‘Groundbreaking’ city deals signed

6 Jul 12
Agreements have been reached to devolve economic powers to six of the largest cities in England as the government continues the roll-out of ‘city deals’ across the country.
By Richard Johnstone | 6 July 2012

Agreements have been reached to devolve economic powers to six of the largest cities in England as the government continues the roll-out of ‘city deals’ across the country.

Birmingham, Bristol, Leeds, Newcastle, Nottingham and Sheffield have all signed accords that will give local authorities a greater role in training, job creation and infrastructure development.

Yesterday’s announcement follows the agreements with Liverpool and Manchester reached earlier this year.

The eight largest English cities outside of London were invited last December to set out the powers they wanted to boost local growth. In return, city councils will reform local leadership, with plans also announced yesterday to create combined authorities to make strategic decisions for city regions.

The city deals include backing for Tax Increment Finance schemes to fund infrastructure in Newcastle, Sheffield and Nottingham.

‘Self-sustaining investment funds’ for local projects will be created to reduce dependence on government grants in Birmingham, Bristol, Leeds and Sheffield, as well as in Liverpool. This will include the devolution of some of the Whitehall transport budget.

This follows the creation of the ‘earn-back model’ in the Manchester deal, where an element of tax revenues raised from infrastructure projects – either corporation tax or business rates – would be localised for further investment.

Responsibility for the franchise arrangements covering local and regional rail services will also be devolved to Leeds, Sheffield and Manchester.

Control over part of the central government skills budget will be given to Sheffield while Bristol, Leeds, Newcastle and Nottingham will join Manchester in creating ‘apprenticeship hubs’. These involve payments being made to incentivise small- and medium-sized businesses to take on more apprentices.

Nottingham City Council will be given powers to create a venture capital fund to invest in high tech business start-ups and growth businesses.

As part of the plans, Leeds and Sheffield city councils will each help form a new combined authority, covering West Yorkshire and South Yorkshire respectively. This will bring the region’s existing local authorities together to make strategic decisions.

Newcastle City Council is also working with the seven authorities across its economic area to form a North East Combined Authority.

Deputy Prime Minister Nick Clegg said the ‘groundbreaking deals’ signalled ‘a dramatic power shift, freeing cities from Whitehall control’.

He added: ‘Everyone in these eight core cities will feel the benefits – from young people looking for jobs, to businesses looking to expand.’

The agreements ‘represent a watershed moment’, cities minister Greg Clark added.

‘Our major cities have seized the opportunity to take control of their economic destiny and will now reap the benefits of new financial freedoms and investment opportunities available to them.’

Clark reiterated that the government’s intention to extend devolution across England. ‘Now we have concluded the first deals, we will shortly set out next steps for this radical extension of power to other places across the country.’

Responding to the announcement, Peter Box, chair of the Local Government Association’s economy and transport board, said the ‘very positive’ deals indicate ‘the success council leaders have had in their discussions with ministers’.

He added: ‘Along with previous deals for Liverpool and Manchester, these will give cities more power to bring in investment, boost the skills of local workers and crucially create new jobs.

‘Town hall leaders now want to see progress from the government on confirming the next round of city deals – in addition to “local growth deals” for counties and other places seeking them.’


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