Regional devolution could unlock £79bn says key study

ALLOWING regional cities like  Liverpool and Manchester to make their own decisions on tax and spending could boost economic growth by £79bn a year by 2030, a year-long study has concluded.

The amount equates to boosting current UK productivity by 5%, said the RSA City Growth Commission, which conducted the study. It is pushing for draft legislation to be in place by 2015.

“Our centralised political economy is not ‘fit for purpose’,” it stated.

The commission, chaired by Manchester-born economist Jim O’Neill, concluded that shifting power away from government ministers and officials to cities would drive up the UK’s long-term rate of economic growth.

“There needs to be a radical reshaping of the UK’s political economy, with our metros given sufficient decision-making powers and financial flexibilities in order to become financially self-sustainable,” the commission said.

The report said that transport links in the north of England should be improved, particularly in the North West in an area it calls “ManSheffLeedsPool”.

It suggested a new high-speed underground system, with a single transport payment card that would work across the region, similar to London’s Oyster card. Also upgraded broadband services would “drive additional inward investment to our cities”.

The commission said the current national approach to skills training and immigration was hurting businesses.

It suggested that handing funding for training over to cities would enable them to provide the right kind of training.

Lord Peter Smith, chair of Greater Manchester Combined Authority and leader of Wigan Council, welcomed the report, stating: “The case for devolution to places such as Greater Manchester is gaining more momentum all the time. Documents like this latest report show that it’s not wishful thinking but based on hard evidence about how cities can reach their full economic potential with more freedoms.

“In the face of the compelling case for empowering our great cities, it’s important that politicians from all the main parties demonstrate their commitment to making this happen.”

Simon Allport, senior partner in he North West at EY said it was “critical” that businesses in the region make their voices heard.

 “The Cities Growth Commission report proposes a clear and ambitious timetable around regional devolution, and sets out individual measures. It adds further to the de-centralisation debate and gives regional business leaders more food for thought. It’s critical that companies continue to make themselves part of this debate to help form a structure that lets city leaders make decisions that will allow the North West’s economy to thrive.

“The devolution of any powers to cities will continue to be a journey, so even after the Chancellors’ Autumn Statement – which is expected to cover regional devolution – businesses in the North West must have a voice, continuing to engage with authorities and each other on the issue.”

Paul Hirst, head of transport at law firm Addleshaw Goddard added: “The report raises some interesting recommendations with connectivity playing a fundamental role in delivering sustainable economic growth. However, the real challenge will be how to implement change.

“Further debate within the cities, such as Leeds and Manchester, is needed to shape the recommendations into specific measures – collaboration and cohesion will be key to unlocking potential growth.”