What does the Spending Review mean for growth in our cities?

Over the last two days we’ve been bombarded with hundreds (at least it feels like it) of policies, initiatives and statistics, and one or two jokes.  Now that the show is over, where does all this activity leave our cities?  The honest answer is I’m not sure.  The devil is always in the detail and much of the detail is to still to be announced.  But I think some of the bigger themes are clear.

First, the decisions about devolution were fairly timid.  Despite the Government’s commitment to localism, the announcement on Heseltine’s Single Local Growth Fund is more about localism in name than in practice. Heseltine argued for £49bn over four years; what was announced today was just £2bn for one year. While I recognise that we are living in an era of austerity, it’s hardly a ringing endorsement of the Government’s commitment to devolution. Divided between 39 LEPs, it’s not a great deal of money – approximately £50m per LEP (and roughly the same as the 9 Regional Development Agencies had in the mid 2000s).  And the worry is that Whitehall will require places to jump through a lot of hoops in order to access this relatively small amount; hardly a localised process.  Given its only £2bn then the process of distributing the money needs to be as simple as possible. It’s more welcome that there was a commitment to continue this for five years; the next challenge for the Government is to consider how to ensure there is greater certainty that this will be sustained through a change of Government, therefore giving LEPs some certainView Postty that will enable them to plan and invest.

Second, whilst the £2bn Single Growth Fund is important, some of the decisions about how the money announced for affordable housing, super-fast broadband and transport could have more impact on how our cities perform over the next decade.  So the £3bn of capital investment to build 165,000 affordable homes along with the £250m announced for more super-fast broadband are welcome and will make a difference in cities across the country.  So will the vast number of inter- and intra-city transport schemes that were announced.  Although I do wonder how many would pass the ‘Eddington Test’ (that smaller transport investments get you better impacts than big grand projects).  My concern is that as we move from policy announcements to prioritisation and implementation the significance of the different needs of different places will be missed by Whitehall departments.

Third, local government has again been hit hard by cuts, receiving a 10% cut that the BBC’s Stephanie Flanders suggested would amount to a 35% cut in real terms for local government since 2010 (although the Chancellor argued that other measures meant that the ‘true’ cut for local government would be 2% in 2015/16). Combined with cuts in welfare, which will affect some city economies significantly, it will be very tough for many cities to manage their budgets given rising demands for their services. To help them manage cuts more effectively, more action is needed that builds on innovative growth financing measures such as Manchester’s City Deal £30m Earn Back proposal and the integrated public services pilots – such as the Tri-borough’s in London and Essex’s Community Budget pilots – that are going on across the country.  It was good to see Earn Back finalised and money for Troubled Families but more needs to be done if we are to realise some of the efficiencies that austerity requires at the same time as improving outcomes.

Fourth, ‘local’ growth is treated differently to ‘national’ growth by the Government.  Maybe I’m reading more into this than it deserves but I am slightly puzzled that local growth gets its own chapter alongside other chapters such as Roads, Rail, Housing and Digital.  I am probably biased but to my way of thinking you can only make informed decisions on issues relating to housing, rail, or roads if you understand the vagaries and variations of different places.  This separation between the ‘local’ and the ‘national’ is reflected in the continued lack of a ‘place’ focus in policy announcements, resulting in a lack of debate about how decisions will affect different places around the country.  As Lord Heseltine noted in No Stone Unturned, Whitehall is organised around themed policy departments, which in turn are shaped around functions and largely ‘space-blind’ initiatives that focus on policy specifics.

So where does this leave us? I’m an optimist, so I still hope that as the detail emerges over the next few weeks and months this will show that government is putting ‘place’ at the heart of its policy-making. In the meantime, in the two years before these announcements kick in, there’s still more to do to give greater freedom to cities with the capacity to deliver and provide greater support to those cities struggling with capacity, decline or both.

Andrew Carter is Director of Research and Policy at Centre for Cities.