A third round of City Deals could lead to the devolution of economic powers to all local authorities in England, the government’s cities adviser Lord Shipley has told Public Finance.
Speaking after a Local Government Association debate, Shipley also revealed that some of the first round cities announced in July could be given extra responsibilities in the near future.Last month, a short list of 20 areas, including Cambridge, Brighton and Preston, were invited to bid for extra powers under the second round. Announcing the list on October 29, Deputy Prime Minister Nick Clegg said the coalition didn’t intend to ‘end up with two-tier decentralisation, where urban areas flourish and rural communities are left behind’.
He added: ‘So, while it’s too early to talk exactly about what a third wave might look like, I very much see this as a step in a journey.’
Shipley, a Liberal Democrat peer and a former leader of Newcastle City Council, said the City Deals agreed so far translated the government’s ‘thoughts around localism’ into practice. He added that he was ‘in favour’ of further deals, which could include more rural areas like Cornwall.
‘The deputy prime minister has said that he would welcome a third wave and that there have been some discussions with rural areas, and I welcome that. That must be the way to proceed, so that in the end all of England is [given] devolved powers.’
Shipley also backed the creation of more combined authorities in urban areas. He said that if Newcastle, Sheffield and Leeds agreed similar arrangements to the Greater Manchester Combined Authority, it would help ‘reduce the risk’ involved in major capital projects.
‘I think there is a very big potential problem if individual councils try to manage financial risk in capital infrastructure projects,’ he said. ‘I use the example of Greater Manchester, where the City Deal has spread the risk over a number of authorities. So it’s about the council tax base and how big that is, and the business rates base and how big that is.
‘I am a firm supporter of combined authorities because they, first of all, bring an area together and reduce competition, but secondly they reduce the risk.’
Further governance reforms were also likely to be put in place if any cities in the first wave agreed additional powers, Shipley added.
‘The City Deals were all a bit different, and so some of them are keen to take on the powers that other cities in wave one took on and learn from their experience.
‘What ministers have said is that there has to be a governance structure that can underpin that further devolution of powers. Ministers are absolutely correct about that, there has to be a governance structure that is fit for purpose.’
