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Unlocking Growth in Cities

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Foreword [DNInsertForewordbyDPMandMinisterforCities] PAGEBREAK Contents

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PAGEBREAK ExecutiveSummary
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1. OurChallengetoCities
Cities are the engines of economic growth and they will be critical to our economic recovery. However,tocreatethenewbusinesses,jobsanddevelopmentthatthecountryneeds,localleaders needastepchangeinthewaytheysupporteconomicgrowthontheground.TheGovernmentwill beworkingwithdifferentcitiesoverthecomingmonthsandyearstomakeaseriesofdealsthat willtransformthewaylocalleadersdriveeconomicdevelopment. Citieswillbecriticalforoureconomicrecoverybutinmanyplacesthiswillmeanastepchange inwhattheydo The Coalition Government is taking tough and decisive action to equip Britain for longterm success by restoring health to the public finances and confidence in the economy through a balancedapproachledbyprivatesectorgrowth.Butthisgrowthwillnotoccurintheabstract.It will be created in individual places where people and businesses work, trade and innovate. The most economically important of these places are cities, which account for 58% of Englands population and 61% of its jobs. When their wider commuting areas are taken into account, this risesto74%ofpopulationand78%ofjobs.1 People are drawn to cities for their social and cultural vibrancy and the economic opportunities they offer. Cities drive innovation and have a brand and status that attract investment to their local and wider areas. For businesses to compete nationally and globally, they need the assets providedbycities:intellectualcapital;privatesectoragglomeration;connectivity;andinvestment inpublicservicesandregionalservices. CitiesaretheenginesofgrowthintheUKandtheywillbecriticaltooureconomicrecovery.Butto create the new businesses, jobs and development that the country needs, we will need a step change in the way civic and private sector leaders engage in economic development on the ground. In the current economic context, the stakes are high: city leaders will need to take bold and decisive action to attract the private sector investment that will so critical to success. This will strong,visibleleadersthatareabletoarticulateaconvincingeconomicvisionfortheirareaand takingthetoughdecisionsnecessarytomakethisvisionareality.Itwillmeanthinkinginnovatively abouthowtotacklebarrierstogrowthonthegroundandaggressivelypursuingthis.Anditwill meanafundamental culture shift. Civicleaders will need tolookoutwards tothe private sector and focus their energies on creating the conditions for private sector growth, rather than being requiredtolooktocentralgovernmentforsolutions.Somecitiesareaheadofthecurveandare alreadydoingthis,butthisneedstobereplicatedacrossthecountry.Ifcityleadersarewillingto
Datafor2008,fromDCLG(2010)UpdatingtheevidencebaseonEnglishCities.DataforcitiesrelatestoPrimary UrbanAreas;forhinterlandsincludestraveltoworkareas(TTWA).
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risetothischallenge,theCoalitionGovernmentwilldoallitcantosupportandempowercitiesto goforgrowth. Wehavealreadytakensomeimportantstepstohelpourcitiestakeonthischallenge The Coalition Government has already taken a number of important steps to support and empowerourcities,puttingnewleversandresourcesinthehandsoflocalleadersincluding: encouraging places across the country to create Local Enterprise Partnerships (LEPs) betweenbusinessleadersandlocalauthoritiestoprovidevision,knowledgeandstrategic leadershiptodrivegrowthandjobcreationintheirarea; putting greater financial powers in the hands of local authorities and allowing them to retainaportionofanygrowthinbusinessratesintheirarea.Inaddition,LocalAuthorities will have new borrowing powers (Tax Incremental Financing), allowing them to borrow against predicted growth in locally raised business rates to fund key infrastructure and othercapitalprojects; introducing the general power of competence through the Localism Act, giving local authoritiesthesamepowertoactasindividualshave,allowingthem,forexample,toset upbusinesses; introducing the Core Cities Amendment in the Localism Act, allowing local authorities to makethecaseforbeinggivennewpowerstopromoteeconomicgrowthandtosettheir owndistinctpolicies; injectingatleast744mofinvestmentinurbanareas2,throughtheRegionalGrowthFund, tosupportgrowthandstructuralchangeneededtorebalancetheeconomy; supportingcriticalinfrastructureinvestmentincitiesandtheirsurroundingareaswiththe 500mGrowingPlacesFund; creatingEnterpriseZonesincitiesandtheirwiderLEPareas,wheretherewillbea100% business rate discount worth up to 275,000 over a five year period for businesses that moveintoanEnterpriseZoneduringthecourseoftheParliament,retentionofallbusiness ratesgrowthwithinthezonesforaperiodofatleast25years,supporttoensuresuperfast broadband is rolled out in the zone and government and local authority help to develop simplifiedplanningapproachesinthezone; launchingthefirstwaveofTaxIncrementFinancing(TIF),worthuptoXbillion,toboost investmentininfrastructurethroughEnterpriseZoneswhichallowLEPstoborrowagainst futurebusinessratesincomeinthearea,withtheTIFringfencedfor25years. Atthesametime,theGovernmentswidereconomicgrowthandpublicservicereformagendas willboostgrowthinourcitiesbysupportingindividualstogainskillsandgetintoworkorstartup
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ThisisbasedonDefrasclassificationoflocalauthoritiesinEngland.

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theirownbusiness3;supportingbusinessestosecureinvestmenttoinnovateinspecificpriority sectors;andbyinvestingininfrastructureandplacestoensurethatbusinesseshavethephysical infrastructuretheyneed,andthatfamiliesareabletofinddecenthousingandqualityoflifeinour cities. ThesemeasureshavebeenbolsteredbyasignificantgrowthpackageintheGovernmentsmost recentAutumnStatement,4manyofwhichwillimpactoncities: theRegionalGrowthFundwillbeincreasedfrom1.4billionto2.4billionandwillbe extendedto2014/15tohelprebalancetheeconomyandincreaseprivatesectorjobs; the National Loan Guarantee Scheme, worth up to 20 billion over two years to guaranteebankloanstosmallbusinessesthathaveaturnoverofupto50million; theBusinessFinancePartnership,whichwilluse1billiontoincreaseaccesstofinance formidsizedbusinesses; theSeedEnterpriseInvestmentSchemewhichwillgivea50percentincometaxrebateon investmentinnewcompanies; extendingtheEnterpriseFinanceGuaranteewhichaimstoimproveaccesstofinancefor SMEsandthesmallbusinessratereliefholidayforafurthersixmonthsfrom1October 2012; providing 100 percent capital allowances on investment in plants and machinery in six Enterprise Zone (Black Country, Humber, Liverpool, North Eastern, Sheffield and Tees Valley); 5 billion of capital projects in the next spending review as part of the National Infrastructure Plan, many of which will be crucial for unlocking growth in our cities. (Examplesofspecificannouncementsonthecorecitiesareonpage20ofthisdocument); targeting up to 20 billion of additional private sector investment in infrastructure throughamemorandumofunderstandingwithUKpensionfunds; a new 100m urban broadband fund that will create up to 10 superconnected cities acrosstheUKwith80100megabitspersecondsuperfastbroadband; the roll out of the Youth Contract at a cost of 940 million over the spending review periodtosupportyoungpeopleintowork; a mortgage indemnity scheme aimed at increasing demand for housing by supporting familiestobuytheirownhomewithafivepercentdeposit; the Right to Buy Scheme which will allow social tenants to buy their own home at a discount;and

It is vital that everyone is able to contribute fully to our economic growth, which is why we are setting up a WomensBusinessCounciltoadviseusonwhatmorecandonetoensurewomenstalentsandskillsareusedtotheir fullest extent. Through our funding for mentoring and credit easing we are supporting both men and women entrepreneurs to set up or expand their companies. Cities cannot afford to waste the talents of those living and workingwithinthemandwewillcontinuetosupportessentialskillsdevelopment. 4 HMT,AutumnStatement2011

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a 400 million Get Britain Building investment fund to kick start stalled housing developments.

RegionalGrowthFundandCities TheGovernmenthasinjectedanadditional1bnintotheRegionalGrowthFund(RGF)tohelp create private sectorjobsandgrowth,particularlyin thoseareas of thecountry thatare too dependent on the public sector. This will build on the 1.4bn already allocated which will support325,000jobs. Giventhecriticalrolecitiesmustplayinrebalancingtheeconomy,thenextroundoftheRGF will have a strong emphasis on these urban areas. Cities will be able to back their citydeals with flexible programmebidsto support apackageofinnovative projects and initiatives that harnessgrowthopportunitiesacrosstheireconomicarea.Aspartofthedealmakingprocess setoutinthisdocument,theCitiesPolicyUnitwillsupportcitiesastheydevelopthesebids.

Butwewillneedtogomuchfurtherinempoweringourcitiestogoforgrowth TheCoalitionGovernmentiscommittedtounlockingthefullgrowthpotentialofallourcities.The Government recognises that more should be done to support and empower cities to make progressincriticalsuccessfactorsthatdrivegrowth. In recognition of the crucial importance of this agenda, the Prime Minister and Deputy Prime Minister asked the Rt. Hon. Greg Clark MP to take on the role of Minister for Cities (a joint Department for Business, Innovation and Skills and the Department for Communities and Local Government portfolio), in addition to his responsibilities as Minister for Decentralisation. The MinisterforCities,supportedbyanewCitiesPolicyUnitintheCabinetOfficeandofficialsinthe Department for Business, Innovation and Skills and the Department for Communities and Local Government, is working closely with individual cities and across all government departments to agree a series of tailored city deals to unlock growth. Lord Shipley, the former Leader of NewcastleCityCouncil,hasalsobeenappointedasGovernmentAdvisoronCitiestosupportthis work;andaMinisterialGrouponCities,chairedbytheDeputyPrimeMinster,hasbeensetupto drivethisagendaandensurethatalldepartmentsareworkingtogethertodelivergenuinechange. The Governments ambition is to create powerful and innovative cities that have the powers, resourcesandautonomytocreatetheirownvisionforpromotinggrowth. Powerfulcities
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If our cities are to reach their full potential, they need the powers and resources to shape their economicdestinies.ItisrecognisedthatEnglishcitieshavelessinfluenceoverthekeydecisions whichaffecttheireconomiccompetitivenessthanotherEuropeancities.5Becausethebalanceof influenceandpowerhasbeensoheavilyskewedtowardscentralgovernment,ithasforcedcities tolookuptocentralgovernmenttoresolveproblems,ratherthanbeingabletotaketheleadand engagedirectlywithcommunitiesandwithprivateandotherpublicsectororganisationstosolve problemsthemselves. The Coalition Government is committed to revitalising and empowering cities through a radical shift in this balance of power. In doing so, we are not looking to dismantle national policy frameworks, but to permit licenced exceptions, allowing cities to take on certain responsibilities and resources from central government where they make the case that this would improve outcomesorefficiencyandultimatelycontributetogrowth. Innovativecities Whilewearecommittedtodecentralisation,itisimportanttorememberthatcitiesalreadyhave significant powers. Through the Localism Act, we have introduced a general power of competence, under which Local Authorities will have the same power to act that an individual has,meaningtheycandoanythingnotforbiddenbylaw. The Government wants cities to make the most of these powers, by developing innovative solutionstotheirownproblemsthroughdirectengagementwith:theprivatesector;otherpublic agencies; voluntary sector bodies; and local communities. There is a whole range of things that cities could do differently: from engaging with local businesses to boost employer demand for skills and apprenticeships; to using creative incentives to attract private sector investment or retainskilledgraduates;toexploitingtheirwiderangingfreedomsundernationalplanningpolicy todelivermore,betterhouseswheretheyareneeded.Wewillsupportcitiestobemoreproactive andentrepreneurial,makingthefulluseoftheirknowledgeandpowers.Buttheonuswillbeon citiestostartactingandthinkingdifferentlytomakethingshappen. Togalvanisecitiestostepuptothischallenge,theGovernmentissettingoutaboldinitialoffer TheCoalitionGovernmentwillbeworkingwithdifferentcitiesoverthecomingmonthsandyears toagreeaseriesoftailoredcitydeals.Thesewillconsistofnewpowersforcities,enablingcivic
Parkinson,M.,Hutchins,M.,Simmie,J.,Clark,G.&Verdonk,H.(2004)CompetitiveEuropeanCities:Wheredothe corecitiesstand?ODPM
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and private sector leaders to influence the key decisions that affect their economic competiveness; and/or innovative projects to unlock growth in each area. This is not about the rollout of blanket policies. It is about Government granting licensed exceptions to cities to do things their way. And we are clear that the deal must be a genuine transaction with both partieswillingtoofferupanddemandthingsinreturn. The first wave of deals will focus on the eight largest cities outside of London and their Local Enterprise Partnerships: Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield.6 We will launch a further wave with a different group of cities in the following year.. Our intention is to negotiate city deals across the Local Enterprise Partnership area. Working at the LEPlevel has two advantages: LEPs are broadly in line with the functional economic geography of cities, which go well beyond the core city centres; and they represent a politicalgeographywhichhasevolvedorganicallyonthebasisofworkinglocalpartnerships.The privatesectorvoiceinLEPswillalsobecriticalinensuringthatcitydealsdeliverwhattheprivate sectorneedstogrowandflourish. Inordertokickstartthisprocessandsignaltocitiesthatweareopentoboldandnewideas,the Coalition Government is setting out an illustrative menu of options that we think could have a transformative impact, and which we would be willing to explore further as part of a deal. This menu is intended to raise the stakes of the debate, encouraging both cities and government departmentstobeambitiousandradicalinthinkingaboutwhatcanbedonedifferently.Theseare not entitlements for all cities, but reforms which the Government will consider in return for ambitious,focusedandinnovativepropositionsfromcities.Thelistisillustrative,notexhaustive, andcitiesshouldnotfeelconstrainedorlimitedbytheideassetoutbelow. Raisingthestakesanillustrativemenuofboldoptions7 Greaterfreedomstoinvestingrowth 1. Givecitiesoneconsolidatedcapitalpot(ratherthanmultiplefundingstreams),allowing themthefreedomtodirectandprioritiseeconomicinvestment 2. Accesstoanadditional1bnRegionalGrowthFund(RGF)tosupportinnovativeand ambitiouseconomicprogrammes 3. Powersforcitiestoofferbusinessratediscountstolocalbusinesses,withtheopportunity
TheeightcorecitiesarethelargestandmosteconomicallyimportantEnglishcitiesoutsideofLondon. TheGovernmentiscommittedtodevolvingpowersandresourcestothemostappropriatelevel.Insomecasesthis willbeindividualLocalAuthorities,butinothersitwillmakesensefordecisionstobemadeatalevelwhichmatches theeconomicgeographyofacity(broadlytheareacoveredbytheLEP).Wewilltakeabespokeapproach,agreeingon acasebycasebasisthespatiallevelatwhichdecisionsshouldbemade,andthegovernancestructuresthatneedto beinplace.
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tomatchfundthisthroughRGFbids 4. EnablelocalbusinessesincitiestocreatecrossLEP,industryspecificBusiness ImprovementDistricts,withthepowertogeneraterevenuestosupportgrowthacrossthe economicarea 5. [FasttrackaccesstonewinfrastructurefundingthroughTaxIncrementFinancing,where thisisspentoneconomicdevelopmentprojects] 6. ACitiesBonusforlocalauthoritiesthatopttopoolbusinessratesacrosstheirLEPto enablemoreeffectiveeconomicdecisionmakingandtomanagefluctuationsintheir budgets Thepowertodrivecriticalinfrastructuredevelopment 7. Allowcitiestotakestrategictransportdecisionsbydevolvinglocaltransportmajor funding 8. Increasecitiescontroloverrailservices,throughdevolvingresponsibilityfor commissioninglocaland/orregionalrailservices,includingthemanagementoffranchise arrangements 9. Greatercontroloverlocalbusservices,throughdevolutionandwiderreformsoftheBus ServiceOperatorsGrant 10. Supportcitiesgenerateresourcesforlocalinvestmentbyintegratingtheuseofpublic sectorbuildingsandpoolinglocalpublicsectorassetsinasinglelocalpropertycompany 11. Putgreaterregenerationfundingandresponsibilitiesinthehandsofcities,bydevolving HousingandCommunitiesAgencyspendingandfunctions 12. Moreplanningfreedomsforcities,includingdevolvingnonplanningconsentswherecities canreduceimpactonbusiness 13. Supportthedevelopmentofconnectedurbanspacesthrougha100millioncapitalpot8 forcompetitivebidsforambitiousbroadbandinfrastructureplans,including: Highspeedbroadbandtostrategicbusinessareas; Citywidehighspeedmobileconnectivity(e.g.WiFi);and Informationanddemandbuildingactivities Enablingcitiestoboostskillsandjobsintheirarea
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TheUKwidefundwillsupportsuitableprojectsinthefournationalcapitalsplusuptosixothercities

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14. Givecitiestheopportunitytogrowapprenticeshipnumbersintheirareabyestablishing CityApprenticeshipHubs,accessingnationalfundingtocatalysenewapprenticeshipsin smallbusinesses 15. CreateaCitySkillsFundtoenablecitiesandcollegestoworktogethertotailorthe provisionofadultskillstotheneedsofemployersinthecity 16. Givecitiestheopportunitytodrivelocalemploymentandskillsthrough: BetterserviceintegrationwithJobcentrePlus,includingthealignmentoflocal resourcestoaidjobgrowth; Workingwithtrainingproviderstotailorskillsprovisiontomatchcityneeds; Sharedservicedeliverythroughcolocation; Effectivepartnershipstoshareandexchangeinformation;and DevelopingemployersupporttoensurethesuccessfuldeliveryofcityEnterprise Zones 17. Improveintegrationbetweenwelfaretoworkprogrammesandothersocialservicesby allowingcitiestoexpandexistingDWPcontracts(e.g.theWorkProgrammeContract)to includeotherwraparoundservices 18. UKTIwillsupportcitiesinwardinvestmentambitionsbyworkingintensivelywithcityLEPs tounderstand,developandpromotetheiroffertointernationalbusinessaspartoftheir widerUKpromotion

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Citieswillneedtooffersomethinginreturn

WhiletheGovernmentiscommittedtodevolvingsignificantnewpowersandfundingtocities,we are clear that cities will need to offer something in return. At the heart of the city deal is the notionofamutuallybeneficialtransaction,negotiatedonthebasisofasksandoffersfromboth parties.

Governmentsasks

Assuch,inreturnfortheofferssetoutabove,theGovernmentwillbesettingoutasks wherewethinkcitiesneedtodosomethingdifferently.Theseaskswillbespecifictoeach cityandthepropositionstheycomeforwardwith,butarelikelytofallintoanumberofareas:

leadershipandaccountability:wherecitieswanttotakeonsignificantnewpowersand funding streams, they will need to demonstrate strong, accountable leadership, an ambitiousagendafortheeconomicfutureoftheirareaandeffectivedecisionmaking structures;

outcomesandefficiency:inagreeingtodevolvepowersorsupportlicensedexceptions cities will need to demonstrate that they have clear goals in terms of improved outcomesorreducedcostsandaplanforachievingthesegoals;

riskandreward:justascitieswillwanttoreaptherewardsofnewpowersandprojects in city deals (for example retaining a portion of additional business rates) they must alsobewillingtotakeonrisksaspartofthedeal;and

innovationandcreativity:throughthedealswewillworkwithandencouragecitiesto becreativeandinnovativeinhowtheyusebothnewandexistingpowerstomaximum effecttoboostprivatesectorinvestment.

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2.UnlockingtheEconomicPotentialoftheCoreCities

Englandseightcorecitiesmakeavitalcontributiontooureconomyandhavegenuinepotentialfor growth. But they have yet to punch their weight internationally. To become worldclass 21st centurycities,theyneedtotakeboldactiontogripandsupportlocaleconomicgrowth.Everycity willneedtotaketheirownapproachtodoingthis,butallwillbedrivenbyanimperativetoattract andnurtureprivatesectoractivity.Ourcitiesneedrealpowers,effectiveleadershipandanability totakestrategicdecisionsacrosstheireconomicfootprint.

Thelastdecadehasresultedinsomerealgainsforthecorecities The eight core cities and their surrounding areas are important hubs of economic activity. They hold huge economic assets: worldclass universities, deep pools of labour, large markets and extensivetransportinfrastructure.Morethan6.5millionpeopleareemployedincorecityLEPs,in over430,000VATregisteredbusinesses.Thereare37universitiesandover1.2millionstudents9 andbetween1999and2010,thenumberofresidentsincorecityLEPswithdegreesorequivalent rose by 900,000.10 These cities also have good domestic and international connections, with 50 millionpassengerspassingthroughtheirairportseachyear.11 Over a decade of growth, the core cities were able to exploit these assets and make big gains more jobs, businesses and higher standards of living. Together with their wider local enterprise areatheycreated532,000newjobsbetween1998and2008.12 ButthecorecitieswerenotpunchingtheirweightcomparedtotheirEuropeanrivals However, despite this positive performance, our largest cities were still lagging behind their European rivals in both the levels of GDP/capita achieved and their performance nationally. WhilstmanyoftheircounterpartsinGermany,FranceandItalyachievedGDP/capitaatorabove theirnationalaverage,ourcorecitieswereperformingbelow(Figure1). Butthegrowthpotentialisthere.ThecorecityLEPsareforecastedtocreate71bnofGVAover the next decade and an additional 346,000 jobs.13 And if an upswing in the global economy is matchedbyastepchangeinlocalactiontoleverageinprivatesectorinvestment,theprizecould beevenbigger.Thiswillrequirehugeamountsofprivateinvestmentatatimewhenweneedto rebalance away from the public sector. It will mean finding and retaining graduates and skilled
HigherEducationStatisticsAgencydatafor200708 LocalLabourForceSurveyandAnnualPopulationSurvey 11 UKAirportStatistics2011 12 OxfordEconomics,UpdatedEconomicOutlookfortheCoreCitiesandLocalEnterprisePartnerships(2011) 13 Ibid.ForecastbasedonthecurrenteconomicandfinancialcircumstancesoftheCoreCityLEPandassumesthat thereislittleadditionalinvestmentbutalsothattherearenomarkedlydownwardtrends.
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Comment [1]: Changed so that data is for core city LEPs to make consistent with rest of document.

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workers;creatingtheconditionsforfirmstoinnovateandgrow;andempoweringstrong,decisive leadersthatareabletotakethetoughdecisionsnecessarytomakethingshappen. Figure1ComparisonoftheGDP/capitaoftheeightlargestnoncapitalcitiesinEngland, Germany,France,SpainandItalycomparedtothecountriesnationalaverage(2007) (0%=countriesnationalaverage)14

80%

60%

40%

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0%
Florence Leeds Lyon

Sheffield

Bordeaux

Rennes

Nice

Barcelona

Nuremberg

Marseille

Liverpool

Murcia

Turin

Sevilla

CologneBonn

Bristol

Brescia

Strasbourg

Cadiz

Milan

Salerno

Hannover

Manchester

Munich

Mannheim

Coruna

Bari

Genoa

Toulouse

Valencia

Bilbao

Malaga

Bologna

Birmingham

Stuttgart

Hamburg

Nantes

NewcastleuponTyne

Nottingham

Frankfurtam Main

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Tounlocktheirgrowthpotential,localleaderswillneedtoworkeffectivelyacrossboundaries Economicmarketsandopportunitiesforgrowthdonotstopattheboundariesoflocalauthorities andsocitiesneedtocollaboratewiththeirneighbourstoachievescaleandtodevelopeffective decisionmakingacrosstheireconomicfootprint.ThismeansworkingsuccessfullywithintheLEP areaandmakingtherightdecisionstoboostthelocaleconomy.Indeed,ifourcitieswanttobe global players, they have no choice but to harness the economic power of the wider area. Birmingham,thelargestcityoutsideofLondon,isonlythe71stlargestcityeconomyintheworld.

ThisworkhasbeencarriedoutbytheEuropeanInstituteforUrbanAffairsfortheESPONSecondaryGrowthPolesin TerritorialDevelopmentproject.Source:Eurostat&DGRegio.CitydefinitionsareEuropeanmetroregionsagreedby OECDandDGRegio.

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Manchester and Leeds were 73rd and 85th respectively.15 To compete in an increasingly competitiveglobalmarket,thecorecitiesmustlookbeyondtheirboundariesandworkwiththeir neighbourstogoforgrowth. Theywillneedtoharnessprivatesectorgrowthinknowledgeintensivesectors Citieswillneedtoredoubletheireffortstoattractprivatesectorinvestmentiftheyaretosucceed. Thiswillmeanfacinguptoneweconomicrealitiesandmakingthemostoftheiruniquestrengths. In many places, this will be difficult but it presents a real opportunity for our biggest cities to remake themselves as truly global players. To do this, the core cities will need to exploit their edge in the knowledge economy; attract and retain the skilled workers that businesses need; createtherightconditionsforinnovation;andbuildinfrastructureandurbanenvironmentsthat businessesandworkerswillflockto. Exploitinganedgeintheknowledgeeconomy Knowledgeintensivebusinessesareattractedtoplaceswheretheyhaveaccesstolargemarkets, deeplabourpoolsandclustersofinnovativebusinesses.Citieswiththeadvantagesofscaleand agglomeration effects have an edge in attracting these businesses. Indeed, employment in knowledgeintensive business services grew by 24% in core city LEPs between 2003 and 2008, compared to growth across all industries of 1.3%.16 Knowledgeintensive services have been resilient in the slowdown. And cities with large knowledge intensive sectors have seen a lower increaseinclaimantcountsoverthelastfouryears(Figure2).Thereisarealopportunityforthe corecitiestotapintothismarketandexploittheirsizeandassetstoharnessfurtherprivatesector growthinthesesectors.

Tom Aldred 4/12/11 13:41

Comment [2]: Change to core city LEPs for consistency

Source:PricewaterhouseCoopersUKEconomicOutlookMarch2007 Source:AnnualBusinessInquiryusingSIC(2003)definitionofKnowledgeIntensiveBusinessServices(KIBS).KIBSare privatesectorfirmsthatofferspecialistprofessional,consultancyandoutsourcingservicestootherorganizations.(P Wood,InternationalEncyclopediaofHumanGeography,Oxford,(Elsevier,2009)

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Figure2KnowledgeintensiveLEPshavetendedtoseelowerincreasesinclaimantcount17

TeesValley

SheffieldCity Region NorthEastern

LeedsCity Region Highershareof Knowledge Intensive Business

LiverpoolCityRegion D2N2 WestofEngland

Lowerincreasein claimant count

EnterpriseM3

Increasingskillsandinnovation The core cities have a strong pool of high skilled workers and compare well to their European rivals on the number of graduates they can draw from (Figure 3). With world class universities, they also have a genuine opportunity to deepen the links between academia and the city economy;topromoteresearchthatbenefitsthelocaleconomy;andprovideanexcellentquality oflifeoffertoattractandretainskilledresearchers.However,havingthisskillsbaseisunlikelyto produce the stepchange in growth needed if cities lag behind in supporting innovation, where theirperformanceismoredisquieting.WhencomparedtoothercitiesinGermanyandFranceour citiesarenotnearlyasinnovativeastheyneedtobe(Figure4).Moremustbedonetoencourage businessestoinnovate,sothatourcitiescanbeglobalplayersintheknowledgeindustriesofthe future.

Source:AnnualBusinessInquiryandclaimantcountdata.Claimantcountincreasesarecalculatedasthepercentage pointchangebetweenOctober2007andOctober2011.

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Figure3Educationtotertiarylevel,percentageof2564yearolds,ineightlargestnoncapital citiesinEngland,Germany,France,SpainandItaly(2008)

Figure4Patentapplicationspermillioninhabitants2006/7ineightlargestnoncapitalcitiesin England,Germany,France,SpainandItaly
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Developinga21stcenturyurbanenvironment Firmsandworkershaveincreasingfreedomtolocatewheretheywant,so21stcenturycitieswill succeedbybeingplaceswherepeoplewanttolive.19Ultimatelycitieswontgrowunlesspeople

WorkonthesetwographswascarriedoutbytheEuropeanInstituteforUrbanAffairsfortheESPONSecondary GrowthPolesinTerritorialDevelopmentproject.Sources:OECDREGPATDatabase,Eurostat,DGRegio(EU27=100). CitydefinitionsareEuropeanmetroregionsagreedbyOECDandDGRegio.
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Glaser,E.,Kolko,J.,Saiz,E.(2001)ConsumerCity.JournalofEconomicGeography1(1).

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choosetoliveorworktherebecausetheycanaccessmoreopportunitiesorabetterqualityoflife. American research suggests that cities providing an attractive lifestyle (consumer cities) have beenbetterabletoattractskilledlabour.20 Ourbiggestcitiesarewellplacedtodothiswiththeir cultural and historical assets and their mix of public spaces, shops, restaurants and leisure facilities.Tocreatetruly21stcenturyurbanenvironments,theywillneedtogofurtherby: Creatingasafeandsecureenvironmentinwhichpeoplewanttoworkandlive,enabled by a directly elected Police and Crime Commissioner responsible for cutting crime and holdingthepolicetoaccount; Deliveringthequalityandquantityofhousingthatpeopledemand;and Delivering the buildings, services and infrastructure (i.e. energy, transport, communications,waterandwastesystems)thatsustainablecitiesofthefuturewillneed.

Cityleaderswillneedtoadoptinnovativeapproachestodeliverworldclassservices,enabledby advancesinnewtechnologysuchassensorsystems,fixedand4Gmobilebroadbandand advancedsimulationandanalysis.UKfirmsareattheforefrontofthesedevelopmentsbutthey areconcernedthatUKcitiesarefailingtokeepabreastofinternationalcounterparts,suchasSan Francisco,BarcelonaandcitiesintheFarEast.Thesenewapproachestoimprovingservicesand thecityenvironmentwillbecriticalascitiesstrivetodeliverworldclassservicesmorecost effectively.Forexample,BoozandCoestimatethat,overthenext30years,globalinvestmentin urbaninfrastructureswillamountto$350trillion21andthatsmarterapproachestobuildingand transportationcouldsavecitiessome$33trillionandreduceemissionsby50%. Andtheywillneedtoshowstronganddecisiveleadership If cities are to take control of their economic future, they need strong, visible and accountable leaders who can provide vision and direction, build partnerships across the public and private sector, lobby and broker deals with Government, and who have the mandate to make difficult decisionsanddrivethroughaneconomicprogramme. Evidence suggests that the democratic mandate provided by directly elected mayors has providedabasisforastronger,moreproactiveandindividualisedstyleofleadershipthanother models[oflocalgovernmentleadership]22.TheMayorofLondonisaninternationallyrecognised successstory,andexamplesfromaroundtheworldreinforcethepotentialofmayorstodrastically improve city leadership and governance. This is why the Coalition Government is committed to

Giacomo,Ponzetto,Tobio(2011)Cities,Skills,andRegionalChange.NBERWP16934 http://www.booz.com/media/uploads/WWF_Low_Carbon_Cities.pdf 22 p.8ofthemayorsconsultationdocument:JosephRowntreeFoundation(2005).LocalpoliticalleadershipinEngland andWales.

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creating directly elected mayors in the 12 largest English cities23, subject to confirmatory referendumsplannedforMay2012. Ultimately it will be for people in these cities to decide which governance and accountability mechanismssuitthembest.Butwhateverformorshapethisleadershiptakes,itneedstobeused tomaximiseeconomicgainsacrossthewidereconomicarea.EvidencefromEuropean(including British) cities shows that where the level of decisionmaking is a good fit with a citys economic footprint this is associated with better economic performance.24 The past decade has seen increasing recognition of the need for coordination and strategic decision making across the economicfootprintofcities.. The creation of Local Enterprise Partnerships is an opportunity for cities to bring together the privateandpublicsectorstoimprovecoordinationandprovidestrategicdecisionmakingcapacity atLEPlevel.ThereisnoperfectLEPwidegovernancemodelthatwillsuitallareas,sowewillwork withcitiesindividuallytodevelopmodelsthatworkforthem.

ThelistedcitiesarethelargestlocalauthoritiesinEngland,withcitystatus,bypopulationsize,saveforone exception.SunderlandalthoughhavingalargerpopulationthanNewcastleuponTyneisnotincludedinthelistasit heldareferenduminOctober2001atwhichlocalpeoplevotedagainstthemayoralmodel. 24 CheshireandMagrini,Europeanurbangrowth:throwingsomeeconomiclightintotheblackbox,paperpresented attheSpatialEconometricsWorkshop,KielInstituteforWorldEconomics,Kiel,April892005

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Case studies of successful Mayors

Chicago Mayor Richard M Daley was Chicagos Mayor from 1989 to 2011 and the citys economic developmentoverthepast20yearscanbeaccreditedto hisstrongleadership. In1989per capitaincomewas$22,700(intodaysdollars),morethan10.5%belowthenationalaverage, andtherewerealsomorethan69,000robberiesandaggravatedassaultsreportedinthecity. Furthermore,between1970and1990thecityspopulationhaddecreasedby17%.However, post1990,Chicagospopulationrose,violentcrimedroppedby63%between1991and2009 and the citys per capita income is now above the national average at $27,000. Ed Glaeser arguesthattheMayorsmostimportantcontributiontothecitysgrowthmayhavebeenhis enthusiasticsupportofconstruction.TheMayoralsoworkedhardtobuildamoreattractive physicalenvironment,startingwithasymbolictreeplantingcampaignandleadinguptothe publicprivatepartnershipthatcreatedMillenniumPark1. London LondonhashadanelectedMayorsinceMay2000.TheMayorsstrongleadership,visionand commitmentcontributedsignificantlytoLondonssuccessfulbidfortheOlympics,andledto theintroductionofthebikehireschemeandthecongestioncharge2whichhasreduceddelays insidethezonebetween20and30%3.TonyTraversarguesthatitisunlikelythatinnovations likethesewouldhavetakenplacewithoutapowerfulMayortocommandthepolitical legitimacyandresourcestopushthemthrough4.TheMayoralsomanagedtosecurefunding forCrossrailnearly20yearsafteritwasoriginallyproposedin1989,convincingcentral governmentofitsimportancetotheLondoneconomyandconvincinglocalbusinessesto providefundingviaaBusinessRateSupplementTax,5demonstratingthecriticalrolethata strongleadercanplay. Footnotes (to be put at the bottom of the page)
1

AssessingtheDaleyLegacyinChicago;EDWARDL.GLAESER;February8,2011, http://economix.blogs.nytimes.com/2011/02/08/assessingthedaleylegacyinchicago/ 2 Bigshotorlongshot?HowelectedmayorscanhelpdriveeconomicgrowthinEngland'scities:Author:Paul Swinney,RachelSmith&KateBlatchford(June2011),fromTransportforLondon(TfL)(2008)CentralLondon CongestionCharging:ImpactsMonitoringSixthAnnualReport:July2008London:TFL 3 AMayorandAssemblyforLondon:10yearson,TonyTraversandChristineWhitehead(July2010)

4

Bigshotorlongshot?HowelectedmayorscanhelpdriveeconomicgrowthinEngland'scities:Author:Paul Swinney,RachelSmith&KateBlatchford(June2011),fromTransportforLondon(TfL)(2008)CentralLondon CongestionCharging:ImpactsMonitoringSixthAnnualReport:July2008London:TFL

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Bigshotorlongshot?HowelectedmayorscanhelpdriveeconomicgrowthinEngland'scities:Author:Paul Swinney,RachelSmith&KateBlatchford(June2011),fromGannonM(2010)APilotStudytoAssessthe RepresentationofPoliticalSupportintheBusinessCaseforPublicTransportCapitalProjectsintheUKCorby: CharteredInstituteofLogisticsandTransport

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3. WhattheCoreCitiesandtheirLEPsareTellingUs
Thecorecitieshavesetouttheireconomicambitions,theirmediumtermprioritiesandthekey challenges they need to address in the months and years ahead. These are summarised below. Theseprioritieswillbethestartingpointfornegotiatingcitydeals.TheGovernmenthasalready takensomeimportantstepsoverthelastyeartosupportthecorecitiesmeettheirpriorities.But wearecommittedtodoingmoreandworkingcloselywiththeseareastotacklethekeychallenges theyfacesothattheycanrealisetheireconomicambitions.

RegionalGrowthFund Inadditiontothe1bnadditionalRegionalGrowthFundmoneyannouncedintheAutumn Statement,450mofgovernmentsupportwasawardedto50bidsinApril2011and950m to119bidsinOctober2011.Ofthe119bidsinOctober2011,55wereawardedtothecore citiesandtheirwiderLEPareas,totallinganestimated445m,thuscreatingorsavingan estimated94,700jobsinsupplychains.Examplesinclude: SiemensplcinGreaterManchesterFundingtohelpdelivertheconstructionofa newHQonthesiteoftheirexistingpremisestodeveloprenewableenergybusiness lines.TheexistingheadquartersbuildingwillberefurbishedandletouttoSMEs. RedxPharmaLtdintheLiverpoolCityRegionIndustrialresearchintocancer treatments,leadingtoindustrialdevelopmentandcommerciallicensing. KromekLimitedintheNorthEasternLEPAprojectforcapitalinvestmentto developandmarkettwonewimagingproductsforapplicationintheaviation securitymarket.Moneywillgotowardsthecapitalequipmentandmachineryfor developmentandproductionoftheproducts.

GrowingPlacesFund

The500mGrowingPlacesFund,announcedinNovember2011willbeallocatedbythe endofJanuary2012.IndicativeallocationsforthecorecityLEPsare: NorthEasternLocalEnterprisePartnership:16.7m GreaterManchester:24.7m LiverpoolCityRegion:13m LeedsCityRegion:24m SheffieldCityRegion:12.3m Derby,Derbyshire,NottinghamandNottinghamshire:17.5m GreaterBirminghamandSolihull:14.9m WestofEngland:11.3m
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SpecificGovernmentActioninAutumnStatementtosupportcorecities

MANCHESTER&LIVERPOOL ManchesterCrossCityBusHighwaychanges andbusenhancementstofacilitatenew crossManchestercitycentrebusservices RochdaleInterchangeReplacementbus stationforRochdaleadjacenttotheexisting, allowingfortheredevelopmentofthetown centreandcomplementingthearrivalof Metrolinkin2014 ElectrificationoftheTranspennineExpress M56atManchesterAirportlinkroadtoA6 southofStockport ManchesterMetroLinkPhase3AExtensions MerseyGatewayBridge ExpansionofMerseyMultimodalGateway (aspartofRegionalGrowthFund) CompletionofWesterngatewayEnabling SchemeatPortSalford(aspartofRegional GrowthFund) Northernrailconnectivity(Liverpool NewcastleincludingNorthernHub) EnhancedCapitalAllowanceswillbe availableintheLiverpoolCityRegion
(MerseyWaters)EnterpriseZoneto promotethecreationandgrowthof capitalintensiveindustries

NEWCASTLE ElectrificationoftheTranspenninerailway TyneandWearmetroupgrade EastCoastMainLineimprovements programme Northernrailconnectivity(Liverpool NewcastleincludingNorthernHub) EnhancedCapitalAllowancesavailableinthe NorthEasternEnterpriseZonetopromote thecreationandgrowthofcapitalintensive industries. Subjecttoduediligence,wewillextendthe existingNorthEasternEnterpriseZoneto includethePortofBlyth,encouragingprivate sectorinvestmentintherenewableindustry andcreatingnewjobsforthesurrounding area.

BIRMINGHAM A45WestboundBridge(Solihull) ReplacementbridgeovertheWestCoast MainLineclosefromBirminghamAirporton theA45strategiccorridorintoBirmingham M6managedmotorwayschemebetween BirminghamandManchester BirminghamNewStreetstationenlargement HighSpeed2(decisionbytheendof2011) A45Corridor(DamsonParkwaytoM42 junction6)diversion(aspartofRegional GrowthFund)

SHEFFIELD&LEEDS A6182WhiteRoseWayImprovement Scheme(Doncaster)Duallingof1.9kmof carriagewayandreplacementof2existing roundaboutswithhighcapacitysignalised junctions LeedsRailGrowthTwonewrailway stations:KirkstallForgeandAppleyBridge Supertramadditionalvehicles(Sheffield)4 AdditionaltramvehiclesfortheSupertram network AcceleratingM1junction39to42scheme ElectrificationoftheTranspennineExpress LeedsStationenlargement ImprovedaccesstotheSheffieldGateway(as partofRegionalGrowthFund) EnhancedCapitalAllowanceswillbeavailable intheSheffieldCityRegionEnterpriseZone topromotethecreationandgrowthof capitalintensiveindustries. SheffieldCityRegionwillbeusing7mfrom theGrowingPlacesFundtoestablisha JESSICAforSouthYorkshire,leveraging13m ofEuropeanfunding

BRISTOL BusRapidTransitschemefromAshtonVale toTempleMeads(Bristol)BusRapidTransit scheme(includingguidedbus)fromthe AshtonGateareatothecitycentre,including feederservicesfromfurtherafield SouthBristolLinkPhases1&2Newlinkroad throughtheSouthBristolarealinkinga numberofexistingradialroutesintothecity plusBusRapidTransitschemes GreatWesternElectrification(electric servicestoBristol,OxfordandNewbury)

NOTTINGHAM HucknallTownCentreImprovementScheme Newinnerreliefroadallowing pedestrianisationofHighStreetplusbus onlylinkandenhancedpedestrianandcycle facilities LondonRoadBridge(Derby)Replacement oftheLondonRoadrailbridgeonthis strategiccorridorintoDerbyfromthe southeast WideningtheA453betweenNottingham,the M1andNottinghamEastMidlandsAirport Developmentconsentgrantedforascheme toimprovetheA1atElkesley NottinghamExpressTransit A46NewarktoWidmerpool

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BirminghamGreaterBirmingham&SolihullLEP
Our LEP is creating a bold and ambitious strategy to achieve transformational change. By working with Government on this agenda we can realise our full potential to become a truly world class city region. This will drive growth across the Greater BirminghamandSolihullareawithbenefitstothewholeoftheUK. AndyStreetChair,GreaterBirminghamandSolihullLEP

Birmingham and its wider LEP have a population approaching 2 million. The area contributes approximately 35.5bn to the UKs GVA and provides close to 900,000 jobs. There are some 69,000 SMEworkplacesinthearea.Withthisscaleofeconomicactivity, thisLEPhasthepotentialtobeamajoreconomicpowerhouse.

Greater Birmingham and Solihull LEP aspires to significantly increaseeconomicoutputbymorethan8bnby2020,createover 100,000jobs,boostinvestment,buildaworldclassworkforceand developworldclassinfrastructure.

The LEPs current economic strengths lie in automotive, general manufacturingandengineering,highvalueproductssuchasjewelleryandthecreativeanddigital industries.Italsohasarobustfinancialandbusinessservicesector.Thesubregionbenefitsfroma centrallocationwithinEngland,wellservedbyrailandroad.Birminghamwillbetheterminusfor High Speed Rail 2, providing much needed rapid rail links to London and Europe. Furthermore, BirminghamAirportisathrivingregionalairport,withscopeforgrowth.TheLEPareaisalsohome totheNationalExhibitionCentreandaclusterofhighperforminguniversitiesandcollegeswhich are at the forefront of research and development in engineering, healthcare, biomedical, low carbontechnologiesandtransporttechnologies.

However,theareafacessomecriticalchallenges: skills: 16% of working age people (192,000) within the LEP area have no formal qualifications,withtheintensitygreatestintheBirminghamcityarea; growth in unemployment: in September 2011 the unemployment rate was 8.6%, significantlyhigherthantheUKaverage(5.5%); unlocking development sites: strategic locations that could help deliver growth, are constrainedbysignificantregenerationchallengesandcosts(e.g.Longbridge);and congestion: although the area is at the heart of the motorway network, this becomes heavilycongestedandrailandlighttransportsolutionsneedinvestmenttoimprovetheir coverageandreliability.

TheGreaterBirmingham&SolihullLEPintendstoprioritise: unlockingkeyinfrastructureandregenerationsites; thecreationofaworldclassdigitalenvironment; better integration of programmes to support lowskilled and unemployed people and alignmentofskillsprovisiontomeettheneedsofemployersandgrowthsectors;and improvingtransportinfrastructureandutilisingittobringdevelopmentsitesforward.
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BristolWestofEnglandLEP
Bristol has joined the list of British supercities distinctive because they are key to businesses development and specialise in different innovationsandindustries....Overthenext20yearsBristolwillemerge as a leading centre for research and production; pioneering new materialstobecomeacentreofadvancedmanufacturing.Source:Airbus
FutureofBusiness2011,HSBCBusiness

Bristol,withthewiderWestofEngland,hasapopulationofjustover 1 million, contributes about 14 billion to the UKs GVA, and has around 450,000 jobs. The West of England has a strong skills base and is well positioned to capitalise on the continued growth of its knowledge intensive industries such as aerospace, environmental technologies,andadvancedengineering.Theareaishometooneof thebiggestsilicondesignclustersoutsideSiliconValley.Throughthe National Composites Centre, the Bristol and Bath Science Park and four universities, it will play a leading role in research and innovation and will support local companies particularly the aerospace and defence sectors to collaborate and develop new technologies.TheexpansionofBristolAirport,theongoingdevelopmentofBristolPort,andthe electrification of the Paddington Bristol Cardiff railway line will help to maintain the West of Englandseconomiccompetitivenesswithothercityregions.

Bristolisoneoftheglobalcentresforcreativeanddigitalmediaindustries.Ithadthehighestnet private sector jobs growth rate between 1998 and 2008 of any major English city outside of London25andretainsanemploymentrateof74.8%(comparedtothenationalaverageof70.3%). Since2001,Bristolspopulationhasgrownby13.2%,puttingadditionalpressureonpublicservices anditsphysicalinfrastructure.Duringthefirstsevenmonthsof2011,youthunemploymentrose to 15%, double the national average and while 35% of the overall workforce hold an NVQ 4 or above,8.2%havenoqualifications.

Businessesfrequentlyreportinsufficientpublictransportprovisionandmajorcongestiononboth the road and rail network as major issues effecting productivity within the West of England. A shortageofsufficienthousingclosetothemajoremploymentsiteshasledtoconsiderablylonger commutingtimesandincreasedcongestionatpeaktimes.Significantimprovementstothelocal transportinfrastructureareseenaskeytounlockingtheeconomicpotentialofmajoremployment sitesinthearea.

Overthenext20yearstheWestofEnglandwillaimto: emerge as a leading centre for research and production; building on recent successes in advancedmanufacturing&aerospace,silicondesignandcreative&mediaindustries; developanddeliverthenecessaryinfrastructuretodriveeconomicgrowth; accelerategrowththroughtheareasEnterpriseZoneandfiveEnterpriseAreas; ensureamatchbetweenskillsandtheneedsofbusinessesnowandinthefuture; createthebestenvironmentforbusinessestostartandgrow;and deliver sustainable economic growth by supporting environmental technologies and increasingcarbonefficiencyandenergysecurityacrossthewholeeconomy.
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BristolEconomicAssessment2011,referencingfindingsfromtheCentreforCitiesreportPrivateSectorCities

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LeedsLeedsCityRegionLEP
The LCR Partnership is a leader in collaborative, lowcarbon economicregenerationnationally.Businessandpartnersshare the Partnerships aims of stimulating growth, creating opportunities and competing with the best city regions globally. We are committed and determined to work together to achieve these goals. Gary Williamson, Chief Executive, Leeds, York and North
YorkshireChamberofCommerce

The Leeds City Region produces 5% of Englands GVA26. Leeds City RegionPartnershiphasbeenworkingtogetherfor7years.Itwasone of the very first LEPs to be recognised by the Government and is consideredasaleaderindevolutionanddeliveryoftheLEPagenda.

LeedsCityRegionoffersscale,amulticentredeconomyandaunique combinationofruralandurbanplaces.Strengthsinclude:thelargest manufacturingbaseintheUKandthebiggestfinancialcentreoutsideLondon27;a53bneconomy (larger than eight European countries)28, a population of 3 million29 and 106,000 businesses30 (including14,000socialenterprises);eightuniversitiesand15collegeswithhighqualityandworld classresearch;worldleadingcapabilitiesinlowcarbonindustries,healthandmedicaltechnologies andadvancedmanufacturing;andstronglocalclustersinthecreativeanddigitalindustries.

TheLeedsCityRegionfacesseveralchallenges,including: low levels of skills and low employment rates in parts of the city region, including a disproportionatelyhighlevelsofNEETs; comparativelylowinwardandindigenousinvestmentandinternationalrecognition,aswell as low export performance (with only 8% of firms exporting as opposed to a national averageof20%); manyareaswithadependencyonpublicsectorjobsandgrants;and significanthotspotsofcongestionandovercrowdingonitsrailandroadnetworks.

TheLeedsCityRegionLEPhasdevelopeda5yearstrategicplantosupporteconomicgrowthand isseekingtheGovernmentssupportto: increasethenumberofbusinessesexportinggoodsfrom2,000to2,800overthenextfour years; increasetheCityRegionscontributiontothevalueofserviceexportsby150mfromits currentlevelof975m; increaseapprenticeshipstartsby100%,focusingonsmallandmicrobusinesses; matchadultskillsprovisiontothegrowthneedsofkeysectors;and furtherestablishLeedsCityRegionasagloballeaderintestingandrollingoutlowcarbon technologiesandsupportfurtherdevelopmentofLeedsCityRegionsbusinessbaseatthe forefrontofthelowcarboneconomy.
26 27 28 29 30

2008, ONS Regional Statistician Business Register & Employment Survey 2010, ONS figures refer to number of employees 2008, ONS Regional Statistician; Eurostat 2010 mid-year population estimates, ONS Inter-Departmental Business Register, 2009

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LiverpoolLiverpoolCityRegionLEP
Duringthepasttwentyyears,Liverpoolhas comefromthedepthsofeconomic,political andfiscalcrisistobetheEuropeanCapitalof Culture.Butitisalsoonabiggerjourneyto economicrecovery.Thatjourneyhasjust begun.Anditisnotjustalocalstory.The renaissanceofLiverpoolispartofawider storyaboutthebigEnglishcities.

Prof.MichaelParkinson,Makenolittleplans:TheregenerationofLiverpoolcitycentre19992008

Liverpool is at the centre of a population of 1.5 million peopleanddrivesthe20billioneconomyinthewiderLEP area.Liverpoolhasbeenoneofthefastestgrowingcitiesin theUKoverthepastdecadewithGVAperheadrisingfrom 87%to96%oftheUKaveragebetween1995and2008. Liverpools prosperity was built on trade and the River Mersey is central to its future prospects. There are 10bn plans to redevelop Liverpool and Wirral docklands, one of thelargestsuchschemesintheUK.Thecityhasoneofthe strongestculturalandtourismoffersoutsideofLondon,and continues to benefit from its status as European Capital of Culture. It also has an internationally significant knowledge base,underpinnedbythreeuniversitieswhichtogetherdraw morethan50,000studentseachyear.TheRoyalLiverpoolHospital,LiverpoolScienceParkandthe Liverpool School of Tropical Medicine are at the heart of a growing and dynamic biomedical cluster. TheLEPsambitionistomakeLiverpoolCityRegionthepreferredchoiceforinvestmentandjob creation by: exploiting the national and international profile of the city and its city region; enhancing the city region infrastructure and distinctive sense and quality of place; encouraging business creation, growth and productivity; supporting research, innovation and enterprise throughout the city region; raising skills and educational attainment; promoting new green industriesandencouragingnewgenerationtechnologies;andensuringthecityregionhasthebest possibleinfrastructure. Todeliverthisambition,thecityregionwillneedtoaddresssomecriticalchallenges.Itcontinues tolagbehindtheNorthWestandUKforoveralleconomicvalue,inpartasaconsequenceofalow businessbase,asignificantskillsdeficitandsomeofthemostdeprivedcommunitiesinthe country.Thecityregionalsohasahigherthanaveragedependenceonpublicsectorjobs. LiverpoolCityRegionsprioritiesarethereforetomaximisegrowthbyunlockinginvestment capital;creatingalargerandmorehighlyskilledworkforce;supportingentrepreneursand businesses;improvinghousing,transportlinksanddigitalconnectivity;andencouraginggreen technology..
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ManchesterGreaterManchesterLEP
ManchesterisprobablytheUKcityoutsideLondon most likely to be able to increase its long term growth rate, to access international networks and enjoy strong connections to the rest of the world. However, it is currently punching below its weight givenitssize.Webelievethisisanopportunity:the city has the potential to grow faster and to continue to reinvent itself and regain its historical dynamism.ManchesterIndependentEconomicReview

Greater Manchester has a population of 2.6million, contributed47.7billiontotheUKsGVA,andhas66.6% ofitsworkingagepopulationinemployment. Greater Manchesters governance arrangements are uniqueasthroughtheAssociationofGreaterManchester Authorities (AGMA) it has established a Combined Authority,operationalfromApril2011. Historically, Greater Manchester has been a pioneer of theEnglishmanufacturingindustry,actingasahubcity fortheNorth.Inrecenttimes,GreaterManchesterhasbeenaleaderinseveralsectorsincluding financialandprofessionalservices,scienceandlowcarbonandisEuropessecondlargestcentre for creative and digital media. Its university sector is a particular strength with Greater Manchester universities having a combined income of 1.4bn, employing 18,000 staff and educating a total student population exceeding 100,000. Professors at the University of Manchester discovered Graphene which brings with it significant commercial potential. Housing remains an important issue for Greater Manchester as markets remain fragile and further investmentinthetransportsystemsisneeded. GreaterManchesterintendstoprioritise: buildingonthedevelopmentofaninvestmentframeworkforGreaterManchester turningaroundthelivesofcomplexfamilies; retaininganddevelopingskillslocally; providingtherightmixofhousingforgrowth; stimulatingresearchandinnovationinlowcarbontechnologies;and establishingaGrapheneGlobalResearch&TechnologyHubinManchester.
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NewcastleNorthEasternLEP
Newcastleisnowathrivingcentreforfirmssupported by the outstanding research capabilities in local universities.Demandforprofessionalbusinessserviceshas been growing as businesses and their networks expand. It is essential that the public sector continue to adopt probusiness policies that place Newcastle as a strong and competitive centre for business and financial services. Jamie Martin, Managing Partner WardHadawayandChairofNewcastleGatesheadInitiative

The North Eastern LEP has a population of around 2 million and generates 32 billion of output per annum31. The vision for the LEP is to rebalance the economy, and create Europes premier locationforlowcarbon,sustainable,knowledgebasedprivatesectorledgrowthandjobs.

WithGateshead,Newcastleisthemainadministrative,commercial,retailandculturalhubforthe widerNorthEast.But,liketherestofthecountry,Newcastlehasbeenhitbytheglobalrecession andweakrecovery;andndthereremainslongrunningissuesofintergenerationalunemployment, with above average levels of young people not in education, employment or training; relatively lowweeklyearnings;andalmostathirdofchildrenlivinginpoverty.

WhilsttherearestrongrailconnectionstoLondonandEdinburgh,andadailyflighttoDubai,cross country rail connections to other major cities, notably Leeds, Manchester and Birmingham are difficult;andtheA1throughTynesideisthethirdmostcongestedlinkonthenationalmotorway and trunk network. Other challenges include: the need to create a large number of entry level jobs;theneedforinfrastructureinvestmentacrosskeycitycentreandmanufacturingsites;finding innovativewaystomeetourhousingambitions,includingapprox36,000newaffordablehomesin Newcastleanditssurroundingareasby2030;anddevelopersfacingdifficultiesinaccessingcredit.

Newcastlesprioritiesarethereforeto: create a joint Accelerated Development Zone with Gateshead, utilising tax incremental finance(creating18,957FTEsand715mGVAperannum); maintainandsupportavibrantfinancialandprofessionalbusinessservicessector; work with central government to ensure reforms to the welfare system are managed effectivelyatthelocallevel; securefurtherinvestmentintheNorthEastslowcarboneconomy,maximisingtheimpact ofourEnterpriseZoneandensuringthattheGreenInvestmentBankislocatedhere; improvetransportlinks,includingintroducingatransatlanticroutefromNewcastleAirport andalleviatingcongestionontheA1WesternBypass.

31

Source:TheNorthEasternLEP:AproposaltotheSecretariesofStateforBISandCLG,December2010

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NottinghamD2N2LEP
Nottingham is a key business hub, supported by an expanding and diverse talent base and a vibrant retail and cultural sector. But most importantly, it offers a great location at arelatively low cost compared to other UK core cities.' Charlotte Greening,
ManagingDirector,ExperianUKandIreland

TheDerby,Derbyshire,Nottingham, Nottinghamshire(D2N2)LEP'sGVAfor2008was nearly36bn,ofwhichatleast22bnwasfromthe conurbationarea. Nottinghamhasmorethan50regionalandnationalmajor employers and has strong financial services, science, technologyandknowledgeintensivesectors,mostnotably inlifesciencesandlowcarbontechnology.Derbyexcelsin aerospace, nuclear research and development, rail technologyandsoftwaredevelopment. Nottingham is considered to be one of the greenest and mostenergyselfsufficientcities,rankingastheUKsNo1 Energy City. Public transport in Nottingham is used by more passengers than in any other city outside London. InwardinvestmentplannedinNottinghamoverthenext5yearsincludestwomoretramlines,and aredevelopedrailwaystationandtransportHub. D2N2isthe5thLEPinthecountryforthenumberofjobs(behindPanLondon,KentandSussex, LeedsandManchester).Nottinghamhastwoleadinguniversitieswithover55,000students,that arehometoworldleadingresearchandcollaborationwithindustry,whilstDerbyhasthehighest percentage of people employed in hitech functions at 12% (four times the national average). DerbyistheonlycityoutsidethesoutheastwithGVAproductivityabovethenationalaverage. As a LEP area, D2N2 faces a significant challenge in rebalancing jobs from the public to private sector. Nottingham needs to increase skill levels to meet employers needs and rebalance its economy towards private sector job growth, whilst Derby has a large number of current or proposedprivatesectorjoblosses. Nottinghamintendstoprioritise: investmentinhighqualitybroadbandandtransportinfrastructure; interventionstoaddresslowskills,longstandingdeprivation,worklessnessandlowwages; innovationandbusinessgrowththroughalocalgrowthfund;and infrastructureforstrategicsites.

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SheffieldSheffieldCityRegionLEP
Our vision is for Sheffield City Region to make a greater contribution to the UK economy by having a local economy lessdependentonthepublicsector,providingconditionsfor businessestogrowandbygivingthenationitsprimecentre for advanced manufacturing and materials and low carbon industries.SheffieldCityRegionLEPproposal,Sept2010.

TheSheffieldCityRegionisanationallysignificanteconomywitha populationofover1.8m(with540,000inSheffield),coveringanarea ofoverthreetimesthesizeofGreaterLondonandwithaneconomic output(GVA)worth25.3bnannually32.

As a vanguard Enterprise Zone (EZ) area, the Sheffield City Region will build on its proud history of being at the very forefront of the UKs industrial and entrepreneurial development through the designation of a Modern Manufacturing and Technology Growth Area. This approach will build on existing assets such as the Advanced Manufacturing Park, which hosts world leading firms like Boeing and Rolls Royce and an international brand name, Made in Sheffield, recognised and associated with quality manufacturingandexcellence.

TheCityRegionhasexcellenttransportconnectionsviaroad,railandairandDoncasterSheffield Airportisamajoreconomicasset,bothasaninternationalgatewayandasanaerorelatedtraining andengineeringarea.Inaddition,theCityRegionhasamongthehighestpostUniversityretention rates in the country a leading local next generation broadband network, with South Yorkshire already delivering superfast broadband as well as a coordinated and collaborative inward investmentoffer.

Likeallareas,theSheffieldCityRegionhasanumberofchallengestoaddressifitistomeetitsfull potential, these include a historical dependency on public sector jobs and grants; educational underperformance and continuing skills gaps in key sectors; as well as a need for infrastructure investment,particularlyfortransport.

TheSheffieldCityRegionLEPwilltakeanintegratedapproachtotackletheeconomicchallenges facingtheCityRegionthrougharangeactivityaroundthefollowingbroadthemes: supportinganddevelopingthemostimportantsectorswiththegreatestgrowthpotential; creatingmorejobsandencouragingpeoplebacktowork; acceleratingratesofbusinessstartupsandsupportingenterprise; raising skills levels, improving educational attainment and an appreciation of business in schools; unlockingtheeconomicpotentialofkeydevelopmentareas; improvingtransportlinks; improvingthehousingofferandcreatingattractivecityandtowncentres;and addressingtheneedtoprovideasustainableeconomy.
32

ExperianREMmodel(Spring2010)

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4.NextStepsonDeliveringCityDeals
TheCoalitionGovernmenthasalreadytakenimportantstepstoempowerandsupportourcities, decentralising significant powers and resources to local authorities; encouraging LEPs to coordinateeconomicdevelopmentacrosscitieseconomicfootprint;andstimulatingprivatesector growththroughtheRegionalGrowthFund.Butweneedtogofurther.Overthecomingmonthswe willdeveloptailoreddealswithourcorecities,devolvingpowersandsupportingprojectswhichwill boostgrowthandjobsforthelongterm. The Minister for Cities will work closely with individual cities and across all government departments to agree a series of tailored city deals to unlock growth, supported by the Cities PolicyUnit,basedintheCabinetOffice. The Cities Policy Unit has been created to work with cities and Government to deliver a new approach to cities policy.The Cities Policy Unit is not about imposing solutions developed in Whitehall,butprovidingatailoredservicetohelpcitiesdevelopcreativenewideasand,crucially, toturntheseintopracticalsolutionsontheground.ThecoreaimoftheUnitistoprovideadvice andsupporttocitiesastheydevelopandnegotiatedeals;toworkeffectivelyacrossdepartmental silos to develop crossWhitehall policies on cities; to be a source of creative ideas; to challenge both Whitehall and Cities to do things differently; and to build strong networks of experts and practitionersinordertobringnewinsightstooldpolicydebates. TheUnitwillbemadeupofasmallteam,drawnfromacrossthepublicandprivatesector,who willworkjointlywiththeDepartmentforBusinessInnovationandSkillsandtheDepartmentfor CommunitiesandLocalGovernment. Ourapproachtodealswillbeinformedbylessonsfromsuccessfulattemptsaturbanpolicy In developing our approach to city deals, we will build on important lessons from successful examplesofurbanpolicyacrosstheworldby: Putting cities in the driving seat: cities, not government departments, are best placed to understand the economic opportunities and challenges they face. Many have already taken theinitiativeandbeguntodevelopcredibleeconomicstrategies,andthesewillbethestarting pointforourworkwithcities. Workingacrossboundaries,sectorsandprofessions:partnershipandcollaborationbetween Government,corecitiesandtheirneighbouringauthoritiesandlocalbusinessesleaderswillbe criticaltodeliveringtransformativechange.

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Devolving real power to city authorities: cities need the right levers to support economic growth. Where there are clear economic gains to be had we will look for opportunities to devolvepowersandresponsibilities. Providingincentivesforsustainablesuccess:localleaderswillneedtoredoubletheireffortsin creatingincentivesandconditionsforprivatesectorsuccess.

Lessonsfrompastattemptsatnegotiatingwithcitiesandlocalauthoritieshavealsotaughtusthat to get the most out of this process, departments and cities will need to agree some basic principles upfront. These principles should guide the way in which cities and government departmentsengageinthedealmakingprocess.

ForcitiesandtheirLEPs:

citieswillneedtoshowleadershipandidentifyprioritiesacrosstheLEPareaattheoutset ofthisprocess; citieswillneedtomakeacrediblecaseforwhysomethingneedstobedonedifferently backedbyevidence; cities should put forward clear, specific and tangible propositions supported by the necessaryduediligence; proposalsfromcitiesshouldworkwiththegrainoftheGovernmentswiderpublicservice reformagenda; citiesshouldbeboldandprioritisethethingsthatwillreallymakeadifferencetoprivate sectordevelopment; citiesshouldbewillingtopoolindividualLApowerstoachievegreatergainsforthewider LEParea;and citiesshouldmaximisetheuseofthepowersandtoolsthatarealreadyavailabletothem.

Forgovernmentdepartments: departmentsshouldbewillingtodevolvepowersandfundingtocities; departments should be willing to work with cities to explore options that can deliver mutualbenefits; departments should be open to tailored solutions where there is scope for improving outcomesinaspecificplace;
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departmentswillneedtobeflexibleandopentonewwaysofdoingthings; departmentsshouldbewillingtotakecalculatedriskstoachievebetteroutcomes; departmentsshouldworkeffectivelyacrossbudgetingsilostounlockbarriers; departments should be proportionate when requiring cities to demonstrate proof of concept;and departments should share the burden of proof (i.e. if cities put forward a proposal departmentsshouldonlyrejectitiftheyhaveevidencetosupporttheirposition).

Thecontentofcitydealswillbedrivenbythespecificprioritiesindifferentplaces Thecontentofthecitydealswillreflectthedifferentneedsofcities.Wearelookingtocivicand private sector leaders to identify their economic priorities and to develop specific propositions, settingoutwhattheywouldliketododifferently,andwhatneedstochangeforthistohappen. We envisage each deal containing a combination of new powers, so that cities have greater influence over the key decisions that affect their economic competiveness; and/or innovative projects to unlock growth in each area. We will take a tailored approach, encouraging cities to experimentwithnewpowersorprojectsastheyseefit(throughlicensedexceptionstonational policy where necessary), to drive change through innovation and to deepen our collective understandingofwhatworks. Inconsideringproposalstodevolvepowersorresourcestocities,wewilllookfor:

Acleareconomicrationale:theremustbeaclearrationaleunderpinninganydevolutionof power.Ourguidingprincipleisthatpowershouldbeheldatthelowestappropriatelevel, andtheonuswillbeasmuchoncentraldepartmentsasoncitiestomakethecaseforwhy powersshouldbeheldatanygivenlevel.

Astrongevidencebase:propositionsneedtobebackedupbyevidencethatallowsfora reasonableassessmentofcostsandbenefits.

An appropriate geography: in some areas the lowest appropriate level may be a Local Authority, but in others it will be the local economic area33. When it comes to powers relatedtoeconomicdevelopment,suchasstrategicplanningandtransport,thereislikely tobeastrongcaseforaligningpowerswiththefunctionaleconomy.

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ThelocaleconomicareareferstothefunctionaleconomicareaasdefinedbytheLEP.

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Appropriate governance and accountability: before devolving powers, Government will need assurances that there is visible and accountable political leadership and effective decisionmaking.Thiscantakedifferentformsandwillbedeterminedbyindividualplaces. Buttherewillbesomeimportantingredientsthatwelookfor: a clear mandate to drive an ambitious economic programme over the medium term; the ability to work effectively across boundaries, build informal coordination arrangementsandtakestrategicdecisionsacrossthewidereconomicarea; visible leaders that businesses can deal, that communities can come to and that centralgovernmentcannegotiatewith;and clarity on who is responsible and accountable for taking actions to support economicgrowth.

Wewilllooktomoveatpaceoverthecomingmonthsinordertonegotiatedealsquickly

Althoughdealswillbenegotiatedandagreedinatailoredway,thebroadstructureofour engagementwithcitieswillfollowthreekeystages: 1. PrioritisationCivicandprivatesectorleadersineachcitywill: developasharedunderstandingofhowthecityregionwilldevelopandwherekey economicopportunitieslie; identifytheoutcomestheyaretryingtoachievetosupporteconomicgrowth;and identifythekeyprioritiestheywanttoachievethroughthecitydealsprocess. 2. OptionsDevelopmentCityleaderswilldevelopspecificproposalsthattheywanttonegotiate adealon,backedbythenecessaryduediligencetomakethecaseforchange.Citieswillbe supportedbyaWhitehallteamaDirectorGeneralorPermanentSecretary,CitiesPolicyUnit andBISLocaltoproduceandnegotiatethestrongestpackagepossibletodelivertheir priorities. 3. NegotiationsTheMinisterforCitieswillleadnegotiationsbetweencityleadersand governmentdepartmentstoagreeaboldsetofpropositionsthatwillhaveasignificantimpact ontheground. Our timings will need to reflect the needs and readiness of each city, but given the national imperative to boost economic growth, and the enthusiasm in our cities for moving this agenda
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forward,weintendtomoveatpace,withanambitionofagreeingalleightdealsbyspringnext year. Although in the first instance we are focusing on the eight core cities because of their size and economicpotential,thistailoredapproachwillnotbelimitedtothesecitiesandweintendtoroll out this approach to other areas. The Government will launch a further wave of engagement in withanewgroupofcitiesoverthenextyear.Andinthemeantime,alllocalauthoritieshavethe righttomakethecaseforbeinggivennewpowerstopromoteeconomicgrowthandtosettheir owndistinctpolicies,undertheCoreCitiesAmendmentintheLocalismAct.

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