Budget 2017: the Chancellor has put cities at centre stage again

The Budget seems to have signalled a re-ignition of interest from the Government in cities and devolution.

Ever since George Osborne’s exit from 11 Downing Street, there have been big question marks over the future of the ‘devolution revolution’ which he championed. But in yesterday’s Budget, Osborne’s successor Phillip Hammond signalled a recommitment to this agenda – and its rationale of empowering cities to grow their economies – with a host of policy announcements aimed at improving the performance of our urban areas.

These announcements can be split into three groups. The first category is national funds aimed at supporting growth across the country – policies that are implemented from the centre but can be used to support city economic growth. The National Productivity Infrastructure Fund (NPIF), which was seemingly forgotten as soon as it was announced this time last year, was extended and increased from £23 billion to £31 billion. This includes the newly launched ‘Transforming Cities’ fund, the focus of which – improving transport links within cities – is something we have long called for. It is now up to the cities themselves to identify how best they can use these funds to their advantage.

The second is the announcement of further devolution deals. These included the new North of Tyne deal, which covers Newcastle, North Tyneside and Northumberland, a deal rising from the ashes of the failed wider North East devolution deal. And there was a second round of devolution for the West Midlands, as well as the announcement that Tees Valley and Liverpool City Region are in talks with government to build on their first deal.

The third is the series of city and growth deals that were announced. The Government is in talks with both Belfast and Dundee over city deals. And there will be growth deals for a number of non-city areas in Wales and Scotland.

As my colleague Andrew has noted, it’s clear from these announcements that the metro mayors were the big winners from the budget. We were reminded yesterday that those places that agreed a deal and elected a mayor have opened the door for further deals, and are front-of-the-queue to take on local control over a growing list of policy areas that can be used to improve city economies, including housing, skills and transport.

But something new also happened – the preferencing by the Government of places with a metro mayor in investment. For example, in the ‘Transforming Cities’ fund, mayoral areas have already been given their own allocation to use according to local priorities– which amounts to half of the total £1.7bn investment – while other cities must now fight it out in a competitive process. Tees Valley has been given £123 million for the South Tees Development Corporation. Greater Manchester will be the first place to thrash out a local industrial strategy. And the Government’s broader commitment to the mayoral model was affirmed with the new £12 million investment to boost capacity and resource for the mayors (£1m for each of the mayors over the next two years).

This of course raises questions for our biggest cities that don’t have a mayor, such as Leeds and Nottingham. Increasingly they are being left behind as a result of not having struck a devolution deal. Yesterday’s development should show local leaders unconvinced by the powers and funding initially on offer in devolution deals, that the Government is ready to put more on the table once the mayoral institutions are in place. In light of yesterday’s announcements, these leaders should be urgently reassessing their position on having a city region mayor.

Yesterday’s budget was a change in direction – and a very welcome one – from a Government that to date had appeared distinctly lukewarm towards devolution. One of the answers to the underperformance of our many great cities will lie in giving them the policy tools to tackle the barriers holding back their growth.

Now attention turns to the emphasis that will be given to the role of place in the imminent Industrial Strategy White Paper (due on Monday 27th November).

Watch this space for analysis of that next week, as well as more post-Budget commentary in the coming days.

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