All Pull Together

Ben Walker, Regeneration & Renewal, 3 November 2006

"This has had the hands of the Treasury all over it," says professor Simon Marvin. He's talking about the cities section of the local government white paper: as the co-author of government-commissioned January 2006 report The Framework for City Regions, Marvin had hoped and expected that the paper would contain firm ideas for how city regions might be governed.

But he was disappointed.

According to government officials and expert commentators, Gordon Brown's lieutenants Ed Balls and John Healey have intervened to stifle progress towards strong city regions - thereby protecting the strategic roles of England's regional development agencies. Under the mission statement "no town left behind", they have weakened the white paper to rein in the major cities' ambitions to establish conurbation-wide governance structures.

"They are uncomfortable with the idea of city regions," says Marvin. "They've sat on it."

Indeed, in a curious compromise that smacks of inter-departmental strife, the local government white paper did endorse the principle of city-regions as economic units, but stopped short of recommending how - if at all - they should be governed. Instead of a clear prospectus for action, the white paper is widely seen by policy analysts as a fudge of coded messages, allowing city regions to be formed but offering few practical building blocks. Rather than offering to metropolitan councils an open door straight to the potential powerhouse of city regional government, the paper forges a winding path in that direction through an almost impenetrable forest of vague statements.

Officials in the Department for Communities and Local Government (DCLG) are keen to present Multi-Area Agreements (Maas) as a rosy apple dropped on the ground to mark the way through these woods. Maas were dreamt up by DCLG officials, and endorsed by David Miliband during his short tenure as communities minister. They are the big brother of Local Area Agreements, under which funding streams are pooled at a local authority level and spending directed towards a set of agreed goals. Under Maas, a consortium of local authorities will agree to pool funds into a single pot, spent to meet a set of goals for the conurbation as a whole.

According to the white paper, Maas have a particular role to play in big cities. There are, it says, a number of key policy areas best addressed across council boundaries: in particular, transport, housing, economic development, skills and regeneration. In theory, Maas will allow cash to be channelled towards the schemes that will best serve the city region as a whole, favouring major strategic projects over inefficient and small-scale local initiatives.

Professor Michael Parkinson's State of the English Cities report, commissioned by the DCLG and published in March 2006, provided much of the evidence to support the white paper's cities chapter. The report found that cities such as Hamburg, Brussels and Stuttgart, which manage their economies on a conurbation-wide level, are more productive than their more fragmented contemporaries. "If you collaborate, you could improve your GDP by ten, even 15 per cent more than if you go it alone," says one senior DCLG official.

Dr Dick Sorabji, head of policy at think-tank the New Local Government Network, says Maas are a step towards a more rational way of running and funding conurbations. "They get over past dilemmas about fitting local authority boundaries to natural economic areas," he says. "In the old world, councils could only do that by expanding their borders, which took ages. And once they'd done it, they often found that they'd buggered up functions best managed at a local level, such as social services."

Sorabji adds that some mainstream public spending, such as that for the NHS and police, could be plunged into a Maa. But it seems unlikely that all council services and funding streams will end up there. "It would be wrong to do it across the board," says Sir Bob Kerslake, chief executive of Sheffield City Council, which has signed with its neighbouring councils a city region development plan proposing conurbation-wide collaboration over the use of resources. "There's no point giving up direct control over things which are better managed at a neighbourhood level. But transport, economic development and regeneration? It makes perfect sense to run them at the city region level. The Maa is a new tool to enable that to happen."

However, Kerslake may have more difficulty setting up a Maa than his counterparts in Greater Manchester, which is in the rare position of proposing a Maa that includes only metropolitan boroughs: authorities which survived Thatcher's abolition of their former upper tier, the metropolitan counties, in 1986. According to a senior DCLG official, metropolitan boroughs can siphon off a proportion of their funding into a single, conurbation-wide pot. "That legislation is still on the books from when the metropolitan counties were created in the 1970s," he says. But if even just one partner council lies outside a former metropolitan county? "Currently, establishing a Maa would need a hybrid bill. These can take years; they're a nightmare." So this puts Greater Manchester in a blessed - and probably unique - position? "It does."

Hence Lord Smith, leader of Wigan Metropolitan Borough Council and head of the Association of Greater Manchester Authorities, has an opportunity to create a Maa with legislative teeth. He is loath to take a dental check of the gift-horse. "It's very encouraging," he says. Manchester proposes that an executive cabinet of the ten council leaders should run its Maa.

"A Maa is an important part of what we want from government," adds Smith.

In city regions like Greater Sheffield, which includes councils from outside the former metropolitan county of South Yorkshire, a voluntary Maa is a possible alternative. But a voluntary system would require councillors to act in the interests of the wider conurbation, even when doing so directed spending away from their own local authorities. "If it's voluntary, there's nothing to stop one council making a unilateral declaration of independence," says a senior DCLG official. He adds that a formal agreement "makes it robust".

New Local Government Network director Chris Leslie is a co-author of Ed Balls and John Healey's September pamphlet, which took a swipe at the idea of city regional assemblies and elected mayors. But Leslie backs Maas, and says that Balls and Healey do too. There's an alternative to the use of complex hybrid bills, he says: Ruth Kelly could ensure that a new local government bill allows all councils the same fund-pooling freedoms as the metropolitan boroughs. "This is the perfect time for the secretary of state to sweep away these legislative obstacles," he argues.

Any new bill would need to be flexible on Maas, in order to cope with ideas such as those of the Regional Cities East alliance. Half a dozen towns in the East of England, including Peterborough and Ipswich, are keen to pool resources and work towards commonly agreed goals - but their councils don't even share boundaries. "It's not going to be easy," admits project chair Richard Atkins. "We're not geographical neighbours." Leslie agrees these towns "don't fit into a neat little box", adding that: "Government needs to find a way of dealing with them. Maas policy can't afford to be too rigid. It would rule out too many areas."

Even if these hurdles can be cleared, all Maa schemes are now at the mercy of the Treasury's sub-national review of public spending, due in March. Assuming that it proves positive about the idea, Maas could be rubber-stamped in July's comprehensive spending review.

Given the go-ahead, legally-binding Maas could be a powerful tool for regeneration - and not just due to the ability to spend sans frontiers.

Supporters argue that, over time, Maas could take on regulatory powers.

"That's the logical next step," says Sorabji. As an example, he says, councils can raise funds from house-builders for the building of new roads - but the ability to approve their construction remains with the Department for Transport's Highways Agency. "Maas could say: 'Give us the powers if we can find the money'," says Sorabji.

That leaves the awkward matter of governance. Greater Manchester has sent Ruth Kelly a detailed business case for its executive cabinet system, and is waiting for a formal response; Kelly has already said that she's willing to take the plan forward. "It's likely that Manchester will go ahead in the first dose of devolution," says Dermot Finch, director of think-tank the Centre for Cities.

However, Finch warns, the city regional agenda will die if other urban authorities aren't prepared to forget well-matured local rivalries in the name of better-managed conurbations. "The Association of Greater Manchester Authorities has been running for a while, and there's a record of trust there," he says. "I hope other cities will look at it and say: 'Oh, there goes Manchester, getting ahead again. Maybe now it's time for us to stop this parochial crap'."

Q&A: What is a Multi-Area Agreement

Q: Multi-Area Agreements. Sounds complicated.

A: Actually, the concept is simple: neighbouring councils agree to share funding. They agree goals for the city region as a whole, and spend the cash across the conurbation with those goals in mind.

Q: What's the point of that?

A: Local authority boundaries often don't reflect economic or social realities: Maas enable action at a city-wide level.

Q: Doesn't that mean some areas will lose out?

A: Possibly. But evidence from overseas shows that conurbations are more productive when key policy portfolios are planned at a city-wide rather than local authority level.

Q: So who decides where the money goes?

A: The Government stipulates that an accountable system of governance must be in place in order for a Maa to be approved. It is likely that other cities will follow Manchester's lead and propose an executive city region cabinet, made up of leaders from all participating local authorities.

These cabinets will then make decisions collectively.

Q: Fair enough. So how can I launch one of these Maas?

A: With difficulty - unless all your partner councils are metropolitan boroughs. Legislation allowing them to pool resources has been on the statute books since the 1970s. Conveniently - and uniquely - Manchester's proposed city region does comprise only metropolitan boroughs.

Q: So unless I'm in Greater Manchester, I can forget about setting up a Maa?

A: Don't be hasty. The Government has been urged to use a local government bill to remove the obstacle. But should it fail to do so, most city regions would need parliament to approve a hybrid bill before establishing a statutory Maa.

Q: Statutory? So they could be voluntary then?

A: They could be. But they would be vulnerable to a rogue council backing out if things went against it. Trusting thy neighbour is a virtue that has proved elusive for many local authorities in the past.

Q: Which is why we need statutory Maas!

A: You got it.