ADD316 London and Core Cities: The Impact of Devolution on Growth

1.1 This piece of work builds on the London Finance Commission and assesses the devolution steps which will best support UK economic growth. The evidence is that economic growth will increasingly be driven by London and the UK’s second tier (Core) cities. Our hypothesis is that fiscal devolution will enable London and the Core Cities to develop more productive economic relationships, ones that take advantage of the capital’s leading global position and the comparative advantages of all. The research will examine this view and, if evidence supports, will develop a powerful narrative in favour of strengthening the fiscal powers of London and the Core Cities.

1.2 The project will also address required changes to local government finance. At present, urban centres also have greater social need, with higher rates of poverty, poor health, economic inactivity and unemployment. The contention is that the level of need in London and Core Cities is undervalued and, as a result, current levels of central government grant are inadequate. It will, therefore, provide an important addition to the broader GLA work on functional or service devolution.

1.3 The total cost of the research is £40,000 and Core Cities, as the contract manager, will invoice the GLA for fifty per cent (£20,000). The GLA has satisfied that Core Cities invited a minimum of three potential suppliers to submit applications as part of procuring this piece of work. Metro Dynamics was appointed following this process. Core Cities procured the work on the understanding that it would cover the full amount, if the GLA’s London Enterprise Panel funding request was not successful. Core Cities anticipates the research to be completed by September 2015

2.1 A demonstration that the future national economic model must be primarily city-led (whilst recognising the potential of other places), and based on an improved understanding, and positive promotion (where market failures exist), of the economic relationship between London and the Core Cities.

2.2 Evidence the economic role of these cities alongside the high levels of deprivation and complex dependency that exist within them (Growth and Reform), articulating how these could be linked together to provide a ‘win win’ with a different approach to national policy.

2.3 Setting out a roadmap to achieve fiscal devolution, based on a stabilised local government finance system.

2.4 Communicating the above in a compelling new narrative that incorporates fiscal devolution into a wider framework of national, city-led growth and rebalancing

The GLA will ensure that this piece of work builds a stronger case for London government to leverage greater investment to improve the capital’s infrastructure. This will provide stronger incentive for London government to invest to support economic growth, jobs and improvements in the quality of life for all Londoners. Greater fiscal powers will also mean London government is held more accountable by Londoners for its decision making.

a) Key risks and issues: The GLA will maintain an active as part of the Steering Group for this piece of work. Regular project meetings will also be held with Core Cities, GLA and Metro Dynamics. This follows initial agreement between the GLA and Core Cities on the specification.

b) Links to Mayoral strategies: Mayor of London’s Infrastructure Plan 2050; LEP Jobs and Growth.

c) Impact assessments and consultation: Officers have considered what consultation is required and decided that consultation is not necessary.

5.1 Assistant Directors approval is being sought for the expenditure of £20,000 to support the work on London and Core Cities: The Impact of Devolution on Growth. The funding for this will be from the London Enterprise Panel (LEP)’s 2015-16 Core budget (subject to LEP Core budget carry forward from 2014-15 being approved). LEP delegated approval to LEP Chair on 28 April 2015 to approve this research work and funding.

5.2 Any changes to this proposal, including budgetary implications, will be subject to further approval via the GLA’s decision-making process.

5.3 The LEP and EBPU Unit within the Development, Enterprise and Environment Directorate, will be responsible for managing this funding.