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The Key Cities group represent cities across England and Wales, we say Britain’s cities in the title of this manifesto because we think the arguments employed here apply to all the mid-sized cities in the country. We believe that if we are ever to rebalance our country and restore prosperity and worth to all of its parts then we have to endow all of its places with the abilities and powers to transform them for the better.
Power, People and Places: A Manifesto for Devolution positions the needs of Britain’s Key Cities at the forefront of the devolution debate, advancing the argument that midsized cities are the ‘missing multipliers’ in the current drive to generate both economic growth and public service transformation. As a consequence we argue that they should be the next level for, and focus of, place-based devolution deals.
With a combined GVA of £163 billion and a population of 7.9 million, the Key Cities make up 11% of the UK Economy. Key Cities are currently growing, in terms of GVA, at a faster rate than larger cities, with some Key Cities outperforming the national average. The relative growth of mid-sized cities is also evidenced in other countries and this emerging trend is contradicting predictions that economic growth will solely accrue in larger city-regions.
Key Cities have unique strengths in vital growth sectors that are contributing to UK PLC, helping to rebalance the national economy by closing the productivity gap between Britain’s regions and by hosting and growing a diverse range of internationally competitive industries. The benefits of agglomeration can be found in Key Cities where there is a high clustering of specialist firms, including advanced manufacturing and knowledge based industries.
This manifesto argues that the multiplying effects of concentrating diverse economic activity in one place is not determined by a fixed notion of scale. As such, it makes no economic sense to restrict devolution solely to big cities; all cities, regardless of size, can and should benefit from devolution. Since there is no optimum scale for devolution, restricting the benefits of devolution to a small number of big cities constrains the growth of Britain beyond its Core Cities and inhibits the public service reform that all citizens, regardless of where they live, so desperately need. In less centralised nations many different sized territories enjoy equivalent powers and freedoms, regardless of population size, and they put such powers to very good use. Britain’s cities and towns want the same.
Despite the successes of Key Cities, their performance is not uniform. All cities continue to face, at different points of the scale, a range of fundamental challenges, namely investments in human capital (skills), critical infrastructure (housing and transport) and complex dependency demands on public services. Some cities are particularly challenged with poor labour market conditions – low skills and low job creation – limiting their potential to be self-sustaining.
Dependency on public services, worklessness and deprivation are less concentrated in Key Cities than some of the larger Core Cities. However, all cities are capable of producing a higher economic output if relatively poor and servicedependent residents can be helped into work and good health. In fact, there will be limited prospects for sustained economic growth without an extensive and qualitative reform of public services. The cogent case for devolution demands that growth and reform must be tackled jointly.
We estimate that with the full integration of public service budgets, the Key Cities Group could realistically aspire to reduce their combined contribution to the government’s annual borrowing requirement by £2.5 billion a year. This equates to a £12.5 billion saving of public money for the Treasury over the course of the next parliament.
The complexity of the issues and varying factors influencing the performance of different Key Cities suggests the need for bespoke policy choices to more effectively tailor solutions, enabling cities to realise opportunities and fulfil their potential, whatever their locale and whatever the range of problems and challenges they face.
Key Cities can offer more specialist employment roles than larger metro-cities. By focusing on their distinct assets and comparative advantages, they have the potential for innovation through ‘smart specialisation’ and the diversification of existing expertise into further specialised niches. This approach can help Key Cities to prioritise knowledge-based investments in their strategic sectors, whilst working with other regions on the basis of shared economic interests. In short, for Key Cities to pursue effective local economic strategies and further contribute to national growth they require greater freedoms from national policies and greater flexibilities in and from centrally driven programmes.
The growth potential of Key Cities, their scale and diversity of roles, as well as their less complicated geographical and administrative arrangements, are all strengths which Government should seek to build on in developing new approaches to genuine ‘place making’ in the many different places that make up Britain’s cityscape. Their variety provides an excellent test bed for developing and running new approaches for economic development and improving public services.
Key Cities will commit to strengthening local governance and accountability with the facility to create directly elected Mayors or fashion alternative models of accountability, and establish Local Public Accounts Committees, where desired.
We would expect on the basis of manifesto pledges that the next Government will commit to a universal offer of place-based settlements and that, following the first Comprehensive Spending Review, five year funding settlements will be agreed with Key Cities to include, as a minimum, devolved funding for: employment, skills, business support, housing and transport.
Based on the readiness of individual cities we would expect the economic potential of Key Cities to merit additional powers, equivalent to those currently devolved to larger city-regions, including the facility for greater fiscal devolution (still to be granted anywhere in England), such as the freedom to set and retain local property taxes (e.g. council tax, business rates, stamp duty etc) and other concessions appropriate to local circumstances (e.g. tax discounts for tourism).
We would expect any new enabling legislation to protect the freedoms of autonomous cities and provide the facility to devolve further, to ‘scale down’, to the most appropriate level of individual city authorities.
In addition Key Cities will seek to re-establish a duty to cooperate with named government departments, agencies and Quangos in the delivery of devolved settlements.
Following the first Comprehensive Spending Review we would expect the next Government to agree five-year funding settlements with Key Cities to include:
• Transport: Fully devolved local transport funds, including decentralised bus and local rail regulation. Local powers and discretions over a range of highway violations, including Yellow Box and Red Light violations. This includes setting the level of fines and retaining all related income within agreed parameters.
• Housing: Local control of all public spending on housing, including housing capital budgets, the ability to determine housing benefit levels and vary broad rental market areas. Relaxation of the rules on reinvestment of Right to Buy (RTB) including the limits on the amount of capital receipts that can be spent on new dwellings and the timeframe (currently three years) in which receipts can be spent.
• Employment and Skills: Devolved responsibilities and budgets for all adult skills (including further education, apprenticeships and careers advice)and employment programmes (e.g. Work Programme, Youth Contract, Fit for Work)
• Business Support: Devolved business support budgets and a proportion of UKTI budgets and functions to
enable Key Cities to take a more direct and proactive role to local trade and
• Planning: Responsibility for spatial planning at the appropriate level to include powers to acquire and designate
land use and housing development. Local powers and discretions to set and vary the rates for a range of nationally determined local fees and charges including those relating to Planning, Licensing, and Housing. Stronger Compulsory Purchase Orders and local powers to unlock stalled sites.
• Single Public Estate: Powers to develop local land and property boards incorporating all local public bodies (including NHS) to assemble and free up land and buildings for business and housing growth and drive coordinated local public services though co-location and shared systems.
• Education: Devolved Education Funding Agency (EFA) for schools and all 16-19
provision with local responsibility for school performance and careers advice
• Health: Co-commissioning function for integrated health and social care with oversight by Health and Wellbeing Boards
• Children’s Services: Integration and devolution of current differentiated funds for Early Years to local authorities and Health and Wellbeing Boards; and whole service approach to looked after children.
• Troubled Families: To build on and extend whole-system approaches to Community Safety integration (policing, probation, early intervention etc.)
• Council tax: Full local controls on levels of council tax (bandings and re-evaluations – including removal of the tipping point for referendum) exemptions discounts and reliefs (including the application and provision of the local council tax support scheme, single person discounts and student exemptions and banding)
• Business rates: Extension of full business rates flexibility and retention, including scope for discounts to new starts and businesses in disadvantaged areas
• Stamp duty: Full retention of all income from Stamp Duty Land Tax and full local discretion over eligibility, rates and banding for Stamp Duty Land Tax
• Borrowing: Permission to borrow on Housing Revenue Account subject to Debt Deals with individual Cities
• Earn-back: Enabling of earn-back deals (including TIF schemes) for investment in transport and housing
• VAT: Local control and retention of VAT receipts, including lowering the rate of Tourism Tax to 5% in line with competitor EU destinations.24 In pursuing VAT reforms, a Tourist Enterprise Zone concept could be applied. This would require minimal investment and could be easily implemented, based on a Business Improvement District style approach.
Phillip is an internationally recognised political thinker and social and economic commentator. He bridges the gap between politics and practice, offering strategic consultation and policy formation to governments, businesses and organisations across the world. He founded ResPublica in 2009 and...
Mark is an experienced policy and research strategist with over 20 years working in partnership with businesses, public bodies, cities and counties to develop successful place-making strategies. Mark has contributed widely to research and policy developments in the UK with...
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