City Leadership: Giving city-regions the power to grow

City Leadership examines the economic case for financial devolution, using original research in Birmingham, Liverpool and Barnsley. It argues that Government must devolve substantial spending and revenue-raising powers to our biggest city-regions, starting with Greater Manchester and Birmingham. The report feeds into the Lyons Inquiry, Local Government White Paper and Comprehensive Spending Review.

Executive summary

City Leadership sets out the economic case for radical financial devolution to England’s cities and towns. It argues that more financial powers and autonomy are essential for our urban areas to achieve their economic potential.  But the scale of devolution is critical. City Leadership recommends a priority focus on our largest city-regions, plus a set of general flexibilities for all areas:

• The two biggest city-regions outside London – Greater Birmingham and Greater Manchester – are ready for significant new powers over regeneration, transport and skills, including devolved spending and revenue-raising. Other large city-regions could follow.
• All areas need greater financial flexibility, building on existing policy initiatives.

This is ‘asymmetric devolution’, with different places having different degrees of autonomy, proportionate to their economic importance.

Key recommendations

Radical devolution to Birmingham and Manchester city-regions:

1. City-Region Contracts that devolve key economic development powers and budgets to city-regions

2. Supplementary Business Rates, hypothecated to key city-regional infrastructure priorities

3. A City-Region Growth Incentive to promote cross-boundary collaboration and efforts togrow the business base

4. A clear policy framework with Whitehall departments, Regional Development Agencies(RDAs) and other agencies sharing a common focus on city-regional growth

5. New city-regional governance structures,with directly elected mayors in the lead, supported by existing local authorities

More freedoms for all cities and towns:

6. Economic Development Contracts within Local Area Agreements, giving local authorities greater discretion over regeneration spending

7. Enabling greater take-up of existing powers, including prudential borrowing, Business Improvement Districts and user charging

8. Improving capacity and skills in local authorities, to further public-private co-operation and promote investment