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Key Cities, Sunderland and Devolution

Screen Shot 2015-10-07 at 09.31.56A report arguing that devolving to mid-sized cities is the future of economic growth received support from Secretary of State for Communities and Local Government Rt Hon Greg Clark MP yesterday (Tuesday 6 October) and Councillor Paul Watson, Leader of Sunderland City Council.

The Missing Multipliers: Devolution to Britain’s Mid-sized Cities (attachment link below) was launched at this year’s Conservative party autumn conference. It follows Monday’s ‘devolution revolution’ speech from Chancellor George Osborne.

Commissioned by Key Cities from think tank ResPublica, the report identifies Britain’s mid-sized cities as the ‘missing multipliers’ in the Government’s current drive to generate both economic growth and public service transformation.

Speaking at the Britain’s Key Cities: Is devolving to mid-sized cities the future of economic growth?launch event, Greg Clark MP, Secretary of State for Communities and Local Government said: “This is an exciting time, and I very much welcome this valuable contribution to the devolution debate. The role of Key Cities are critical to the UK’s economic growth, and I am pleased that so many of them are playing a central role in shaping the devolution proposals currently being negotiated with the Government.

“I would encourage them all, individually and collectively, to ensure that they continue to influence these negotiations to ensure they deliver the powers and flexibilities they need to maximise their future economic growth.”

The report makes the case for granting mid-sized cities like Sunderland, significant fiscal powers to transform their ability to invest in essential public services. Allowing cities to retain a greater proportion of tax revenue they generate will increase their ability to stimulate economic growth, attract businesses and deliver better services for residents.

This would help ensure that Sunderland City Council is more accountable to local residents for the money it raises and how it is spent. Devolution on this scale would also allow the council to use its creativity to generate additional income to benefit the Wearside economy. Local authorities would have the powers to offer tax incentives and other schemes to make our cities more attractive to business, bring in further jobs and revenue.

As a member of the Key Cities Group, Sunderland is seeking a commitment that the new Cities and Local Government Devolution Bill will allow the fullest possible devolution of funding and powers to all cities, towns and counties, including over tax raising powers.

Sunderland is calling on the Government to agree five year funding settlements options with Key Cities. Any settlement being based on an initial core package of economic powers with the facility for cities to negotiate individual ‘City Deals’ including devolved funding for employment, skills, business support, housing and transport.

Councillor Paul Watson, Leader of Sunderland City Council and Chair of the Key Cities Group, said: “Given the spending cuts that are coming down the line, the Government has a responsibility to do all it can to help cities manage them. A devolution settlement without fiscal devolution is incomplete and may put at risk the whole strategy.

“We want to play our part in growing the British economy but we need to be freed up to do it.”

Report author and director of ResPublica, Phillip Blond, said: “With a combined GVA of £163bn and a population of 7.9 million, the Key Cities make a vital contribution to their regions and to the national economy.

“Together they represent 11 per cent of the UK Economy (13 per cent of England’s total GVA) and contain some of the fastest growing cities by GVA; Milton Keynes, Bournemouth and Cambridge, for instance, are all growing faster than the national average.”

The report is also backed by Lord Heseltine, who has championed more help for the regions and advises the new Communities and Local Government Secretary Greg Clark.

He said: “The devolution agenda is gathering pace. Over the past five years we have witnessed the beginning of a process to reverse the centralisation of decades.

“I welcome reports such as ResPublica’s “The Missing Multipliers: Devolution to Britain’s Key Cities” because they add to the momentum and widen the horizons of all those involved in the process.”

Key Cities in figures
• With a combined GVA of £163bn and a population of 7.9 million, the Key Cities make up 11 per cent of the UK Economy

• Overall, nine out of the 26 Key Cities generate tax revenues greater than the total amount of public sector expenditure

• Savings from public service integration could reduce the borrowing requirement of Key Cities and cut the annual ‘budget deficit’ of Key Cities from £7bn to between £3.5bn and £5.2bn, saving billions over the course of a Parliament

• In 2012/13 total expenditure in Key Cities exceeded revenues by £7bn or 12.2 per cent, higher than the equivalent deficit gap for England and Wales

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