10 March 2006
Treasury officials will shortly report to Chancellor Gordon Brown on the financial implications of devolving new powers to city-regions, as the local government reform agenda took another firm step in that direction this week.
Public Finance has learnt that a joint study by the Treasury, Office of the Deputy Prime Minister and Department of Trade and Industry is likely to view positively the potential for devolving powers, similar to those granted to the Greater London Authority, to other city-regions.
A Treasury spokesman told PF: 'This paper is being published jointly with the ODPM and the DTI, and considers the importance of cities as drivers of regional economic growth. This is part of the evidence-gathering that will inform [the] government's longer-term work on regional policy and cities and provides context for the Comprehensive Spending Review 2007.'
Potential Treasury backing for a city-regions agenda, even with a series of possible caveats over financial arrangements, could inject further momentum into proposals to regenerate urban England outlined in a major ODPM-commissioned study this week.
State of the cities, written on behalf of the ODPM by Professor Michael Parkinson, claims that England's cities have 'the best chance since the end of the nineteenth century' to join Europe's elite economic centres. But it warns that this can be achieved only through the devolution of further powers from central government.
'What is clear is that the way forward for urban regeneration is to empower strong local leaders to determine how best to take forward local and regional regeneration,' he said.
Parkinson's study of 56 major towns and cities found that some key metropolitan areas, such as Greater Manchester, had overcome economic and population decline through an increase in university education, which has changed the economic profile of residents.
In an interview with PF, Parkinson stopped just short of calling for local tax-raising powers. But he added: 'The message to ministers is implicit in the report – London has thrived on the back of its powers and there is an obvious need for further devolution.'
Richard Leese, leader of Manchester City Council, immediately called on Whitehall to relinquish its tight control of local business rates as the first step towards injecting 'regeneration momentum' nationally.
Parkinson has warned ministers not to simply create new tiers of local government, urging them instead to focus on informal local and regional partnerships.
David Miliband, minister for communities and local government, welcomed Parkinson's 'monumental' research and said the ODPM had long been moving in the direction outlined by Parkinson.
PFmar2006
