One city deal - many lessons

There’s a movie starring Adam Sandler and Drew Barrymore called 50 First Dates. Set in Hawaii, the premise is that Barrymore’s character suffers from short term memory loss and is unable to remember meeting the smitten Sandler after they spend an afternoon together.

Sandler is forced to woo Barrymore anew each day, contriving a variety of improbable ways for the two to meet with hilarious consequences.

I’ve not seen the film.

The premise sprung to mind a month or so back when we reported on the progress of the city deal negotiations.

Of particular concern was the fact that the Cities Policy Unit was being briefed on all that had gone before around sub-regional policy developments. With the intention at that point being to announce a number of city deals in the Budget – less than eight weeks away – the unit was being brought up to speed on topics such as multi-area agreements, statutory city regions etc.

Those who wanted to see England’s cities empowered were having to start their wooing all over again.

That the unit was starting from this point whilst at the same time working towards announcing a number of deals, gave rise to fears that the announcements in the Budget would be about quantity rather than quality.

Confounded expectations

As it turned out, the reverse ended up being true. Just one city deal was announced by George Osborne last week, it contained the prospect of a truly meaningful policy change, and to no-one’s great surprise, the city to strike the deal was Greater Manchester.

As recently as last week, Leeds, Newcastle and potentially even Birmingham were in the running to have something announced alongside Greater Manchester. High-level meetings between those cities and Treasury officials were taking place up to a matter of days before the Budget. It seems the decision not to announce more deals was made at something approaching the 11^th hour. More deals will be announced after the local elections, when purdah has lifted and – more to the point – there is clarity about which cities will be led by elected mayors. But I’d be surprised if they contained an element as interesting as the ‘earn back’ mechanism that sits at the heart of Greater Manchester’s deal (details of which subscribers can read about here).

I’ve written before about how tortuous the process of securing meaningful devolution of powers from Whitehall departments to cities has been and why Greater Manchester has been best placed to engage with this process.

It seems to me there are three advantages that Greater Manchester has that allowed it to strike this deal. Firstly, having been through the statutory city region process, it has its governance arrangements in place. Ministers may like the idea of elected mayors – and the election of a maverick in Salford in May is a potential cloud on the horizon for the city region – but they are basically happy with the Greater Manchester Combined Authority as the body for the city.

Secondly, Greater Manchester’s investment framework for identifying and prioritising the projects that will create additional growth and repay upfront investment genuinely impressed ministers such as chief secretary to the Treasury Danny Alexander. This much was clear at the launch of the Greater Manchester Growth Plan earlier this month.

The importance of geography

Lastly – and this is not a new point – the city has its geography sorted. People involved in the deal talk about how a key factor for the Treasury was the importance of being able to demonstrate that the ‘earn back’ model would not simply lead to a displacement of economic activity. This meant being able to convince the Treasury that whatever form of tax increment financing or accelerated development zone that were ultimately approved would not simply suck in economic activity from surrounding nearby areas.

Greater Manchester was able to demonstrate this because its joint working and focus on investment has long been at the city regional level – a level corresponding to a genuine functional economic area.

In contrast, Newcastle and Gateshead are pushing for the creation of an accelerated development zone just in their two areas after missing out on enterprise zones. As we reported two weeks ago, this hasn’t gone down well with the rest of the Tyneside conurbation.

Liverpool City Council secured itself some goodies by jumping the gun and moving to the elected mayoral model. But they are not comparable with what Greater Manchester has secured and there has never been any suggestion that the Merseyside local authorities are ready to work together at the city regional level with the maturity that Greater Manchester displays.

If the Treasury really does place a premium on innovative projects not simply displacing economic activity, then the sector needs to realise that the most radical new powers are likely to be devolved only to areas that broadly correspond to functional economic areas.

You often hear warm words about vague terms such as ‘culture’ and ‘maturity’ being more important than structures. Well the truth is that sometimes structures matter a great deal.