City Regions, Local Enterprise Partnerships and Enterprise Zones: Elite Responses
The idea of City Regions is not a new one and has been accepted in principle by all major English political parties. Few would argue against an integrated approach to infrastructural improvement based on natural economic relations within an area. Certainly representatives from two Core cities whom we interviewed were enthusiastic for a City Deal. 'We were really, really pleased' (Local Authority CEO). However, a politician from a potential City Region told us, whatever the deal, 'I think it is delivery of these schemes that is the most important thing for all of them.' Because of the individual nature of each 'City Deal' they did not know what they would get at the time of interviewing. However, one council leader told us: 'We don't expect to have revenue raising powers because we have been told that the Treasury won't let us.' In the event, some cities did and others didn't. The lack of correspondence between the government's localism ideology and centralist practice also produced a certain amount of cynicism. 'My personal view is that we should be as independent as possible and we should have revenue raising powers
… but … I mean there is no loss of central control that I am aware of … At the end of the day, in my personal view, we want the kind of powers that you have in European Cities; the same levels of accountability and discretion over local taxes'
(Core City Mayor). Another correspondent believed that the Core Cities would proceed in this direction anyway and questioned the significance of the deals: 'without the City Deal it would not make a great deal of difference' (civil servant with regional responsibilities).
At the same time 10–15 cities had been invited to bid for a 'Super-connected Cities' programme which would give them super fast broadband. The first 10 were announced in the budget of 2012. Not all were Core Cities and not all Core Cities were included. They were Birmingham, Bristol, Leeds and Bradford, Newcastle and Manchester and the four UK capital cities. Ultrafast broadband is defined as a minimum download speed of at least 80Mbps (Department of Culture, Media and Sport, 2012). However, as one specialist body has pointed out, 'Sadly, the actual speeds associated with these terms isn't made clear, though the likes of Virgin's highest-speed fibre optic network of 100Mbit/s, already available in some areas, will surely be a benchmark' (What HiFi, 2012). Furthermore, the scheme has been scaled back by the government following complaints from companies who are existing major suppliers, so that it is now a voucher scheme available to small businesses (Business Analysis, 2013).
Prior to the Super-Connected Cities announcement, our Core Cities were reluctant to be specific about their broadband speed needs, but one LEP Executive said of his Enterprise Zone: 'we know what we mean by High Speed Broadband which may be a little bit more than Government is expecting'. In fact, some other LEPs which do not include Core Cities and will not become City Regions also have extensive plans for improved internet access. One rural area already has some 100 megabyte speeds and is planning super-super fast broadband (up to 200 megabytes) in some areas. Another small city is developing a different approach. It intends to focus on delivering a minimum 10 megabytes to every household with aspirations up to 50–100 megabytes. If the government is insufficiently ambitious, it may be that the City Regions could be overtaken by other local authorities and LEPs. Indeed, it subsequently became clear that while speeds would be good by existing European standards, they would not compare with other international players. The main reason for this is that the intention is that while fibre optic cables may be laid to the new hubs, only copper wire (which is cheaper) will be used from the new hubs to users.
The Localism Act offers some devolution of powers to any LEP, though the powers available are not specified. 'Core cities campaigned and lobbied hard to get an amendment in the Act whereby there could be a transfer of powers and responsibilities, not just to London but also to the Core Cities and actually what happened was that it was to any local authority' (Local Authority CEO). Almost all city leaders, however small their cities, would argue for the importance, not just of their economic hinterland but also of seeing them in the context of their whole 'travel to work and shop' footprint in working towards economic development. However, as an economic developer from a medium sized city put it to us, the Coalition Government's 'policy is encouraging the big cities to be competitive whilst ignoring the potential of the smaller cities … and the solutions for big cities
are not always the same as the solutions for small cities'. Thus there is a danger that certain government policies will concentrate only on the Core Cities. He argued that if all the smaller cities in his region came together they would represent the equivalent of two or three core cities. He wanted government to engage in conversation with them as well. Of course, the Cities' Minister had suggested that the government would 'consider the case for extending the city deal process to other communities in due course' (Clark, 2011), and, as we have seen, additional deals are being agreed in 2013, but the Localism Act also makes reference to LEPs as well as cities in this regard. The danger is that without sufficient core funding of their own, 'they'll have to look to the government for funding' and so 'will look inward' (economic developer) rather than seeking wider links.
The emphasis on the Core City within a City Region was also seen by some interviewees to have its downside. In one potential City Region LEP area, it was already causing tensions between the city proper and its rural hinterland. Superconnected cities funding, for example, will go to the cities themselves. The counties or smaller cities within the region have to apply to other sources of funding. As one Local Authority CEO told us: 'If we are successful in our superconductivity bid we are not going to be able to use that for them [other authorities within the LEP] … They will be saying what is going to happen to all of the money? All the money is going into the city.'
The claimed advantage of LEPs is that they are sub-regional. 'The introduction of a Local Enterprise Partnership is where we can bring together partnerships that aren't necessarily bound by local authority boundary … which can reflect the travel to work between the city and the county, because the city is in the centre' (local businessman). This is thought to provide a better basis for spatial planning within a local area. However, where LEPs contain smaller cities and mostly rural areas, there can also be problems of coherence. As an economic developer for a medium sized city complained to us, the surrounding rural areas dominate the internal debate: 'We have not had a sensible conversation in our LEP about Urban Policy because only two thirteenths of it is interested'. Even disagreements about tax receipts were anticipated. If business rates are retained, will these be by the city authorities, who currently generate most, or will the rural LEP members demand they be shared throughout the partnership? A city businessman from elsewhere argues for rebalancing, but in the opposite direction. Some cities could lose out because while they provide the services for a wide geographical area, 'it will lose because a lot of the larger companies are now located just outside the City boundary'. So the city has the cost of providing services, but the county has the business rates income. This has led to the pooling of business rates income in some areas. So far, we have found only one LEP website that has adopted the sharing of tax receipts (Leicester and Leicestershire LEP, 2013).
The latest City Deals could also present issues of coherence and co-operation. Most tend to refer, at least formally, to the relevant LEPs. LEPs, although administratively supported by the local authorities, are required to be dominated by business interests, hence the Birmingham and Nottingham proposals. LEPs
were originally described by one Minister (Vince Cable) as replacing Regional Development Agencies but operating over much smaller geographical areas. In a few cases where a single city dominates a city region, like Birmingham, this appears to be possible. However, the development of the latest round of City Deals (2013) has further complicated the matter since, although billed as 'City' deals, most appear to involve LEPs to some degree or another. Where one city dominates and is the focus of the LEP economy, the aims of the City Deal and the economic growth plans of the LEP are likely to be compatible, but where there are rival cities within the LEP, tensions may develop between any 'City Deal' and the local growth plan of the LEP. Indeed, should one city within a LEP be offered a City Deal and another not, tensions are likely to be intense. It seems likely that there may be a move in future to realign cities and their hinterlands between LEPs.
The City Region model's ideal governance structure is either a CCA with high local government involvement and so democratic openness, or a directly elected Mayor within the dominant city. While one leading businessman liked the idea of there being a choice, this could present problems. Were a LEP to contain within it more than one directly elected Mayor, there would be the potential for confrontation at least as great as any prospect of co-operation. Indeed, even where there is only one directly elected Mayor, that Mayor's remit is currently restricted to the city itself. Many city hinterlands, or as Local Authority Economic Developers prefer to think of it, the 'shop and work footprints', will contain a number of other smaller cities. What, then, is the relationship between the directly elected Mayor and the other urban administrations? At least one directly elected city Mayor has been heard to muse about his future relationship with the City Region. As one of our interviewees said, co-operation would require one to overlay the governance of directly elected Metropolitan Mayors over the whole region. But if that were to be done nationwide, would you then need LEPs?
Similar issues of co-operation and coherence could potentially arise with Enterprise Zones whose locations vary widely. Whilst most regarded them as a potential valuable addition to their local economies, there was concern about how well thought through the policy had been. As one Core City politician explained about central government: 'The thing that gets me is the lack of purpose. They only create structures'. So the local authorities are left with the task of integrating the new developments into their existing economies. Where an Enterprise Zone was not inside or in proximity to the city boundary, there are genuine fears about directly negative impacts. 'What we've got to try and stop people doing is going there instead of here. Displacement is not something that we want … Do I see it as a risk? Absolutely!' (Local Authority Council Leader).