A busy end to the year

Local government looks set for a busy end to the year. From today until Parliament rises on the 20th, announcements are expected on: councils’ grant settlements for 2012-13; who will pilot ‘whole place’ community budgets; the legislation affecting business rates and council tax benefit; and possibly some revelations around just how much more council budgets will be cut back during the spending review period.

The government insists the sector must first demonstrate its suitability to receive whatever ill-defined powers are set to be passed down

It will make for a heady mix and, as Tony Travers argues, could all add up to something resembling meaningful reform.

As is customary with the prospect of reform, government insists the sector must first demonstrate its suitability to receive whatever ill-defined powers are set to be passed down.

Under New Labour, an entire inspection regime in the shape of the comprehensive performance assessment was set up to allow the sector to demonstrate its worth. New powers were not forthcoming.

During David Miliband’s stint as local government minister, there was an upsurge in interest in city regions. But this soon turned into an obscure conversation about putting partnerships between councils on a formal or semi-formal basis rather than on what powers they could take on.

So far, the theme under this government isn’t drastically different. For all the sound and fury around the bidding process to become a community budget pilot, the tangible benefits of having a crack squad of Whitehall civil servants come to your area is unclear. Similarly with the ‘city deals’ that Nick Clegg is set to announce today more seems to be known about the requirements on the cities than the goodies on offer.

Still, it should come as no surprise that Greater Manchester is in the mix to be a community budget pilot and has made the greatest headway on negotiating the devolution of powers. Its long track record of joint working was put in place for the benefit of the member councils, not to impress ministers.

But the mixture of successful political leadership and a canny group of chief executives has ensured it is well placed to deal with Whitehall on as close to its own terms as possible. Other areas could do worse than take note.

UPDATE - 15:00, Thursday 8th December

Right, so today’s announcement by Nick Clegg and Greg Clark has clearly taken things on a bit. The ‘city deals’ prospectus contains a clear list of some genuinely significant powers that may be on offer to cities.

It essentially looks like the government is proposing to repeat the process of negotiations that took place at the end of the last administration to set up a statutory city region for Greater Manchester. There is plenty of learning from that process for the current one.

Last time around, the chancellor Alistair Darling had no real interest in devolving powers to regions or cities. However, he was eventually forced to announce the creation of two pilot statutory city regions in his 2009 Budget out of desperation as he looked around for any possible source of economic growth. George Osborne is clearly now in the same place.

The eight cities should not assume there is now a pan-Whitehall consensus that they should be made responsible for their economies

The process described in the prospectus looks similar: there are powers on offer to cities (albeit more clearly and boldly stated) and expectations from the government of what will be seen in return (a focus on functional economic areas; a clear, if not explicitly stated, desire for elected mayors to deal with).

But what is being proposed is on an altogether greater scale. Last time it was Greater Manchester and Leeds that the government chose to deal with and only the former made any progress. Now, the plan is to hold discussions with all eight regional cities.

This is a huge task. It asks an incredible amount, both of the cities involved and the Whitehall departments coming to the table.

Last time, Greater Manchester made progress because it had its geography sorted and because it had conducted the Manchester Independent Economic Review. This substantial piece of research gave the city a clear agenda of what powers it wanted, what it would do with them, and what outcomes it expected to achieve. It is extremely unlikely that all the other cities have their ducks so well arranged.

From the other side, the negotiations required extremely skilful handling by Treasury officials, including a keen awareness of what departments’ ‘red lines’ were and how to keep them off the agenda. For example, any area that wants to make further education part of its deal will come across the Department for Business, Innovation & Skills’ insistence that reforms be employer-led. Similarly, getting the Department for Work & Pensions on board and willing to work with cities would be a huge step forward.

The whole process was described to me by someone intimately involved as “a process of easing, of extruding, little bits of power out of Whitehall”. The eight regional cities should not assume that Thursday’s announcement means there is now a pan-Whitehall consensus that cities should be made responsible for their economies.

The potentially crucial difference is that the statutory city region talks took place at the fag-end of a dying administration. This time, there is a clear run of three-and-a-half years until the next general election and the announcement has the backing of the deputy prime minister.

Nick Clegg will need to personally drive this agenda forward and could have plenty of Whitehall heads to bang together in order to make it happen.