Teething troubles for Combined Authorities must not be mistaken for failure

By Mike Emmerich, Director

Britain loves nothing more than to build up people and institutions in public life and then to participate in the spectacle of their destruction.

Not even three months since the election of a crop of new metro mayors for Combined Authorities across England, we’re already seeing the process start. The National Audit Office (NAO) report in early July said little more than that it is early days for Combined Authorities and much remains to be done to make a success of them. Yet some of the reporting of their findings seemed gleefully to anticipate their failure.

Meanwhile in the real world, new Combined Authorities and their metro mayors have been creating new ways of running cities amidst the toughest fiscal conditions and policy stress in living memory. Among the many challenges to which this has given rise is the adjustment by powerful city and other councils - which have for centuries been the focal point for civic, political and business leadership - to the reality of new and potentially powerful metro mayors.

That this should lead to tensions should come as a surprise to no-one in public life. You might have expected this in areas where Labour-dominated city authorities have been spliced together with suburban areas that propelled Tory candidates to victory, as in the West Midlands and Teesside. But it is in the power relationships between city halls that the new modus vivendi is being forged and tested. It is generating heat: in private in Manchester and Birmingham and rather more publicly in Liverpool.

Steve Rotheram’s mayoralty sits uneasily alongside that of Liverpool’s city mayor Joe Anderson, an institution that has dragged Liverpool from near-ruin to real success through exemplary regeneration. As this journal has reported, serial leakers have enabled the press to dine out on some of the steps in the painful process of making the new reality work.

At this point, cue extensive tutting and eye-rolling from some that this proves what they knew all along: ‘provincial’ politicians just aren’t up to the task of running their own cities. Why can’t they just replicate the successful model of the Greater London Authority (GLA), they ask?

Of course, you could write a whole book about the patronising attitudes and suffocating centralising tendencies that have led us to the point where even modest loosening of Whitehall’s grip is seen as a dangerously radical experiment in localism (and in fact, I did).

But parking that for a second, there are good reasons why we shouldn’t expect the new Combined Authorities to function like the capital.

For a start, the structure is completely different. In London, Sadiq Khan and the GLA sit as a quasi-federal government, with its own bureaucracy and a £16bn-a-year budget.

The Combined Authorities, in contrast, are sleeker beasts. In part this was to neuter accusations that they represented an extra layer of red tape, so the new mayors have minimal staff, modest budgets and, without a GLA-style assembly, they must lead cabinets of council leaders with city-region responsibilities but only local accountability.

But in part the model was to overcome a design flaw in London: that there is no functioning mechanism by which the GLA and borough councils can work together on policy. The London model has been successful but is far from perfect. Housing is a case in point: while Sadiq Khan wants 90,000 affordable homes built by 2021, in 2015 there were just 5,790 such homes completed and planning consent remains reserved to the boroughs. Hopefully the new Mayoral Combined authorities can do better: bringing strategic and local together creating both the growth and social inclusion that has eluded the capital.

Those who would criticise that this has not been an elegant process so far should remember: it's very, very early days. The new mayoralties need time and support to bed in. I hope in its future report on them the NAO will compare the Government largesse in preparing for the creation of  the GLA, or the millions spent on rolling out many central Government programmes with the Pickles-era penny-pinching that has deprived the new metros of any financial support for managing the transition.

Now, the Bloomberg Foundation has stepped in. The metro Mayors are currently at Harvard University learning from mayors around the world. Will we mock that or see it as a much-needed downpayment on the institution-building our city governance needs if it is to succeed? Readers of this magazine know better than most: building strong institutions is a great deal harder than knocking them.

First published in Local Government Chronicle

https://www.lgcplus.com/politics-and-policy/governance-and-structure/mike-emmerich-dont-mistake-ca-teething-troubles-for-failure/7020716.article

 

 

A weak and wobbly centre creates opportunity for enterprising cities

 

By Patrick White, Director

 

This week’s Queen’s Speech was notable for its absences. Many of the least popular election pledges – widely blamed for the Conservatives’ disaster at the polls – were summarily junked.

Denounced by Labour as “threadbare”, Theresa May’s programme for the next two years certainly seemed to come from a government with few new policy clothes. Coming the same week as the start of the fractious Brexit negotiations, it’s becoming clear that serious structural reform for local government will now be put firmly on the backburner. Any legislation that might attract even a murmur from backbench dissenters is unlikely to be contemplated.

Even formerly big-ticket items have been left in limbo. Not a peep, for example, on the proposed Local Government Finance Bill, which would have seen councils keep 100% of their business rates. It is true that the proposal had rightly become less than universally popular among local authorities. But while some commentators have judged recent comments by Chancellor Philip Hammond to spell 'the end of austerity', in reality revenue funding is still going to be in short supply for the foreseeable future.  And whatever money Government does magic up for councils will presumably all go towards the now certain to be continued finger-in-the-dyke approach to social care funding.  It is hard to see how any of this is a cause for celebration.

But central inertia, combined with growing concern about the economy and vocal pressure from business, presents real opportunities for city leaders to show their fundamental importance. With a centre that knows it lacks levers, place-based growth gets even more important.

In the context of a loosely-defined Industrial Strategy, places that can demonstrate a joined-up vision based around specific projects and impact have a chance to shine.  If you can get the support of your businesses, and are prepared to invest the time and effort in projects that will actually benefit all parts of your population, then now is a good time to get things done.

Maximising success means doing two things. Firstly, quantifying the payoff in terms of inclusive local growth in new, more sophisticated ways. So rather than just measuring expected GVA or numbers of jobs created and assuming that everyone will benefit, places need to look at more precise, socially-focused indicators such as increasing median wage levels, improving rates of skills progression in firms, or lowering the cost of transport from deprived areas to employment centres. Recent work by the RSA and others can help places be more confident about showing how necessary infrastructure investment, for example, could make more of an impact on groups most at risk from stagnant wages, rising inflation and poor productivity.

Secondly, working with businesses – from SMEs to top tier firms - to make the case for action and investment will be important. This Government will need to feel that it is doing the things that win back the confidence of businesses, currently in despair at the instability and lack of grip.  And where national regulation is going to be hard to tackle, local investment and action is much more likely. 

But leaders should expect business to play its part too. Taking a long-term view, investing more in skills and engaging with schools and communities ought to be compulsory for business leaders seeking to reflect the national mood. Mounting fears about the availability of skilled workers post-Brexit will provide the stick for this, if carrots don’t suffice. And local leaders will be emboldened by confirmation in the Queen’s Speech that new T-Levels for technical education survived the policy cull – providing a framework for private sector collaborations.

This context is particularly acute for new metro mayors starting their terms. Given all the uncertainties, the temptation will be to wait and see how things pan out - but for our biggest cities that can't be true. They must be proactive and show government what they need and why, articulating themselves in ways that carve out a new, less siloed approach to city economics. This will need to reflect more accurately the importance of the human end of capital and accept the political and ‘social logic’ of a place as being of equal importance to the outcome of some quasi-scientific, economic modelling based appraisal.  One that explicitly moves away from the approach that has left so many of our urban population feeling disconnected from the growth and investment around them.

https://www.themj.co.uk/Central-government-inertia-spells-opportunities-for-cities/208040

 

Good Morning Minister. No change, all change

Civil Servants, just like nearly everyone else in the country, was expecting a Conservative government to be returned to power following last week’s General Election.  Few, if any, were expecting a change in Prime Minister.  Some may have been pondering the pros and cons of a reshuffle, but staff in most Departments were working on the basis that most, if not all, their Ministerial team would remain unchanged.

The machine would have done its job and generated briefing on the Labour Party manifesto.  Whitehall is nothing if not scrupulous about such things. But on Monday morning the civil service found itself with the Prime Minister it expected, leading the party it expected to be in Government, and with a Cabinet that it had got to know and was getting used to working with.  So much the same, and yet so very different at the same time.   The civil service is very good at dealing with changes of political direction.  Reshuffles and changes of administration are much more keenly felt in Whitehall than in local government.  This is partly because a Permanent Secretary has much less executive power than a council Chief Executive and because their Secretary of State is often under the close eye of No.10.  This means that the best of them can turn on a sixpence.  But my hunch is that this even-crazier-than-normal moment of all change, no change is going to take just a bit of figuring out.   If you are working with Government in the weeks ahead, here are a few things that might be worth bearing in mind.

 

Firstly, don’t underestimate the extent to which the machine, including Ministers, will want to get on with business in an apparently normal way.  The election was last week and this week there is the business of Government to attend to.  But the recently departed Chiefs of Staff in No.10 set the pace and process of decision making.  Yes, they reflected the boss’ instincts to consider carefully and avoid news where possible.   I’m not suggesting that Secretaries of State, let alone junior ministers, will now be able to announce new things at whim.  But the new team will have a new approach.  And everyone will be trying to second guess that approach and learn how to work with it.  

 

Secondly, with no majority, taking any legislation through Parliament just got even more difficult.  There is a fine line here which may prove one of the most challenging for this Government.  Don’t legislate at all and you run the risk of looking like you aren’t doing anything, whilst the calls for action from various interest groups build up.  Lose more than a handful of votes and the already limited stores of credibility and political capital will be all used up, making a no confidence vote more likely.  So, expect little action on anything remotely legislatively risky.  Security and preventing domestic extremism will be important both in the light of recent atrocities and because it will unify the DUP and Conservative parties.  But generally, existing policy which has already been agreed and for which legislation is already in place, will be the safest space in which to operate. 

But, thirdly, the civil service is also working for a Government that has decided itself that it wasn’t elected to deliver its own manifesto.  This will be something of a conundrum for Ministers and their officials.  If you can’t legislate, and all that everyone can agree about the manifesto was that it was awful, then what, exactly, is on the to-do list?  Whitehall’s challenge here is an opportunity for local business and political leaders.  Finding things that can be done, which will be welcomed locally and support confidence in the economy, is likely to be met even more positively than previously.

Fourthly, good ideas are going to be doubly welcomed if they come from and with the support of businesses.  It is not hard to accurately imagine the tone of some of the calls to No.10 over the weekend from the leaders of our biggest businesses and the City of London.  This is a Conservative government about which the only positive thing that businesses will say is that it isn’t led by Jeremy Corbyn.  This is uncomfortable ground for any Tory PM, particularly one that has so annoyed her backbenchers.  So, expect Secretaries of State and No.10 to be particularly interested in what businesses have to say.   Greg Clark has a big opportunity and challenge in creating an approach to industrial policy that works for business and local growth.  He will be committed to getting it right.

Fifth, look at the economy.  Employment is high, but growth is sluggish at best, wages and living standards are perceived by the electorate to be falling and, where wages are high, no-one can afford a house.  We know that linking up spending on infrastructure, housing and skills needs to be done better.  And we know that building more housing (with associated social infrastructure) matters.  But now, maybe, there will be some effort in Whitehall to achieve it, particularly as this really doesn’t need legislation.  It’s certainly worth cities pressing their ideas.  And with Gavin Barwell in No.10 and Sajid Javid staying at DCLG, recent progress on housing might continue.

Six, I didn’t mention HM Treasury.  All thoughts, however speculative, of breaking up the Department will have been consigned to the dustbin (where they always end up).  But equally, don’t expect a sudden reversal in the move of power from No.11 to No.10.   Secretaries of State and their Permanent Secretaries may secretly welcome the changes at No.10, but none of them will be arguing for a return to the days of an overmighty HMT.

And, finally, unavoidably, there is Brexit.  The main impact on Whitehall is that lots of people are being moved into Brexit related roles.  The impact of this is only going to increase in the weeks and months ahead.

So what to do.  My advice is to work with your business leaders on the ideas that drive growth and benefit communities and individuals, be clear where investment needs to be joined up and what needs to happen to make it so.  Understand your local exposure to different Brexit challenges and opportunities.   Don’t wait for officials to tell you what can and can’t be done, but don’t count on anything that needs legislation.  And perhaps, more provocatively, cities could ask for a little less permission whilst assuming a greater chance of forgiveness.   Local leadership just got even more important.

Spring Budget 2017 Review

By Ben Walters

This was the last spring budget (by current plans), and it was fairly muted in tone. That was expected: with all the uncertainty surrounding the UK economy, the Chancellor had no desire to add even more moving parts. But despite the lack of major announcements, there was something of interest for cities and LEPs.

We have also seen one of the fastest and most significant u-turns of a recent Budget. The reversal on self-employment NIC taxation after one week has been damaging to the Chancellor’s standing and will undermine the ability to reform self-employment and terms & conditions in the medium term. It creates a shortfall of £2 billion which will force the government to have to find these savings elsewhere. For Philip Hammond’s first budget as Chancellor this could have an effect in changing the balance of power in the Cabinet, and risks making the Government look weak and vulnerable to back bench pressure for policy change.

State of the economy

With significant revisions to economic forecasts over the last 12 months, it was no surprise that there were even more announced by the OBR. But, while many focused on the 0.6% increase for 2017 (1.4% growth upgraded to 2%), with lower growth from 2018-2021, both forecasts predict virtually identically sized economies in 2021. There were announcements that borrowing will fall, bringing borrowing down and the potential for a surplus by the next Parliament closer. This signals a continuance of austerity budgeting, which will concern local authorities who have experiences significant cuts since 2010.

Austerity

Many planned welfare cuts will hit in April of this year (£12bn of day to day spending cuts over the next 3 years), with a bigger impact than any other announcement in this Budget, while median earning won’t exceed the 2007 peak until 2022. This continued austerity will hit local government particularly hard: from £8.2bn in 2016/17, down 34% to £5.4bn in 2019/20. This is the 2nd biggest fall in any department resource budget. With significant efficiency savings already having being made, it seems inevitable that services will be even further effected. Local Government has worked hard to mitigate cuts through service transformation and devolution. The role of Combined Authorities alongside the Northern Powerhouse, Midlands Engine and Great Western Cities will be important to ensure places can work together to deliver effective services at various spatial levels whilst continuing to grow in the coming period. Both the budget and recent announcements around Local Growth Fund and the Industrial Strategy Green Paper suggest that Government will fund projects and programmes which support UK growth. The challenge for places is to develop effective propositions which can tap into these funding sources.

Devolution

There were signals that devolution and regional working continue to be supported by HMT. Already there are 13 areas in England which have received devolution deals, and 6 will (for the first time) be electing mayors in May of this year. The Midlands Engine Strategy was announced, codifying much existing thought, as well as allocating the £392mn announced in the Autumn Statement for its LEPs, and again confirming the importance of Mayors (with LEP funding per head over 30% higher than areas without a Mayor, similar to the Northern Powerhouse funding allocations). A further deal with London was announced, building on previous work around infrastructure funding, business rates, justice, health, skills and employment support. While much written about devolution tends to look at its ability to spread decision making away from Westminster, and reduce regional inequality, recently we have seen more devolution to London. Finally, Greater Manchester was confirmed to be in further talks about transport funding.

Inclusive Growth

According to recent findings from the Inclusive Growth Commission, 55% of the 13.5 million living in poverty in the UK are working families. The Prime Minister has previously referred to wanting to create an economy which works for everyone. In the Budget the Chancellor referred to inclusive growth, linking it directly to “investing in skills and education”. A key part of this is reform of technical education through ‘T-Levels’ and a revised technical skills system, following from the work of Lord Sainsbury and Baroness Wolf. There will be support for students through maintenance loans for higher level technical courses. There were also announcements of changes to schools (including more free schools, and opening to door to more selective schools, and more money released).

This is a small step in the inclusive growth agenda. The IFS predicts that the overall changes to the tax and benefit system means that the bottom 10% of earners will see a fall in annual net income of £1,300, over 11% of their total income, and the bottom 70% of earners seeing falling incomes. The poorest decile of working-age families with children will see a £3,250 fall in annual net income, and a typical lone parent not in work will see over 20% of their income cut (and in work over 10%), while a typical ‘DINK’ (dual-income-no-kid) couple would see theirs rise. The impacts of these cuts will be significant, and demonstrate that Inclusive Growth will need more focus and support to achieve the Prime Minister’s ambitions.

Industry Strategy - Two Cheers

BY Mike Emmerich

The much awaited Industrial Strategy Green Paper has arrived. The Metro Dynamics team have run the rule over it, looking at what’s in it and what it means. Two cheers rather than three is our view. It’s a start and not a bad one at all, but it’s what happens next that matters most.  And that needs local places as much as central government to be bold with their ideas and proposals.

It’s hard to argue that the Green Paper is, in essence, wrong. But it’s equally hard to argue that the Government or indeed places have yet to rise as fully as we need to the challenges facing post-Brexit Britain.  On the one hand this is fair enough, those implications are not yet clear.  But the nation is hungry for a new approach to business and growth. The Government has fed us a little, and yet as we digest the voluminous Green Paper sandwich it has offered, we’re left wondering: where’s the meat? The Green Paper is very necessary indeed. But is it sufficient?

The Government is promising continuity. There are elements of very welcome certainty. The world around us looks like a very different place to the one we knew even just a few years ago. On the other side of the Atlantic, the new administration looks set to rein in free trade in a quite significant way, promising stiff penalties on some movement of capital. There is little sign of that in the Industry Green Paper. On the contrary, it is clearly and deliberately international in tone, even if the means by which we will trade with the EU is changing through our impending exit from the single market. The Green Paper also looks set to continue with an approach where the supply side of the economy is at the centre. Its emphasis is firmly on creating the conditions for business to grow, on ensuring adequate skills, investment, infrastructure and innovation. These are among the ten pillars supporting the new approach. So far so good.

But the Government is also promising change. Its tone is more activist and there is a clearer signalling than ever before on the role of the state in direct stimulus to innovation, skills and a focus on supporting key sectors of the economy. The Government’s role, so long cast as the handmaiden, the servile facilitator, is now more central and its tone, more assertive. The Green Paper is the most explicit recognition in years that Government can intervene to make things happen. If the Green Paper was meant to mark a departure, without a jarring volte face, then in its broad intent, it has succeeded.

But it is a Green Paper, not a White Paper: a signal of the Government’s broad intent not a final and definitive statement of its settled will; the Government is open for responses. The problem is that for a very Green Paper, it is surprisingly loaded with lots of small announcements. Perhaps this is another sign of continuity: Government’s desire to announce small things often rather than to focus on the ideas that will really deliver the change Britain needs in our industrial fortunes. It also has more than its fair share of re-announcements. The danger in this approach, as ever, is that these small initiatives will dominate as we digest and respond to the paper. The better reading is that they are pilots, examples and, like the Green Paper itself, statements of intent. But that may not be what Whitehall thinks. In fact, our view is that Whitehall has done a good job in difficult circumstances.   But there is much yet to be done if what follows is to deliver what urban Britain needs.

As we look to life beyond the Green Paper and its translation into policy, it is vitally important to stay focused on the big issues, not endlessly debate the announcements it contains or get distracted by chasing funding from new or existing pots. We pick out six in particular:

1.  More and better transport and infrastructure. Creating certainty that the big population centres will be linked by fast road and rail. HS2, northern powerhouse rail and the Manchester/Sheffield road are all needed. We need the certainty that they will be delivered along with better intra-city connections and bolder plans for broadband too.

2. We need to build more housing, and support more communities in all the big cities of a kind that people want to live in: in city centres, in suburbs and at city fringes: investing in the schools and amenity to drive quality of life up, making every neighbourhood feel more ‘liveable’.

3. We need major investment in near market research to bring together city business and universities: creating strong local institutions that push the boundaries of the possible in innovation, creating jobs and growth.

4. We need similarly strong local skills institutions: funded and led by employers and the state, driving high quality skills into local labour markets with a focus on the long term.

5. We need to do all the above to create jobs for the people left who got behind in cities but also give them a leg up into those jobs though high quality temporary jobs in the community.

6.  We need to cut out the guesswork where we can. Cities and other places need detailed, granular understanding of the reality of their local economies and industry sectors. A new approach needs to be underpinned by cutting edge economic data, that pinpoints opportunities and threats in local economies and to underpin investment decisions.

To achieve all of this cities need some wriggle room: devolved powers and funds from Government alongside bolder ambition and strong leadership of their own. There are positive signs from the Government. Its ideas for building institutional strength in places chime with our thinking. Places not just Whitehall have roles to play. But the policy proposals so far look timid. If cities, not least those with Mayoral arrangements don’t rise to the challenge and help embolden the Government’s approach, they will probably remain so. In this respect, though not others, there is a lesson we need to heed from the USA. Its time to put some meat in the sandwich.

Further Reading                                  

More detailed analysis of the Green Paper is available below

Details of Mike Emmerich’s forthcoming book Britain’s Cities, Britain’s Future are here [http://londonpublishingpartnership.co.uk/britains-cities-britains-future/]

Green paper - Industry Strategy

By Ben Walters

On the 23rd January, the government released a green paper on its new Industrial Strategy, as a public consultation. This is the first major strategy since the new government, and further clarifies the changing economic approach that will be taken over the coming years. It continues an increase in interventionist policies (such as the 2016 Autumn Statement), as well as a focus on regional inequality and productivity. While the main influences of these policies (Theresa May, Greg Clark and Phillip Hammond for the Autumn Statement) of the strategy were not ‘Leavers’, they are all seen as governments response to the referendum, and how to adapt the economy to best meet the challenges and opportunities this presents. The Green Paper mentions how many of its policies are targeting improvements in the long-term, rather than short term fixes. Below are the three main objectives of the strategy:

·         Build on our strengths and extend excellence into the future.

·         Close the gap between the UK’s most productive companies, industries, places and people and the rest.

·         Make the UK one of the most competitive places in the world to start or grow a business.

The paper outlines the strengths of the UK economy and labour markets, before discussing the lack of real wage growth since the 2008 recession, as well as faltering productivity levels, particularly by ‘per hour worked’ metrics, as well as increasing disparities among productivity between different regions of the UK.

In order to meet these objectives, the strategy also outlines 10 ‘pillars’.

1.       Investing in science, research and innovation

2.       Developing skills

3.       Upgrading infrastructure

4.       Supporting businesses to start and grow

5.       Improving procurement

6.       Encouraging trade and inward investment

7.       Delivering affordable energy and clean growth

8.       Cultivating world-leading sectors

9.       Driving growth across the whole country

10.   Creating the right institutions to bring together sectors and places

While all of these pillars have been created equally, I have highlighted some that seem to have a greater backing than others (whether through policy support or political rhetoric). On skills, there will be an increase in technical education around the UK, focusing on STEM subjects, with dedicated technical centres for non-university education. Infrastructure had significant support in the Autumn Statement, but less of substance announced today. The Inclusive Growth Agenda supports the 9th pillar well. And the 10th is supported by the devolution, as well as both the Northern Powerhouse (more info below) and the Midlands Engine.

In regards to cultivating world-leading sectors, slightly more content has been released today. Government is designating industry ‘Champions’ for 5 sectors (Life Sciences, Ultra Low Emission Vehicles, Industrial Digitalisation, Nuclear, and Creative Industries). They do not commit to financial support, but to encourage industries to “come to the Government with proposals to transform and upgrade their sector through ‘Sector Deals’”. These deals are open to all sectors, not just those with designated ‘Champions’.

While the green paper did not announce any new money, it does tie together a number of funding opportunities. For example, the ‘Industrial Strategy Challenge Fund’, which invests £4.7bn in research and development, will partially be used to support the Industrial Strategy. £556mn for the Northern Powerhouse was also allocated to individual LEPs (after being announced in the Autumn Statement), often towards projects supportive of the Industrial Strategy. And the Industrial Strategy will also guide further government economic policy, making possible the introduction of further funding at a later date. For example, in his introduction, Greg Clark links its strategic approach has been used in decisions on Hinkley Point C, Heathrow’s 3rd runway, other private investment announcements and the Autumn Statement’s increase in R&D funding.

While much of what was released matches what has been rumoured or openly discussed, several policies have been left out. These include widening corporate takeover rules, as well as corporate governance. The consultation runs until the end of April, so the white paper targeted for ‘early 2017’ has likely been pushed back to the summer.

Autumn Statement Review

By Ben Walters

On Tuesday, Philip Hammond delivered his first Autumn Statement as Chancellor, and gave the Treasury a chance to react to both Brexit and new fiscal forecasts. Below, we have discussed some of the changes which may impact on cities.

‘showing the Treasury’s reaction to both Brexit …’

Local Growth & Devolution

The Autumn Statement announced the allocation of round 3 of the Local Growth Fund to Local Enterprise Partnerships (LEPs) across England. This was previously announced in the 2016 Budget, and totals £1.8 billion: £556 million will go to the North of England, £543 million to the Midlands and East and £683 million to London, the South East and the South West (specific LEP allocations will be announced in the coming months). Alongside this, Government will consult on lending up to £1 billion to local authorities at a new ‘local infrastructure rate’ (of gilts + 60 basis points – which would currently total approximately 1%) for three years, to support high value for money infrastructure projects.

Whilst not as detailed or expansive as in previous years, Government has reaffirmed its commitment to devolution: working towards a second devolution deal with the West Midlands Combined Authority, and beginning talks on future transport funding with Greater Manchester. Government will devolve the budget of the Work and Health Programme to both London and Greater Manchester, and it has reannounced the devolution of the adult education budget to London from 2019-20. Additionally, Government has confirmed the Greater London Authority’s (GLA) affordable housing settlement (£3.15 billion to deliver over 90,000 housing starts by 2020-21). The publication of the Northern Powerhouse strategy by Government, and the upcoming Midlands Engine strategy, demonstrates the continued focus on raising productivity.

Finally, there were further signals of increased government support for local investment, as Government will allow mayoral Combined Authorities to borrow money, with a borrowing cap. It also confirmed arrangements for the Northern Powerhouse and Midlands Engine Investment Funds, which will start supporting SMEs in early 2017.

In Scotland, there was continued support for city deals. The Government confirmed city deal funding in Aberdeen and Inverness, as well as indicating progress towards a deal with Edinburgh. It will also work towards a city deal for Stirling and will consider deal proposals with the Tay cities; this means that all Scottish cities have the opportunity to agree a city deal. In Wales, there has been good progress towards a city deal for the Swansea Bay City Region, and the indications of shaping a deal in north Wales. It’s also continuing to support the implementation of the £1.2 billion city deal for the Cardiff Capital Region.

Infrastructure & Investment

Infrastructure investment features strongly in the Chancellor’s speech. First, Government has made significant changes to its ongoing infrastructure policy. The National Productivity Investment Fund will spend £23 billion over 5 years, including £1.3 billion into road transport networks, £1 billion into Digital infrastructure investments, £2 billion into R&D spending, £1.4 billion into affordable housing and £2.3 billion going towards the Housing Infrastructure Fund. It has highlighted the central role it would like the independent NIC to play in policy advice, inviting it to set out recommendations each year, on the country’s strategic infrastructure needs and how to meet them. It’s set out a fiscal remit for these recommendations, increasing infrastructure spending (from 0.8% currently) to 1% of GDP by 2020-21, and between 1 and 1.2% of GDP between 2020 and 2050. And, it aims to increase transport spending by 50% to invest £61 billion this parliament, and increase economic infrastructure investment by almost 60%, from £14 billion in 2016-17 to £22 billion in 2020-21.

Secondly, the government has endorsed the NIC study on the Cambridge-Milton Keynes-Oxford corridor, welcoming the interim report and its recommendation for an Oxford-Cambridge expressway, providing £27 million in development funding, and it will bring forward £100 million to accelerate construction of the East-West Rail line. It is also considering the NIC’s work on delivery models for housing and transport in the corridor, and asking for a new study on how emerging technologies can improve infrastructure productivity.

Other Key Points

As on devolution, while the policies of the Autumn Statement have generally been accepted positively, there were some notable policy areas which have been generally left out. This could arguably be due to the Chancellor wanting to limit the Autumn Statement and not cover all policy areas. Whilst there has been a renewed Government focus on justice and inequality, there was only a small mention of inclusive growth measures – external analysis suggests only a limited impact on lower income deciles. And there was little talk of any investment into the skills budget, whether through education or other investment. As skills have a major part to play in productivity, this may come under focus at a later date.

There have also been a series of announcements which allude to the significance of an upcoming Industrial Strategy. While many of the policies which were announced did have relevance to an Industrial Strategy, there is no official word on when we will have hard information on it (although unofficial rumours speculate there could be an announcement soon).

Finally, in terms of process, there are changes to the future of fiscal events in the UK. Namely, while there will remain two forecasting events, the primary event (the Budget) involving significant fiscal changes will be moved to the autumn, while the secondary event (the Statement) will be moved to the spring. The Statement will also be reduced to minor responses to the forecasting in hand, only making significant fiscal changes when necessary. This was a stated aim of Philip Hammond when he became Chancellor, and means that there will be both a spring and autumn budget in 2017 (and no spring or autumn statement).

Inclusive growth: the new challenge

By Ben Lucas

At the Core Cities Summit last week, city leaders were understandably frustrated by the suggestion that inclusive growth is on the agenda because of the EU referendum.They didn’t need Brexit to tell them that the economy is not delivering for their residents. But, as chief market strategist for Britain and Europe at JP Morgan Asset Management, Stephanie Flanders, said to those leaders, Brexit has created a unique opportunity to change our economic model

Prime minister Theresa May has said her number one priority is to develop an ‘economy that works for everyone’. In her speech on becoming prime minister she asked to be judged on the extent to which she succeeds in this.

She has already committed to economic reform, a new industrial strategy and a renewed focus on productivity. And we await an Autumn Statement in which the Government will set out a new fiscal and economic framework.

It was due to these changed circumstances that the RSA Inclusive Growth Commission decided to publish an interim report last week.

If there is a debate going on about economic priorities and the new framework for policy, then we want to do what we can to influence this.

Of course, the commission was launched before the EU referendum and the issues we are looking at have a global as well as national dimension. That is why the Organization for Economic Cooperation and Development (OECD) has also recently embarked on an Inclusive Growth project.

But the circumstances of Brexit create a specifically British opportunity to rethink our economic model. The starting point for this is the recognition that growth is not working for millions of our citizens.

Average earnings have stagnated since the early 2000s. Employment may be at record levels, but so is in-work poverty.

Research by the Joseph Rowntree Foundation shows the majority of those in poverty are now in work.

In former single-industry towns, too many relatively well-paid, high status jobs have been replaced by jobs which do not provide a basic threshold of decency and respect, let alone pay.

At our evidence session in Sheffield, we were told that what is needed is not just jobs, but quality jobs. This, against the backdrop of the growing concern about terms and conditions at Sports Direct, which has a big facility on the edge of the city region.

The scale of the challenge is huge. Such is the difference between poorer and better off areas in the UK that if all our towns and cities were to have gross value added per capita at the rate of the national average this would add another £192bn to the economy.

So it is not one or two shiny new policies we need, but a sustained and substantial long-term strategy to improve economic outcomes for those who have been left behind.

In our interim report we argue for a different approach to social and economic policy.

We need better, more employment-focused skills and training, but we also need stronger business demand for high value jobs in less prosperous areas.

We need urban environments which are attractive to live and work in and we need social policies which support families and enable children to be schooled and then work-ready.

We need better education standards, particularly in stem subjects, just as we also need affordable, quality housing.

Where social and economic policy can effectively be brought together is in towns and cities and around functional labour markets and population-based public services.

The Government’s re-affirmation of its commitment to devolution and its emphasis on supporting all cities to succeed is, of course, welcome. But in the Autumn Statement there should be a clear commitment to ‘grown-up devolution’.

We need to see more innovation in the way in which social policy and public service reform are linked with local economic growth.

That means bringing into scope the programmes and functions of departments like the Department for Work and Pensions and Department for Education, which have so far been the most devolution-resistant.

To finance this, we will look at the case for treating spending on social infrastructure as a form of investment, on similar terms to those which apply to physical infrastructure.

To paraphrase Barack Obama’s former chief of staff, Brexit is too good a crisis to waste.

The Inclusive Growth Commission will maintain the momentum with ideas which can spread prosperity across our towns and cities. What we need is for local government to rise to the challenge with us.

This article originally appeared at the MJ.