Out-Law News | 23 Oct 2014 | 11:36 am | 2 min. read
The final report of the RSA City Growth Commission, an initiative led by former Goldman Sachs economist Jim O'Neill, concluded that a political system in which economic decisions were centralised in London was "not fit for purpose" and "unsustainable in the long term". It called for a "radical reshaping of the UK's political economy"; a so-called 'devo met' which should run in parallel with 'devo max' for Scotland.
"The ambitious goal of the commission was to think of specific recommendations to boost the trend growth rate of the UK economy," O'Neill said. "We conclude that bolder efforts to improve our infrastructure, both digitally but especially physically, are crucial for creating agglomeration."
"We argue that all 15 metro areas should be able to take on different packages of devolved powers over time, and there's no reason why other places could not come together to take on policy and budget flexibilities too. The current five metro areas that have Combined Authorities seem to be the best placed, along with London, for warranting earlier steps towards full 'devolved status'," he said.
However, the report warned that the scale of the challenge was "huge". Greater Manchester, which is England's largest 'metro area' after London, already operates at a fiscal deficit of between £4bn and £5bn annually, it said. Greater Manchester is one of five 'combined authorities' created by the government in April 2014 along with Sheffield City Region, North East (Newcastle), Liverpool City Region and West Yorkshire (Leeds). A further combined authority is proposed for Birmingham and the West Midlands.
The UK government has already committed to publishing long-term plans to create a 'Northern Powerhouse' connecting Leeds, Liverpool, Manchester, Newcastle, Sheffield and their associated urban areas alongside this year's Autumn Statement. In its report, the commission suggested that similar measures be adopted in the North East and Midlands. These areas would benefit from new and better transport links, including an integrated payment system based on London's 'Oyster' card to enable ease of travel across each region; as well as better broadband connectivity.
At the same time, strategic planning authority powers should be coordinated across each of the metro areas to enable them to better align housing and transport development across their 'travel to work' areas. These powers could be modelled on the arrangements already in place between the London Boroughs and the Greater London Authority, the report said.
Metro areas should also be given responsibility for skills funding, allowing them to target skills training with the jobs that they aim to create, the report said. It also proposed allowing metros to recruit beyond national immigration caps where necessary and allowing them to become immigration 'sponsors' on behalf of small and medium businesses (SMEs) which would otherwise struggle with recruitment and administrative costs.
Ultimately, the commission called for those metros with "the most robust governance structures [and] a track record of delivery and risk management" to be given 'Devolved City Status', with the same consultation rights within central government administration as the devolved administrations. Each devolved city region could be given appropriate tax, borrowing and spending powers, it said in its report.