Unlocking Growth in Cities

Greg Clark Excerpts

Tuesday 20th March 2012 Written Statements

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

I am delighted today to inform the House that the Government and Manchester have agreed a ‘city deal’ which focuses on a new financial instrument to drive growth based on an ‘earn back’ principle.

In December the Government launched “Unlocking Growth in Cities”, which set out the terms for a programme of city deals—binding agreements that enable cities to negotiate the devolution of the specific powers, resources and responsibilities required to meet locally determined economic and social objectives.

Over recent months, I have undertaken negotiations with the Greater Manchester Combined Authority and local enterprise partnership to bring forward radical devolution proposals that will enable them to drive economic growth. At the heart of this ‘deal’ is an intention to create a revolving infrastructure fund, allowing Greater Manchester to ‘earn back’ a portion of the additional tax revenue from the increased gross value added generated by the £1.2 billion it is investing in infrastructure, on a payment-by-results basis. Greater Manchester will reinvest ‘earned back’ funds into further infrastructure projects, prioritised with regard to their ability to drive further economic activity.

This enterprising model is symbolic of the sorts of innovations that I hope will be equalled and surpassed by future ‘city deals’.

Other elements of the deal commit Manchester to:

Establish a Greater Manchester investment framework to align core economic funds from central Government, European funding, and the private sector funding to drive economic growth. Investment will be prioritised on the basis of gross value added and jobs per pound of public funding.

Create a city apprenticeship and skills hub to channel participation funding direct to employers, in particular small and medium-sized enterprises.

Strengthen Greater Manchester’s business growth hub, which includes access to trade, investment and businesses advice, with Government contributing £4.4 million of transitional funding, prior to local funding from enterprise zone revenues coming on-stream from 2015.

Develop Manchester’s role as a beacon for high value inward investment. Greater Manchester and UK Trade and Investment will work jointly to analyse Manchester’s assets and opportunities, and then to pursue the investment pipeline that emerges. This will include analysis of Greater Manchester’s new Graphene Institute and existing links to emerging economies including China and India.

Greater Manchester will establish a low carbon hub, and work with Department of Energy and Climate Change to develop a plan to reduce emissions and UK Green Investments and Greater Manchester plan to establish and fund a 50/50 joint venture company (Greater Manchester Green Developments Ltd) to develop a portfolio of investment propositions (e.g. retrofit housing, retrofit public buildings, heat networks).

Establish a joint homes and communities agency and Greater Manchester housing investment board to set up an investment fund, utilising national investment streams and locally generated resources to develop new housing, both for market sale and affordable access, initially on land in public ownership. It would also identify opportunities to bring additional empty homes back into use.

Commit Government and Greater Manchester to work together towards delivery of a package of transport proposals encompassing devolution of the Northern and possibly the Trans-Pennine Express franchises (working with other authorities including Merseyside, South Yorkshire, Tyne and Wear and West Yorkshire); bus improvement measures, including the devolution of central subsidies and smart ticketing; and devolution of local transport majors funding.

This is the second city deal to come forward. Further city deals are being negotiated.