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Osborne unveils two-speed devolution for cities and counties

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Chancellor George Osborne has indicated counties will not be able to get the same devolved powers and controls over transport, skills, housing, policing, and health and social care as cities.

In a speech in Manchester this afternoon, Mr Osborne reinforced his ultimatum that he was “not interested in any more half-way house deals” and that the government would “transfer major powers only to those cities who choose to have a directly elected metro-wide mayor”.

A City Devolution Bill will be included in the Queen’s Speech on 27 May and Mr Osborne said the legal framework would be in place by the end of the year “so that any city can proceed to implement a mayoral devolution deal”. Northern powerhouse minister James Wharton will be responsible for the legislation, Mr Osborne said.

However, counties hoping to follow in the footsteps of the Greater Manchester Combined Authority, which negotiated a devolution deal including powers and controls over transport, skills and housing in return for adopting the elected mayor model, are unlikely to be afforded the same powers.

While Mr Osborne acknowledged he couldn’t “build a northern powerhouse with just the big cities of the north” as half of the economy was outside them, he confirmed that what would only be available to “the towns and great counties of the north” would be a “form of the city deals programme we ran in the last parliament”.

While city deals give places powers to promote economic growth, these are often in relation to specific projects and are not the same as being given full control through devolution.

Mr Osborne added: “I want councils and local enterprise partnerships here to come forward with plans to build on their strengths.”

Earlier in his speech he said he had been asked throughout the general election campaign why powerhouses could not be created elsewhere in the country.

He said: “Let me be candid. I think if I had tried to deliver, simultaneously, new devolution settlements in every major city, at the same time, and tried to get every city authority to accept new elected mayors, it simply would not have happened.

“Getting Manchester through the Whitehall machinery and overcoming the political divide was difficult enough.

“But I always thought this: if I could work with you to achieve this new model of civic leadership and local power here in Greater Manchester, I could hold it up to the rest of the country as the example of what was possible.”

Mr Osborne said he wanted to “confront head on” the elected mayor issue which has in the past been met with widespread opposition from leaders and residents following failed referendums in cities in 2012.

He said the Manchester model was “not like London” and that a new level of bureacracy had not been created.

“Other cities can find the mayoral model that works for them,” he said. “But it has to involve a city-wide elected executive mayor.”

He added: “There’s a reason why almost every major world city has an elected mayor. It’s a proven model that works around the globe.

“It’s a powerful point of accountability. A person vested with the authority of direct election. It makes the devolution of multi-billion pound budgets, and powers from policing to housing possible.

“Having a powerful elected mayor will give Greater Manchester – and other cities too I hope – a powerful new voice in our national life.”

Mr Osborne said he was also willing to look at going “further down the road of fiscal devolution” now that authorities across Greater Manchester, along with Cheshire East Council, are piloting a programme to retain 100% business rates growth, as are councils in Cambridgeshire and Peterborough.

He said: “Now it’s time to think whether we could go further down the road of fiscal devolution.

“So that you take control of raising more of the money you spend – and, from my way of looking at things, see the rewards from the taxes you cut.”

Meanwhile, Mr Osborne said he also wanted to create more enterprise zones, which offer business rates relief, superfast broadband, simplified planning rules to areas, among other benefits, and added he would be “inviting bids” in due course.

He also announced that chair of the City Growth Commission Jim O’Neill “whose work has inspired the thinking behind the northern powerhouse” had been appointed commercial secretary to the Treasury.

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