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Councils could see odds stacked against them in 'devolution revolution'

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The chancellor’s pledge to bring about a devolution “revolution” and the appointment of Greg Clark as communities secretary herald a brighter future for town halls eager for extra responsibility. Or so it seems.

But just how well will George Osborne’s rhetoric and Mr Clark’s leadership translate into a meaningful drift of power and financial levers towards authorities?

The experience of councils already caught up in ‘city deals’, one of the last administration’s efforts to devolve control, is one good place to look for answers.

Deals agreed during the days of the coalition were also described by Mr Clark in 2013, the then Treasury and cities minister, as the stuff of revolution, albeit a “quiet” one.

And, as the chancellor said last month, they will be the model on which many future agreements between ministers and town and county councils are based.

“We’ll empower the towns and great counties of the north too, by extending a form of the city deals programme we ran in the last parliament,” Mr Osborne promised.

So how well did city deals passed then fare?

Councils and their advisers likened the route to sealing deals to a rollercoaster ride.

The thrilling prospect of extra resource was foreshadowed by slow and creaky talks, punctuated by periods in which they were oblivious to what ministers and officials would allow.

“City dealing” for authorities in the last parliament was like, according to Neil McInroy, chief executive of the Centre for Local Economic Strategies, a negotiation of any kind between unequal partners. And there is little reason to think those arranged in this parliament will be different.

“Deal-making is like any game. You have to ask: who holds the cards?” he adds.

“In this case, it is Whitehall: they have the five aces and the wherewithal. It is a deal of unequal players at a time of cuts when a lot of capacity has gone from local authorities.”

According to Mr McInroy, questions should also be raised about the ability of the shrivelled civil service to cope with the weighty analysis required for each and every council bid for devolved powers.

While the first phase of eight deals with England’s largest ‘core’ cities was agreed within months, talks for the second wave of 20 rolled on for almost two years. Two of the 20 authorities that applied saw their city deal proposals swallowed up by ‘growth deals’, which are brokered by local enterprise partnerships instead.

At one point in 2013, about halfway through this period, negotiations on deals appeared to rust up both within Whitehall and between some councils. Local leaders complained about “painful progress” and “convoluted conversations” with officials .

The so-called “Cities Unit” in the Cabinet Office, the Department for Communities & Local Government and the Department for Business, Innovation & Skills – all of which played a role in negotiations – became caught in what leaders called a “turf war”. “The Cabinet Office tells us one thing and then BIS tells us something else”, one told LGC.

Mr McInroy questions how officials co-ordinating the fine print of deals across multiple departments will cope when the number of bids rises further than those in phase two. “Each city is different, so examining exactly how different deals work takes time,” he adds. “What happens when officials have to examine 30, 40 or 50?”

One way city deal discussions between departments and local authorities could be oiled is through the publication by Whitehall of clear rules of engagement to which every party adheres, according to Naomi Clayton, a senior analyst at the Centre for Cities.

“The feedback we have had from cities going forward is that they would like to see greater transparency and clarity through the city deal process,” she adds.

Ministers should make clear “what is potentially on the table” and where the “red lines” lie as councils seek to gain ground from Whitehall, according to Ms Clayton.

The Centre for Cities’ own analysis found the deals that had been agreed look “quite different” across the country.

This variation partly reflected how well each local authority both co-operated with local agency partners and its structures of governance.

But the shape and ambition of agreed city deals is also explained by the wherewithal each authority had at its disposal to plough into negotiations.

Negotiating the deals proved “incredibly resource intensive” for both sides, according to Ms Clayton.

“As far as the first wave was concerned, larger cities like Manchester have long had the infrastructure in place to negotiate those deals and were able to very clearly demonstrate what the government was going to get out of it.

“The wave two deals were probably narrower in focus than the first wave of city deals,” she adds.

The fine print of first wave deals does spell out ambitious agreements that offer realistic prospects of attracting real investment, according to official papers.

For example, Sheffield secured an agreement to borrow cash against its predicted income from business rates to fund major infrastructure.

But the deal for second wave Thames Valley Berkshire largely amounts to far-off targets to improve skills and boost employment rates. After a year of negotiations, the government promised to stump up a mere £2.4m.

How much ground councils and regions secured from Whitehall last time depended heavily on how much they could put into city dealing, it seems.

So how can resource-starved authorities wanting to take on Whitehall in the “devolution revolution” make the most of the chancellor’s offer?

The answer may well lie in making friends with your neighbours, according to Ms Clayton.

“Coventry and Solihull are now formally joining a combined authority with Birmingham as a group. They will be pushing for further devolution.”

It’s not difficult to see how the two smaller authorities might stand a better chance of securing extra resources with the might of England’s largest local authority behind them.

Towns, cities and counties which are eager to get their hands on extra power and resource might well benefit from following their lead.

City deals timeline


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