The new engines for city development

Alan Bruce, senior associate at economic development consultancy SQW, Regeneration & Renewal, 16 February 2007

One of the big ideas in last year's Local Government White Paper was to create Multi-Area Agreements (MAAs) to strengthen cross-boundary working. MAAs, it said, are likely to be voluntary, with local authorities and partners pursuing shared goals and pooling resources for use across a wider area. They could be especially appropriate in larger cities and city-regions but might also apply to other areas with common issues.

In December the Government also launched consultation on another white paper proposal, city development companies, which will close in March.

CDCs are city or city-region-wide economic development companies formed to drive growth and regeneration. This move recognises that in recent years, interventions to revive urban areas and local economies have increasingly been delivered through a variety of special purpose vehicles. It now seems to be generally acknowledgment that these can benefit from a tightly defined, more business orientated focus.

The prospects for MAAs and CDCs are bound up with the ongoing Sub-National Review, in which the Department for Communities and Local Government, the Treasury (DCLG), and the Department of Trade and Industry are looking at the right levels (local, sub-region or region) at which to deliver particular economic policies. The Barker, Eddington, Leitch and Lyons reviews must all be successfully brought to conclusions that don't conflict, and it seems increasingly likely that the 2007 Comprehensive Spending Review, originally expected in the summer, will be put back until the autumn.

Until all these have been drawn together, it is unrealistic to expect clarity on MAAs and CDCs, but this offers time to consider whether, if they do survive as big ideas, they are more than just another version of local area agreements (LAAs) - three-year agreements between government and local partnerships setting out the priorities for a local area. A key difference is that economic development is not mainly about public services (despite the importance of such things as transport and planning), but seeks to influence the way in which businesses and markets perform.

While MAAs are not just cross-boundary LAAs, lessons can be learned from the DCLG's 2006 study on LAAs' progress. The broad conclusions carry mixed messages. On a positive note, the pooled budgets and shared goals do offer the prospect of better local working. Negatively, the process was highly prescriptive and innovation averse (because of the limited timescales and need to sign up partners). They were meant to be pilots, but as yet there has been no proper evaluation, and there is uncertainty about whether the gains made will be worth the effort. There has been limited engagement from government departments (despite support from government offices in the regions), which was the intention of the original prospectus.

The process, especially in two-tier areas, was extremely complex and a turn-off for politicians.

Ironically, a 2005 evaluation of the negotiation of pilot LAAs carried out by the Office for Public Management for the Office of the Deputy Prime Minister found that the ambiguity of the LAA offer encouraged players with many different aspirations to commit to the process and was an initial positive, but this became a negative in delivery.

Examples of partnerships that might favour MAAs/CDCs always include Greater Manchester, where the joint activity has been virtually continuous since Margaret Thatcher abolished the metropolitan counties in 1986. Similarly, Sheffield has built on the track records of existing bodies, including urban regeneration company Sheffield One, to establish its CDC, Creative Sheffield, to spearhead economic development. But perhaps more interesting possibilities are those such as Elevate and Regional Cities East. Elevate East Lancashire is one of the Government's nine housing market renewal pathfinders formed to find innovative solutions to low demand, negative equity, and housing market collapse in towns across East Lancashire. The project will last for ten to 15 years and had funding of £100 million for 2004-2006. As well as neighbourhood improvements, there are clearly economic and image issues which transcend traditional rivalries.

Regional Cities East is a six-strong alliance in the east of England, largely dealing with the problems of growth. The six - Peterborough, Luton, Ipswich, Norwich, Colchester and Southend-on-Sea - believe that by sharing best practice, collaborating on joint ventures and setting clear priorities, they can create more jobs and affordable homes than they could by working alone. They share a common belief: that medium-sized centres can deliver economic growth in a sustainable way. They have also identified common challenges such as to improve infrastructure and skill levels.

So the lessons for aspirant MAAs/CDCs are: first, keep it specific: don't try to cover all local authority economic development functions. Second, decide whether to target immediate gains or important long-term issues. Third, make it clear how MAA development might fit in with exiting initiatives, such as sub-regional investment plans and the role of the regional development agency.

The Government does not clarify what new powers, if any, will be devolved to MAAs - crucial if they are to form effective partnerships.

However, for partnerships that aspire to an MAA/CDC, there are some big tasks to be completed, while hopefully clarity emerges: get regional and sub-regional partners on board, but allow for the fact that government offices and departments may not yet have sufficient resources to participate as full partners. Perhaps most important is to build a core business case for a MAA or CDC - and don't wait for Whitehall!