed to continue with the arrangement.

My first 18 months saw significant decisions relevant to that great city. I created a development corporation to regenerate 600 acres of toxic land on the banks of the Mersey, saved the iconic Albert Dock by listing it, announced that Britain’s first garden festival would be held in Liverpool, and introduced the Derelict Land Grant that Peter Walker had used to get rid of rural eyesores for regenerating urban dereliction. Of particular significance, this money had to be spent in partnership with the private sector, thus establishing the concept of partnership and gearing.

The riots of 1981 created a dilemma for me. I felt a personal responsibility. I had been the partner minister for 18 months. People had rioted. I felt a need to escape the stereotypical reactions that inevitably follow such events. There are usually two sides to a story and, whilst sympathetic to the traditional response of a Tory government that such behaviour cannot be tolerated and the forces of law and order respected, I wanted to be sure there was no alternative case to answer. It is not impossible that the Prime Minister herself

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shared my sense of unease. She readily agreed to my suggestion and made no attempt to dissuade me. The three weeks I walked the streets opened my political eyes.

Suspended as I was in limbo between Cabinet and the realities of life in one of our largest and historically renowned cities, one lesson shone out with every passing day. Decisions in the public and increasingly the private sector were taken in London. Ministers took decisions about health, education, transport, employment, social security and much else. Local administration reflected those decisions in Whitehall’s outposts in specialist local government officers such as County Surveyors, Housing Officers or Chief Constables. Budget allocations, statutory responsibilities, circulars and career prospects were the cement that solidified the system. In the private sector, Liverpool was full of branch offices. Decade after decade of tax incentives had empowered the takeover of the family businesses that had produced generation after generation of articulate, self-motivated entrepreneurs and replaced them with branch managers.

Within days of my first step along the streets of that great city, I knew what was wrong. There was no one in charge. The political and social divides had no bridge across which human dialogues could flow. Everyone knew who was responsible. It was always someone else. I decided I had to set examples to demonstrate that, even in those harsh economic circumstances, things could work in Liverpool, problems could be solved, and together there were strengths on which to build. I became a sort of clerk of works suspended between two layers of government. I had taken a big step towards the international pattern of elected mayors. It’s about how we create better spaces for people to live, to grow, to learn, to play, to meet, to call ‘home’ and to say that word ‘home’ with pride.

Dissatisfaction and total disengagement with the place you live is a stark feature of parts of British society. I don’t mean a lack of pride in your city or your suburb. It is more local and more personal than that. There are communities, even streets, that, combined, evoke no sense of pride. No pride in the architecture, no access to the people

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who can support you and help you get ahead in your life, and no belief that you have a stake in your community and its future. These pockets of low engagement and aspiration exist up and down the country. The devolution agenda is designed to tackle this issue. London is too powerful and takes too many of the everyday decisions. If you live 200 miles away from the people who decide your future, you become frustrated, lack hope and ultimately become apathetic. Too few of the men and women who devise the policies that shape your early years, your adolescence, your education, your life chances, your whole life, have never experienced your life. Let us be frank. The people who design and construct and administer these deprived communities do not tend to live in them.

Four years on the Tory backbenches after 1986 left me to follow my own instincts in the political wilderness. One significant event stands out in my mind that further consolidated my conversion to the mayoral system: Sapporo, the capital city of Hokkaido, Japan’s snowy northern island. The local mayor seemed the epitome of youthful local pride and leadership. He had a vision and the policies to implement it.

With the 1990 election of John Major as Prime Minister I was back in the Department of the Environment. I had brought back with me the promotional brochures I had picked up in Sapporo. At one of the earliest meetings in Number 10 I tried to use it to enthuse my new colleagues. There was no take up! I returned to the reformist agenda and the pursuit of unitary counties. My colleagues anticipated exactly the entrenched opposition that had prevailed in the early ’70s but I was authorised to set up a local commission for England to test local reactions and, if I could demonstrate support, proceed by local agreement to the amalgamation of a county and its districts into a unitary authority. Sir John Banham became the first chair of this roving commission.

I had more success with my colleagues when it came to reform in Scotland and Wales. The absence of Conservative councillors opened the gateway to much needed reform and the government established unitary counties on the face of the legislation. Years later in a meeting with the COSLA (Scottish Local Authorities) I had some difficulty in

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reminding the then new generation of Scottish local government leaders that there had ever been a two-tier system!

One other landmark established in the early 1990s was the creation of City Challenge. The background to this initiative lay in a project announced in 1981 to tackle the acute challenges Knowsley Council faced with an estate called Cantril Farm. It suffered from all the worst characteristics of urban deprivation. I persuaded the Council to accept an offer by the Abbey National Building Society and Barclays Bank to buy it. Laurie Barratt of Barratt Homes joined in by building homes for sale close by. I secured the appointment of Tom Baron, a tough property developer, as chief executive and provided grant help to stimulate the transformation. Renamed Stockbridge Village Trust, it is a model of urban renaissance in the most extreme of circumstances. Its success persuaded me of two things. First, to secure much greater involvement of council tenants in the management of their own estates. Second, that public private partnership could add a valuable dimension to social reform.

I returned to the concept in the ’90s. Thirty local authorities were invited to bid for only 10 pots of money with which to regenerate one of their deprived council estates. They had to establish a separate management structure involving both the tenants and the private sector. The use of such competition in tackling social deprivation was controversial. It worked and the losers became the winners the second time round. It was another significant step towards the restoration of local empowerment. Years later I was to learn how far there was still to go. I visited a deprived estate in Birmingham with the then council leader, Sir Albert Bore. I was taken aback by how the key social services the people depended on were spread across the city, independent from each other. Some of the people delivering those services were present. Most had never met. This reflected the dysfunctional nature of government departments. Whitehall had been replicated in the local authority. One team was dealing with health, another benefits, another training, and so on. The bus from the estate to the job centre cost an unemployed person £2 each way. This was a system designed for the individual functions of central and local government, not the people or the place.

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I left the Department of the Environment in 1992 to become President of the Board of Trade. My first enquiry as to our industrial strategy invoked the official response “we are not allowed to use those words”. My experience in attempting to define an industrial strategy has inevitably focused on the role of government and the public sector.

However, there is considerable overlap with the private sector. At its most basic, individuals and representative bodies from the private sector maintain an ongoing dialogue with government in support of policies that create the most favourable background in which they go about their business.

In addition, such matters as the supply of educated and trained labour, procurement policy, research funding, location of government offices and regional support programmes are the bread and butter of political life.

The issues become more divisive and thus controversial when government intervenes. In practice, all governments intervene every day. The market knows no morality. Civilisation is the coded practice that replaces the jungle with modern living conditions. In every community there is a tiny minority of feckless, careless or downright crooked against whom the great majority of citizens have to be protected by law as governments intervene and regulate.

It is a matter of practical judgement where you draw the line. You cannot preserve old technologies, moribund companies or hopeless management. On the other hand, I have not the slightest doubt that the government was right to rescue Rolls-Royce in the 1970s. Others disagree. I have probably steered through more acts of privatisation than any minister before or since. Political philosophy must be tempered with common sense.

The great engines of technological innovation are today empowered and fuelled by huge taxpayer-funded defence, space and other programmes. Public opinion, with its increasing concern about the threat to the environment, global tax and profit manipulation,

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international terrorism, and crime, will drive regulatory intervention deeper into our way of life.

If the role of government in wealth creation is so important, the next question centres on the collective response of the private sector. The answer is complex and controversial. Understandably, opinion focuses on and is led by the great raft of British companies that are world competitive. Too little time is focused on those that are not. My experience tells me that our competitor nations have been much more positive in the partnerships within the private sector and between the public and private sectors that they have created. There are different models, but the most common is the role of Chambers of Commerce. In the 1990s, I pioneered the establishment of Business Link to provide comprehensive support to businesses. By the time of the arrival of the Coalition government, the system was attracting two million enquiries a year but, in an act of political vandalism, it was replaced by a much less ambitious concept.

Over subsequent years it has been rebuilt with publicly supported growth hubs and the wider local enterprise partnerships. There is an urgent need to build this process to world standards.

The election of the Coalition government in 2010 strained the already fragile commitment of the Tory manifesto to “give the citizens in each of England’s 12 largest cities the chance of having an elected mayor”.

The Lib Dems had no enthusiasm and, it is fair to say, neither did many senior Conservatives. The referendum campaign attracted little public interest, minimal levels of turnout and very disappointing results. A split in Bristol’s Labour Party enabled a local independent to beat both main parties. He was the only winner.

For me, the turning point came when George Osborne and Vince Cable invited me in 2012 to produce a report of much wider compass – growth in local economies across England. This report became No stone unturned: in pursuit of growth and advocated significant devolution within England.

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The support of George Osborne, the Chancellor of the Exchequer, who was becoming something of a convert to devolution, was crucial. Supported by a team of some 30 civil servants drawn from across Whitehall, I was given unprecedented access to the machinery of government, with no attempt to guide or influence my conclusions. George Osborne not only welcomed its conclusions but he had also looked with care and interest at the way the 10 Manchester boroughs had worked together after the demise of its conurbation authority in 1986.

It was fortunate that he had recruited a former senior executive from Goldman Sachs, Jim O’Neill (Baron O’Neill of Gatley), as a ministerial colleague at the Treasury. He was not only a Mancunian, but had advised the local politicians on their evolving, cooperative structures. The ground was thus prepared for a second attempt to achieve the devolution authorities under local mayors. The process was admirably summed up in the House of Lords by Lord Goddard, the former Labour leader of Stockport. He said: “Greater Manchester did not, in principle, want an elected mayor but the deal was that if it wanted full powers then that was the price. Looking at the full deal, the 10 leaders felt it was a price worth paying.”

One lesson learned was simple. If the only route to success was voluntary, then there had to be a deal with prizes! The chosen vehicle originally took the form of City Deals – packages of devolved power and cash in return for reform in the local administrative arrangements. These city deals were followed by devolution deals, which insisted on directly elected mayors.

By 2017, six Combined Mayoral Authorities had held their first elections, secured their initial deals, and in 2019 I was invited to write this report into their present status and future prospects.

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4. ENGLISH DEVOLUTION: THE COMBINED AUTHORITY MODEL

Before exploring how we came to the Combined Authority model, it is worth stating again the value and power of devolution¹.

The situation is, and remains, clear. Many of the UK’s major cities have underperformed economically for decades, falling progressively behind the rest of the national economy and many international competitors, especially with regard to rates of productivity.

There is no single solution to tackling these economic challenges. If our great city-regions are once again to become the engines of economic growth for our country, it will require long-term and enduring partnership work between the private sector and all levels of government, ensuring that city-regions have: a good supply of skilled labour; are well connected; have land available for homes and employment; have rich, innovation ecosystems, often built around a university; and have an attractive cultural offer for their communities.

Effective leadership across city-regions, with the right mix of powers and funding at the appropriate spatial level, can generate greater allocative and productive efficiencies, creating an economic dividend arising from:

l better tailoring of policies to local conditionsl exploiting synergies through better local coordination of different thematic interventionsl encouraging greater policy innovation through local trialling of different approaches. ¹ Sources relied upon: OECD, The Metropolitan Century (2015); A Pure Theory of Local Expenditures, Tiebout (1956); Fiscal Federalism, Oates (1972); On the ‘economic dividend’ of devolution, Andrés Rodríguez-Pose and Nicholas Gill (2005); Regional decentralization and fiscal incentives: federalism, Chinese style, Jin, Qian and Weingast (2005); UK Government Industrial Strategy (2017); OECD Economic and demographic trends in cities (2015); OECD What makes cities more productive? Evidence of the role of urban governance from five OECD countries; OECD Reducing regional disparities in the United Kingdom (2018).https://www.keycities.co.uk/sites/default/files/news/attachments/16-09-20-Competing%20with%20the%20continent%20draft.pdf

Indeed, recent OECD evidence suggests areas with more integrated leadership, across a functional economic geography (such as a city-region), can support higher rates of economic growth and higher rates of productivity when compared with those areas that have more fragmented governance. Therefore, institutions – such as Mayoral Combined Authorities in the UK – could provide a basis upon which city-regions can secure this form of economic dividend.

In addition, the benefits from establishing and supporting the UK’s Mayoral Combined Authorities is not necessarily limited to the specific cities. Over time, the improving economic performance of these cities could lead to better economic performance overall for the UK.

Gross Value Added (Balanced) per head of resident population Value in current basic prices (£)

2001 2005 2009 2013 2017

Greater London Authority 27907 34436 38157 42205 48857

Greater Manchester Combined Authority 14909 18215 19927 21333 23729

Liverpool City Region Combined Authority 12607 15733 18306 18450 20740

North of Tyne Combined Authority 13574 17521 18708 20279 23021

West Midlands Combined Authority 14990 17468 17818 19636 23006

Cambridgeshire and Peterborough CA 18228 21056 23110 25646 28877

West of England Combined Authority 20066 23544 26610 28972 31602

Wales 12274 14932 15723 17751 19899

Scotland 15337 19064 21371 23103 25485

Northern Ireland 13767 16759 17538 18642 21172

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Source: As of February 2019, House of Lords library

However, despite the clear importance of devolution, the mayoral authorities we currently have, and the model that underpins them, came via a somewhat circuitous route. The failure of the 2004 North East England devolution referendum cast a long shadow, but, in the early days of the Coalition government, the devolution movement began to climb up the agenda. In particular, the passing of the Localism Bill 2011 and the provisions in the bill that provided for elected mayors was an important step. However, there was – as was to be expected – fierce resistance:

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“Some of the measures in the Localism Bill were being subjected to intense scrutiny and opposition in the House of Lords, led by former local government leaders, many of whom sit in the second chamber. In particular, they objected to the proposals for ‘shadow mayors’, which would have made all council leaders into mayors following Royal Assent in Autumn 2011, before holding 71 referendums in May 2012, and the first mayoral elections (in cities that voted yes) in May 2013. June 2011 the government agreed to abandon these proposals.²”

Attempts to break through the resistance continued. The next step in the battle: City Deals. The November 2011 consultation paper What can a mayor do for your city? and, alongside it, the December 2011 paper called Unlocking growth in cities, set out a menu of powers but, importantly, made it clear that powers only came if agreement was reached. The powers were highly economic in nature, and two tests became fundamental to the whole project:

“Does the relevant authority cover the right geography? A tightly constrained city-centre authority cannot run a local transport network, for example. Does the relevant authority have visible and accountable leadership?³ ”

These two pillars – geography and accountability – I think are ones we must not forget as we assess our current Combined Authorities.

Nonetheless, attempts to reach deals began in earnest, and the deal-based model began to develop. Indeed, it is important from the start to remember that the Combined Authorities this report studies came from deal-based processes, and so the dynamic was baked in from the start:

“A deal is a two-way transaction – so cities will need to do things in return. Where cities want to take on significant new powers and funding, they will need to demonstrate strong,

² Institute for Government, Achieving Political Decentralisation, January 2014

³ Ibid

visible and accountable leadership and effective decision-making structures.⁴”

There were some benefits to this approach. It created flexibility and adaptability instead of rigidity and systemisation. Local authorities were treated with respect and not subject to an unbending and commanding hand. The goal was one of conversation as opposed to conflict.

However, the approach has also had drawbacks. It has meant a lack of uniformity and in some areas, fudges. It has also led to some opacity within the system and concerns about the transparency of deals⁵. Further, the power given to local authorities has also meant that a number of deals have not made it to fruition. On balance however, the drawbacks were, in my view, a price worth paying.

Even this limited devolution still led to huge resistance throughout Whitehall. I hit the headlines in 2012 when I said what everyone involved in the agenda was thinking:

“Central government is not enormously inclined to giving away power. There is a huge battle going on.”

The battle continued and the deal-based approach developed further. A number of deals were either completed or being negotiated by the end of 2014. Alongside this, in early 2014, Whitehall’s capacity began to grow even further with the development of the Cities and Local Growth Unit.

However, events intervened to move devolution even higher up the agenda. Narrow victory in the 2014 Scottish independence referendum spooked the political class. In the wake of the independence referendum, the need to deal with our constitutional settlement took on even greater importance. David Cameron

⁴ HM Government, Unlocking growth in cities⁵ See also the PSA Research Commission’s report, Examining the role of ‘informal governance’ on devolution to England’s cities, March 2016

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understood this and, the morning after the result, when declaring the need for a “new and fair settlement” he said:

“It is also important we have wider civic engagement about how to improve governance in our United Kingdom, including how to empower our great cities – and we will say more about this in the coming days⁶.”

Two months later, the first devolution deal was announced between the government and Manchester. Other deals began to follow.

Why the speed of adoption? It is difficult to disagree with the Institute for Government’s assessment in its excellent paper Making devolution deals work:

1. Strong institutional leadership.

“It was clear that this process was to be led by HM Treasury. Previous efforts to decentralise have foundered because their sponsoring department did not have the necessary clout to compel other departments to give up power. Having a strong department, such as the Treasury, leading the charge greatly improved this initiative’s prospects for success. Alongside this focus from the Treasury, a reformed and cross-departmental Cities and Local Growth Unit emerged, with the purpose of providing both support and challenge functions around devolution proposals for local areas and Whitehall departments. Increasingly, this unit has worked closely with an expanded team within the Treasury, who lead on centre-local negotiations and the evaluation of different areas’ proposals.⁷”

2. Strong political leadership.

“The devolution agenda, and the ‘Northern Powerhouse’

⁶ David Cameron, speech directly after the result of the Scottish Referendum⁷ Institute for Government, Making devolution deals work, January 2016

initiative in particular, is closely and personally associated with the current Chancellor. In previous work, the Institute for Government (IfG) has emphasised the importance of strong political leadership for decentralisation to be successful. Without this kind of leadership from the top, it is much more likely that Cabinet ministers will defend their own ‘territory’ and resist attempts to empower local areas at their own department’s expense.⁸”

3. Strong local leadership.

“The Chancellor, in his first ‘Northern Powerhouse’ speech, said that he was willing to enter into negotiations over “serious devolution of powers and budgets for any city that wants to move to a new model of city government – and have an elected mayor”. So, unlike City Deals or the mayoral proposals that preceded them, this initiative signalled the recognition by central government that meaningful devolution requires subnational structures that exist at an appropriate scale to take on tasks currently performed by Whitehall, and that these would likely require new forms of visible, accountable leadership.⁹”

It is also important not to underestimate the personal element in driving these deals, particularly in respect of Greg Clark and George Osborne:

“So today I am putting on the table and starting the conversation about serious devolution of powers and budgets for any city that wants to move to a new model of city government – and have an elected Mayor.¹⁰”

Finally, there is a structural element. There was a two per cent real-terms reduction in local authorities’ income between 2010-11 and 2015-16, taking account of both central government funding and

⁸ Institute for Government, Making devolution deals work, January 2016⁹ Ibid¹⁰ George Osborne, Northern Powerhouse speech, June 2014

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¹¹ National Audit Office The impact of funding reductions on local authorities, November 2014 ¹² George Osborne, Chancellor on building a Northern Powerhouse speech, May 2015¹³ HM Treasury, Spending Review 2015

council tax (as estimated in November 2014¹¹). The additional revenue stream was therefore often much welcomed.

With the general election in 2015 and the Coalition government over, would there be a retreat? No. One week after the election, George Osborne said:

“Here’s the deal. We will hand power from the centre to cities to give you greater control over your local transport, housing, skills and healthcare. And we’ll give the levers you need to grow your local economy and make sure local people keep the rewards. But it’s right people have a single point of accountability: someone they elect, who takes the decisions and carries the can. So, with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone. But nor will I settle for less.¹²”

This rhetoric was matched by requests for further devolution proposals. It was clear that devolution was marching onwards, as set out in A country that lives within its means¹³:

“The government is committed to building strong city regions led by elected mayors, building on the ground-breaking devolution deal with Greater Manchester in November 2014. The Chancellor has asked all relevant Secretaries of State to proactively consider what they can devolve to local areas and where they can facilitate integration between public services. City regions that want to agree a devolution deal in return for a mayor by the Spending Review will need to submit formal, fiscally-neutral proposals and an agreed geography to the Treasury by 4 September 2015. The Treasury and DCLG will work with city regions to help develop their proposals.”

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Thirty-eight bids were received by the September deadline. Alongside these bids, the Cities and Local Government Devolution Bill was heading for Royal Assent. Further powers for Greater Manchester were included in the post-election July Budget.

Indeed, by the end of 2015, George Osborne’s conversion was complete. In his 2015 Conference speech he announced business rate retention, mayoral precept and the abolition of uniform business rates.

“The way this country is run is broken. People feel remote from decisions that affect them. Initiative is suffocated. Our cities held back. There’s no incentive to promote local enterprise. It’s time we fixed it. And I’ll work with anyone, from any political party, to make that happen.¹⁴”

Proposals began to be fully scrutinised. In February 2016, the House of Commons Communities and Local Government Committee reported on the future of devolution in Devolution: the next five years and beyond and in April 2016 the National Audit Office published its report on English devolution deals.

In 2016, the Cities and Local Government Devolution Act 2016 was passed and in the March 2016 Budget, three further deals were announced: East Anglia, Greater Lincolnshire and the West of England. Common streams began to emerge within the deals:

“While the specific functions and terms of each devolution deal differ, there are common themes in those that have been announced so far. All of the deals include an agreement on devolved responsibility for substantial aspects of transport, business support and further education. Other policy areas included in some of the deals are housing and planning, employment support and health and social care. There are also similarities in aspects of local proposals that have not been accepted by central government, for example

¹⁴ George Osborne, speech to Conservative Party Conference, 2015

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¹⁵ National Audit Office report on English devolution, April 2016¹⁶ George Osborne, April 2015¹⁷ Department for Business, Enterprise and Industrial Strategy, Industrial Strategy: building a Britain fit for the future

school-age education. The transfer of functions ranges from clearly specified devolution of powers and funding in some policy areas such as adult skills, to more limited approaches such as employment support co-commissioning.¹⁵”

Then came another political upheaval. The result of the referendum of our membership of the European Union caused a significant change in government. Nonetheless, the foundations had been laid and May 2017 was the moment of truth. On 4 May 2017, the six directly elected mayors who commissioned this report were duly elected and took office.

The pace of devolution changed. Government turned to other things. The centralisers fought back. I am reminded of George Osborne’s words:

“There are so many forces working against this kind of thing. Literally no one wants you to succeed. It is in everyone’s interest that powers rest where they are at the moment. The forces of inertia in government are incredibly strong.¹⁶”

Even so, the situation was less of a reversal but more of a change of pace. Some – albeit very limited – fiscal powers were devolved (mainly via pilots), and in November 2017 the Industrial Strategy White paper announced skills advisory panels and, importantly, local industrial strategies:

“We will work in partnership with places to develop Local Industrial Strategies, which will be developed locally and agreed with the government. These strategies will help identify priorities to improve skills, increase innovation and enhance infrastructure and business growth. This will guide the use of local funding streams and any spending from national schemes.¹⁷’

The November 2017 Budget, too, offered some support for Combined

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Authorities and in 2018, housing deals were agreed with Greater Manchester, the West Midlands and the West of England.

Nonetheless, the reports filed by the Ministry of Housing, Communities and Local Government about the progress of devolution in 2016/2017 and 2017/2018 do not make particularly happy reading for supporters of devolution. With parliamentary time taken up by the endeavour of leaving the European Union, and the debates, disagreements and disputes surrounding the nature of our exit, devolution is a totemic example of a valuable policy that has fallen by the wayside.

However, as will be outlined below, whilst the attention has been on Westminster, the Combined Authorities themselves have developed, evolved, and achieved. The institutions themselves show no signs of slowing down.

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Transforming Cities Fund allocations in the 2017 BudgetWest Midlands – £250mGreater Manchester – £243m Liverpool City Region – £134mTees Valley – £59mWest of England – £80mCambridgeshire and Peterborough – £74mSource: Mark Sandford, Devolution to local government in England

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5. UK DEVOLUTION: REPLICATING WHITEHALL

Reflecting on the above, it is very difficult to separate out the developments that led to the creation of the Combined Authorities from the broader trend of devolution within the rest of the UK, in particular Scotland and Wales. The two referendums of September 1997 set forth the creation of the Scottish Parliament and the National Assembly for Wales by the Scotland Act 1998 and the Government of Wales Act 1998, and the Combined Authorities are products of similar desires.

However, there are serious differences between the motivations behind them and the structures created. The Combined Authorities are, in a sense, children of an economic vision for the United Kingdom, whilst devolution to Scotland and Wales has often been seen more through a constitutional lens. As rightly identified by the RSA:

“At the heart of the cities agenda is an economic imperative; [the] need to maximise the productivity and growth potential of agglomeration and connectivity if we are to tackle the fiscal challenge still ahead.¹⁸”

Thus, the powers devolved have happened backwards: the Scotland and Government of Wales Acts provided powers over things such as health, education, housing and roads, but the ability of Scotland and Wales to economically achieve played second fiddle. It is only much more recently that Scotland and Wales have been given fiscal

Cardiff City Regionc. 50 per cent of the total economic output of the Welsh Economy.c. 49 per cent of total employment.Over 38,000 active businesses.Source: City Deals and the Regional Economies of Wales

¹⁸ RSA: Unleashing Metro Growth – Final Recommendations of the City Growth Commission, October 2014

Aberdeen, Glasgow and Edinburgh City Regions70 per cent of Scotland’s population.82.5 per cent of Scotland’s knowledge-intensive jobs.75 per cent of Scotland’s growth sector jobs.Source: Scotland’s Urban Age, Burness Paull

powers, and their respective governments have often been slow to use the levers they have been given.

The institutions mirror the structure. Devolution to Scotland and Wales created parliaments in Westminster’s image. MPs become MSPs and Assembly Members. The Houses of Parliament became the Scottish Parliament and the Senedd. The Combined Authorities, without such legislative powers, have evolved differently – the nature of their model is much more presidential.

The relationship with government is also different. Scotland and Wales each directly have a seat at the table in Cabinet. Their Secretary of State acts as a single point of contact between the devolved administration and Westminster. Their link to government is much clearer.

The above approach – and its lack of emphasis on economics – has risked the creation of mini-Whitehalls, where powers are devolved but the siloed approach remains. This is not what we should seek to emulate in England.

City Deals have been taken up with considerable enthusiasm in Scotland and Wales. For example, the Scottish and UK government have jointly invested £250m in the Aberdeen City Region Deal.¹⁹ Nonetheless, these deals do not come with elected mayors, and so the deals lack a single point of accountability.

Six deals have been signed between Scottish local authorities, the Scottish government and the UK government.²º and two have been

¹⁹ http://www.abzdeal.com/about-the-city-region-deal/, 11 June 2019²º Scottish Government, https://www.gov.scot/policies/cities-regions/city-region-deals/

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agreed between Welsh local authorities, the Welsh government and the UK government²¹:

l The Cardiff Capital Region City Deal involves a £1.2bn Investment Fund, which will go into a range of projects including the development of a South Wales Metro over a 20-year period.

l The Swansea Bay City Deal provides £1.3bn of funding over 15 years: £241m from the Welsh and UK Governments, £637m from the private sector and £396m from other public sector organisations.

Finally, something should be said, albeit briefly, about London. Though well beyond the scope of the report, London has continually been the UK’s devolution sandbox, with continuous cycles of devolution and abolition:

“London-wide government was reorganised four times between 1855 and 1986, leading prominent scholars to label it a ‘recurring experiment’.²²”

The current settlement instituted by the Greater London Authority Act 1999 has meant that London is now almost 20 years along its latest devolution journey, and its impact has been integral to shaping how mayors are perceived in the UK. I have been struck, in particular, by the level of support given to the six metro mayors, on whom this report focuses, by the Mayor of London’s office, and the collegiate relationship they have after working together on a number of joint submissions and campaigns.

London is often seen as a model for the other mayors. However,there are still considerable limits to London’s powers. Almost 20 years on, its financial powers are still highly limited compared to some European cities. London currently retains just 7 per cent of

²¹ City Deals and the Regional Economies of Wales, Welsh Assembly Economy, Infrastructure and Skills Committee, 2017²² Institute for Government, Achieving Political Decentralisation, January 2014

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the income it raises, whilst New York, a competitor city, retains around 50 per cent.²³ Therefore, when looking at fiscal powers, the six Combined Authorities who commissioned this report should be looking beyond London in this regard.

Nonetheless, the London Mayor’s office has successfully developed politicians with considerable informal power, and is regularly looked to by the public for leadership both nationally and internationally. Similarly, London shows how control over transport is key to devolution succeeding. It is often the most direct access that mayors will have with their voters.

The results speak for themselves:

“A 2011 poll found that only 5 per cent of Londoners wanted to abolish the Mayor and Assembly, when choosing from a list of possible reforms.²⁴”

²³ London Finance Commission, Raising the capital, May 2013²⁴ Institute for Government, Achieving Political Decentralisation, January 2014

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6. GLOBAL DEVOLUTION: OUR INTERNATIONAL COMPETITORS

People compete, companies compete, countries compete. That is the world in which we live. It is impossible to overstate the importance of our great cities in allowing us to compete globally. They played a defining role in what we are. They must be equipped to do so again in carving our future. Essentially, they must have the power and resources to build on their strengths and eradicate their weaknesses. They must rebuild the culture of enterprise that created them. They must be free to initiate, experiment and just do things differently as local circumstances demand. They must dare to excel. Competitor cities overseas are ahead of the game.

In its recent interim report, Lord Kerslake’s commission concluded three things. First, in comparison with 30 OECD countries, the UK was 28th in terms of inter-regional inequalities. Second, the problem is getting worse despite all attempts to stop it. Third, London is decoupling from the UK economy. I would add another statistic. In a recent league table of international education measurements, the UK ranked 15th in science, 21st in reading and 27th in mathematics²⁵. Therefore, the next level of context we must examine is global. Each of the six Metro mayors have to steer their regions through an increasingly competitive global race with cities and regions throughout the world. They do so, in a sense, with one arm tied

Centre for Cities How do cities trade with the world, April 2019

Cities account for 64 per cent of all of Britain’s exports.

The EU is by far the largest export market for every British city, with 45 per cent of city exports being sent to the bloc.

Services account for 57 per cent of all city exports.

²⁵ OECD, PISA 2015 Results: Excellence And Equity In Education: Volume I

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behind their backs. The UK remains a highly centralised state, as identified by the RSA:

“While global competitors are free to invest in their major cities, UK metros are at the mercy of central government, permanently bidding for a share of a fixed pot of national expenditure. The UK has the most centralised system of public finance of any major OECD country; sub-national taxation accounts for only 1.7 per cent of Gross Domestic Product (GDP), compared to 5 per cent in France and 16 percent in Sweden.²⁶”

The below graph from the Institute for Government speaks for itself:

Nonetheless, there are always lessons to be learned by looking to cities and regions in other countries, as I discovered after visiting Sapporo in the 1980s. In 2016, Hugo Bessis wrote an excellent report – Competing with the continent – for the Centre for Cities²⁷

which showed that:

²⁶ RSA, Unleashing Metro Growth, October 2014²⁷ Centre for Cities, Competing with the continent, September 2016

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l Cities (in the 17 European countries the Centre for Cities report studied) accounted for 3 per cent of land area but 42 per cent of GVA.l Europe’s 50 largest cities produced a quarter of European output.l Roughly 60 per cent of UK output is generated in our cities.l London accounts for 24 per cent of UK GVA.l UK cities are, generally, much less productive than cities on the continent. l UK cities have a lower share of high-skilled residents than cities in most other countries.

Alongside a general overview, the specifics of how a number of cities operate also provide valuable guidance, and so I have briefly profiled here a number of our main competitors: Rotterdam, Lyon, Frankfurt, Chicago, Sapporo and Milan.

Rotterdam

With a population of more than 630,000, Rotterdam is the second largest city in the Netherlands (Eurostat, 2014). It is within the Randstad, one of the biggest conurbations in Europe. Given its size and industrial structure, Rotterdam is most similar to UK cities such as Sheffield and Glasgow.²⁸

Its core strength is its port, the largest in Europe and one of the biggest in the world. As a result, logistics and consumer goods industries play a big role in the city, attracting firms like Unilever and Procter & Gamble. For this reason, Rotterdam has traditionally had a working-class reputation. However, in recent years the city has been transforming itself as a modern urban economy based on services and seeing greater GDP growth than other parts of the country.²⁹

²⁸ Bessis H. (2016) Competing with the continent, Centre for Cities.²⁹ https://www.arcadis.com/media/4/8/3/%7B483A4E62-BBD5-4328-9877-3A1113FB28BD%7DRotterdam%20City%20Focus.pdf

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Rotterdam, together with all other Dutch municipalities, has a mayor, a municipal council and aldermen, all of whom share legislative powers. The mayor is directly appointed by the national government for a renewable six-year term, while the municipal council is directly elected every four years. The council then elects the aldermen.

The powers and responsibilities of the municipality are laid out in the Municipal Act. They include economic development and housing planning, physical repairing and cleaning, welfare and job finding, social development and public services.³º

Municipalities rely on three forms of funding. More than 60 per cent of their finance comes in the form of an annual grant from the national government Municipalities Fund, which each municipality can spend freely on activities decided by the council. The national government also provides ad-hoc transfers to cover the costs of activities resulting from national policy in areas such as urban regeneration and education. Last, municipalities can raise their own income from local taxes and assets such as port authorities or municipal properties. Locally raised funding accounts for approximately 10 per cent of all municipalities’ revenue.³¹

Since 2015, Rotterdam has been part of the Metropolitan Region of Rotterdam-The Hague, a non-elected inter-municipal authority covering 23 municipalities, created with the idea of maximising the agglomeration benefits the area offers. The Metropolitan Region has two main pillars: a top-down approach to transport, which has been the main focus so far, and a bottom-up approach to economic development.³²

The KVK is the Netherlands Chamber of Commerce, which has offices across the country, including in Rotterdam. Each business needs to be registered with the KVK. The Chamber provides them with advice and support on a variety of topics such as how to run a

³º Association of the Netherlands Municipalities (2007) Local Government in The Netherlands³¹ European Parliament (2015) Economic, social and territorial situation of the Netherlands³² OECD (2016) The Metropolitan Region of Rotterdam-The Hague

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business, entrepreneurship and stimulation of business growth in the local area.³³ More than 1m entrepreneurs are signed up to the Chamber – approximately 55 per cent of all businesses. The KVK has approximately 14,000 employees.³⁴

Lyon

Second only to Paris, Grand Lyon is one of the biggest metropolitan areas in France. With over 1m inhabitants (Eurostat, 2015), the city is the capital of the Rhône department, in east-central France. For its size and industrial structure, Lyon is most similar to Birmingham and Manchester.³⁵

Lyon is successfully transitioning from an industrial past into a service-based economy. Its leading sectors include life sciences, bio-technology and software development. The city is also the international headquarters for Euronews and Interpol.³⁶ To build on this success, Lyon is taking part in La Confluence, Europe’s biggest redevelopment project, which is designed to double the size of Lyon’s city centre by 2025, creating housing and office space without significantly expanding the city territory.³⁷

The Métropole de Lyon – also called Grand Lyon – was created in January 2015 by merging the powers and responsibilities of the Urban Community of Lyon with those of the Rhône to maximise the benefits of agglomeration via better integration at the local level. This was the result of a reorganisation legislated via the MAPTAM law, which also affected Paris and Marseilles. Grand Lyon now comprises 59 communes, organised in a municipal council chaired by a mayor who serves for six years. The urban area will have its first directly elected mayor in 2020.

³³ KVK, https://www.kvk.nl/english/ 29/05/2019³⁴ KVK, https://www.kvk.nl/over-kvk/jaarverslagen/ 29/05/2019³⁵ Bessis H. (2016) Competing with the continent, Centre for Cities.³⁶ https://www.aderly.com/why-doing-business-in-lyon/economy/ 29/05/2019³⁷ http://www.lyon-confluence.fr/en/urban-project/urban-redevelopment/ 29/05/2019

Grand Lyon has control of all decisions of interest to the metropolitan area. These include powers over economic development, education, culture and leisure, public services, quality of life and street cleaning.³⁸ The urban area has an economic strategy for 2016-2020 outlining the main priorities and actions for its first term.³⁹

Research by Centre for Cities has shown that while France is a relatively centralised country (in a similar manner to the UK), its local government has more fiscal autonomy. Only 22 per cent of local funding is in the form of a transfer from the national government to fund public service delivery. Local taxes instead make up 48 per cent of local revenues. These taxes include local property taxes, residential property taxes, taxes on buildings and on land, and business property taxes.⁴º

Lyon has historically worked very closely with businesses, even before becoming the Grand Lyon. The Lyon Economic Development Agency (ALDERLY), set up by the Lyon Chamber of Commerce in association with several other organisations in 1974, supports companies planning to relocate to the area by providing advice and assistance. The agency has three missions: seeking out companies with relocation plans, promoting the Lyon region, and assisting incoming companies.⁴¹

Grand Lyon also has a successful chamber of commerce managed by elected leaders, providing business support and representation, and the metropolitan area actively supports entrepreneurs through Lyve, a city-led initiative aimed at providing business advice to entrepreneurs and creating a business environment that can foster innovation.⁴² The chamber of commerce has over 100,000 members and 450 employees, and for 2019, a preliminary budget of €18,183K.⁴³

³⁸ https://www.grandlyon.com/metropole/missions-et-competences.html 29/05/2019³⁹ https://www.grandlyon.com/metropole/developpement-economique.html 29/05/2019⁴º McGough L. & Bessis H. (2015) Beyond business rates, Centre for Cities.⁴¹ https://www.aderly.com/about-investinlyon/ 29/05/2019⁴² https://www.grandlyon.com/fileadmin/user_upload/media/pdf/espace-presse/dp/2018/20180517_dp_lyve.pdf 29/05/2019⁴³ https://www.lyon-metropole.cci.fr/upload/docs/application/pdf/2019-05/01-01_budget_primitif_2019.pdf, 29/05/2019

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Frankfurt

As of 2017, Frankfurt am Main has a population of approximately 750,000, with a total of 2.3m people living within the metropolitan regional authority area. The fifth largest city in Germany, it is most similar to Bristol – in size and relative economic success compared to the rest of the country – and to London in industry make-up.

Frankfurt is Germany’s financial centre and the most important finance hub in the Eurozone. It is home to the German Bundesbank, the European Central Bank, and international banks such as Bank of America and Barclays have offices there. Other professional services also play an important role in the city, making Frankfurt one of the most successful cities in Germany. However, this success comes at a cost, and Frankfurt is not only the most expensive place to live in Germany, but one of the most expensive cities in the world.⁴⁴

Frankfurt is an independent urban district in the region of Hesse and it has territorial sovereignty within its defined city limits. The mayor, directly elected since 1995, is in charge of the city’s administration. However, although the role carries great responsibility, Frankfurt has fewer powers than large cities like Berlin and Hamburg.

Urban districts were created to abide by the proximity principle, which suggests that, when relevant, powers should be held as close as possible to people. They also help ensure city-specific matters are met. For example, Frankfurt district is responsible for policy areas such as housing, parking, libraries, museums, job centres and the enforcement of the city’s low emissions zone.⁴⁵

Cities have three sources of revenues: fees and duties, such as waste disposal fees and low emission zones; fiscal transfers from the government, to ensure balance across municipalities; and taxes. The

⁴⁴ https://www.euronews.com/2018/03/15/paris-climbs-to-world-s-second-most-expensive-city-to-live⁴⁵ https://www.frankfurt.de/sixcms/detail.php?id=2717 30/05/2019

business or trade tax is the most important source of income, and nearly all municipalities with a population over 80,000 have a trade tax. In Frankfurt, the trade tax is around 15 per cent of corporate profits.⁴⁶ There are other taxes cities like Frankfurt can rely on as sources of income – for example, Frankfurt also levies a tourist tax of €2 per night ⁴⁷– and in some cases the revenues are shared with the Lander, the regional authority the city is part of.

Beyond the city itself, the Frankfurt/Rhine-Main region is also recognised as one of 11 European metropolitan regions of Germany. The metropolis extends beyond the administrative boundaries of the core city and controls and coordinates regional development.

IHK Frankfurt am Main is the chamber of commerce for the city and plays an important role in the economy of the urban area. It provides legal and commercial advice to business, offers vocational and skills training to employees, and lobbies for a free market capitalist economy with minimal intervention from government. It expresses views on all policy areas that affect its businesses, such as taxes or the state of the Euro. It maintains close links with other chambers of commerce in Germany and the rest of Europe.⁴⁸

In Germany, every business needs to sign up to the chamber of commerce by law (there is no specific number for Frankfurt, but basically it means every business in the area). The chamber of commerce has 220 employees supported by 420 businessmen who commit themselves on an honorary basis. The chamber is financed by membership. Its estimated income for 2019 is €45.7m, with around €659K after expenses.⁴⁹

⁴⁶ https://www.gtai.de/GTAI/Navigation/EN/Invest/Investment-guide/The-tax-system/Company-taxation/trade-tax.html#7046 30/05/2019⁴⁷ https://www.bettensteuer.de/en/city-tax-frankfurt-main 30/05/2019⁴⁸ https://www.frankfurt-main.ihk.de/english/about_us/ 30/05/2019⁴⁹ https://www.frankfurt-main.ihk.de/ihk/vorstellung/organisation/index.html; https://www.frankfurt-main.ihk.de/images/broschueren/Erfolgsplan2019.pdf 30/05/2019

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Milan

With more than 1.3m inhabitants, Milan is the second most populous city in Italy. Capital of Lombardy, its metropolitan area covers a population of more than 3m, making it one of Europe’s most densely populated areas. Milan plays a similar role to London in terms of its weight in the national economy, but its industrial structure is more similar to Bristol’s.

In recent years, Milan’s services sectors experienced strong growth. It is Italy’s financial hub, and media and the creative industries play an important role in the city. It also maintains its position as an industrial and manufacturing centre, especially for the automotive, pharmaceutical, bio-technology and food and beverage industries.

As of 2015, Milan Council and the province of Milan merged into the Metropolitan City of Milan, similar to the Greater London Authority and Berlin ‘City-state’. The metropolitan area has a mayor, directly elected every five years, supported by a metropolitan council.⁵º

Similarly to the old province, the Metropolitan City of Milan has responsibilities over strategic economic planning of the local area, transport, local roads, education and schools, employment and equal opportunities. The metropolitan area is also responsible for economic and socio development, mobility, public services, planning and a three-year economic strategy.⁵¹

Excluding transfers related to regional imbalances, the aim of metropolitan cities is to be financially independent from national and regional government. Currently, more than 80 per cent of Milan’s revenues are raised locally via taxes such as levies on roads and vehicles, and the government is looking at other ways in which metropolitan areas can raise their own finances.⁵²

⁵º http://www.cittametropolitana.mi.it/portale/conosci_la_citta_metropolitana/storia/index.html 03/06/2019⁵¹ http://www.cittametropolitana.mi.it/portale/conosci_la_citta_metropolitana/funzioni_competenze/index.html 03/06/2019⁵² Ferri V. (2017) Le risorse finanziarie dei governi di area vasta: situazione e prospettive

The Metropolitan City of Milan has a joint chamber of commerce with neighbouring councils of Lodi, Monza and Brianza, covering over 200 towns. The chamber has three aims: ensuring businesses are registered and adhere to industry rules; support, competitiveness and development of the local economy; and protecting customers.⁵³

In Italy, it is also compulsory to sign up to the chamber of commerce. More than 400,000 businesses are members of the Milan, Monza, Brianza and Lodi Chamber of Commerce – 300,000 of which are specifically based in Milan. Their chamber has about 400 members of staff. In 2018, its income was €107m, with €1m net.⁵⁴

Chicago

The City of Chicago, Illinois, has 2.7m people, with 9.5m in the wider metropolitan area. Both the city and the metro area are the third largest in the US. In the UK, the most similar is Manchester. Both cities experienced post-industrial decline and then reinvention of their centres in recent years.

Chicago has a highly diversified and globalised economy. Financial services, higher education and healthcare are big employers, but no single industry employs more than 14 per cent of the workforce, making the city economically resilient.⁵⁵ The city centre is currently experiencing a property boom which hasn’t yet expanded to the metro area.⁵⁶

The legislative branch of government of the City of Chicago is the City Council. It consists of the mayor, city clerk and aldermen elected from each of the 50 wards for a four-year term.

The powers of the council are granted by state legislature and home

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⁵³ https://www.milomb.camcom.it/chi-siamo 03/06/2019⁵⁴ https://www.milomb.camcom.it/home ⁵⁵ https://statisticalatlas.com/place/Illinois/Chicago/Industries 30/05/2019⁵⁶ https://www.chicagobusiness.com/commercial-real-estate/downtown-chicago-apartment-markets-hot-streak-continues

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⁵⁷ https://www.chicityclerk.com/city-council-news-central/council-agenda 30/05/2019⁵⁸ City of Chicago (2019) Annual Appropriation Ordinance for the year 2019⁵⁹ https://www.chicagolandchamber.org/AboutUs/AbouttheChamber.aspx 30/05/2019⁶º Ibid ⁶¹ https://ilchamber.org/about2/ 30/05/2019

rule provisions of the Illinois constitution. Policy areas under the mayor’s responsibility include transport, policing, fire, parks, libraries, housing, the environment and schools. The mayor has more power than any in the UK – for instance, raising taxes and implementing minimum wage laws.⁵⁷

Local taxes are the council’s biggest source of revenue. These include utility taxes, sales taxes, taxes on businesses, transportation, recreation and transactions. Local non-tax revenues such as licences, permits and fines also play an important role. The city also benefits from some transfers and intergovernmental revenues, but they play a smaller role.⁵⁸ Chicagoland Chamber of Commerce is the most influential business organisation in the city and the wider metropolitan area. It represents 1100 businesses with more than 400,000 employees across all the major industries, half of which are international businesses. The chamber supports its members by offering educational programmes, networking events and providing information of technological, marketing and commercial developments in the area.⁵⁹ It has a board of directors from the 125 most influential businesses, a senior council of 11 and a staff of 20-25, seven of whom are senior executives. Members contribute $24bn a year.⁶º

There is also an Illinois Chamber of Commerce, which covers the whole state, but is mainly a pro-business lobbying organisation only.⁶¹

Sapporo

Sapporo, with almost 2m inhabitants, is the capital of the northern island of Hokkaido and Japan’s fifth largest city. While it plays a bigger role in the Japanese economy than Cardiff does in the UK, the

⁶² https://www.jetro.go.jp/en/invest/region/sapporo-city/icinfo.html 30/05/2019⁶³ http://www2.city.sapporo.jp/global/english/business/industry/ 30/05/2019⁶⁴ Outline of Local Government System in Japan, lecture by Professor Shunsuke Kimura, Meiji University⁶⁵ Ibid

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two cities are comparable in terms of their role within their region. Both are very rural and relatively less well off than other parts of the country.

Sapporo aims to become the world’s most innovative city. Its biggest industries are information and communications, and wholesale and retail. In particular, it is a cluster for IT, digital content and bio-technology firms.⁶² Sapporo is the main economic and logistical hub of Hokkaido, one of Japan’s largest agricultural regions. Its strategic position at the centre of the island makes it an ideal location for the accumulation, processing and research and development of farm and marine products. ⁶³

Sapporo is one of 20 large ‘ordinance-designated’ cities in Japan, which are roughly equivalent to the Core Cities in the UK. Designated cities are divided into wards and have a mayor who is elected every four years. A local assembly is also elected.

The city has responsibility for a number of policy areas. These include powers over roads and public housing, education, elementary education, cultural and sports facilities, welfare and sanitation, child and elderly welfare, and basic safety responsibilities such as fire defence and resident register.⁶⁴

Sapporo’s major revenue sources are a mix of local taxes and national transfers. Local government has a broad tax base across local income, consumption and property streams. This self-reliance incentivises the city to pursue economic growth to fund local services. The national government supplements this through treasury disbursements, which are usually reserved for specified uses, and a local allocation tax –raised nationally and specifically earmarked for local government – which local governments are free to use as they like.⁶⁵ As in the UK, the national government also redistributes funding to cities to ensure

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a high quality of public services across the country.

The Sapporo Chamber of Commerce is the local organisation representing businesses. It covers over 19,000 small and medium size enterprises and its members are organised into six departments, depending on their size, industry and category. This helps the chamber make a better case for its members at the local and national level.⁶⁶

The aim of the chamber of commerce is to support its businesses and to make their voice heard by politicians, local and national. In contrast to other chambers in Japan, Sapporo’s is the only one affiliated with an academy that is focused on improving human resources in the area and ensuring they are relevant to the local economy.⁶⁷ It has a board of approximately 68 members and councillors, about 130 staff and an annual budget of ¥1.9b.⁶⁸

In closing, each of these city-regions are the product of their own economic history. However, it is also striking how each of these successful city-regions have a number of common elements: clear city-region leadership; control over key powers to drive economic growth; and greater financial autonomy to use and raise funding for investment. Within England, our devolution journey has only partially accepted these findings and our city-region mayors have not been provided with commensurate powers and freedom to govern. We need to go further and my conversations with our city-region mayors reinforce this finding.

⁶⁶ https://www.sapporo-cci.or.jp/ 30/05/2019⁶⁷ Ibid⁶⁸ Sapporo Chamber of Commerce

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7. TALKING TO THE MAYORS

Following their invitation to produce this report, I have had the privilege to talk candidly with each of the six mayors of England’s first new Combined Authorities. Their reflections have crisscrossed the relationship between formal powers, strategic ambitions, local politics and the frustrations of central control. Each story is different. But there are many common themes that relate to my own experience of city regeneration. This chapter draws on these common themes as a basis for the recommendations that follow. As I contemplated my interviews with the six mayors of England’s new Combined Authorities for this report, I thought back to 1979 when, as the new Secretary of State for the Environment, I wished to tackle the dereliction of 6000 acres of East London. My plan involved a serious intervention into, and diminution of, the responsibilities of local government. On those grounds, my civil servants were opposed. It was a massive intervention into the local economy. On that ground, Keith Joseph was opposed. It would cost money. My friend Geoffrey Howe threw the weight of the Treasury against me. Only Margaret Thatcher supported me – but one was enough.

Three years later, I was seriously concerned that I had very little evidence on the ground to demonstrate any success for the policy. I called Sir Nigel Broackes, the very experienced private sector chairman, and asked for an explanation. Legislation, planning permission, architects and consultation don’t add up to a credible political excuse. He offered to paint historic churches if I felt that would make my defence easier. I was far from satisfied.

This memory remains with me. As I went to talk to them, the mayors had been in office for a short time and they face re-election campaigns in the upcoming years. I decided to put this point upfront. There was ready agreement that, for them, the strategic opportunities were essentially long term. It will take a decade to demonstrate conclusively what a difference the new-found ability to draw together and coordinate the policies and programmes that Whitehall compartmentalises into functional disciplines.

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In fairness, it was recognised that the start line for each mayoralty was not drawn only by their formal establishment. When the metro authorities were abolished in 1986, the remaining local authorities reacted in different ways. The 10 metropolitan districts of Greater Manchester may have lost an umbrella, but they continued a close relationship, the success of which played a significant role in persuading George Osborne that there was a framework on which to build municipal devolution. Cleveland and Avon were abolished but, again, an informal but effective framework of coordination remained. The West Midlands maintained no recognisable means of coordination until the Local Enterprise Partnerships provided for the dialogue that is now in place. The Merseyside Authority left no legacy that might have kept its constituent authorities in some form of partnership, whilst Cambridgeshire and Peterborough never had such a wide framework.

In the wider context, it is a surprise that the six mayors came into office in the first place. Despite the 2010 Conservative manifesto pledging to give the citizens of England’s 12 largest cities the option of an elected mayor, it was not favoured by their Coalition partners and the first round of local referenda led to only one supportive vote in Bristol. There was little interest and few friends. Too many entrenched positions were threatened. The government rightly believed there was no majority in Parliament for a comprehensive restructuring of local government. The only practical journey involved voluntary local deals. The presence of ministers open to a devolution agenda was crucial and the support of George Osborne in the Treasury and Greg Clark in the Department of Communities and Local Government provided the boost for the only practical way forward.

The six mayors know that the job they were asked to do and the powers with which they were entrusted are a fudge. At every turn, elected councillors and their officials had to be persuaded. As the former leader of Stockport, Lord Goddard, speaking in the House of Lords, so eloquently put it: “It was a deal”. Putting it another way, he could have said: “It was a job half done”. Even where funds were made available, too often council negotiators thought they

would be able to siphon off the money for their local pet projects. The proposed mayor was to be a conduit through which to enhance their budgets.

The inevitable outcome of such a disparate set of negotiations is a compromise. Comparisons with the Redcliffe-Maud recommendations, the government’s original Local Enterprise Partnership boundaries and the travel-to-work patterns, as set out above, articulate just how much compromise there has been. There are real benefits in what has happened, but there is much more to do. Many parts of our country will not benefit because they are not involved. In other cases, excluded councils which refused to be involved know full well where their real economic relationships lie and are forming relationships as constituent non-voting authorities. Truth to tell, many of them want the economic benefits but won’t help to provide sufficient housing for the people without whom these economic benefits will be smaller. In other cases, police and fire authorities or waste disposal authorities have non-coincidental boundaries, thus acting as further barriers to combining the mayoralty with that of the elected crime commission.

This reality has become evident as the original settlements have often been augmented by subsequent deals and the allocation of additional funds. The mayors themselves have their own priorities. Without exception, they have either published or are working on strategic long-term policies for their areas.

All of them recognise that at the heart of the case for devolution is the need to create more wealth and improve living standards. Some of them add a more social dimension to their ambitions, but at the heart of both the government’s and the mayors’ agenda is economic performance. The clearest manifestation of this are the subsequent negotiations, concluded after the original settlement, to define and implement local industrial strategies. The mayors are enthusiastic in their welcome but, again, have deeply held concerns about gaps in the powers available to them. For example, any serious discussion about industrial policy must begin with the availability of an educated, skilled and motivated workforce. Every mayor is

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confronted by local employers for whom this is a major priority. The mayoral model excludes education, devolves skills and training only to higher education students and includes only minimum experimental projects in the field of employment administration.

These omissions shut off any feeling of responsibility for local involvement in addressing the issues and finding solutions. Tomorrow’s problems are already being created in the failing schools, in companies that don’t train but rely on their ability to poach the skilled staff they need from companies that do. World competitive standards demand zero tolerance of low performance. Too little responsibility for driving improvements is in local hands. There is a universal appetite among the mayors to convert these local problems into local responsibilities.

In inviting the mayors to devise local industrial policies, the government opened the door to another essential but controversial field of policy – the provision of private and social housing. The mayoral model includes no formal responsibility. Individual mayors have found ways to attract some additional funding or have used their influence to remove obstacles. There are other similar gaps in the formal definition of mayoral powers, but once education, training and housing are included as inescapable ingredients of any industrial strategy, involvement in these issues leads directly to some of the more intractable social issues of our time. There is no universal view among the mayors as to how far they should move beyond the strict economic issues into the associated problems of social provision and care. Some want to concentrate on delivering economic benefits, while others believe a wider involvement unavoidable at least, and desirable at best.

There is a legitimate dilemma and possibly a difference of political approach. At the heart of the matter is this issue: How can you argue for a mayoral role in tackling failing schools without involving them in the social complexity of excluded children? Should solutions and the institutions often necessary simply be left to each borough, or should conurbation-wide institutions offer specialist services of a quality more akin to the sophisticated and technologically advanced

solutions increasingly available? Similarly, mayoral involvement in housing provision leads straight to the complexity of problems associated with some deprived housing estates. There is a powerful case for widespread devolution of responsibilities in these fields. That does not preclude the present devolution to metropolitan boroughs, but it is difficult not to believe that at least reserve powers should be available at a mayoral level to secure rationalisation of resources, adequate specialist funding and a refusal to tolerate low standards.

A similar range of conflicting issues surrounds the establishment of Mayoral Development Corporations. The use of such corporations over the past 40 years has been responsible for large scale development in difficult and deprived areas. They have been partnerships initially forced on local government and then, from the 1990s, agreed voluntarily. They affect, however, travel-to-work areas much larger than existing local authority boundaries and can involve policy issues, particularly housing, which can be of significant local controversy. In the initial stages, they were invariably way beyond the resource of any one authority, whilst the benefits are felt in employment over an area well outside their boundary. There is a powerful case to enable mayors to initiate these instruments of regeneration in partnership with central government.

Mayoral authorities are designed to encourage close coordination of policy and stimulate investment within a long-term perspective. The mayoral authority, once established, works to a four-year cycle, but within the authority area there is a revolving door of annual elections at a borough level which inevitably become interwoven with party battles. There is also a five-year general election cycle. There is a strong argument for an independent enquiry into the timing and coincidence of these electoral timetables, with a view to achieving greater coincidence and thus less short-term disruption.

A final issue relates to how these mayors deal with the centre. In 1994, Government Offices for the English Regions were set up. In May 2010, they had a total of 1700 staff and in 2006-07 alone they delivered some £7.7bn on behalf of central government departments. By 2011 they were gone. My view is that the abolition

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HM Land Registry

Central Ministry of Defence

Homes EnglandDepartment for Business, Enerfy & Industrial Strategy (BEIS)HMRC Valuation AgencyDepartment for Environment, Food and Rural A�airsNatural EnglandCommissioner for Tra�c

HMRC

Department for Education

Student Loans CompanyHighways EnglandThe Environment Agency

Homes EnglandHome O�ceHMRCCharity Commission for England and WalesCrown Prosecution ServiceHM Land RegistryCrown Commercial Service, TheHealth and Safety ExecutiveNational Museums LiverpoolPublic Health England

Planning InspectorateHomes EnglandCabinet O�ce (SW)Homes & Communities AgencyHMRCHealth & Safety ExecutivePublic Health EnglandDriver and Vehicle Standards AgencyEnvironment AgencyDefraNatural EnglandCrown Prosecution ServiceCare Quality CommissionHM Courts & Tribunals Service

Information Commissioner's O�ce

The Insolvency ServiceCities and Local Growth UnitArts Council EnglandHeritage Lottery FundImperial War MuseumEnglish Institute of SportBBCGovernment Equalities O�ceTeaching Regulation Agency Equality and Human Rights CommissionOfstedDriver and Vehicle Licensing AgencyPublic Health EnglandHealth Education EnglandNational Institute for Health and Care ExcellenceBritish CouncilHomes England HM Inspectorate of ProbationTribunal Procedure CommitteeGeneral Medical CouncilParliamentary and Health Service Ombudsman

HMRC - Walsall

O�ce for the Public GuardianHM Courts & Tribunals ServiceDept for International TradeSolicitors Regulation AuthorityNetwork RailSmall Business CommissionerHMRC - BirminghamHomes EnglandInsolvency ServiceHigh Speed Two (HS2) Ltd

Environment AgencyOfQUALLocal Government Ombudsman

Locations of each of the local government offices

of the Government Offices simply enabled Whitehall to recreate the earlier fragmented model. People didn’t lose jobs. They moved offices. Therefore, as part of this report I asked each of the Combined Authorities to map the local and governmental offices they were aware of in their area. See the previous page for the results. They speak for themselves.

Starting with the mayoralty in London in 2000, this country is slowly becoming accustomed to the concept of directly elected and powerful Combined Authority mayors. Since this report was commissioned, the North of Tyne and Sheffield have agreed to move to this model and, again, a glance at their composition reveals that the framework is far from optimal.

The new mayors of our large cities have been welcomed on the world stage by their peer group of mayors from most advanced countries. Representing their conurbations overseas is an important part of new responsibilities. They are ambassadors for their local interests, partners with local employers in pursuit of inward investment, large contracts and overseas visitors, to name just a few. They must face the flak of ill-informed local criticism for undertaking ‘overseas junkets’ when, in practice, such activities are exhausting and often tedious. But they can be invaluable in furthering local interests. Fighting for the self-interest of their communities is what they are paid to do and overseas travel is a part of that.

There is another beneficial aspect. It is the best training ground for the job. All over the world their equivalent mayors are grappling with the same economic, social and housing problems. Worldwide communications and the accelerating use of technology are forcing change. You do not need to be professionally qualified to understand that environmental policy, clean water and clean air are an international agenda.

The people will know what the highest standards are and where they are being achieved. They will know who achieved them and how. Mayors will need to define their policies against world standards. If they don’t, local challengers will. The post-war world brought

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large growth in twinning between our leading cities and overseas equivalents and, consequently, our city centres are already linked to overseas cities. That should not preclude our new Combined Authorities from creating relationships with similar conurbations in order to learn how others are tackling similar problems.

No one has ever found a way of keeping party politics out of the workings of democracy. Candidates stand on platforms and argue for policies aimed at sections of their electorates. In this context, no government with a parliamentary majority will accept the right of elected politicians at a subordinate tier to frustrate its manifesto pledges. At a local level within a Combined Authority there will inevitably be authorities of differing political allegiance. Within these political structures there will be stakeholders of such fundamental significance as the academic and business communities, the exclusion of whom would be an act of considerable self-harm. The system is full of checks and balances.

This is clearly recognised by the first generation of mayors who, inevitably, must articulate policies in a language that resonates with their supporters but, in practice, are dealing everyday with practical decisions where there is much more opportunity for decision-taking devoid of dogma and doctrine. The Local Enterprise Partnership cannot exercise a veto over the elected mayor, but no mayor is going to achieve his or her stated objectives without the support of those whose investments create the jobs and employ the people.

Similarly, great public institutions such as universities, the local hospitals, research institutes or government quangos can cooperate to everyone’s benefit or simply sit on their hands. The result of all this is a system of influence, of dialogue, of pushing at open doors and quiet conversations in closed rooms. In a very British, practical sort of way it is, in the minds of the six mayors, capable of giving us a process of power sharing at a local level with joined up thinking and practical policies that will contribute to the revival of our great industrial and commercial heartlands. Their search for competitiveness on the world stage will succeed only if they are entrusted with the powers and resources available to mayors across the world.

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The mayors seek such powers and the clarification of existing powers. What no one has yet challenged is their ability to think and act outside the legal box. They will push the frontiers and so they should. It will be a brave government that tries to put them back in the box where local public opinion is strongly behind them.

8. THE WAY FORWARD

Throughout my political life, as a nation we have failed to reform our institutions and administrative systems to keep pace with the ever-escalating pace of change. The political hurdles facing our political parties were just too high. The human instinct to protect the status quo remains simply too strong. The consequence has been change at the speed of the slowest ship in the convoy. Progress required compromise, consensus, fudge.

We can go on in just the same way. It is less controversial, more comfortable and the consequences will become apparent long after the present generation has moved to pastures new, oblivious to the strictures that history will surely and rightly heap upon us. In the public sector, the government in London sets the scale of the resources available to sustain our public services and prescribes uniform patterns nationally that are designed with limited regard to local opinion, circumstance or opportunity.

Our education, excellent in many aspects, fails too many of our children.

Our hunger for skilled people is evidence of the inadequacy of our training provision. Immigration is the consequence, with the

Onward, Firing on all Cylinders“There are no large (G20) countries which have a more regionally imbalanced economy than the UK and are richer than the UK in terms of GDP per head. Conversely, all large countries that are richer than the UK have a more balanced economy.”

Paul Collier, The Future of Capitalism “The geographic divide between thriving and broken cities is not inevitable; it is recent and it is reversible. But it cannot be reversed by small adjustments to public policies. Trivially, small is insufficient, but, more fundamentally, spatial dynamics depend upon expectations: firms will locate where they think others will locate. Expectations are currently anchored on the changes of recent decades, and so momentum is self-fulfilling. To change this requires a policy change sufficiently large to shock expectations into a different configuration.”

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divisiveness it encourages. Low productivity is a measurement to prove the point.

Social provision is distributed in packages convenient to Whitehall’s power structure, with too little coordination at a local level to build ladders of aspiration in our most deprived communities.

Half a century of stop-go economies has widened our regional imbalance. The economy expanded much faster in London and the South East and had to be reined back long before the ‘go’ reached much of provincial England. The evidence in our industrial towns is there for anyone to see.

We have too many local authorities, too much overlap and too little experimentation, choice or discretion. Their disciplines are functional. The economics of place and the strategies to support them change often with every new minister, let alone every new government. Enterprise is used to define the private sector. This ignores the benefits that can flow from the enterprise of those employed in the public sector in changing and improving the quality of public service. Too easily a focus on the enterprise of private sector companies fails to embrace the contributions that the public sector can bring to creating the culture and background against which those companies can themselves flourish.

In the private sector, the representative bodies are more pressure groups than support systems. They are a pale shadow of those of our competitors. They represent only a fraction of local companies and, in practice, that fraction embrace our best, export-orientated competitive companies. The problem lies elsewhere with companies that have little ambition and are content to just manage and survive.

As I write this report, the shadow of Brexit hangs like the darkest storm cloud over our body politic. Whitehall, the powerhouse of our society, is paralysed by indecision. The overwhelming majority of our citizens have no idea how the negotiations with the European Union will end. We will either leave or remain but, either way, the need to make our country competitive contains its own imperative. I believe

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the proposals that follow to be urgent and relevant.

Let me be clear about our purpose. Our purpose is to build a vision of tomorrow that inspires all of us to give of our best. Our society can offer to its people the equal of anything in the world. We have excellence and exemplars in education, culture, social provision, inventiveness and enterprise. We have a historic legacy that ensures our place in tomorrow’s world. All of this reflects the energy, genius and initiative of millions of our citizens. Such people excel in any circumstance. The challenge is to harness that talent and unleash that enterprise so it embraces more people, distributes its benefits more deeply, penetrates communities more widely. We seek to enthuse more people, entrust local communities, create partnerships that multiply individual endeavour, and encourage communities to influence their destinies. As individuals, the more we enrich ourselves, participate, initiate, take responsibility and lead, the more we enrich society as a whole. In each of our citizens and in every quarter of the land, every flame should be fanned, every resource tapped; every one of us encouraged.

Change is not about them, or him, or her, or it. It is about us. Today. Now.

The only way that reform on the scale and with the urgency proposed can be achieved is with the determination and conviction of the government. If the Prime Minister does not believe in it and the Chancellor of the Exchequer will not drive the Treasury behind it, it will not happen.

“In the RSA’s recent Future of Britain poll, they found that just 22 per cent of those surveyed believe our democracy is in a healthy state.”

RSA: Ed Cox Blog As parliament procrastinates, it’s time to devolve

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9. MY PROPOSALS

The steps that follow are the route map for the reform needed in Whitehall and in our conurbations to truly empower our English cities.

1. The reform of government and Whitehall itself is therefore the crucial first step.

A new Department for the English Regions should be established with a powerful Secretary of State, Permanent Secretary and functioning civil service.

This department will involve a significant restructuring of Whitehall equivalent to the creation of the Department of Trade and Industry and the Department of the Environment in 1970. It is necessary to bring under one ministerial control the essential features of the devolution agenda, including planning, local government, housing, transport, skills and the employment agenda.

2. All government policy offices outside London should be co-located in regional offices led by an official at Director General level. Place-making policies are now the inevitable consequence of existing spatial transport, housing and industrial policy. It is essential that government reorganises itself appropriately to facilitate and respond to such change.

3. The Boundary Commission should be activated to review existing local authority boundaries, starting with the Combined Authorities. It should proceed to the examination of the boundaries of freestanding cities to ensure they too can contribute to the nation’s prosperity.

4. Select committees should be established in both Houses of Parliament to comment on, advise and review the devolution process.

5. The Prime Minister should establish a committee of Combined Authority mayors under his or her chairmanship to meet at least

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twice a year and, under the chairmanship of the Chancellor of the Exchequer, in time for each public expenditure round.

6. The government should take all necessary steps to ensure its departments and all quangos cooperate with Combined Authorities in the exercise of their responsibilities. Of particular relevance are Homes England, Highways England, Network Rail, the Environment Agency, Education and Skills Funding Agency, Office for Students and Regional Schools Commission, UK Research and Innovation, Sports England and the Arts Council.

7. There is widespread ignorance about the structures, support systems and freedoms available to cities across the world with which our cities must compete. The government should compile and publish a report outlining the structure and powers enjoyed by the world’s 20 most prosperous cities. It should be updated annually with a scoreboard comparison with our own conurbations and a justification for the difference.

8. The government should review the electoral cycles within each conurbation to ensure that they allow periods of stability without annual elections.

9. Modern technology and communications have facilitated much greater use of local offices. The government should explore with the mayors the potential this offers to disperse the offices of Whitehall more evenly across the country.

10. To have any practical relevance, visions must be built on identified strategies and practical proposals to achieve them.

The first responsibility of the new mayors is to set out their vision for their conurbations. Five-year programmes updated annually should cover:

i. Its spatial structureii. The economy

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iii. Transportiv. Housingv. Education and skillsvi. Carbon reductions and environmental improvement

The mayoral strategies should be given statutory status and the government should incorporate the strategies in its own national strategy.

In addition, each mayor should commission and publish a condition of the people report analysing the social imbalances, the scale of health statistics and other indicators of relevant advantage or disadvantage upon which political priorities can be based.

11. The role of mayor and Police Commissioner should be combined.

12. With immediate effect, the government should transfer day-to-day responsibility to Combined Authority mayors for these services:

l Affordable housingl Schools performancel The skills budgetl The unemployment and employment programmes

13. There are two big decisions required in a new financial deal for Combined Authority mayors. Both relate largely to capital funding.

The government is presently considering the future concept of the present European structural funds amounting to €10.9bn.

In addition, George Osborne created a single pot by top-slicing part of the central housing, skills and transport budgets to create a £12bn fund to be distributed annually over the period 2015-2021. This fund reverted to its functional subdivisions as soon as he left the Treasury.

A new composite fund embracing both these concepts and including the Transport Capital block grant should be created. Part of this

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fund should be allocated competitively in support of the mayoral strategies. It should be determined in significant measure by the ambitions of those strategies and the local contributions from public and private sources that the mayor can commit in addition. These policies have been proved to work, excite local dynamics and add greatly to what the public sector can afford. The other part of the fund should be used to encourage the rest of England to convert to the mayoral conurbation model, mayoral cities or unitary counties.

14. Further, the government should allow mayoral authorities to raise local taxes and charges. These could include vehicle excise duty, airport passenger duty, tourist tax and local cultural admission charges. With appropriate local exclusions, it is ludicrous for British tourists to pay to visit historic collections and buildings abroad while millions of visitors to this country enjoy free access.

15. The Chancellor of the Exchequer should explore with the mayors other options for local tax raising powers and the issue of local bonds.

If authorities are not given powers to raise finances, Government should provide core funding commensurate with the scale of the challenge.

16. There is one economic judgement that must be reappraised. Orthodox Treasury thinking tests capital projects against a rate of return on investment. Such a philosophy will allocate resources to high growth areas and build on success. Therein lies the problem of the left-behind. If we are serious about rebalancing, then we have to be serious about the role of the public sector in facilitating this. There is an element of risk and an element of faith. I had no idea what the consequences would be when I created development corporations in the East End of London and on Merseyside. In rebuilding great areas of our country and restoring faith in millions of our citizens, we have to rebalance our economic priorities. The calculations cannot just be measured in crude economic terms. The Treasury, working with economists, businesses and conurbations, should devise a more balanced method for judging investment decisions in our cities. They

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should draw on international experience. The power of competition, match funding and gearing should be harnessed to achieve the best value for money for the taxpayer.

17. The mayors working together should establish a leadership academy for city governance. It should host a bi-annual international convention for mayors to learn from best practice across the globe and to promote international trade with our partners.

18. The role of the mayor needs to be strengthened. The ability to achieve the standards of excellence necessary must not be frustrated by the conflicting loyalties and powers of the constituent authorities. The inevitable compromises and delay are incompatible with the urgency for progress to world competitiveness and the scale of the challenges we face.

19. The mayor should be empowered within his or her mayoralty to appoint people with appropriate experience and expertise from businesses, universities and other public life to the Combined Authority cabinet.

20. No mayor should be constrained by anything other than a simple majority in the workings of a Combined Authority. This will give the mayor the confidence to set an ambitious agenda with businesses and other organisations without being unnecessarily constrained by local political wrangling.

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10. CONCLUSION

These recommendations and many of the observations throughout the report strike at the heart of the way we run our country.

I seek not to criticise those employed in those institutions, supported by them or proud of their history. I seek their support to help create and mould the institutions designed for tomorrow’s world.Perversely, as global forces present challenges unimaginable to earlier generations, it is to the empowerment of people as individuals that we must look for a response. Global power must be challenged by little battalions. Individuals leading great companies, public servants of shining dedication, communities embracing the weak as well as the strong, cities proud of and exploiting their strengths. Each of us in it together.

Where once a great navy defended our island fortress, the frontiers of that fortress have been moved by technology to the iPhone and laptop of each of us, beneficiaries of a worldwide communications system that is transforming political accountability and democratic institution. The most powerful artillery is no match for the miniaturised terror weapons available to a single disaffected citizen. The response is in our families, our schools, our communities, our social services.

Only governments at all levels working in partnership with communities and businesses can rise to the global threats of terror, climate change, tax evasion and many others, but even they can see that even the most powerful are powerless alone. We live in an ever more interdependent world and, with wisdom, will support the institutions that sustain it. Empowering England’s cities is imperative to any vision of tomorrow.

Annex: The Combined Authorities

Cambridgeshire and Peterborough

Background and deal Cambridgeshire and Peterborough is often described as three different economies: the knowledge-led economy in Cambridge and its surrounding area; the research and manufacturing hub of Peterborough; and the more rural economy of Fenland.⁶⁹ Together, they make up an area embracing 800,000 people and 1300 square miles.

It is an area of the past and the future, of ancient buildings and cutting-edge research. Its attractiveness as a place to live and work is reflected by its continued population growth: Cambridge and Peterborough have consistently been in the top five fastest growing cities in the UK in recent years. There are now 1000 technology and bio-technology companies in and around Cambridge, and the area’s economy is in good health:

“There are 41,650 businesses across Cambridgeshire and Peterborough with just under 35,000, or over 80 per cent, being micro businesses with nine or fewer employees.

Cambridgeshire and Peterborough Combined Authority constituent authoritiesCambridge, Cambridgeshire, South Cambridgeshire, East Cambridgeshire, Huntingdonshire, Fenland and Peterborough. (This is the only one of the metro authorities I have studied which features a county council.)

Cambridge had the highest number of patent applications per 100,000 people in the UK l (341, more than twice its closest competitor, Coventry), and Peterborough was 13th highest.l Gross Disposable Income per head has grown by 11 per cent between 2011 and 2016 in real terms.

Source: Cambridgeshire and Peterborough Independent Economic Review

⁶⁹ See, for example, in the CPIER Review

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Some 195 businesses qualify as ‘large’, with 250 or more employees. At the time of the 2011 census, Cambridgeshire and Peterborough had just over 400,000 employed residents. Some 70,000 people commute into the area for work, while nearly 60,000 Cambridgeshire and Peterborough residents commute outside the area.⁷º”

Nonetheless, there are also a number of contrasts. Cambridge is the least equal city in the UK based on income and wealth and Peterborough and Fenland each contain areas that are among the 10 per cent most deprived nationally and both are among the worst areas nationally for the number of premature deaths.⁷¹

Cambridgeshire and Peterborough Combined Authority has a bold target, set out in its Devolution Deal, of doubling GVA over 25 years. For an area of such importance to our future economy, it is essential that we get devolution in this area right.

Despite this, devolution in East Anglia has had a somewhat difficult history. In March 2016, plans were made for full East Anglia Devolution (dubbed the ‘Eastern Powerhouse’) which would form an East Anglia Combined Authority consisting of Norfolk, Suffolk, Cambridgeshire and Peterborough.

This concept was sufficiently advanced for a deal to be offered by the Secretary of State to the relevant authorities. However, a number of councils did not support the deal as it stood, and so in June 2016 a second approach, in which the original Combined Authority was split in two, was made.

Norfolk and Suffolk rejected their devolution deal in November 2016,

Outside of Cambridge and Peterborough, the Fenland economy consists of: l 100,200 people, 60 per cent of working age.l 3405 businesses, GVA of around £2.2bn a year.l Productivity level of £69,500 a worker.

Source: Fenland Council

⁷º C&P Spatial review⁷¹ Ibid

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but the Cambridgeshire/Peterborough deal retained support, and in November 2016 a deal was signed which provided the Combined Authority with broad powers in respect of investment in the region, transport, land use, and skills and education.

Cambridgeshire and Peterborough Combined Authority (summary compiled with reference to Devolution: A Mayor for Cambridgeshire and Peterborough, DCLG)

Powers

l General power of competence.

l Ability to raise a precept on council tax bills.

l Ability to raise an infrastructure levy.

l Borrowing powers.

l Transport powers including: the power to develop and implement a Local Transport Plan; the development of a Key Route Network.

l Bus franchising powers.

l Land and development powers including the specific power to review housing needs within the Combined Authority area and to propose the creation and development of Mayoral Development Corporations.

Budget

l Single pot consisting of an Investment Fund grant worth £600m over 30 years.

l Apprenticeship grant for employers.

l Housing fund totalling £170m (consisting of a £100m housing and infrastructure fund and an additional £70m for housing in the City of Cambridge) over five years, to March 2021.

Alongside the above, in November 2017 the Combined Authority was provided with £74m from the Transforming Cities Fund.

The Cambridgeshire and Peterborough Single Pot breaks down into three components:

Investment Fund GrantAn annual payment of £20m to a maximum of £600m over 30 years.

Transport GrantAnnual transport grant of £22.554m each year from the 2017/18 financial year to the 2020/21 financial year, plus an additional £3.663m from the National Productivity Investment Fund.

Adult Education BudgetAn Adult Education Budget consisting of £11.5 million for the 2019/2020 financial year.

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The story so far

The first official meeting of the Cambridgeshire and Peterborough Combined Authority took place on 20 March 2017. Elections were held shortly after and James Palmer, previously leader of East Cambridgeshire District Council, became mayor.

One particularly notable thing about the Combined Authority is that it has no Local Enterprise Partnership, after the well-documented demise of the Greater Cambridgeshire Greater Peterborough LEP in December 2017. After that, the Combined Authority announced that the LEP would be replaced by a Cambridgeshire and Peterborough Combined Authority “business board”, a development that has been seen as a success.

One of the focal points of the Combined Authority’s work has been supporting the development and publication of a number of reviews and frameworks regarding the region. A good example was the joint funding of the Cambridgeshire and Peterborough Independent Economic Review, a comprehensive assessment of the area’s economy that will serve well as an evidence base for the upcoming years.

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The Combined Authority earmarked these as its key projects in 2019/20:

Transportl Commencing work on an Outline Business Case for the Cambridge Autonomous Metro.

l Bringing forward a Strategic Outline Case for improvements to the A10 connecting Ely to Cambridge.

l Conducting a feasibility study for a road link crossing the River Great Ouse.

l Providing support for the reinstatement of the rail link between Wisbech and March.

l Working to develop an interim train station at Cambridge South, and formalising further plans for train stations at Alconbury and Soham.

Skillsl Completing a full business case in support of a university in Peterborough.

l Utilising the opportunities provided via devolution of adult education.

Housingl Directly delivering 2000 new affordable homes by 2021/22.

l Developing strategic economic plans for each market town in the Combined Authority area.

⁷² https://www.cambridgeindependent.co.uk/news/chancellor-gives-share-of-717m-for-new-cambridge-district-9064307/, accessed on 18 June 2019

In addition, the Combined Authority has allocated significant sums towards transport improvements (including £10.5m specifically to the road system around Wisbech), housing developments, and developing the proposal for a Cambridge Autonomous Metro. It has also secured around £200 million from the Housing Infrastructure fund⁷².

Also of note is the fact that in June 2018, the CPCA signed a formal agreement towards forming an official Partnership Accord with Cambridge, Massachusetts.

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Cambridgeshire and Peterborough boundary comparison

United Kingdom: 2011 Travel to Work Areas

Cambridge

Huntingdon

PeterboroughWisbech

Huntingdonshire

Cambridge

South Cambridgeshire

East Cambridgeshire

Fenland

City of Peterborough

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries under the Redcliffe-Maud

ReportPeterborough & North Fens

Cambridge & South Fens

Greater Manchester

Background and deal

Greater Manchester Combined Authority is the constituent authority with the longest collaborative history and the ‘most developed’ in terms of devolution. It is also a region that shows no sign of slowing down:

“A great deal has changed in Greater Manchester over the past ten years – a mayor has been elected, a combined authority formed and six devolution deals, granting the city region new powers and resources, have been signed.⁷³”

The recent Greater Manchester Independent Prosperity Review report set out the recent economic fortunes of the area:

Between 1998 and 2008, GVA grew by 2.6 per cent per annum, ahead of a UK average (excluding London) of 2.4 per cent per annum.⁷⁴

Between 2010 and 2016, 117,000 net jobs were created in Greater Manchester, a growth rate of 1.4 per cent per annum (when compared with the UK average (excluding London) of 1.3 per cent per annum.⁷⁵

Despite being an area with over 124,000 businesses⁷⁶, it is a place that still faces real economic challenges: from 2010 to 2016 the overall rate of growth was sluggish at 1.5 per cent per annum (compared to 2.1 per cent nationally) and the average Greater Manchester resident earns 81p an hour less in real terms than in 2006.⁷⁷

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Greater Manchester Combined Authority constituent authoritiesWigan, Bolton, Bury, Rochdale, Oldham, Tameside, Stockport, Manchester, Trafford and Salford.

⁷³ Greater Manchester Independent Prosperity Review, March 2019⁷⁴ Ibid⁷⁵ Ibid⁷⁶ Greater Manchester Industrial Strategy, June 2019⁷⁷ Greater Manchester Independent Prosperity Review, March 2019

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100

105

110

115

120

125

130

135

140

145

150

Greater Manchester UK Average London UK excluding London

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Manchester 1998 to 2016 (Index of1998=100, forecasts from 2016 to2018) (Source: Greater ManchesterForecasting Model 2018).

100

110

120

130

140

150

160

170

180

190

200

Greater Manchester UK Average London UK excluding London

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Manchester 1998 to 2016 (Index of1998=100, forecasts from 2016 to2018) (Source: Greater ManchesterForecasting Model 2018).

: Employment in Greater

: Total GVA in Greater

Source: Greater Manchester Independent Prosperity Review, March 2019

Its devolution journey is therefore one of significant importance. It began with the abolition of Greater Manchester Council in 1986. Importantly however, despite this, the link between the local authorities remained strong, particularly as a result of the Association of Greater Manchester Authorities, a voluntary association that helped coordinate work between the local authorities of Greater Manchester.

This cooperation continued and in 2009 the region became one of the Statutory City Region pilot areas. Two years later, the Combined Authority itself was established, alongside the Local Enterprise Partnership. This developed into a city deal, announced in March 2012, and this solidified into a number of devolution deals:

November 2014: devolution of broad powers regarding transport, business support, employment and skills, planning, crime and housing (conditional on agreement to have an elected mayor).

February 2015: devolution of health and social care.

July 2015: transfer of fire and rescue responsibilities and creation of the Greater Manchester Land Commission.

November 2015: further devolution of transport powers, social housing powers and control over EU funding.

March 2016: devolution of criminal justice, 100 per cent business rate retention pilot and the establishment of the GM Life Chances Fund.

November 2017: additional funding for transport, tackling homelessness, mayoral capacity and post-16 education and training alongside a local industrial strategy pilot.

These deals provide Greater Manchester with broad, and significant, powers:

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Greater Manchester Combined Authority (summary compiled with reference to Devolution: A Mayor for Greater Manchester, DCLG)

Powers

l Functional power of competence.

l Ability to raise a precept on council tax bills.

l Ability to raise an infrastructure levy.

l 100per cent Business Rate Retention.

l Borrowing powers.

l Policing and Crime Responsibilities.

l Fire and Rescue Responsibilities.

l Health and Social Care Responsibilities.

l Transport powers, including responsibility for the Local Transport Plan.

l Bus franchising powers.

l Land and development powers including:a) the specific power to prepare a strategic plan for housing in the entire region; b) compulsory purchase powers to acquire and dispose of land to build houses, employment space and infrastructure; c) to propose the creation and development of Mayoral Development Corporations.

l Single pot consisting of an Investment Fund grant worth £900m over 30 years.

In addition to the above powers, Greater Manchester has access to a number of additional budgets and funds such as a Local Growth Fund, the Life Chances Investment Fund, the Greater Manchester Housing Investment Fund (worth £300 million), the Work and Health Programme budget, the apprenticeship grant for employers, and the adult education budget for the area.

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The story so far

The Greater Manchester Combined Authority currently consists of 10 constituent authorities: Wigan, Bolton, Bury, Rochdale, Oldham, Tameside, Stockport, Manchester, Trafford and Salford. The GCMA boundaries broadly cohere with the original metropolitan county structure and are also contiguous with the Greater Manchester LEP. GMCA has no associate members.

Andy Burnham is the Mayor of the Greater Manchester Combined Authority. Before his election, he was the MP for Leigh, having held ministerial positions in a number of departments including the Home Office, Department for Health and the Treasury. As the Combined Authority with the most expansive powers, it has recently used those powers in publishing a number of far reaching plans and strategies:

First, via the Greater Manchester Public Services Model, announced in late 2018, the Combined Authority set out a place-based approach to public services, with the explicit aim of integrating public services relating to health and social care, the emergency services, housing providers and schools. This is a radical shift in how public services will be delivered, and the results will provide a strong evidence base for other Combined Authorities.

Second, the Greater Manchester Spatial Framework consultation ran from January to March 2019.The Combined Authority has described it as: “the most ambitious and far-reaching planning strategy of its kind in England, promising to deliver over 200,000 new homes across the city-region and create thousands of new jobs.”

Finally, the Combined Authority has recently launched its Local Industrial Strategy, with the aim of encouraging investment into and supporting jobs and growth in the region. This strategy sets out an ambitious approach, particularly in respect of the following sectors:

health innovation;advanced materials and manufacturing;

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digital, creative and media; clean growth.

In addition to the above, the mayor has also focused on another specific priority: reducing rough-sleeping. The A Bed Every Night scheme, designed to deliver accommodation and support to rough sleepers in the city-region, has, on latest figures, helped over 1500 people since November 2018.

The Combined Authority is also currently working on a UCAS-style system for apprenticeships and technical training, as well as providing free bus travel to 16 to 18-year-olds via the Our Pass scheme and support for care leavers across the city region via the Care Leavers Guarantee.

Alongside the above, the Combined Authority’s Greater Manchester Strategy, Our People, Our Place, sets out Greater Manchester’s core goals. There are too many to mention in this brief summary, but some particular aims stand out (listed overleaf):

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Aim (by 2020):

l To meet or exceed the national average for the proportion of children reaching a ‘good level of development’ by the end of reception.

l For there to be 1000 fewer looked after children in Greater Manchester, a reduction of more than 20 per cent on 2016 levels.

l For median resident earnings to exceed £23,000 (from £21,585 in 2016).

l By 2020, GVA per job to exceed £44,500, up from £41,984 in 2015.

l By 2020, the proportion of journeys to work by modes other than the car to have reached 32 per cent, up from 29 per cent in 2015.

l By 2020, more than 10,000 net additional dwellings to be built per annum, up from 6,190 in 2015/16.

l By 2020, Greater Manchester to have reduced CO2 emissions to 11mt, down from 13.6mt in 2014.

l Over the period to 2020, victimisation rates to be in line with or below the England & Wales average.

l By 2020, improving premature mortality due to cardiovascular disease to result in 160 fewer deaths per annum.

l By 2020, 90 per cent of people aged over 50 in Greater Manchester to identify their neighbourhood as ‘very’ or ‘somewhat’ age-friendly, compared to 80 per cent in 2017.

Greater Manchester boundary comparison

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Greater Manchester boundary comparison

United Kingdom: 2011 Travel to Work Areas

ManchesterWarrington and Wigan

Local Enterprise Partnerships (LEPs)England: 1, 2017

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries in respect of the Local Enterprise Partnership

The boundaries under the Redcliffe-Maud

Report

Bolton

Wigan-LeighManchester

Warrington

Altrincham-Northwich

Stockport

Ashton-Hyde

Oldham

Bury-Rochdale

Liverpool City Region

Background and deal It was good to see, on arrival in Liverpool, a large number of cranes and new developments springing up alongside the Albert Dock, the Pier Head and the waterfront. Nonetheless, this is a region that has had historic challenges: between 1984 and 1996, employment in the city region fell by 12 per cent.⁷⁸ But it is a region that needs to succeed, being home to around 1.5 million people, 40,000 businesses and 625,000 employees.⁷⁹

Despite a vibrant economy that leads in logistics, manufacturing and tourism, this economic heft exists in a region with difficulties that must be faced head on. The city-region has the second highest proportion of its economically inactive population suffering from a long-term illness among London and second-tier city regions, and the highest proportion of workless households.

Yet this is an area which is starting to show success. The 2017 GVA statistics show that in 2017 Liverpool City Region’s GVA grew by 3.3 per cent: compared to an average in England of 2 per cent.⁸º

And this success can continue, based on the strengths that the city-region can offer. Recent GVA growth has come from advanced manufacturing, with high levels of productivity in particular in pharmaceuticals, automotive and chemical products and material chemistry, with the recent growth of the hydrogen cluster and other low-carbon energy developments a particular opportunity. It has emerging growth opportunities in the health and life sciences sector where it has world class assets in infectious disease control, growing

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Liverpool City Region Combined Authority constituent authoritiesLiverpool, Sefton, Wirral, Knowsley, St Helens and Halton.

⁷⁸ University of Liverpool and Liverpool John Moores University, The State of Liverpool City Region Report⁷⁹ Liverpool City Region, submission to the 2015 Comprehensive Spending Review⁸º https://www.liverpoollep.org/news/liverpool-city-region-economy-growing-faster-than-national-average-2/

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28 | MAKING THE MOST OF DEVOLUTION | 29

Is Liverpool’s public sector too big? Not as big as it was.

3.32 It has sometimes been argued that the

Liverpool City Region economy is too

public sector dominated. In part that is

an over simplification. The kind of public

sector jobs – for example high or low

value added – is important. That said,

the balance has been changing in the

recent austerity years. 20,400 FTE Jobs

were lost in the public sector in the city

region and 25,900 gained in the private

sector, a net gain of 4,500 jobs. Liverpool

City Region had the third highest loss

of public sector jobs after Bristol and

Newcastle upon Tyne – nearly 16%,

one and a half times the national fall.

By contrast private sector jobs grew by

just 7% – below the national but above

five other second-tier city regions

(Figure 3.20).

3.33 The public-private sector rebalancing

varied within the city region, with the

biggest public sector job losses in

Liverpool, Sefton and St Helens. The

biggest increases in private sector jobs

were in Knowsley, Halton and Liverpool

(Figure 3.21).

THE HARD FACTS

-5.3

-14.7 -16.2

-7.3

-14.0 -14.2-17.5 -15.8

-11.3 -10.6-13.3 -11.9

-8.0-10.5

13.8

8.3 8.1 7.6 7.2 7.2 7.2 7.0 6.7 6.2 6.1 5.0

-1.0

7.6

-20.0-15.0-10.0-5.00.05.0

10.015.0

20.0

Public sector Private sector

London C

R

Birmingham

CR

Leeds C

R

Leice

ster C

R

Nottingham

CR

Bristo

l CR

Manch

ester C

R

Cardi  C

R

Edinburgh C

R

Newcastl

e upon Tyne C

R

Liverp

ool CR

She�eld CR

Glasgow C

R GB

-2.4 -3.8

-17.9

-6.8

-23.7 -25.4

-15.8-10.5

16.5

8.3 7.7 5.5 3.5 2.07.0 7.6

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-20.0

-10.0

0.0

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20.0

Knowsley Halton Liverpool Wirral St. Helens Sefton LCR GB

Public sector Private sector

Figure 3.20: % change in FTE Employment in Private and Public Sectors, 2009-14Map 4: Liverpool City Region’s key sectors, firms and anchor institutions

Figure 3.21: % change in FTE Employment in Private and Public Sectors, 2009-14, Liverpool City

Region local authorities

Source: Business register and employment survey

Source: Business register and employment survey

Liverpool City Region's key sectors, firms and anchor institutions

Source: University of Liverpool and Liverpool John Moores University, The State of Liverpool City Region Report

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specialism in precision medicine and digital health innovation. The area has a unique cultural, sporting and tourism offering that makes it an ideal location to live, study, work and invest.

The Combined Authority itself generally maps onto the older Metropolitan County of Merseyside. This consisted of Knowsley, Liverpool, Sefton, St. Helens and Wirral. Halton is also a Liverpool City Region Combined Authority member, though historically being in Cheshire.

The Combined Authority is a product of two main devolution deals. The first, signed on 17 November 2015, focused on powers in respect of transport, skills and business support. This was followed by a second deal, announced on 16 March 2016, which devolved further powers and responsibilities to the Combined Authority, in particular new powers over transport, a 100 per cent business rate retention pilot and additional agreements in respect of greater cooperation between the Combined Authority and government. This deal also set out a plan for integration of health and social care into the Combined Authority’s remit.

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Liverpool City Region Combined Authority (summary compiled with reference to Devolution: A Mayor for Liverpool City Region, DCLG)

Powers

l Functional power of competence.

l Ability to raise a precept on council tax bills.

l Ability to raise an infrastructure levy.

l Borrowing powers.

l Ability to raise an infrastructure levy.

l Transport powers including the power to develop and implement a Local Transport Plan and a Key Route Network

l Bus franchising powers.

l Land and development powers including:

a) the specific power to prepare a Strategic plan for housing in the entire of the region;

b) to be consulted on important planning applications;

c) compulsory purchase powers to acquire and dispose of land to build houses, employment space and infrastructure;

d) to propose the creation and development of Mayoral Development Corporations.

Budget

l Single pot consisting of an Investment Fund grant worth £900m over 30 years.

l Apprenticeship grant for employers.

l Business Rates Pilot.

These deals provided for the following powers:

Alongside the above, in November 2017, the Combined Authority was provided with £134m from the Transforming Cities Fund which was increased by £38.5m in the 2018 Budget. In 2018, the authority was allocated £7.7m for a Housing First approach to tackling homelessness and £2.1m in funding for a homelessness trailblazer pilot.

The Liverpool City Region Single Pot breaks down into four components:

Investment Fund GrantAn annual payment of £30m with a maximum of £900m over 30 years.

Transport GrantAn annual transport grant of £26.513m each year from 2016/17 to 2020/21, plus an additional £4.372m in 2017/18 from the National Productivity Investment Fund.

Adult Education BudgetA budget to provide funding for training and education to help people aged 19 and over move into work, apprenticeships or further education, totalling £50 million.

Local Growth FundAn investment fund including a ‘flexible’ element of £247.56m from April 2016 – March 2021.

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The story so far

The first mayor of LCR is Steve Rotheram. Born in Liverpool, Rotheram was previously the Member of Parliament for Liverpool Walton from 2010 to 2017.

Transport has been a particular focus of Mr Rotheram’s first two years as mayor, with a major emphasis on the modernisation of the region’s transport systems. Working with Transport for the North, the city region has successfully made the case for connecting the city region to the HS2 network via a new twin-track line between Liverpool and Manchester as part of Northern Powerhouse Rail. This will bring a £15 billion boost to city region GVA, 24,000 new jobs, 11,000 new homes and 3.7 million more visitors annually.⁸¹

The Combined Authority has procured new, state-of-the-art trains for Merseyrail to replace a nearly 40-year old fleet, put out a new tender to replace the two 60-year old Mersey Ferry ferries, implemented new technologies to update the way people pay to use the Mersey tunnel, and reopened a stretch of railway line to allow direct services between North Wales and Liverpool to run again. Work by the bus alliance has brought the main operators together with the Combined Authority to increase fare-paying patronage, improving ticketing products and information for customers and a £375m investment by operators in new buses. Plans for an ambitious 600km walking and cycling network in the Liverpool City Region have also begun.

Another area of interest to the Combined Authority has been that of investment. A Strategic Investment Fund has been set up, with the aim of providing an additional £500m in funding for the city region, and a £10 million Green Investment Fund was recently announced. A number of funds have also been launched to support colleges and schools in the LCR.

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⁸¹ https://www.liverpoolcityregion-ca.gov.uk/hs2/

On skills the Liverpool City Region Combined Authority has:

provided half-price bus travel for all apprentices under the age of 25;

launched the UK’s first UCAS-style webportal for apprenticeships;

introduced the Households into Work Programme to support long-term unemployed households back into work.

Finally, there has also been more of an emphasis on the social and cultural side of the mayoralty. The region incorporated an evaluation of social value as one of the determinants in its Spatial Development Strategy and the Combined Authority has set up a Fairness and Social Justice Advisory Board to ensure that social justice and value are hard wired into policy making.

The Liverpool City Region has recorded a number of other key successes, including:

Launched the Households into Work Programme, supporting 800 households who are long-term unemployed back into the work place.

Launched a £6m Mayoral Town Centre Fund to support local high streets.

Investing £40m in 30 schools and colleges across the city region.

Investing £10m in the Shakespeare North project.

Launching the city region’s Borough of Culture programme and allocating 1 per cent of devolution funds to cultural projects.

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8387

Liverpool City Region boundary comparison

Sefton

Wirral

Liverpool

Knowsley

St Helens

Halton

United Kingdom: 2011 Travel to Work Areas

Liverpool

Warrington and Wigan

Local Enterprise Partnerships (LEPs)England: 1, 2017

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries in respect of the Local Enterprise Partnership

The boundaries under the Redcliffe-Maud Report

Southport-Crosby

South Merseyside

Liverpool

St Helens-Widnes

Economic development l Publishing a Liverpool City Region Local Industrial Strategy.

Transport l Implementing the £1 “fast tag” scheme for the Mersey tunnel.l Building a smart ticketing system for transport in the city region.l Publishing a Mayoral Transport Plan and statutory Transport Strategy. Education l Implementing the UCAS-style apprenticeship portal.l Commissioning of the Adult Education Budget.l Delivering the Households into Work Programme.l Publishing a Fair Employment Charter.

Spatial Planning l Developing a Liverpool City Region Spatial Development Strategy.

Energy l Developing an outline business case for the Mersey Tidal Power project.

Housing l Delivering the Housing First Pilot.l Developing a Mayoral Housing Strategy.

Government sign-off of the £25m Liverpool City Region Urban Development Fund.

Commissioning of the £50m Adult Education budget allocation, and delivery of the Skills for Growth Action Plans.

Launch of a UK-first fleet of Hydrogen buses in the city region, including building the UK’s first hydrogen filling station.

The launch of the Liverpool City Region Air Quality Task Force, with both Government and Local Authority engagement.

The Combined Authority has also set out a number of projects that it will be focusing on over the 12 months:

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Tees Valley

Background and deal The Tees Valley has been at the heart of the cultural, economic and geopolitical history of the North East over the past two hundred years. Its impact remains constant: to this day the region offers around 279,400 jobs and an economic output of £13.1billion per annum (Source, Tees Valley Economic Assessment, 2018).

Though the area has challenges that any effective devolution settlement for the region needs to address, there remains much to be optimistic about. As I noted in my 2016 report on the Tees Valley area, Opportunity Unlimited:

“The UK as a whole has a major challenge to move from yesterday’s industry into tomorrow’s world, and the Tees Valley has made significant progress on that journey.”

The Tees Valley region was (bar Darlington) from 1974 onwards, part of the non-metropolitan county of Cleveland. Though this was abolished in 1996, the five unitary authorities agreed to coordinate strategic planning, economic growth and strategic plans for inward investment creating the area known collectively as the Tees Valley. To this day, a number of residual Cleveland institutions have remained, most notably Cleveland Police and Cleveland Fire Service.

Proposals for a Combined Authority first came about in 2009 and in 2011 the five unitary authorities pooled their

Tees Valley Combined Authority constituent authoritiesDarlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton-on-Tees.

l The Tees Valley employment rate for the 12 months to June 2018 was 68.4 per cent, compared to a UK rate of 74.9 per cent. l Since the Strategic Economic Plan in 2016, the Tees Valley has gained an additional 130 businesses, to 17,230 in 2018, including 17,150 SMEs.

Source: 2018 Tees Valley Economic Assessment

strategic economic functions via the Tees Valley Local Enterprise Partnership. In 2014, the region obtained a £5m City Deal and a Growth Deal worth over £100m.

The Tees Valley Devolution Deal was agreed in October 2015, allowing fiscal control of skills, transport and infrastructure, innovation and business support and includes a 30-year gain share worth £15m per year.

This deal provided the Combined Authority with broad powers in respect of investment in the region, transport, land-use, and skills and education.

Tees Valley Combined Authority (summary compiled with reference to Devolution: A Mayor for Tees Valley, DCLG)

Powersl Functional power of competence.

l Ability to raise a precept on council tax bills.

l Ability to raise an infrastructure levy.

l Borrowing powers.

l Transport powers including: a) the power to develop and implement a Local Transport Plan;b) Bus franchising powers.

l Land and development powers including the specific power to review housing needs and to propose the creation and development of Mayoral Development Corporations.

Budgetl Single pot consisting of an Investment Fund grant worth £450m over 30 years.

l Apprenticeship grant for employers.

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The Tees Valley Single Pot breaks down into four components:

Investment Fund GrantAn annual payment of £15m a year with a maximum value of £450m over 30 years.

Transport GrantAn annual transport grant of £13.930m each year from the 2016/17 financial year to the 2020/21 financial year, plus an additional £2.298m from the National Productivity Investment Fund.

Adult Education BudgetA budget to provide funding for training and education to help people aged 19 and over move into work, apprenticeships or further education (currently totals around £30m a year).

Local Growth FundA fund to improve the Tees Valley area, including ‘flexible’ funding to be spent on local growth priorities. The total ‘flexible’ element of the Tees Valley Local Enterprise Partnership’s Local Growth Fund allocations for 2016/17 to 2020/21 is £103.129m.

Alongside the above, in November 2017, the Combined Authority was provided with an initial £59m from the Transforming Cities Fund with a further £16.5m awarded taking the total to £75.5m.⁸²

⁸² https://teesvalley-ca.gov.uk/tees-transport-fund-hits-76million-after-budget-boost/

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The story so far

The five Tees Valley Local Authorities – Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton-on-Tees – became a Combined Authority in April 2016, and in May 2017, Ben Houchen, a Conservative, was elected the Mayor of the Tees Valley Combined Authority.

The emphasis within the Tees Valley Combined Authority has firmly been on job creation, often working with the LEP, which maps directly onto the Combined Authority. Examples cited by the Combined Authority include its heavy involvement in the jobs taskforce set up in the wake of the closure of the Redcar steelworks and the area’s 12 enterprise zones, as well as announcements of plans for a £150m overhaul of Darlington’s Bank Top train station.

One of the focal points of Ben’s mayoralty is around his pledge to bring back Durham Tees Valley Airport into public ownership. Having published a 10-year plan to save the airport, the purchase from previous owners PEEL was completed in early 2019.

The CA’s Strategic Economic Plan (2016 to 2026) has set itself the following targets to deliver by 2026:

25,000 additional jobsExtra £2.8 billion into the Tees Valley economy

And by 2040:10 per cent of the total GVA growth target for the Northern Powerhouse (w/ only 4 per cent of the population)

There has been a particular focus on the proposed regeneration of a substantial area of South Tees. This area mainly comprises the large former SSI and Tata Steel land zones in Redcar, Lackenby, Grangetown and South Bank.

The South Tees Development Corporation (STDC) was established in shadow form in February 2016 and formally launched in August 2017. The aim is for the regeneration to create 20,000 new jobs in

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Tees Valley and contribute an additional £1bn per annum into the Tees Valley economy. Following an announcement by the Chancellor Philip Hammond at the 2018 Autumn Budget, it became the only site in the country with Special Economic Area status. In March 2019, the South Tees Development Corporation published its Master Plan for the area, designed to set out:

“the vision, strategy and ideas for the transformational regeneration of the South Tees Development Corporation area into a world class employment-generating zone and economic growth enabler for the Tees Valley.”

As I learnt in respect of the Development Corporations of the 1980s, challenges of this magnitude take much longer to fix than any one electoral cycle, but the approach taken is a promising one.

The Combined Authority has also invested in a number of additional projects:

Transport l £2m funding for highways improvements on the A171 between Swans Corner to Flatts Lane in Middlesbrough.

l £3.37m funding to improve connectivity within the Darlington Growth and Enterprise Zone.

l £220,000 to help bring a fleet of hydrogen road vehicles and new refuelling infrastructure to the region.

l £2.95m funding for a highway improvement scheme to improve capacity around the Cargo Fleet Roundabout in Middlesbrough.

l £20m to fully fund the delivery of the redevelopment of Middlesbrough station.

l £25 million to support the redevelopment of Darlington station.

Source: South Tees Development Corporation Masterplan

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Education l Since August 2016, supported more than 1200 apprenticeships through the Tees Valley Apprenticeship Grant for Employers.

l £7.5 million for new ‘Routes to Work’ scheme to help 2500 long-term unemployed back to work.

l £1.3 million new Apprenticeship Fund to prioritise quality vocational courses in high-growth sectors.

l £29.5 million annual fund to improve post-19 education to ensure local people are re-skilled to fill local jobs.

l £8.3 million for the new Cleveland College of Art and Design campus in Hartlepool.

l TeesValleyCareers.com launched – a £3 million initiative to deliver excellent, consistent careers education across the five Tees Valley boroughs.

Business l Worked with a number of Tees Valley companies to create and protect around 1400 jobs via the injection of over £200m of private sector investment.

l As part of the “Business Compass” scheme, undertaken over 1000 detailed company reviews and provided £4.2m to 417 Tees Valley SMEs.

l £7.6 million for the new Tees Advanced Manufacturing Park in Middlesbrough.

l £4.6 million for Liberty's ground-breaking powder metals project, boosting our research credentials while creating good quality jobs.

l Invested £2.4 million for superfast broadband.

Housing l Established the Tees Valley Land Commission, a body responsible for identifying brownfield and public sector land across the area and helping to bring forward sites for new jobs and housing.

Airport l Acquired Durham Tees Valley Airport for £40m bringing it back into public control.

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Tees Valley boundary comparison

DarlingtonStockton-on-Tees

Hartlepool

Middlesbrough

Redcar and Cleveland

United Kingdom: 2011 Travel to Work Areas

Darlington

Hartlepool

Middlesbrough and Stockton

Local Enterprise Partnerships (LEPs)England: 1, 2017

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries in respect of the Local Enterprise Partnership

The boundaries under the Redcliffe-Maud Report

Teesside

West of England

Background and deal

The West of England Combined Authority was formed in 2017, with the explicit aims of championing the region and driving clean and inclusive economic growth.

The West of England currently sits as an economic leader within the UK, with an economy worth over £33 billion a year. With a population of over 1.1 million people, one of the highest rates of employment in the country (79 per cent), and over 45,000 businesses, it is clear that the West of England is a place where highly skilled people work, where ideas flourish and where businesses grow.

Home to the cities of Bristol and Bath, the Combined Authority covers much of the previous Avon authority area, abolished in 1996, though it now has a much different purpose and set of functions. The West of England hosts world-leading clusters in sectors such as aerospace and advanced engineering, financial and professional services, creative and digital. More recently, emerging businesses in areas such as robotics, artificial intelligence, driverless cars and ‘Internet of Things’ have put down roots here.

But the region’s successes bring challenges. Its population is growing at a faster rate than other city-regions, and so the strain on the transport network, housing supply and digital infrastructure is growing. Also, some residents and communities are disconnected from the broader success of the region.

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West of England Combined Authority constituent authoritiesBath & North East Somerset, Bristol City and South Gloucestershire.

West of England key statistics l £33.5bn in GVA in 2017 (+ 2 per cent)l 79.1 per cent employment in 2018 (+ 0.5 per cent)l Average house price of £285,862 in Dec 2018 (+ 3.4 per cent).

Source: WECA Quarterly Economic Bulletin [Q2]

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The Combined Authority itself is constituted from three authorities: Bath and North East Somerset, Bristol and South Gloucestershire. Building on a strong track record of partnership working in the region, the West of England Combined Authority also works closely with North Somerset Council.

As a result of devolution, significant powers and funding have been transferred to the region.

Transport l Devolved and consolidated local transport budget.

l Identify Key Route Network.

l Prepare a local transport plan.

l Power to give grants to UAs to exercise their Highways functions.

l Integrated transport authority functions including:

– Concessionary fares – Local bus information – Community transport

l Memorandum of Understanding with Highways England and Network Rail.

Planning and Housing l Mayoral spatial plan.

l Call in powers for cross boundary, linear infrastructure planning applications.

l Compulsory purchase powers with consent of constituent Council.

l Creation of Mayoral Development Corporation with consent of constituent Council.

l To promote the establishment of a joint assets board for the region.

Skills and employment l Responsibility for the Adult Education budget.

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The West of England Single Pot breaks down into two components:

Investment Fund (gainshare): This fund, which is 50 per cent capital and 50 per cent revenue, amounts to £30m per year for 30 years (subject to 5 yearly government gateway reviews);

Transforming Cities Fund (TCF): The West of England Combined Authority has also secured £103m TCF, (which has to be spent by March 2023), to deliver strategic transport enhancements in the region.

Some of the key elements of the devolution deal:In addition to the £1 billion over 30 years agreed in the devolution deal, the West of England has also obtained around £100 million in extra funding for the region, including:l £14.9m per annum to develop and enhance skills of adults over 19 years old;l £5m to trial superfast 5G networks;l £4m for the Future Bright skills programme;l £3m to progress housing development and attract additional funding; l £6.3m to improve roads;l £8.5m for a Skills Innovation Fund targeting SMEs;l £2.8m for a new Energy Hub and Low Carbon Fund;l £1.35m to support the region’s creative sector;l £2m to run the Combined Authority and deliver our ambitious plans;l £46.4m from the West of England’s business rates retention pilot⁸³.

l Co-design and co-commission the new work and health programme.

l Assess economic conditions of the Combined Authority area.

l Support the West of England Growth Hub.

l Support Invest in Bristol and Bath.

⁸³ The region has retained an extra £46.4m of revenue through the 100 per cent Business Rate Retention pilot which has operated since the 2017/18 financial year

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⁸⁴ https://www.lgcplus.com/politics/devolution-and-economic-growth/tim-bowles-my-councillor-past-has-been-invaluable-as-mayor/7024083.article

The story so far

Elected on 4 May 2017, Tim Bowles, a Conservative, became the first West of England Mayor. Prior to his election, Mayor Bowles was a businessman and councillor, a background which he has stated publicly has assisted him in his role as mayor:

“I became a councillor because what happens within my local community really matters to me, and that experience has been invaluable as I’ve worked with council colleagues and others to shape the West of England Combined Authority and set priorities.⁸⁴”

In his first two years, Mayor Bowles has particularly focused on skills, launching schemes for people aged from 11 to 60 – to improve their skills and career prospects. This includes:

Future Bright which is supporting adults who are in work but on benefits to improve their job prospects and boost their wages.

The West of England Careers Hub, which has now extended to every school and college in the region, including special schools. The Hub works with schools and colleges to improve careers advice and work experience for pupils, inspiring them to be ambitious and preparing them for their careers.

The Women into Digital Jobs, Education and Training programme, a programme working with women across the region, as they are currently under-represented in digital roles.

Adult Education Budget, helping equip adults over 19 with the skills and qualifications needed for life, work, apprenticeships and further learning.

The West of England was chosen as one of the first places in the country to test out new 5G technology, a trial that has now been extended. Outside of technology, the Combined Authority has also allocated a significant amount of money to tackling challenges of congestion and poor air quality. Of particular note is the creation of a Low Carbon Challenge Fund, with the aims of supporting community energy projects and helping SMEs improve their energy efficiency.

The West of England has also led the way nationally in aligning strategic transport and spatial plans. The Joint Spatial Plan (JSP) was the first such joint planning approach in the UK – considering the impact that development in one area has across council boundaries. The JSP has the aim of delivering 105,000 homes of all types, including affordable, across the region by 2036, linked to necessary transport infrastructure as set out in the Joint Local Transport Plan.

The West of England has also submitted an ambitious Housing Infrastructure Fund Bid to bring about major improvements to Temple Meads Station and the A4 strategic growth corridor (between Temple Meads and Keynsham).

Finally, a West of England Joint Assets Board (JAB) has also been established, which aims to bring together senior leaders from the public sector through the region, including education, emergency services, councils, NHS and central government.

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West of England boundary comparison

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West of England boundary comparison

United Kingdom: 2011 Travel to Work Areas

Bristol

BathWeston- super-Mare

England: Local Enterprise Partnerships (LEPs)1, 2017

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries in respect of the Local Enterprise Partnership

The boundaries under the Redcliffe-Maud Report

Bristol & Bath

Bath and North East Somerset

MidsomerNorton

Radstock

Bath

Keynsham

Kingswood

Bristol

North Fringe

Yate/Chipping Sodbury

South Gloucestershire

Thornbury

Emersons Green Science Park

The West of England Combined Authority has earmarked the following key projects over the next year:

Rail l Aim to significantly increase rail usage, particularly via progressing work on MetroWest, in partnership with North Somerset Council, a project which focuses on major improvements to local and suburban rail.

Mass Transit l Research further the potential future demand and opportunities for mass transit within the region.

Local Industrial Strategy l Develop a Local Industrial Strategy, with the aim of setting out how the region can achieve its ambition for clean and inclusive economic growth.

Integrated smart-ticketing l Work to build the digital platform needed to make integrated smart-ticketing happen, in order to give residents the flexibility to move across different transport options easily.

Strategic masterplanning l Invest in Strategic Development Locations to deliver an approach to housebuilding that ensures consistent design quality of homes, whilst respecting local context and communities.

Investment l Continue implementing Investment Enterprise Zones to provide opportunities for business and employment.

Skills and employment l Implement the new £8.5m Workforce for the Future fund to reduce the barriers for employment in the region.

Support for the creative sector l Rollout a £1.35m Creative Scale-Up Programme, with the aim of supporting investment in creative businesses.

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West Midlands

Background and deal It is difficult to understate the historical importance of the West Midlands to the success and prosperity of the United Kingdom. In the heat of the Industrial Revolution it became a region of firsts. The first cast-iron bridge. The first self-propelled locomotive on rails. From leather in Walsall to iron in Coalbrookdale, it has always been a region at the very heart of the United Kingdom.

However, the 20th century was not as kind to the West Midlands as the century before it, and a weak economy held back the region. The historical challenges the region faced were well set out in the Resolution Foundation Report, Midlands Engine Trouble:

“As recently as the early 1980s, the overall employment rate in the WMCA trailed the English average by just 0.6 percentage points. By 1991, it had fallen 3 percentage points behind. That disappointing performance continued into the decade leading up to the financial crisis. The WMCA’s economic growth lagged the city region average from 1997 to 2007. Pay growth in the city was poor too: in 2001, median earners in the WMCA earned 73p more than the average city region, but by the time of the financial crisis this advantage had all but disappeared.⁸⁵”

In the years immediately following the financial crash, this situation not only continued, but worsened. The challenges the region faced by 2016 can be seen by the two graphs on the following page, originally included in the report referred to above:

West Midlands Combined Authority constituent authoritiesBirmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhamptonl Covers over 3,300 square milesl Population of 660,000,293,000 jobsl Economic output of £11.5bn

⁸⁵ The Resolution Foundation, Midlands Engine Trouble, December 2016.

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This publication is available in the Shared Growth section of our website @resfoundation

14Midlands engine trouble: The challenges facing the West Midlands Combined Authority Section 2: Victim of changes: The WMCA in crisis and recovery

In recent years the wider West Midlands region and the Greater Birmingham and Solihull LEP in particular have performed strongly on attracting foreign direct investment (FDI), with the third highest number of FDI projects after London and the South East. However, not enough of this has manifested itself in the overall growth figures or, as discussed below, in employment.[5]

On earnings, anaemic growth preceded a tough post-crisis pay squeeze

Weak economic growth in the WMCA before and after the crisis has gone hand in hand with weak productivity growth. The UK’s abysmal record on productivity is well known, but even compared with this low bar the WMCA’s performance has disappointed. In the immediate run-up to the financial crisis between 2004 and 2007, real GVA per hour worked in the WMCA grew by less than any other city region. As of 2014-16, GVA per hour worked in the WMCA is the third lowest of the city regions, trailing significantly behind the top performers of London, the West of England and Glasgow.

This weak productivity growth aligned with weak pay growth in the pre-crisis years. As recently as 2001, the hourly earnings of median workers in the WMCA were 73p higher than the city average. As Figure 2 illustrates however, by the time the financial crisis was beginning that gap had dwindled to just 2p.

[5] Department for International Trade, FDI projects by UK region (2011 to 2012 tax year to 2015 to 2016 tax year), August 2016

Figure 1: Growth in the WMCA

GVA per head at constant prices (1997=100)

Notes: Dotted line is an extrapolation based on trend growth in GVA between 2012 and 2015.

Source: RF analysis of ONS, Regional Gross Value Added

WMCA

City region average

Rest of GBWMCA peak

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105

110

115

120

125

130

135

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Financial crisis

7.5 ppts

This publication is available in the Shared Growth section of our website @resfoundation

15Midlands engine trouble: The challenges facing the West Midlands Combined Authority Section 2: Victim of changes: The WMCA in crisis and recovery

Looking across the pay distribution, this underperformance relative to other cities was not isolated to median earners in the WMCA but was spread across most of the pay ladder. As Figure 3 highlights, excluding the lowest earners (for whom the National Minimum Wage was an important leveller across the UK) and those at the top, wage growth was weaker for people working in the WMCA between 1997 and 2009 than in other city regions.

Figure 2: Typical pay in the WMCA is stuck at turn of the century levels

Median gross hourly earnings (RPIJ deflated)

Notes: In this chart and in the rest of this report unless otherwise specified, city region average (ex. WMCA) is an average by population rather than taking each of the city regions as one data point.

Source: RF analysis of ONS, ASHE

WMCA

City region average (ex. WMCA)

WMCA peak

£10.00

£10.50

£11.00

£11.50

£12.00

£12.50

£13.00

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Financial crisis

-3.5%

Source: The Resolution Foundation, Midlands Engine Trouble, December 2016

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It is this challenge that the West Midlands Combined Authority (known as WMCA) had to meet.

The closest thing to a precursor WMCA has is the old West Midlands County Council, which was abolished in 1986. The abolition of the West Midlands County Council left the county without a unifying authority though cooperative working continued in a handful of areas such as transport, via the West Midlands Integrated Transport Authority and policing, via West Midlands Police. A number of these organisations now have successor organisations that fall under the WMCA’s remit, for example Transport for West Midlands, an executive body of the WMCA that oversees transportation (road, rail, bus and Metro) within the metropolitan county.

The seven metropolitan councils issued a “statement of intent” to form the WMCA in July 2015. In November 2015, the Chancellor of the Exchequer agreed and signed a devolution deal with the seven metropolitan councils and three Local Enterprise Partnerships of the WM. The authority formally came into being on 17 June 2016 through a statutory instrument (the West Midlands Combined Authority Order 2016) under the Local Democracy, Economic Development and Construction Act 2009. The Budget of 22 November 2017 confirmed a second devolution deal for the region covering housing, skills and digital technology, and in 2018 WMCA also signed a skills agreement and a housing deal.

The above gives WMCA the following sizeable powers as set out in the table overleaf.

The West Midlands Combined Authority (summary compiled with reference to Devolution: A Mayor for the West Midlands, DCLG)

Powers l Functional power of competence.l Ability to raise a precept on council tax bills.l Power to raise a supplementary business rate.l Borrowing powers.l Adult Education and Skills.l Transport Authority powers including the power to develop and implement a Local Transport Plan and a Key Route Network.l Bus franchising powers.l Land and development/regeneration powers including: 1. Land assembly and infrastructure provision; 2. Compulsory purchase powers to dispose of land to build houses, employment space and infrastructure; 3. To propose the creation and development of Mayoral Development Corporations.l Concurrent powers with constituent authorities on air quality.

Budget 2019-20 Forecast:l Revenue Expenditure: £262m l Capital Expenditure: £551m

The West Midlands Single Pot is broken down into three components:

Investment Fund Grant l £36.5 million annually, with a maximum value of £1.095 billion over a 30 year period.

Transport Grant l £17.6 million each year from the 2016/17 financial year to the 2020/21 financial year, plus an additional £2.5million from the National Productivity Investment Fund.

Adult Education Budget l £126m The Adult Education Budget for the area.

When single pot funds are combined with other new programmes and funding announcements, the CA has secured devolved resources in excess of £2bn for the region.

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In addition to the powers and funding mentioned, in the November 2017 Budget, WMCA were provided with £250 million from the Transforming Cities Fund.

The story so far

The geographic footprint of the WMCA is more complex than Greater Manchester, reflecting existing local relationships and the Functional Economic Market Area (FEMA). An independent formal assessment of the FEMA in June 2015 concluded that a geography covering the three Local Enterprise Partnerships (Greater Birmingham and Solihull, Coventry and Warwickshire, and the Black Country) had the highest degree of coherence in terms of commuting, migration and industrial specialisation.

The WMCA therefore currently consists of seven full constituent members: Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. In addition to these constituent authorities, there are “non-constituent” members: the three Local Enterprise Partnerships and 11 LAs: Cannock Chase, North Warwickshire, Nuneaton and Bedworth, Redditch, Rugby, Shropshire, Stratford-on-Avon, Tamworth, Telford and the Wrekin, and Warwickshire. There are also four “observer organisations”: Herefordshire, the Marches LEP, the West Midlands Fire and Rescue Authority, and the West Midlands Police and Crime Commissioner.

Once established, in June 2016, working with the three LEPs, the WMCA set out its economic ambitions in a regional Strategic Economic Plan, Making Our Mark...The West Midlands, The Best Region in the UK to do Business, setting out how the region would use new devolved powers to create 500,000 jobs, increase life expectancy, build 1.9 million new homes and upskill the region’s workforce.

The WMCA developed its strategic approach to major policy domains through a series of Policy Commissions, including the Mental Health Commission (January 2017), Land Commission

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(February 2017) Productivity and Skills Commission (April 2018) and Leadership Commission (2018).

Most recently, the CA worked with BEIS to produce the country’s first Local Industrial Strategy (May 2019) which sets out how the West Midlands will meet the Future of Mobility Grand Challenge as the centre of transport innovation in the UK; develop new market opportunities in data driven health and life sciences; build on the five foundations of productivity, including targeted action on skills, housing and transport with plans to drive up levels of business innovation and the commercialisation of research and development; and make sure all communities can contribute to and benefit from economic prosperity. The focus on inclusive growth is supported by the CA establishing an Inclusive Growth Unit and decision making tool.

In May 2017, the West Midlands elected Andy Street as the first Mayor of the WMCA. Prior to becoming mayor, Andy combined a career at John Lewis with a number of economic roles in the public sector, notably chairing the Greater Birmingham & Solihull Local Enterprise Partnership (GBSLEP) between 2011 and 2016.

Mr Street has placed himself squarely as a mayor who wants to tackle the challenges identified above head on. His renewal plan for the region, published prior to him becoming mayor, described the challenges he faced in the following terms:

“We must not squander this opportunity. The region faces a stark choice: do we embrace this renaissance by growing the economy in a way which benefits everybody and become Britain’s beating economic heart? Or, do we look backwards? There is only one answer. If I’m the Mayor, I will work tirelessly to make this happen.”

Latest data, as outlined in the CA’s latest State of the Region report (published July 2019) outlines several positive developments for the region: “The West Midlands is experiencing an economic renaissance bucking the trend of other areas outside London. GVA, the measure we use to assess the value of goods and services in an area, is growing

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at the same rate as the UK at 3.6 per cent and is at an eight-year high reaching £99bn…GVA per hour, the best way to measure productivity, is increasing at 3.1 per cent, significantly above the UK at 2.5 per cent. This economic growth is matched by growth in the number of active enterprises at 3.6 per cent, again above the UK at 3.3 per cent. Those enterprises are creating record numbers of jobs with a growth rate of 3.1 per cent – three times the England rate... The number of people with NVQ Level 4+ qualifications has increased by 3.3 per cent over the year compared to a UK increase of 2.3 per cent. There were similar positive results for those with ‘No Qualifications’, falling by 2.5 per cent compared to the UK average change of +0.2 per cent.”

At the same time, the report is realistic about the challenges that still face the region, commenting: “Manufacturing looks most vulnerable to the impacts of Brexit, and the West Midlands is particularly exposed. Although headline productivity is moving in the right direction, it still lags behind the rest of the UK, as does the proportion of WMCA residents with qualifications and their healthy life expectancy. Youth unemployment is still stubbornly high. Without effective investment in productivity and skills, the region risks losing the ability to attract future investment and there continues to be disparity in employment levels by gender and ethnicity. We know there is still a long way to go to meet our ambitions. Too many people remain left behind, unable to access, shape or feel the full benefits of sustained economic growth.”

WMCA point to number of particular highlights of the past four years for the region. Aside from the successful 2022 Commonwealth Games bid, the WMCA is taking action across a number of areas to support happier, healthier, better connected and more prosperous communities, and to ensure the benefits of High Speed 2 are maximized for the region. The CA’s Review of 2018-19 highlighted the following progress:

Economic Growthl The number of jobs has increased to 1.9m +3.1 per cent (+56,000) compared to +1.3 per cent for England (2016/17).

l Developed the West Midlands Industrial Strategy.

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l Supported the region’s response and planning for Brexit.

Housing and Regeneration l Secured a £350m Housing Deal with Government.

l Worked with partners to accelerate house building: 14,628 new homes (a 21 per cent increase on 2017/18) and a 33per cent per cent increase in affordable homes completed.

l Approved £20 million of funding to unlock land for regeneration in five town centres across the region.

Productivity and Skillsl Published a Regional Skills Plan and secured the first Skills Deal in the country with £69m of new and planned investment for the region.

l Mentored more than 1500 young people through the Mayor’s Mentors programme.

l Supported over 400 people through the ‘Connecting Communities’ employment support programme.

l Delivered pre-employment training for 100 local unemployed people through the £5m Construction Gateway project.

l Secured Government agreement to a West Midlands Apprenticeship Levy transfer scheme, allowing up to £40m of unspent levy funding to be used to support regional SMEs’ take-up of apprenticeships.

Health and Wellbeingl Supported the Homelessness Taskforce and started delivery of the Housing First pilot.

l Continued delivery of the successful Thrive programme with the development of multiple streams of work including ‘Thrive Into Work Individual Placement Support’ (IPS) and ‘Thrive At Work’.

Public Service Reform, Inclusion and Cohesionl The West Midlands was selected in September to become the innovative home to the UK’s first multi-city 5G test bed.

l Established the Inclusive Growth Unit in June 2018.

l The Social Economy Taskforce has been operational throughout 2018/19, and will publish its final report in summer 2019.

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West Midlands boundary comparison

Wolverhampton Walsall

Dudley

Sandwell

Birmingham

SolihullCoventry

Local Enterprise Partnerships (LEPs)England: 1, 2017

North Worcestershire

Birmingham

Wolverhampton

Mid-Sta�ordshire

Walsall

Dudley

West Bromwich-Warley

United Kingdom: 2011 Travel to Work Areas

Coventry

BirminghamDudley

Wolverhampton and Walsall

The current Combined Authority boundaries

The boundaries in respect of the 2011 Travel to Work Areas

The boundaries in respect of the Local Enterprise Partnership

The boundaries under the Redcliffe-Maud Report

Environment l Developed a regional Low Emissions Strategy and Action Plan with local authorities to help identify where working regionally could accelerate local action on air quality and carbon emissions, attract investment and improve health.

l Regional Energy Strategy approved by WMCA Board in January 2019.

Transportl Extended the half-price Swift travel offer to all young people aged 16-18, on bus, rail and Metro, enabling an extra 100,000 young people to benefit.

l Supported the delivery of early Clean Air Zone measures by securing over £6 million to support the retrofit of buses to the highest European clean air standard for buses (Euro VI) across the region.

l Passenger numbers on Midland Metro increased to more than eight million in the first 12 months after opening of the Birmingham City Centre extension. Construction of the extensions at Centenary Square, Edgbaston, Wednesbury Brierley Hill and Wolverhampton City Centre continues.

WMCA’s most recent annual plan (June 2019) sets out where the Combined Authority wishes to go next to pursue its shared vision of building a region that is happier, healthier, better connected and more prosperous:Economic Growth Building on the region’s distinctive strengths, the WMCA will work with partners to focus activity on creating the conditions that support inclusive economic growth. Building on the Strategic Economic Plan and other key regional commissions, our Local Industrial Strategy sets out how we will:

l Strengthen the foundations of productivity, taking advantage of market driven opportunities in mobility, data driven life health and life sciences, modern services; and creative content, techniques and technologies.

l Ensure all communities can contribute to and benefit from economic prosperity, while enhancing the environment and investing further in social infrastructure

l Design our actions based on a set of inclusive indicators.

l Take full advantage of transformative investments in the region, including High Speed 2, extensions to our metro system, the 5G test bed

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trials, the Commonwealth Games in 2022 and Coventry City of Culture in 2021.

Housing and RegenerationTo enable and support the delivery of 215,000 new homes by 2031, significantly increasing the proportion of affordable housing and driving new quality and design benchmarks through:

l Setting a strategic investment and delivery strategy for housing and land (e.g. regional spatial investment and delivery plan) to support the delivery of at least 215,000 additional new homes by 2031.

l Delivering a pipeline of land for development and investment, unlocking and accelerating delivery on challenging brownfield sites.

l Increasing the supply of the right homes in the right places for the region (including affordable and social housing).

l Transforming the quality of development (e.g. through a new regional design charter).

l Brokering new funding and investment for development, infrastructure and land.

l Accelerating place-making and regeneration in town centres and beyond (e.g. through a town centres programme).

Productivity and SkillsTo enable and support more people into employment and higher skilled jobs so that all communities benefit from the region’s economic growth and businesses can access the skills that they need to grow – through:

l Developing a regional approach that improves the focus and impact of careers education for young people.

l Improving the provision of mentoring opportunities for young people in the region – e.g. the Mayor’s Mentors scheme.

l Creation of regional networks of specialist technical education and training (e.g. Digital Skills Plan).

l Accelerating the take up of good quality apprenticeships across the region (e.g. £10m levy funding committed to West Midlands apprenticeship fund).

l Supporting inclusive growth by giving more people the skills to get and sustain good jobs and careers (e.g. Connected Communities Employment Support Pilot).

l Developing a new approach to commissioning and delivering provision funded through the Adult Education Budget to include a shift in higher level skills delivered in priority sectors, pre-apprenticeships and targeted training.

Public Services Reform To create a region that does more collaborative work across services and sectors to innovate and drive better outcomes for citizens – including a focus on:

l Providing tools and capability to support inclusive growth and help shape investment, infrastructure and services around social as well as economic goals (e.g. inclusive growth framework and population health intelligence function and supporting a Social Economy Taskforce).

l Public Service collaboration through supporting public service and whole system collaboration across the region that delivers better outcomes for citizens, supports more inclusive developments and infrastructure, and helps to close the region’s fiscal gap over the long term. Transport Continue to develop a fully integrated transport network that meets the economic and environment needs of the region – through:

l Improving the customer experience.l A common approach to cycling and walking.l Ensuring Safety and Security on the network.l Helping to improve air quality.l Support Bus as the backbone of the region’s public transport network. l Deliver the best rail services.l Continue to invest in Metro.l Invest and develop our Key Route Network.l Develop the future regional Transport Strategy.l Ensuring readiness for City of Culture and Commonwealth Games.

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EMPOWERINGENGLISH CITIES

MICHAEL HESELTINE