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Why City Region Mayors Matter

Posted on April 24, 2015

Since the 2014 Scottish referendum the debate about local devolution continues in many of our city regions – and will continue after the general election.

It is generally accepted that cities are the drivers of economic growth in the 21stCentury.  If we are to unlock this potential we need devolution of powers and spending.

It is important to appreciate that England is a highly centralised state. As of 2011 the proportion of tax set at a sub-national—local or regional—level was at most 2.5% of GDP.  This compares with 15.9% in Sweden; 15.3% in Canada; 10.9% in Germany; and 5.8% in France[i].

However, it is important that businesses understand that ‘fiscal devolution’ and ‘spending decentralisation’ are not the same thing.  The relaxation of central Government’s control over spending programmes (e.g. City Deal) on its own it is not fiscal devolution – this is the decentralisation of spending. ‘Full’ fiscal devolution involves the ability of Cities to have local tax and borrowing powers in order to create investment[ii].

Our previous blog sets out 10 benefits of organising at the city region level based on the functional economic geography and the role of cities as centres of economic growth.  Here we set out below why ‘full’ devolution is important to business and why this requires much stronger governance and accountability arrangements.

 

There is reluctance in some areas to accept an elected mayor – often quoting the failed referendums in 2012.  However, these previous proposals were not well presented and the benefits were unclear.  For example, the proposal for mayors in Wakefield, Bradford and Leeds was not the appropriate geography and, unsurprisingly, local people could not see the benefits.

Local politicians should not see this as a lack of appetite or ambition for a single elected leader – or ‘metro-mayor’.  George Osbourne has made it clear that his vision of devolution of powers and budgets is based on a new model of city government – including an elected City Region Mayor.  The Conservative party manifesto states that the conservatives would continue to ‘strengthen and improve devolution for each part of our United Kingdom’ as part of the Northern Powerhouse initiative.

In addition the Labour party has said it would ‘embark on the biggest devolution of power to our English city and county regions’ and the Liberal Democrats set out a range of pledges to ‘rejuvenate local government in England’ and enable ‘even greater devolution of powers from Westminster to Councils or groups of Councils working together – for example to a Cornish Assembly.’

There is generally all party consensus on the benefits of devolution, but the governance structures must be appropriate for each city-region.

The House of Commons report[iii] last year stated that,…..

….“fiscal powers should be devolved to groups of local authorities, covering a recognisable large scale area, that can demonstrate how they share, and work together as, a functioning economy”……, “a strong, locally agreed governance model will also be required. We do not prescribe a particular governance model, but any arrangements must be detailed and transparent, with a clear means of scrutinising decisions and holding those with power to account. If more significant and meaningful decisions are made locally about how money is raised and invested, local people should have a better opportunity to identify and hold those making such decisions to account”.

 …and…

 ……we are clear that there must be a requirement on local authorities seeking fiscal devolution to demonstrate a commitment and an ability to deliver on the principles of openness, public accountability and scrutiny, which should underpin all decentralised governance arrangements[iv].

…and….

The key features of the fiscal devolution we want to see adopted in the next parliament are as follows……d) The functional economic area should be able to demonstrate a record of competent, strategic financial management and have governance arrangements which ensure transparency and accountability, including democratic elections[v].

Academics and think tanks are also consistent in calling for strong, directly elected, governance structures for the city-regions. For example –

In their report, Second Tier Cities in Europe: In An Age of Austerity Why Invest Beyond the Capitals?, Liverpool JMU states,….too many cities are still attempting to use 19th century local boundaries and 20th century forms of government to shape and develop a 21st century global economy. Successful city regions need governance to be upscaled to the functional economic level. At the moment, too often, there are too many, too small local government units that are not fit for purpose. European, national and regional governments should incentivise and encourage voluntary collaboration but also strengthen territorial governance at city region level.[vi]

The City Growth Commission reported,… achieving Devolved Status will depend upon metros demonstrating robust governance and accountability structures, visionary leadership and the economic growth potential to ride the difficult storms of decentralisation and devolution. We believe the focus on the metro scale is vital here to realise the economic benefits of such bold reform.[vii]

Centre for Cities also state,….. the scale of powers that are on the table for combined authorities is significant, and that requires significant reform to their accountability to the public and amongst constituent authorities. To do so, this routemap recommends that a combined authority must have a directly-elected city-region mayor in order to receive additional powers and responsibilities[viii].

 

London already has a mayor. Manchester has moved ahead with substantial devolution of powers and funding in return for its ‘devo-manc’ proposals for an elected ‘metro-mayor’ in 2017.  It is important that other regions follow suit with an elected ‘metro-mayor’ / single ‘city-region leader’.  Growth could then be driven at the most effective city-region scale with strong democratic accountability leading to greater devolved powers and budgets.  A single charismatic figurehead would also be able to lead the combined authority and speak for the city region when competing for inward investment and jobs.

 

References-

[i] House of Commons Communities and Local Government Committee: Devolution in England: the case for local government, First Report of Session 2014–15 Report, HC 503 Incorporating HC 1018, Session 2013–14, published on 9 July 2014 page 6

[ii] House of Commons Communities and Local Government Committee: Devolution in England: the case for local government, First Report of Session 2014–15 Report, HC 503 Incorporating HC 1018, Session 2013–14, published on 9 July 2014 pp7-8

[iii] Devolution in England: the case for local government First Report of Session 2014–15, House of Commons Communities and Local Government Committee (June 2014) Summary

[iv] paragraph 77

[v] paragraph 152.

[vi] Second Tier Cities in Europe: In An Age of Austerity Why Invest Beyond the Capitals? Liverpool JMU, Metropolitan Research Institute, Budapest, University of Tempere, University of Paris Est, University College London (September 2014) paragraph 6.5

[vii] Powers to Grow: City Finance and Governance, RSA City Growth Commission (September 2014) page 24

[viii] Economic growth through devolution: Towards a plan for cities and counties across England, Centre for Cities, (November 2014) page 6