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Dr Neil Lee
Head of the socio-economic centre
T 020 7976 3611
Dr Neil Lee

'City Deals' are an important first step - but localism should not stop here

Authors: Dr Neil Lee Dr Neil Lee

08 December 2011

A series of ‘City Deals’ have been announced today with the Huffington Post and LGC trailing the story. Amongst other things, the eight core cities will be getting a single consolidated capital pot, fast track Tax Increment Financing and a single City Skills Fund to help match skills needs with provision.

This is an important and welcomed announcement. But the challenge is now for cities to prove that they can deliver economic growth using the new powers they have been arguing for. Given that growth is predicted to be 0.7% next year, now is a tough time for cities to get what they want.

Devolving power is never easy, however, and there will be some challenges along the way – the success of these deals depends on managing these pressures. First, we need to be careful not to expect too much payback too soon – the City Deals are important, but benefits will be long term and any new powers are dwarfed by the wider economic context.

Second, it will require buy in across Whitehall. In – Streets Ahead: What makes a city innovative? – a Cities 2020 report released yesterday, my colleague Lizzie Crowley argues that innovation policy has been increasingly centralised. Cities need to be able to come up with a policy to reflect their own distinctive innovation ecosystems.

Third, for true localism to succeed the government is going to have to accept that sometimes failure happens.  National government needs to keep an eye on the big picture and give cities the freedom to sometimes fail, learn from each other and ultimately succeed. Media pressure from a few high profile problems is inevitable in the longer term. The government needs to accept this.

Cities face a difficult economic climate in which to prove their worth. The City Deals represent an important step towards devolving powers to our cities, enabling them to drive economic recovery. Yet we shouldn’t see them as the final step in empowering our cities - they are only the start.