The present Coalition Government believes in 'small government' and is determined that economic growth will be generated predominantly from the private sector itself. Whilst there remain various government funding initiatives
(such as BIS Start-up Funding, Capacity Funding, the Regional Growth Fund and the Local Growth Fund) to be bid for, the amounts of such funding are greatly reduced over those provided by the previous administration. The creation of City Regions as well as LEPs is an attempt to encourage co-operation within subregions both between business and local authorities and between different local authorities themselves, with the aim of their self-funding economic development. Hence the slight increase for some City Regions in revenue related powers.
City Regions have been used across Europe to encourage urban economic growth and impact upon their regions, although in practice this appears not always to have been as successful as has been claimed (European Network of City-Regional Competitiveness Programme, 2000–2006). However, it is clear that to be effective they do require that appropriate powers be devolved from national governments, especially revenue-raising powers. While Core Cities were enthusiastic about being designated City Regions, not all have gained all the additional powers they wanted, and any shortage of serious revenue raising powers is likely to hold them back.
The government is in the process of agreeing to an additional 20 City Deals during 2013/2014. Whilst the individual City Deals will devolve particular additional powers to the cities in question, in principle, other smaller cities and even LEPs in relatively rural parts of the country may seek additional powers under the Localism Act of 2011. If all LEPs were successful, this could lead to a real fillip to economic growth. However, realistically, not even the government expects all LEPs to succeed. Indeed, as we have seen above, moves are already afoot at the local level to consider restructuring LEP membership and realignment of local authorities. Also, since this is supposed to be bottom-up economic development and the government requires competitive bidding for any government funds, there is an inevitable potential danger of competition between cities. Already plans for some Enterprise Zones in proximity to one another suggest that there may be competition in particular sectors.
As many as 25 medium sized cities, including many of those cities involved in the second round of City Deals, have already formed themselves into a new pressure group called the 'Key Cities'. This is a potential challenge to the Core Cities group. While at the time of writing it is unclear what their aims will be, they no doubt will develop distinctive requirements. There are proposals for these two groups, along with the Greater London Authority (GLA) and the London Boroughs, to form an Urban Forum within the Local Government Association (LGA). The LGA has attempted to speak for local authorities, though it has never spoken for all of them. With the rise of the Urban Forum, the default rump of that organisation is the County Councils and some Districts. At the same time, various other, less formal, groupings are developing around infrastructure issues, like the East Coast Railway group. With LEPs and City Regions cutting across local authorities as well, there is a serious danger that their collective voice will become weakened at a time of severe central government imposed cuts on local authority finances, and the danger that the local authorities could become a series
of disparate voices. Whilst this might be seen as a form of extreme Localism, it is unlikely to aid local authorities and their provision of services at a time when their budgets are predicted to fall yet again by 2015/2016.
The Minister for Business, Information and Skills has been reported as complaining about the lack of an overall national economic strategy from the government of which he is a member. In 2013, some limited sort of growth strategy appears to be emerging. Without such a strategy there is a serious danger that the bottom-up approach could lead to far greater differentials between sub-regions. Indeed, the recent analysis of the gross value-added figures for 2011 by the Centre for Research on Socio-Cultural Change (CRESC, 2013) suggests that differentials are substantially increasing. Ironically, the former RDAs were criticised for failing to equalise economic growth between themselves and were thus abolished. Yet, as one of our respondents pointed out, reducing regional inequalities is not the job of regions or local authorities. It is the responsibility of national governments, who need both coherent policies and a structure for their delivery. As Parkinson et al. (2012) argue, deconcentration of investment and decentralisation of responsibilities and resources can improve performance, but national governments must not abdicate responsibility for delivering policies.
The City Region in England is an old idea in a new wrapper. It is a development which the large cities have been pressing for, and the potential is very considerable. Their enthusiasm for the project is likely to be a highly significant factor in making it a success. However, there are some serious downsides which it appears are not being adequately addressed both in terms of devolution of powers and in coordination.