Core Cities

Greg Clark Excerpts

Thursday 8th December 2011 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

(Urgent Question): To ask the Secretary of State for Communities and Local Government if he will make a statement on the powers and finance he intends to devolve to local authorities.

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

I am grateful for the opportunity to answer.

I have laid in the Library today a copy of a document that the Government are publishing entitled “Unlocking growth in cities”, and I have laid a written ministerial statement. The document outlines a new framework for the relationship between our larger cities and central Government.

England’s largest cities—many of the issues in question are devolved matters—are the economic powerhouses of our country. We are offering them a menu of new powers that we want to explore as part of a series of bespoke “city deals”. The ability to do that comes from an amendment that was introduced into the Localism Bill, which was promoted by the core cities group and attracted all-party support. It allowed powers to be devolved to cities in future, and I believe it is important to act on it.

Our cities have great potential to contribute more to growth, and to enable them to do that we want to free them from Whitehall control in a number of areas, with the aim of stimulating growth. The first wave of deals that we propose will be with the eight largest cities and their surrounding local enterprise partnerships. As with any deal, cities will have to offer something in return for their new powers and funding. They must guarantee that they can provide strong and accountable leadership, improve efficiency and outcomes, and be innovative in their approach.

The bespoke approach of recognising the differences between cities and allowing licensed exceptions is a new idea to put cities back in charge of their own economic destiny and enable them to seize the opportunities for growth. It represents a big shift in how Whitehall works, with the presumption being that powers should be handed down wherever cities make a convincing case.

It is important to say that today’s document sets out a series of indicative options for the transfers of control that could be considered as part of each deal-making process. The list is not intended to be a statement of policy or represent an automatic entitlement for cities. It is neither prescriptive nor exhaustive, but it might help the House if I give some examples of the content of the document.

We want to bring an end to the current system of requiring cities to bid to different Whitehall departments for different pots of cash, whether for roads or housing. Instead, we want to explore whether they can get one consolidated capital pot, to direct as they see fit. We want them to have the ability to set lower business rates for certain types of company. We already have very successful business improvement districts, and sometimes firms in a particular sector across a wider area may benefit from the same degree of flexibility.

There will be a £1 billion boost to the regional growth fund to create jobs, and we will encourage cities to bid for that money to help clusters of businesses in their area, so one bid could help several small companies. We know that many small businesses find the system of taking on apprentices daunting, so cities will be able to set up city apprenticeship hubs, which will help local employers and local people to make the most of the opportunities offered by apprenticeships.

We want to improve the way in which services work together in cities, to make it easier for people to get back into work instead of being passed from one service to another—from Jobcentre Plus to the town hall to a careers adviser. That can be done under one roof, and we want to make that possible. We also want to offer powers over infrastructure to unlock investments in improving transport, housing and broadband. Currently, transport projects can be delayed because cities have to go through the Whitehall machinery, but they may have the capacity to make some of the decisions themselves. Cities should also be able to have more of a say on their priorities for housing and regeneration, instead of having to go through the Homes and Communities Agency.

Cities will be able to bid for a share in a £100 million capital investment pot to spend on ambitious broadband infrastructure projects. We expect bids to include a range of projects, including superfast broadband for strategic business areas and city-wide high-speed mobile connectivity.

As I said, we want to start with the eight core cities that proposed the amendment to the Localism Bill, but I wish to be clear that our vision extends to the whole of urban Britain. I will be open to suggestions from other cities about how they can make use of the powers that the Bill, now the Localism Act 2011, gives them.

The powers that we are proposing will help to allow our cities to be the economic, social and cultural magnets that they have the potential to be, and places where people aspire to live. Our cities have too often been straining at Whitehall’s leash, and they now have an opportunity to seize the powers that are available to them. I hope that the conversation and negotiations that we will have in the months ahead will be fruitful, and I commend this statement to the House.

[Mr Speaker]

Yes, I notice that the Minister refers to his “statement” to the House, and his observations did somewhat exceed the time limit allocated to Ministers for dealing with urgent questions—so much so that one wonders whether he might have considered making an oral statement in the first instance.

[Hilary Benn]

I am grateful to the Minister for his reply, but it should not have taken an urgent question to bring him to the Dispatch Box this morning. Once again, a major policy announcement affecting local government, this time made in the Deputy Prime Minister’s speech in my constituency this morning, is all over the national and regional media, who were clearly pre-briefed yesterday, whereas the House should have been told first today.

The efforts of councils and communities up and down the country make the biggest contribution to our cities, and it is the Government’s job to help them do so. At least the Deputy Prime Minister acknowledged today that areas once synonymous with urban decay were “dramatically revived” thanks to Labour’s investment. However, when we examine the “unprecedented transfer of power” that he has talked of, in fact we find unprecedented cuts, as confirmed in this morning’s local government settlement, on top of the cuts already resulting from the scrapping of regional development agencies. Those cuts are substantial, front-loaded and unfair.

Will the Minister explain why the 10% most deprived local authorities, which include the core cities of Manchester and Liverpool, are facing reductions in their spending power nearly four times greater than the 10% least deprived authorities? There is only one way to describe that, and it is as balancing the books on the backs of the poor or, when it comes to job losses, on the backs of women, who have lost twice as many jobs in local government as men since the coalition was formed. How many more public sector jobs will be lost in the core cities in view of the revised Office for Budget Responsibility forecast published last week?

When does the Minister expect the new powers for the core cities to be confirmed? He has assured the House today that they will be available regardless of the outcome of the mayoral referendums, so when does he propose to extend them to other councils?

On the devolution of local funding, we developed single pot funding, a good idea that is now being taken forward. We welcome that, but will the Minister tell the House by how much the Government have slashed local capital spending in the core cities? Is that not why we now face an “infrastructure deficit”? Those are not my words but those of the Prime Minister.

How will reducing the affordable housing budget by nearly £4 billion unleash the power of local councils, including the core cities, when it means that they will find it much more difficult to provide the homes that their people need?

Councils will welcome a role on apprenticeships, although many already play a role, but why are local authorities, including the core cities, excluded from playing a part in the Work programme? Surely they should have a role in helping people to find jobs, which is an urgent task up and down the country.

On the changes to local government finance announced by the Deputy Prime Minister today, which will affect all councils, will the Minister give the House an assurance that no local authority will lose out financially? Will there be effective redistribution from the most well off to the least well off? How much of the increase in business rate revenue do the Government plan to keep for themselves? How exactly is that localisation?

On the business rate discounts, to which the Minister referred, who will decide where and to which industry they can be offered, and will he assure us that that will not just result in better-off areas being the ones that can attract new businesses?

The Opposition support strong and innovative local government, which should have the powers it needs to do that job, but no amount of warm words will hide two very uncomfortable facts: the Government are cutting unfairly and their failed economic policy is undermining the growth of our core cities and all local communities, when what they really need is a change of course.

[Greg Clark]

I accept your words, Mr Speaker, that, such is the replete quantity of announcements that we are making, I might have made a statement on them. However, I am pleased to be able to respond to the right hon. Member for Leeds Central (Hilary Benn).

The intention of the proposals is to begin a series of negotiations with cities—we have not made a definitive announcement of powers that will be vested in one city rather than another. I thought it reasonable to publish a document to encourage cities across the country and see what others have suggested.

The right hon. Gentleman mentioned RDAs, but he will know that local enterprise partnerships in each of the cities are making major contributions to our reform. It is significant that when people were invited to make a proposal on how they should organise themselves economically, local businesses and local authorities proposed core cities as a preferable alternative. I am not aware of any consensus on the retention of RDAs.

On the local government finance settlement, to which the right hon. Gentleman referred, he will know that this is the second year of a settlement announced last year. I can confirm that the figures are exactly the same. The average reduction in spending power is 3.3%, which is less than last year’s reduction, and there is the protection of a maximum reduction of 8.8%.

In terms of fairness, we have again advantaged the deprivation and needs component of the formula to ensure that it has a greater weight compared with the system that we inherited.

On jobs, the right hon. Gentleman will know that to rebalance the economy it is important that we have private sector job creation. That is the agenda that the local enterprise partnerships are putting forward, and each of the core cities is clear that that is what is needed. They have a great capacity to create private sector jobs. Our future jobs are likely to come from knowledge-intensive industries, of which cities are ideally placed to be the hosts. In cities, people are in close proximity with one another and can share knowledge and insights. Cities will be the cradles of growth in future, and it is right that private sector job creation should be the key to that. He will also know that the Office for Budget Responsibility independent report on the autumn statement projected an increase in private sector jobs of 1.7 million in the years ahead.

We will negotiate case by case on what each city would like to be part of the single pot. It is important that we recognise that the needs of Liverpool are perhaps different from those of Bristol or of Leeds.

The right hon. Gentleman asked who should approve the discounts available in business rates. That is clearly a matter for the local authorities representing the whole of the city area. When there are industry-specific arrangements, we would expect a ballot of those industries, as with business improvement districts, which can have a higher levy.

The proposals we are making today are consonant with the discussions that we have had with each of the core cities during months past. I hope that the right hon. Gentleman and his colleagues, having been instrumental in providing this power, will join the leaders of all parties in the cities to ensure that we can give them the tools they need to unlock growth in their areas.

[Mr Stewart Jackson (Peterborough) (Con)]

The Minister’s reply to this urgent question shows that this Government are serious about civic renaissance. Will my right hon. Friend make efforts to speak to his colleagues in the Treasury about supporting tax increment financing and residential estate investment trusts, and about the development of more detailed special-purpose vehicles to access private sector capital to drive regeneration, not just in large cities, but in smaller ones such as Peterborough?

[Greg Clark]

My hon. Friend is absolutely right. One power that we are keen to see devolved to cities is a greater ability to invest in infrastructure, which can unlock growth and lead to financial prosperity. We have consulted on suggestions for tax increment financing and will propose our response shortly, but it is clear that cities want to be in the vanguard of using such powers.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

The Minister talked about the devolution of business rates, but he did not respond to the question that my right hon. Friend the Member for Leeds Central (Hilary Benn) asked him on Government plans to retain part of the revenue from them. If the Minister is serious about localism, will he tell the House whether the Government will consider options for devolving all business rate revenue to local government and not allowing a clawback by the Treasury?

[Greg Clark]

The right hon. Gentleman will know that the Government have consulted on precisely that. It is important that there is a strong connection between an authority’s business rate receipts—all authorities; not just cities—and its policy behaviour in respect of businesses. The direction in which we are headed is very clear, but the precise technical details will be made clear in days to come.

[Lorely Burt (Solihull) (LD)]

I welcome today’s announcement, particularly the repatriation of business rates. Real localism means people having their own money to spend how they decide locally. How many savings will be made by reversing Labour’s Whitehall centralisation, under which so much taxpayers’ money was lost in administration costs before it ever got to front-line users?

[Greg Clark]

There is recognition that whatever the intentions behind the regional agencies, whether RDAs or regional arrangements more generally, they had become instruments—or, as it were, embassies—of Whitehall in the country. Our preferred approach is to devolve powers to cities so that they can revive their reputation of being able to determine their own future and stand proudly in the world as beacons of investment.

[Mr Graham Allen (Nottingham North) (Lab)]

As Chair of the Select Committee on Political and Constitutional Reform, I strongly welcome the principle and philosophy behind today’s announcement and the co-operation with the core cities in moving the proposals forward. All parties should ensure that they are on the right side of the ambition of local government for greater independence. Is the Minister aware that local government in this country is one of the few in any of the western democracies to remain a creature of statute? Will he consider pushing localism much further towards genuine independence, as is enjoyed in other western democracies? The Local Government Association is currently looking at that and might well campaign on it in the new year.

[Greg Clark]

I commend the work of the hon. Gentleman and his Committee. He is right that we want to improve the standing of local government and its ability to be recognised as having—in effect—a constitutional significance that cannot simply be brushed aside. As he will know, our reforms in the Localism Act 2011 move considerably in that direction to establish a general power of competence for local government, so that it no longer exists to do those things that it is told to do by Parliament and central Government. Instead, the default should be the other way around: councils should be able to do things unless they are explicitly prevented from doing them by Parliament. The Act is a huge step in that direction, but I look forward to the report from the hon. Gentleman’s Committee—it will be taken very seriously in the Government.

[Julian Smith (Skipton and Ripon) (Con)]

This is a great opportunity for northern cities such as Leeds to seize back control from London. Does the Minister agree that Leeds is doing the right thing by attracting inward investment, sovereign wealth funds and other sources of capital, and not relying on money from Whitehall?

[Greg Clark]

My hon. Friend is absolutely right. One of the things that was suppressed under the old regional arrangements was the identity of cities internationally, and one of the proposals that we make in the document is that UK Trade & Investment should work even more closely with cities to promote the identity of cities such as Liverpool, which is world renowned and should be given particular prominence in UKTI’s work around the world.

[Mr Ben Bradshaw (Exeter) (Lab)]

I was pleased by the Minister’s clear statement that these new powers would not be restricted to the biggest regional cities, but applied—as he said—to all urban areas. But how on earth is that compatible with one of the first decisions that this Government made, which was to take away Exeter’s unitary status?

[Greg Clark]

I know that there has been an extensive debate, and great opposition in the area, about that issue, but it was settled. Rather than change administrative boundaries, which could bog down this process and waste time, our choice has been to respect existing administrative boundaries and, within that, transfer powers.

[Guy Opperman (Hexham) (Con)]

Will the Minister outline how his core cities plans will impact on business rates and investments to boost the economy of Newcastle and the north-east?

[Greg Clark]

The connection between business rates and investment should of course be a virtuous circle. It should be possible to invest in major infrastructure projects knowing that they will attract business, so establishing a clear connection between the activities and behaviour of the council and the rewards for that. The proposals that my right hon. Friend the Secretary of State for Communities and Local Government will make on the reform of business rates, combined with the access to single capital pots, will provide—for the first time—the ability as of right for cities to invest in their infrastructure, attract businesses and reap the rewards of doing so, and so enter that virtuous circle.

[Jonathan Ashworth (Leicester South) (Lab)]

The Minister has announced some very interesting measures, but I am not entirely sure that they will compensate for the huge cuts our cities face. It is very disappointing that Leicester is still not considered a core city. We are the pre-eminent city in the east midlands, we have a very successful mayor in Sir Peter Soulsby—a former Member of Parliament—and I am sure that the city could benefit from some of the proposals announced today. Will the Minister add Leicester to the list of core cities?

[Greg Clark]

The hon. Member for Nottingham North (Mr Allen) looked somewhat askance at that, but I think that rivalry between cities is healthy. Cities should have an identity, and verve and competitiveness should be encouraged. As I said to the right hon. Member for Leeds Central (Hilary Benn), I will not rule out the inclusion of any cities that can make a good case for taking on some of these powers. I would certainly expect Leicester to be pre-eminent among those cities.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I grew up in the city of Liverpool and I am sure that fellow Scousers will welcome these proposals, but I now represent a seat in Suffolk, which does not have a city but is bigger than most of the cities that my hon. Friend has mentioned. What is stopping the transfer of these powers to shire counties, and why are they being restricted to cities at present?

[Greg Clark]

My hon. Friend knows that our agenda for decentralisation extends across the country to authorities of all types—indeed, the Localism Act enacts those powers—but it is right to recognise that our cities have particular challenges and opportunities. Just as cities around the world have prospered from having a policy focus, it is right that we should consider the challenges of urban Britain and, by transferring powers to cities and encouraging them to realise their potential, we should help our cities to do what cities in other countries do, which is to match or exceed the national average of prosperity. Too often, our cities are below the national average in income, and we want them to improve their position.

[Tony Lloyd (Manchester Central) (Lab)]

The Manchester region will welcome the direction of travel that the Minister spells out, but does he recognise that the fundamental partnership between the previous Government and my city—and other northern cities—which saw such dramatic changes, was premised on the fact the Government ensured that resources were adequate? Will he guarantee that we will see a proper resource base for our core cities?

[Greg Clark]

The reforms give more control and more direct ability for authorities to have the resources that they need to invest. One of the features of the system that we inherited from several Governments is that too often our great cities, which have an international standing and reputation, have had to look up to Whitehall to plead for assistance when they have the capacity and resilience to invest and reap the rewards themselves. That is the change that we want to secure and these proposals are a step towards that.

[Stephen Williams (Bristol West) (LD)]

The Minister has visited Bristol and he will know that the city of Bristol is not the same as Bristol city council. A pot of money will be welcome to help to solve the city’s transport problems, but power over the entire urban area would be more welcome. Will the Minister endorse the case for an integrated transport authority for the county that used to be Avon?

[Greg Clark]

This is one of the proposals that I expect to come from Bristol. The Government recognise, in this document, that cities include their surrounding area, and indeed that is how local enterprise partnerships defined themselves. One of the criteria for the deals is to ensure that all the connections in the area in and around the city are reflected in what is proposed, so I expect that to be part of the discussion that we will have with the authorities in my hon. Friend’s area.

[Mr Gordon Marsden (Blackpool South) (Lab)]

What the Minister’s paper shows, in what it says about LEPs and skills, is that Ministers are having to reinvent the wheel on what RDAs did. Belatedly, they are giving powers to LEPs, wasting 12 months in the process. Does he accept that, as Members on both sides of the House have said, these powers and opportunities should also be available to second-level towns, coastal towns, rural areas and suburban areas on the edge of cities? Will he also look at the need to combine a skills strategy with localism in those areas—something that his colleagues in the Department for Business, Innovation and Skills and across the Government have so far failed to do?

[Greg Clark]

That is explicitly referred to in the document. We want to give the opportunity for cities to engage in skills strategies and help to equip the next generation of workers to enable businesses to prosper. I have been clear in what I have said: while we are starting with the core cities, this should by no means be seen as an exclusive process and I want to extend these principles beyond that.

On the point about the ability to do this through LEPs, I think that the identity and strength of cities were submerged under the regional structure that we inherited. Having swept away the regional approach, we are giving life to the potential of these cities, as is being increasingly recognised.

[Martin Vickers (Cleethorpes) (Con)]

I welcome the Minister’s announcement and the continuing devolution of powers to our local authorities. Like the hon. Member for Blackpool South (Mr Marsden), I represent a coastal constituency, and my constituents will be concerned that investment will be sucked into our cities to their disadvantage. Will the Minister assure me that other measures will be introduced that will help constituencies such as mine?

[Greg Clark]

My hon. Friend knows that coastal cities have been a particular focal point for the Government. As a considerable presence in his area, he will want to encourage his authority to make use of some of the powers that are generally available. It is right to recognise the importance of cities and what they can do, but one of the contributions that they can make is to revive the prosperity of areas even outside the city boundaries, and I am sure that that will be the case in and around the Humber.

[Nick Smith (Blaenau Gwent) (Lab)]

May I press the Minister on the point that local authorities should surely be included in the Work programme? They could play a great part in helping people to get jobs.

[Greg Clark]

The document makes an explicit proposal that local authorities should be able to participate in the Work programme. It is relevant for them to be able to bring local insights to bear, the better to get people from welfare into work.

[Robert Halfon (Harlow) (Con)]

I welcome these moves from Fabian centralisation to local democracy, but will my hon. Friend consider extending these devolved powers to core new towns such as Harlow, especially given that we are now an enterprise zone?

[Greg Clark]

I am delighted by Members’ requests to extend these powers beyond the cities. It is music to my ears. I would be delighted to have such compelling propositions and requests from cities and new towns and indeed from other parts of Britain. We are starting with the core cities, but we want to go further.