At the same time, seamless government should be a precondition in a service area where individuals are constantly crossing administrative boundaries to get to work, to school, to college, to hospital or to visit family and friends. Equally, integrated government is necessary in an area where citizens need to be presented with clear options between different modes of transport if the UK is to achieve its ambitious environmental and economic objectives.

However, transport services in England remain far less integrated than many of their European comparators. Whilst Transport for London wields huge responsibility and power in the capital, other city regions and sub-regions are yet to be given the scope to develop appropriate mechanisms for their areas.

More must therefore be done to interconnect different modes of transport, across different geographic regions and across different tiers of government. The web of confusion that currently exists should be simplified and power and responsibility devolved to those bodies that connect with customers and citizens.

Designing new governance models
The question is what sort of governance structures would be most appropriate? And, once established, what powers and flexibilities should be devolved down?

The government has been pursuing a devolutionary journey over the past few years – the Local Transport Act 2008 encouraged greater accountability and decision-making at the local level. The Local Democracy, Economic Development and Construction Act seeks to take this a step further and allow partnerships to establish themselves further at the sub-regional tier. The terrain is becoming more and more complex – MAAs, MAAs with statutory duties, ITAs, Economic Prosperity Boards, Combined Authorities and City Region Forerunners. Our goal should be to ensure that we have the right frameworks within which they can thrive.

In the first place, our research demonstrated the importance of a bottom-up and flexible approach to allow different areas to cultivate viable models suited to the particular circumstances of their local areas. Second, it was clear that current expectations that whole administrative areas should have to commit to specific partnerships represents an inflexible model that is likely to prevent sub-regions reflecting their economic footprints and travel patterns.

More generally, the constant is the need for commensurate powers and responsibilities. The ‘pain’, which councils and their partners may encounter (such as the loss of sovereignty, organisational and cultural change and difficult questions about membership, boundaries, democratic accountability and stakeholder input) needs to be matched with clarity over the ‘gain’ that can be won.

However, there was a widespread opinion among local politicians and officers that the ‘incentives’ had not been articulated sufficiently clearly to encourage areas to adopt harder governance mechanisms such as ITAs. Therefore, NLGN set out some ‘asks’ of central government that should help build a more accountable and responsive sub-regional governance arrangement. This should include greater flexibility over capital expenditure, an end to the bidding culture in Regional Funding Allocations, formal input into new rail franchises and control over local bus and rail networks.

This research opens up difficult questions around how councils can work together across administrative borders in a flexible and multi-dimensional way. However, a failure to put aside institutional self-interest risks failing the communities that local authorities are there to serve.

On the Right Track: new models for integrated transport by Nigel Keohane was published in July 2009 by NLGN. It was kindly sponsored by Atkins, Bircham Dyson Bell and Yorkshire Forward.

Greater flexibility and certainty of funding for MAAs will be pivotal if we are to meet the capital investment challenge. Capital Contingencies, a recent report from the New Local Government Network, argues that the onus must fall to local authorities and sub-regions to ensure that fiscal limitations in Whitehall do not dictate a generation of under-investment in infrastructure.

Curbing the national debt is the issue set to define the next decade of public policy. The implications will be many and profound, but it is the capital investment budget in particular that has much to fear from the centre’s balance-sheet anxieties. Sustaining investment strategies in an era of fiscal consolidation will of course require ingenuity and self-determination at a local level. But harnessing the economic potential of the sub-regional tier will be another vital piece of puzzle that must not go overlooked.

The ramifications for public finances from averting total financial collapse are already unravelling. The Budget 2009 forecast a halving of public sector net investment by 2014, from £44bn to £22bn. The party political conference season, wedding debt reduction with all three parties likely to form the next government, confirmed that there will be plenty more austerity to come.

In such an environment it would be easy to neglect the infrastructure needed to support sustainable and prosperous communities, but the lessons of the past tell us that this would be anathema to economic growth. With the increasing recognition of the importance of the sub-regional tier in economic development, it is fitting that it possesses such a rich seam of possibility for infrastructure funding in a severely constrained fiscal time.

Working collaboratively at this level gives councils the ability to pool resources, co-ordinate investment strategies and drive plans to critical mass. In addition to realising economies of scale and uniting the sometimes fractured investment of individual authorities, there could be untapped potential for sub-regional arrangements to act as nascent legal entities which may be capable of undertaking new borrowing. The sub-region may also be the key to unlocking private sector finance and involvement. Pooling resources can generate momentum and enable upfront funding commitments, essential to make investment opportunities sufficiently de-risked and viable for developers.

Much will depend on the extent to which the lengthy and difficult formation processes are reflected in additional freedoms. But crucially for capital investment, the level of discretion that is granted to both the funding of local authorities and sub-regional bodies could make or break their ability to sustain capital investment. Making limited grant funding go further will only be possible with far greater flexibility at a sub-regional level.

It is for this reason that the New Local Government has called for MAAs to be granted funding on a 5 year basis at the next Comprehensive Spending Review, and for creation of a new Single Capital Pot for the sub-regional tier in its new report. Such flexibility would be a vital adjunct to efforts at a local level to preserve investment. Without it, efforts to integrate investment and co-ordinate strategy will be needlessly shackled.

Avoiding a return to the crumbling infrastructure and repairs backlogs of the 1980s and 1990s will demand greater activism at both local and sub-regional levels. The latter provides an important new range of options for releasing investment, but only if it is rewarded with flexibilities and freedoms that are a true reflection of the vital role it can play.

A multi-area agreement is designed to be a cross-boundary coalition of local authorities with plans to tackle issues including housing, transport and skills at a regional and sub-regional level. The MAA Forum was set up in 2008 by NLGN and the Institute of Political and Economic Governance at the University of Manchester in order to share learning and ideas, as well as to influence policy thinking on sub-regional governance.

Chris Leslie, Director of NLGN congratulated the three areas and said that he looked forward to more sub-regional partnerships being signed off in the near future, but warned that Government must continue to devolve powers to sub-regions.

He said:

“We welcome the new MAAs being signed today. However central Government needs to do more to further unlock the powers that local authorities and sub-regions need to harness the untapped potential in their areas, especially in terms of economic development. If these new MAAs had additional powers – for instance a longer term commitment from the Treasury on capital grant funding – then many other cities and sub-regions would follow suit. We very much look forward to working with the new MAAs and encouraging others down this route through our MAA Forum.”

Further details of the MAAs signed on 9 September can be found at

City Region of Birmingham, Coventry and the Black Country (http://www.cityregion.org//)
North Kent (http://www.tgkp.org//)
West of England (http://www.westofengland.org//)

Nick Hope urged the Government to be bolder in its approach to sub-regions, arguing:

“If Whitehall fails to match the ambition of sub-regions with greater ambition itself very few areas will go down this more formal statutory route.

There is a real opportunity for robust governance arrangements at the sub-regional tier, which provide the leadership and drive for important strategic economic decision-making and interventions to take place, but these collaborative partnerships need new tools and flexibilities if they are to be effective.

Both local and central government need to prioritise economic needs over institutional self-interest or they will fail future generations. It will take more than “business as usual” to deliver the infrastructure and inward investment needed for prosperity.”

Economic leadership on the world stage, national monetary policy and central financial initiatives alone will not be enough to take the nation out of recession. A more localised approach is vital in strengthening the nation’s economic resilience and building future prosperity.

We do not have a homogeneous economy in this country. We live in a series of highly varied economies with different assets, histories, busineses, industrial strengths, infrastructural weaknesses and employment and skills challenges. “Functional economic areas” as they are known – the places people live, work, travel and shop – tend to have a sub-regional footprint.

We need active government, taking decisions at this spatial level as well as nationally. The problem is that existing local and regional administrative boundaries are somewhat artificial and do not match this economic geography. Redesign of organisational structures can be time consuming, costly and disruptive, and so what is needed is a more organic process of individual councils coming together and collaborating sub-regionally. In the same way that public services should be far better tailored around the citizen, governance should much better reflect the economic footprint of areas.

Important progress is being made on this kind of partnership working, with new sub-regional governance arrangements emerging and strengthening across the country. A number of areas have signed Multi-Area Agreements (MAAs) with central government, where Ministers have granted flexibilities and powers to clusters of local authorities so that they can better deliver in policy areas such as housing, skills and transport.

Despite this progress, the sub-regional agenda needs to be driven forward at a far greater pace. Sub-regional partnerships are crying out for greater control over their own destinies. Whether you go to Tees Valley, Tyne and Wear, Leeds, Leicestershire, Manchester, Merseyside, Birmingham or Bristol the story is the same: they want more powers so that they can kick start their economies.

Too often Government departments are unwilling to give up their systems of top-down micro-management and local authorities are overly protectionist when it comes to pooling money and sovereignty with their neighbours. But, if Whitehall and local councils fail to prioritise economic needs over institutional self-interest they will fail future generations. It will take more than “business as usual” to deliver the infrastructure and inward investment needed to grow out of recession.

If the Government is to ‘build Britain’s future’ it must recognise that it cannot do so from SW1. Strong strategic leadership at the centre should not be confused with control from the centre. A one dimensional approach will fail to capture the complexities of spatial variation or be sufficiently responsive to the fast-changing circumstances of different areas.

In the 21st century a more sophisticated approach is needed in public policy. Just as citizens must be empowered to have a greater say over the services they receive, so too should partnerships of elected councils be empowered to deliver growth in their economic sub-regions.

Devolution of powers to local authorities will not capture the public imagination or turn around Labour’s polling figures. However, better skills opportunities, improved public transport, new homes, jobs and economic growth in the places people live just might. Government must wake-up now to the fact that to achieve this it must embark on a radical programme of devolution to enable a more citizen-centred and place-focused approach to public policy.

Click here for information on the new report Bordering on Prosperity: Driving forward sub-regional economic collaboration

Written in conjunction with our MAA Forum, the essay collection brings together some of the leading thinkers from across the country on the sub-regional agenda. The collection argues that collaboration between councils is continuing to go from strength-to strength but, as the policy frontiers are pushed, the debate about the future direction for the sub-regional agenda – or, perhaps more accurately, sub-regional agendas – is heating up.

In his foreword, new Housing Minister Hon John Healey said the essays provided some “sharp perspectives on the debate about further devolution to sub-regions”. In these economic circumstances, he argues that “we need active government and we need flexible government, willing to prioritise economic needs over any dogmatic commitment to old ideas or institutional self-interest”. He defends Regional Development agencies and argues that “We will extend the scope for sub-regions, but we must do so both with local authorities as the base and within a wider regional policy”.

In contrast the Shadow Local Government Minister, Bob Neill MP, adopts a far more critical stance on RDAs but states that a Conservative Government will “give local authorities the power to come together to establish new enterprise partnerships that truly reflect natural economic divisions, and to take over from their RDAs the responsibility for economic development within those areas”. Importantly he suggests that the Conservatives are “certainly open to encouraging building on existing partnership arrangements where appropriate”.

Professor Alan Harding and James Harding, from the Institute of Political and Economic Governance, argue that the repercussions of the Multi-Area Agreement (MAA) experience could be profound, representing “an early step on the road to what might ultimately be a radically different approach to the way central-local government relationships have operated in the past.

Simon Murphy and David Howl, from the Birmingham, Coventry and Black Country City-Region partnership, make the case for Accelerated Development Zones (ADZs). Neil Darwin, from the Regional Cities East partnership, makes a compelling case for a more flexible and inclusive approach to MAAs and sub-regionalism from central government. He warns central government against an exclusive focus on the traditional larger city-region model and calls for greater recognition of diversity and more control for smaller cities in England.

James Flanagan provides reflections from Leeds City Region, one of only two forerunner city-region pilots in the country. John Jory, Chief Executive at Mid Sussex District Council, argues that a business led partnership of public and private organisations working in collaboration that the shared aims and objectives of the sub-region can be delivered. Kieran Curran, form Lancashire County Council, provides an insightful comparison with the United States and the approach the Obama administration is adopting of allowing new ideas to be tested, whilst maintaining partnership between the federal states and Washington.

Nick Hope, editor of the essay collection and NLGN researcher said:

“This essay collection illustrates that there is no shortage of ideas about where the sub-regional agenda should go next. But collaboration across policy strands and administrative boundaries requires a change of mindset and new ways of working in both central and local government.

The key question, whichever political party is in Government, is whether they recognise the wealth of untapped economic potential out there and are willing to provide the leadership in central government to unlock the powers that local authorities need to harness it”.

Download MAA-essay-collection

Communities and Local Government Secretary Hazel Blears welcomed the ambition in the MAAs and sought to underline the government’s commitment to them, saying “there is real passion and drive behind these Agreements”.

This commitment was backed up by impressive Ministerial attendance. Secretary of State for Innovation and Skills John Denham was there, along with Secretary of State for Justice Jack Straw, and Regional Ministers Phil Hope and Beverley Hughes. Business Secretary Lord Mandleson, declared he was ‘an optimist about the success of MAAs because the principles behind them are based on good common sense”.

Representatives of the first tranche of Multi-Area Agreements signed in July 2008 were also present to witness the new agreements, as were those who are expected to be in the third tranche later this year, including the Olympic Legacy MAA team of Greenwich, Hackney, Newham, Tower Hamlets, Waltham Forest.

The focus of the Agreements was on equipping regions for economic regeneration. For example, the Pennine Lancashire Agreement aims to strengthen and connect their stretched rural economy. Their plan will use new powers to raise skills by 4per cent and help half a million people. They will create a ‘graduate into industry’ scheme at new Pennine Lancashire University campuses. To break down the economic barriers of rural areas they will develop better broadband networks and use new powers to redirect and pool funds to improve routes to Manchester, Leeds and local business areas. They will widen the M65 and develop new and improved rail services at Clitheroe-Manchester Raillink, Todmorden Curve and East Lancashire Railway.

Today’s event brings the number of signed Multi-Area Agreements to ten, and it was announced today that seven other areas are working towards MAAs to be signed later this year; North Kent, Birmingham, Hull, Fylde Coast, Milton Keynes, the West of England and the Olympic Boroughs.

The PBR stated that with regards to integrated city-region planning, within the context of the Single Regional Strategy, Government would consider the merits of greater flexibility over capital funding to support the more effective programme management of projects. It also suggested increased statutory responsibilities for strategic transport issues, which could involve greater co-ordination or joining up with with the new Integrated Transport Authority functions too.

Other proposals included:

• A joint board between the city-region and the Homes and Communities Agency to provide strategic direction of housing and regeneration spending
  
• A city-region Employment and Skills Board with strong employer representation and formal powers to influence provision in line with employer demand
  
• Integration of the DWP three levels of devolution model, as announced in the Welfare Reform Green Paper.

Crucially, if MAAs are able to negotiate statutory arrangements it will allow them to unlock a wholly new set of functions and interventions. They will be able to accept grant in their own right, enter into legal contracts and possibly raise revenue and host a borrowing capability of some sort. It looks as though the prospect of ‘MAAs+’ or ‘MAAs V2.0’ are now on the cards.

The Government announced that there would be at least two forerunner city-regions at Budget 2009. However, whilst these two sub-regions represent an important first step it is vital that many more MAAs are quickly granted the statutory status they need to drive economic growth, build economic resilience and further contribute to sustainable development in their area.

The PBR leaves a lot of unanswered questions regarding MAAs, but what it does say is significant and the details will no doubt become clearer with imminent Government response to the Sub-National Review.

With recession looming the economic impact will not occur evenly across the UK and those outside of London will be hardest hit. Recent statistics are already striking; insolvencies have increased by 40% in the North West since the second quarter of 2007 compared to an increase of 15% in London, in the same period mortgage possession claims issued have increased by 22% in the South West compared to a 9% increase in London, and house prices from June to August (annualised % change) have fallen by 19.2% in the North East compared to 9.8% in London. That is not to say that London doesn’t face huge economic challenges. Of course it does, but many of the challenges London faces are different to those in Leeds, just as many of the challenges Leeds faces are different to those in Leicester.

In this economic climate the old top-down decision-making processes of Whitehall are limited in what they can achieve. The Government’s approach in the coming weeks and months to sub-national economic development and regeneration will be vital. Ensuring that decision making occurs at the spatial level at which complex problems exist and effective solutions can be best found is critical. Multi-Area Agreements (MAAs), bottom-up sub-regional partnerships of local authorities that work together to achieve their economic priorities and vision, do just that. Seven have been created so far, but more will soon come online. MAAs negotiate devolution of powers from Whitehall Departments that they can then use to offer their own bespoke solutions, based on the key economic drivers and challenges they have identified in their area. Across England MAAs will be well placed to drive forward the agenda on transport, skills, housing, planning, employment, enterprise and productivity.

While the MAA acronym sounds “techie” and the debates around sub-regional governance structures might sound highly academic, the economic benefits they bring will be tangible- whether through encouraging business start ups in areas to create jobs or helping people get the skills they need to get into work. There is a risk that in tough economic times politicians will wrongly dismiss MAAs as an unnecessary diversion or distraction. But, MAAs are a key weapon in the country’s economic arsenal and they will help strengthen the economic resilience of areas. It is not enough for central government to ensure that it does everything it can in these daunting economic times; it must also ensure that it grants sub-regions the freedoms and flexibilities to do all that they can. The economic downturn should not stifle ambition and halt devolution, quite the opposite, renewed ambition and greater devolution is more needed now than it was before.

There is compelling evidence of a functional sub-regional layer of the real economy – whether you look at markets for labour, goods and services, relative economic performance, or industrial clusters. In addition, whilst there is variation across the country, research also suggests that in many places travel-to-learn patterns follow sub-regional geographies. For example, The CfBT has found that Manchester College of Arts and Technology recruits from every borough in Greater Manchester. Given that functional economic and skills training areas tend to follow sub-regional geographies it would seem that this is the most appropriate spatial level to operate and MAAs provide the opportunity for local authorities to do so.

MAAs will also be able to offer vital strategic oversight. Not only will they be able to co-ordinate and integrate the various elements of the education and skills system, they will be able to facilitate a more joined-up approach to the wider policy context. As it becomes increasingly clear that social and economic problems are multi-faceted, diverse and vary between localities, the case for “local place shaping” becomes ever-stronger and the need for MAAs all the more compelling. For instance, MAAs will be able to match up transport infrastructure and public transport with travel- to-learn patterns. They will be able to link education and skills training to their strategies to tackle worklessness and to improve economic performance. Having co-ordinated strategies, for planning, transport, welfare, employment, economic development, education and skills, is vital if spending and policies are to be most effective.
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Given this context, there is a growing feeling, in local and central government, that MAAs are an essential vehicle to deliver better skills and have a leading role to play in the skills system of the future. The first round of MAAs signed off in July 2008 provided a strong indication that this is the case with Greater Manchester, Partnership for Urban South Hampshire, Leeds City Region, Bournemouth, Tyne and Wear and Dorset and Poole MAAs all having a very strong skills focus. But other local authorities must act quickly and take the opportunities that are currently presented through MAAs.

The Government has stated that local authorities will need to submit their proposals for sub-regional groupings, for the delivery of 16-19 education and skills, to their Government Offices by 26th September 2008. Key powers may not be devolved to councils if they fail to establish strong and formal sub-regional partnerships. For instance, the responsibility for Further Education commissioning for 14-19 year olds will transfer from the LSC to a new government agency (the Young People’s Learning Agency), rather than to local authorities in 2010.

Skills is just one policy area where MAAs will provide an opportunity to pull funding and key responsibilities away from the centre to allow local authorities to tackle local challenges with locally tailored solutions. Now is the time for councils to show real vision and ambition. MAAs represent the best chance for local government to show that they can develop sub-regional arrangements organically, targeting resources more effectively at the spatial level where challenges and opportunities exist. Councils must step-up, otherwise there is a real danger that at a time when funding and responsibilities for skills should fall to local authorities they will immediately bounce back up to national or regional quangos.