In particular we will be discussing the future of capital finance availability and desired flexibilities for city regions, MAAs, any new Economic Prosperity Boards as well as regions.

Split into three sections, this event will commence with overviews from key speakers from Partnerships UK, One North East and WSP (to be confirmed), before moving into small roundtables to focus on specific asks from central government. The final session, with politicians from the major political parties, will provide the Forum with the opportunity to put across the specific asks as well as hear where each party is on the future for capital finance.

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