New city deals for distributed wealth creation in UK

Posted on 12 Jul 2012 by Chris Flynn

Last week the government agreed to devolve new powers to England’s largest cities. Chris Flynn speaks to manufacturers for their view on the City Deals.

On July 5 deputy prime minister Nick Clegg and cities minister Greg Clark unveiled a series of deals with six core cities to help them invest in growth, improve local skills, create jobs, support local businesses, control budgets and improve critical infrastructure.

In December 2011 the cities were invited to suggest the powers they need to drive local growth. Each city has now signed up to a series of pledges in order to receive funds from the government to directly invest in growth and infrastructure.

The six cities – Birmingham, Bristol, Leeds, Newcastle, Nottingham and Sheffield – will join Manchester and Liverpool, whose deals were already in motion, to make a total of eight core cities outside of London.

Nick Clegg said: “These groundbreaking deals signal a dramatic power shift, freeing cities from Whitehall control. Everyone in these eight core cities will feel the benefits, from young people looking for jobs, to businesses looking to expand.”

He added: “They are the economic powerhouses of England – so it makes sense that the cities decide for themselves how to boost their local economies.”

Tailor made

Each deal is designed to suit each city’s needs. Leeds and Sheffield will each form combined authorities, bringing their existing local authorities together to make more strategic decisions about how money is spent and what it is spent on. Newcastle is working with the seven authorities across their economic area to take steps towards forming a combined authority.

Liverpool and Bristol have voted to directly elect mayors supported by strong decision making structures across the wider economic area.

Greater Birmingham and Solihull has established strong private sector leadership and decision-making across its local enterprise partnership and Nottingham has created a new private sector-led governance structure to deliver their deal.

Andrew Esson is managing director of Quick Hydraulics, a hydraulic manufacturer based in North Tyneside. Quick Hydraulics falls outside of the area covered by the Newcastle deal but he still expects it to have a positive impact on the company.

“Although my business is based in North Tyneside rather than Newcastle, I would expect that anything good for Newcastle will be good for North Tyneside as well,” he said. “One of our greatest frustrations up here is the transport infrastructure and how difficult it is to get from one side of the city to the other. Hopefully the deal will accelerate the elimination of bottle necks on the A1 through Newcastle.”

Less London-centric

John Leach, head of automotive at consultants KPMG, commented that improving transport between and within core cities is an important issue.

“For local businesses the link to London isn’t absolutely fundamental as links to other nearby cities and areas. All roads seem to point towards London which is fine if you want to visit your banker or lawyer but not if you want to work with other companies,” said Mr Leach.

Independence on skills

Another issue addressed by the city deals will be the skills agenda with the opportunity for cities to communicate with local businesses on how skills should be taught.

Kevin Parkin, CEO of Sheffield-based R3 Products, feels that a demand led skills system needs to be created: “We have had too many supply-led skills for too long and young people are not coming into businesses with the skills sets that we need.

“With a demand led skills system we can specify exactly what we want and we can match the skills of individuals with the skills of businesses and we need a huge amount of skilled workers to replace the amount of people that will retire in the next 5-10 years,” he said.

“It should have come ten years ago though. Now that we have it under our own control we can decide where the funding goes. We can decide exactly the skills that we need and tailor individuals to be ready for work,” he added.

Not a moment too soon

The view that these deals should have come sooner is shared by Andrew Esson. “It could have been much sooner,” he said. “Personally I would like to see an even bigger and broader deal to include the Tyne and Wear region.”

Mr Esson also questioned the deputy prime minister’s statement that the deals signal a “dramatic power shift.”

The Quick Hydraulics MD said: “Like many people I tend to be a bit sceptical these days but I think it is far too early to come to the conclusion that this is a power shift. It certainly gives a bit more autonomy to the Newcastle and Gateshead area but we will have to wait and see what effect the deal has.”

However, leader of Leeds City Council, Councillor Keith Wakefield, disagreed: “This deal spells the beginning of a fundamental shift in the relationship between Whitehall and the core cities. It marks the first steps of a new era which will allow the North to truly control its own destiny.”

John Leach added that it will take time to see the full effects of the deals but insisted that all companies within the core cities need the opportunity to access the soon-to-be available funds.

He said: “I think we are on a journey and the direction of travel is definitely for a devolvement of power in terms of economic funding for business and skills provisions for businesses but we need to make sure that there is a trickle down of funding to all organisations.”

For more information and to view each city deal visit