UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 977-vi

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

OFFICE OF THE DEPUTY PRIME MINISTER:

HOUSING, PLANNING, LOCAL GOVERNMENT AND THE REGIONS COMMITTEE

IS THERE A FUTURE FOR REGIONAL GOVERNMENT?

Monday 12 June 2006

MR DAVID LUNTS

MR PAUL ROGERSON, MS NICOLE BROCK,

MR MICHAEL FRATER and DR SIMON MURPHY

MR DERMOT FINCH

Evidence heard in Public Questions 493 - 559

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Office of the Deputy Prime Minister: Planning, Local Government and the Regions Committee

on Monday 12 June 2006

Members present

Mr Clive Betts

Lyn Brown

John Cummings

Mr Greg Hands

Alison Seabeck

In the absence of the Chair, Alison Seabeck was called to the Chair

________________

Witness: Mr David Lunts, Executive Director of Policy and Partnerships, Greater London Authority, gave evidence.

Q493 Alison Seabeck: Welcome, Mr Lunts. Apologies first from Dr Phyllis Starkey, our regular Chair, she is unfortunately not here today. She is actually on a visit to Iran so was unable to get here. It would be very helpful if you could identify yourself for the purposes of the record.

Mr Lunts: I am David Lunts. I am the Executive Director of Policy and Partnerships at the Greater London Authority.

Alison Seabeck: Thank you very much.

Q494 John Cummings: Good afternoon, Mr Lunts. Would you tell the Committee what aspects of the London model of governance you believe to have been key in the success of the London Assembly? What do you believe have been the major obstacles you have encountered, and would you tell the Committee how you have tackled them?

Mr Lunts: What do I think has been successful about the model? I would say, firstly, I think there is a useful degree of clarity about roles and purposes within the governance model, which is important. In particular, I think the decision in the 1990s to look for quite a powerful elected executive Mayor with a very clear and distinct role separate from an elected assembly, which of course is primarily there to scrutinise the Mayor, was sensible. It was quite controversial at the time but it was probably the right thing to do and it draws heavily from international models of various kinds. The clarity and distinction in terms of roles within the governance structure is one reason why it has been successful. I think another is that the GLA has been correctly set up as a strategy body. Compared with the old GLC, for instance, its role, remit and responsibilities are at a much more strategic level. By and large it does not get involved in detailed matters of service delivery. I think a third reason it has been successful is that there has been a strong demarcation line between the GLA itself based at City Hall and the functional bodies which the Mayor is responsible for, particularly Transport for London and the London Development Agency. Although there is a strong element of service delivery around the Mayor in TfL and the LDA they are at arms' length, they are not part and parcel of the corporate body called the GLA. I think the roles are clear. Some of the areas that perhaps have been less successful are those where the Mayor and the GLA has a very clear responsibility to develop strategies, and there is a whole raft of those, many of which are statutory obligations and some others that the Mayor has chosen to do himself, but where the powers that he currently has do not extend far enough to really influence the implementation of those strategies. There are a number of areas - I do not know whether we will talk about these but they are very much topical matters given the consultation the Government is running on further devolution to the Mayor - around areas of waste, learning and skills in London, around housing and planning, where certainly the Mayor's view is that there is a need to devolve more powers to the GLA.

Q495 John Cummings: Can you give any examples of major obstacles that you have encountered and how you have tackled those given the uniqueness of your Assembly and the powers of the Mayor?

Mr Lunts: In terms of specific obstacles, they do largely relate to this area where the Mayor has obligations, responsibilities, and some of them are defined quite clearly in the GLA Act. For instance, an example would be waste. The Mayor has a statutory responsibility to develop a waste strategy for London. The Mayor has got some very clear views about waste management in London, about recycling and sustainable development. His view is that London is not working hard enough, nor in a co-ordinated enough fashion, to deliver what is in his waste strategy. This is his view. He does not really have sufficient powers within the Act to see that his strategy is implemented. Areas like that are where the way we are trying to overcome those obstacles at the moment is very much to engage with ministers through this consultation exercise to see if we can secure a broader range of powers to address those obstacles.

Q496 John Cummings: It is quite obvious that London is rather unique in its economic status and also in its governance arrangements. How far do you think that the model of governance in London can be transferred to other English cities?

Mr Lunts: This is very interesting and quite difficult because, you are absolutely right, the London model is unique, it is a new experiment in governance in this country, although it does draw quite heavily, but not exclusively, from international models. The circumstances in London are quite different in many respects from the circumstances in other cities, not least because London had an elected city government in the form of the GLC which was abolished in 1986 and where since 1986 there has been a fairly strong view across London that London needed to gets it governments back, and that is why there was a clear vote for that in the referendum that preceded the GLA. Secondly, London has a very specific identity and, again, that is why Londoners by and large welcomed their own city government. Of course, one of the identities that London has is although it is a whole series of neighbourhoods and component parts, there are many issues which can be tackled only at a pan-London level, not least Transport but many others too. All of those factors - there were other factors as well - meant that a new form of government for London was likely to be on the cards and had some internal logic.

Q497 John Cummings: Do you think such a model of governance could be transferred to other English cities?

Mr Lunts: Some of the factors that I have mentioned are factors in other cities, but many of them are not. London has 32, and if you include the City of London 33, separate boroughs. There is no other city in England that has a comparable arrangement of really quite small scale boroughs. There are issues in other cities about neighbouring authorities beyond the major component part - Manchester, Birmingham and other places - but I think the parallels are by no means exact. I think some of the inevitable difficulties and potential tensions around simply replicating the London model are pretty well rehearsed. On the other hand, I think there are some elements in the London model which are capable of more easy replication. I think in particular there has been some very useful and important work done to try and integrate at a city level in London land use planning, economic development, transport planning. Certainly the Mayor is working hard to try and secure more integration of adult skills and learning within those strategies as well. Integration of those critical pieces of infrastructure at a city level is something that could be replicated elsewhere.

Q498 Alison Seabeck: You have obviously made representations to Government on the issue of powers and the need for the Mayor to have additional powers, and you have set out some of the areas of strategies you would like to see that extended into. We heard evidence from the Learning and Skills Council that they were very anxious about the splitting away of London if, indeed, the powers they have are transferred across to the Mayor. Do you see or have any concerns that potentially this could weaken a wider institution?

Mr Lunts: I think if the Mayor were here he may say that may be an advantage of a further devolution of learning and skills to London.

Q499 Alison Seabeck: What are the problems? In your view, why is it essential that the Learning and Skills Council comes across? Is it not operating well in your view, or is that just a regional thing?

Mr Lunts: I do not think it has worked well. The Learning and Skills Council's performance in London has been particularly poor if you look at performance nationally of the Learning and Skills Council. Secondly, there is no doubt that London, like anywhere else but perhaps even more so in London given the underlying characteristics of the economy here, is very, very reliant on a significant increase in skills levels to respond to new job opportunities. Something like 80 per cent of new jobs in London are going to demand Level 3 skills and above. We really need a step change. We know that employment rates in London are lower than anywhere else in England. These problems of polarisation and people increasingly being left behind as the economy continues to modernise and grow are very, very active in London. The Mayor's view is very strongly that there is a compelling case just on the basis of democratic accountability for learning and skills to be responsible to London government rather than to the Learning and Skills Council in Coventry, and secondly, perhaps even more importantly, the evidence on the ground does suggest many areas where London has specific needs are not being targeted in as specific a way as the Mayor would want to see. I think that is not just the Mayor's view, that is a fairly widely shared view across business, across boroughs and across the voluntary sector in London.

Q500 Alison Seabeck: Michael Lyons is carrying out a review at the moment, including looking to local government funding. Have you submitted a view to him about where you would perhaps consider wanting further freedoms in terms of raising additional funds, outside the Congestion Charge? Is it appropriate, in your view, for the GLA to have those fund-raising powers or are there powers you would like to see with the boroughs?

Mr Lunts: I am glad you raised that because I should have mentioned it in my opening response. Another area where certainly the Mayor would like to see some further devolution change is in the whole question about financial responsibility and the ability to raise revenues locally. The GLA is heavily reliant, as is most of local government, on central Government grant. There have been some welcome moves away from that in recent years, not least with the prudential borrowing regime that is available now to TfL which has worked very successfully. Yes, the Mayor has made submissions to Michael Lyons and the Mayor's submission revolves around a relatively small number of main propositions. I suppose the most important and radical is the Mayor would like to see the GLA's reliance on the council tax precept changed so that boroughs would remain funded through the council tax, but he regards it as being advantageous to have a regional income tax to fund the GLA's activities. In his view, it would be more progressive and it would sharpen the accountability of the Mayor and London government to the electorate by detaching it from the council tax bills. A regional income tax which, in his submission, initially at least would be pegged at a level that would replace the existing precept, which would be about a penny on regional income tax. Secondly, he would like to see a denationalising of the London business rate. He would like to see much more control of London government over the level of business rate in London. The other areas that he has recommended to Michael Lyons are there should be more flexibility to undertake specific local tax raising measures in order to fund specific infrastructure projects, which is obviously something which is available to a lot of North American mayors to have things like tax increment finance, and particular measures to focus on particular infrastructure requirements. I think that view is taken because it is fairly clear that business in London is open to the suggestion that it should perhaps pay more tax but they want to see the benefits of those extra taxes. Finally, the Mayor would like to see some freedoms and flexibilities for the Mayor to respond to particularly environmental taxes, perhaps some ideas around commuter taxing, using the congestion tax model but perhaps extending that to other areas, such as airports and so forth.

Q501 Alison Seabeck: Has the Mayor had any discussions with the Treasury about the regional income tax proposal? Is it something he sees as applying in London or would he expect it to be applied in other parts of the country and, if so, by what sort of body?

Mr Lunts: I think the Mayor's view about it is that it is very much a particular mechanism to help fund London government at this stage. The three main drivers for this proposal in his view are (a) it is more progressive as a system of tax, (b) it is more transparent because it means that Londoners can see precisely how much they are being charged by the Mayor for what he is doing, and (c) it introduces a bit more freedom, a bit more flexibility, in terms of the revenue that can be raised. He sees it as having those three advantages but, because of the accountability point, I can see that it might be rather difficult to introduce regional income tax elsewhere because there is no accountable regional government to insert into the formula.

Q502 Mr Hands: It seems to me that quite a number of backers of the city-region concept in this whole regional government debate have latched on to London as a possible example of a way forward for city-regions. My first question is does the Mayor think that London is itself a city-region or is it just a city?

Mr Lunts: I suppose it is tempting to say you could argue it is both. London clearly is a city in its own right. It operates as a city but it operates as a city on a particular scale. Arguably, the London city-region is a good deal further than the current GLA boundaries. All kinds of people have claimed to have the definitive answer as to what really comprises the London city-region but it is very clear if you look at commuter patterns, investor patterns or housing markets and a whole range of things, the London economy and people's travel to work into and out of London is much, much wider. Ultimately it is probably a rather futile quest to try and redefine the extent of the London city-region.

Q503 Mr Hands: So if there were a London city-region, which I think you and I would probably both agree is a slightly questionable thing, it would extend quite a bit further into Surrey, Kent, Buckinghamshire, Hertfordshire, et cetera, so you would not see the current GLA boundary as being the London city-region.

Mr Lunts: In the Mayor's submission to Government on reviewing the GLA and the mayoral powers five years on he was not asked particularly to address should the GLA boundaries change, and he did not address it. The Mayor is on the record on various occasions, I know, as referring to the fact that there may come a point at some time in the future when it is appropriate to look again at the GLA boundaries. There has been some speculation and at times I think the Mayor has wanted to encourage that to consider whether at some point the GLA needs to expand, perhaps in some way out to the M25. Although the London city-region concept inevitably is something which is difficult to pin down, one of the things that are very powerful in terms of the geography of London and the map around London is that there are certain defined boundaries. At the moment there is the governance boundary, the electoral boundary of the GLA, there is the M25, which is a real collar, and there is the greenbelt. There are some quite specific spatial definitions to London and arguably some of those are not very well reflected in the current electoral boundaries or governance boundaries.

Q504 Mr Hands: Based on that, and I am asking you to speculate about areas that are not in London, how applicable do you think the Mayor/GLA model could be to a city-region like, for the sake of argument, Stoke-on-Trent taking over the surrounding region? It does not sound very applicable at all.

Mr Lunts: I hesitate to respond too enthusiastically to your offer to speculate about the future of boundaries in Stoke or anywhere else. I have already said that my own view, based on less than two years' work in the GLA and working in local government, in national government and ODPM, is there are real difficulties and constraints on what can be achieved, particularly in the short-term, with new governance models at city-region level. I think there is quite compelling logic to city-regions needing to be better organised, better defined, given more freedom and flexibility to exercise strategic leadership and organisation of things like land use planning, economic development, transport and so forth, but any argument that suggests the way to resolve this is to make some very quick and definite decisions that involve a wholesale reorganisation of boundaries and local government I suspect would be unwise and likely to set things back.

Q505 Mr Hands: I think many people are viewing London or the GLA as a city-region government, but I would differ from that. Do you think that you have sufficient influence in Whitehall? I am not asking in a general way but specifically on economic policy and how far the London economy is aligned with the UK at the moment. In your evidence you say the London and the national economy have been closely aligned the last 20 years. What would happen if they were to become disjointed? Do you think that London has sufficient clout as an elected body with the Mayor and the Assembly, with Whitehall, to be able to do something about that?

Mr Lunts: I think probably it does not. London is hugely successful, hugely important, it is the dynamo of the national economy, we all know that. It has various unique aspects which mean that it has got international competitive advantage and is in an extremely advantageous position to benefit from emerging investments coming from the growing economies in the Far East and elsewhere, all that is taken as read. Because London government is still new, it has only been around for five or six years, because the original settlement that established the GLA was inevitably one which, although I said at the beginning was a bold measure in terms of introducing a new and innovative form of government, involves some compromises and some fudges - that was inevitable perhaps for a new system - I think the time has come to have a more sophisticated view about how Whitehall and Westminster engages with London government. Our view, the Mayor's view, is very much if London government is going to really matter, if the Mayor is going to be properly accountable to Londoners for London's continued performance locally and in the wider world, then it is time to devolve more seriously some of the powers and responsibilities that are absolutely essential to continuing to drive London's competitive advantage. Labour market and labour force issues is the obvious big one that is currently no responsibility really of the Mayor.

Q506 Mr Hands: How would you describe the institutional relations between London and the surrounding parts of the South East? How often does the Mayor meet, or does he ever meet, with the leaders of, say, Hertfordshire and Surrey County Councils or the RDAs for the East of England and the South East and that kind of thing?

Mr Lunts: I think relationships are not bad. The London Plan, which I suppose is the foundation document for the Mayor and the GLA - it is the most important strategy he publishes because it is very much about setting a vision and the statutory spatial strategy for London, and it obviously has to be right, and it is the document that goes through a very extended period of consultation and inquiry before adoption - is quite a good example of where collaborative working with adjacent regions has been quite successful. Equally, we have joint arrangements with the East of England and South East to consider issues that are relevant to their regional plans. I think that works quite well. The Regional Development Agency in London, the LDA, has good relationships, good rapport, not just with the adjacent regions but also with the RDA network nationally. We are working very closely with the East of England and South East on the Thames Gateway strategy. By and large it works reasonably well. There are differences in political view across those regions and across those authorities that you will be well aware of, but by and large it works pretty effectively.

Q507 John Cummings: Could you give the Committee an example of where the city and its surrounding communities in what is termed as the "hinterland" have had a disagreement about a proposed course of action, and could you tell the Committee what happened?

Mr Lunts: A disagreement?

Q508 John Cummings: Yes.

Mr Lunts: Around anything major?

Q509 John Cummings: Anything specific that leads us to believe how you would resolve such a conflict.

Mr Lunts: In the time that I have been at the GLA, which has been about 15 or 16 months, nothing springs to mind as being a major fallout between the regions. I would need to check back and look at what I might be able to drag up from the time before I was there. Can I get back to you on that?

Q510 John Cummings: It does not appear to be a major problem?

Mr Lunts: No, I do not think so.

Q511 John Cummings: Has it ever been suggested to you that London's economic and cultural success has been detrimental to the life of other settlements in the London "super-region"?

Mr Lunts: That London success has been at the expense of adjacent regions?

Q512 John Cummings: Yes.

Mr Lunts: I do not think so, no. I am very much of the view that adjacent regions and regions beyond largely benefit from London's success. Certainly if London was less successful it is very difficult to see how adjacent regions would benefit from that outcome. No, I think pretty much it is win-win. Some people may say it is not fair because London gets investment that could in theory go elsewhere, and I suppose at one level that must be true because if you are investing somewhere you are not investing somewhere else, but by and large I think people outside London have benefited enormously and perhaps the best example of that is the enormous regeneration and growth over the last 10/15 years of east of London, Canary Wharf, the Isle of Dogs and now the Gateway more generally. That, coupled with new infrastructure, means that it is a very important source of in-commuting, it generates a very substantial tax surplus that is available for reinvestment by the Exchequer, and London has a massive range of facilities, not just jobs and economy but culture, leisure, all kinds of things, from which people in adjacent regions benefit.

Alison Seabeck: Thank you very much for your time, Mr Lunts.

Witnesses: Mr Paul Rogerson, Chief Executive, Ms Nicole Brock, Head of Regional Policy, Leeds City Region; Mr Michael Frater, Chief Executive of Telford and Wrekin Council, and Dr Simon Murphy, City Region Project Director, Our City Region Partnership (Birmingham), gave evidence.

Q513 Alison Seabeck: Thank you very much for coming. First of all, can I offer the Chair's apologies, she is in Iran today. If you could start by identifying yourselves for the record, please, your name and your role?

Mr Rogerson: I am Paul Rogerson , I am the Chief Executive of Leeds City Council.

Ms Brock: I am Nicole Brock, I am Head of Regional Policy at Leeds City Council.

Mr Frater: I am Michael Frater, I am Chief Executive at Telford and Wrekin Council.

Dr Murphy: I am Simon Murphy, the City Region Project Director.

Alison Seabeck: Thank you very much. I am very grateful to you for having rushed here having had a horrible journey from the West Midlands.

Q514 John Cummings: In your submission, that is the submission from Birmingham, you describe the role of city-regions as "building urban and regional competitiveness and reducing regional imbalance". What do you mean by "regional imbalance"? Can you tell the Committee what you can do to reduce it, and how will you do it?

Dr Murphy: The regional imbalance is in terms of the prosperity gap and the GVA figures between the best performing parts of the United Kingdom and those that are currently under-performing. Our estimation is that the city-region at the urban core of the West Midlands is an under-performing region. How we would close that gap is by targeting strategic decision-making on certain key policy areas, namely transport, housing and sustainable communities, competitive locations, economic development if you will, innovation and enterprise, particularly skills and employment, and the area of creativity and culture. We believe by taking decisions at a city-region level across eight council areas, working with partners such as the Development Agency, the Learning and Skills Council, the Regional Assembly and the business community, all of whom since we submitted our evidence have agreed to join the executive board, so we have a very broad based executive board taking these decisions in those policy areas, taking decisions on a collective basis across a wider area, will enable us to take strategic decisions more quickly and to spend public and private monies more effectively and more efficiently than currently is the case.

Mr Frater: As well as imbalance between regions there is intra-imbalance within the region as well. There is growing evidence that there is an economic fault line that runs broadly north/south through the West Midlands and to the west of it, places like Telford, where I work, and Stoke where there are significant challenges. Telford's GVA is on a par with the likes of Stoke, Blackburn, Grimsby, at the bottom of the league, so there is an opportunity to address imbalance within the region as well as between regions.

Q515 John Cummings: Do you think that this is a role that all cities can play or should the Government be concentrating on the development of only a few city-regions?

Mr Rogerson: Like many initiatives, this is an initiative that started within local government from the eight core cities which had been working together for some years and proposed this idea to Government. It does seem to me that certainly the starting point has to be the major core cities outside the capital. Whether there is advantage for other towns and cities to follow suit, for example in our own region Stoke-on-Trent are proposing that they will form their own city-region which makes a lot of sense as they really look equally to the East Midlands cities, to Manchester and to Birmingham, I think Stoke-on-Trent will demonstrate whether this is a concept that is applicable, as it were, at the smaller city level and at the town level.

Q516 John Cummings: So you are not averse to more cities being brought under the umbrella of city-regions?

Dr Murphy: Currently Government is inviting us to describe to them how we would actually run a city-region in the urban core with the West Midlands. We are doing that in terms of the governance models we would put in place, in terms of the policy areas where we believe this wider base of decision-making can have a strategic impact in terms of closing the prosperity gap and increasing the quality of life for our citizens. I guess if the model is proved to work in one or two areas, or maybe more, it is something the Government could consider rolling out across the whole of the country and inviting other areas to look at city-regions also. We, and Leeds, I am sure, are by no means the only two within the country currently working on this agenda but we are responding to encouragement from Government to come forward with our proposals on how we would do it ourselves.

Q517 Mr Betts: I just want to explore with you about the fact that you are developing a City Region Development Plan - this is Birmingham - and you have already got a West Midlands Spatial Strategy in existence. Are you intending for your plan to supersede the Spatial Strategy, is it going to be a part of it, or is it a building block towards it? What happens if there is a conflict between the two? Presumably you want your plan to be the one that is taken account of and perhaps the Regional Assembly's efforts are not worthwhile any more?

Mr Frater: If I could start the answer to that. Within the region I have the responsibility for the strategic overview of the Regional Spatial Strategy and I am also, as it happens, the recently appointed secretary to the Regional Assembly, so I would be in serious trouble with my colleagues if they thought the Regional Spatial Strategy was going to be subject to being driven just by the eight authorities. The answer is no, I think we see the Regional Spatial Strategy, which is currently going through its first review, particularly in light of the housing numbers, as being the principal means of achieving housing growth. The RSS as currently formulated, and I do not think that will change fundamentally, sees most of that growth taking place within the existing metropolitan areas. In that sense there is not a fundamental conflict between the two. The challenge with the new housing forecasts is how those numbers are going to be achieved across the region, not just within the major urban area, certainly in the short-term.

Q518 Mr Betts: What happens if there is a conflict? You would have a particular problem wearing two hats in a conflict.

Mr Frater: Indeed.

Q519 Mr Betts: How would a conflict be resolved? If the Assembly organisation has a view on life and the Regional Assembly does not share the same view, you have got a problem, have you not?

Mr Frater: We would have if we allowed that situation to develop, but I do not believe we will. Firstly, the Regional Assembly chair sits on the shadow board for the city-region. Given the nature of the RSS, which is not going to fundamentally change - it will change in detail but not in principle - which already declares that the majority of growth should be within the major urban areas, there is not going to be a fundamental conflict there.

Dr Murphy: Can I add a point to that which Michael was making about the executive board that will be running the city-region. It will have the eight leaders on it in terms of its governance structure but there will also be the chair of the Development Agency, the chair of the regional Learning and Skills Council, the chair of the West Midlands Regional Assembly, as Michael has said, and also a business representative. Some of the issues that you are raising there we hope would be dealt with by the executive board before they ever became an issue in terms of conflict. Currently there is a review of our Regional Economic Strategy which is driven by the Development Agency and we are working very closely with them to ensure that our City Region Development Plan and the new RES complement each other and, indeed, within the Regional Economic Strategy the city-region working is seen as a delivery mechanism for some of the key aspirations that will be within that wider West Midlands Regional Economic Strategy from the Development Agency.

Mr Frater: We have developed the programmes for the Regional Economic Strategy review and the Regional Spatial Strategy review so that they run in parallel to the same timescales so we can have read across between the two.

Q520 John Cummings: Both Birmingham and Leeds call for greater alignment of national policy with the city-region competitiveness agenda. In fact, the Birmingham partnership states at paragraph 20 of its memorandum, that "national and regional programmes [should be] aligned behind the city-region's competitiveness strategy". Does the Government's policy on city-regions give you both the backing that you need?

Mr Rogerson: In terms of the Leeds city-region, which is a large city-region in the North comprising of ten authorities, if we take transport as something that is crucial to removing impediments to the economy within that area operating as a single economy, at the moment there is a Passenger Transport Authority covering a part of the city-region in the south, the Passenger Transport Authority covering West Yorkshire and there are separate requirements for Local Transport Plans to be submitted by North Yorkshire and other districts. What we are looking to is to say let us look at how the city-region economy operates, let us have one vision for transport across that city-region with a view to aligning the various Local Transport Plans that are then submitted to take account of all of the key corridors impacting upon that economy. I could offer a similar example with respect to investment by the Regional Development Agency which currently is organised along the old county metropolitan areas so that we have a plan for West Yorkshire with analysis at that level and with delivery at that level, whereas the Regional Development Agency has been urging the DTI to support this to look again at the functioning economy and seeking to allow us to ensure there is an alignment of policy, whether it is promoting development more generally, whether it is regeneration or transport, because we believe that will be more conducive to greater growth across the whole of that city-region area.

Q521 John Cummings: Would you care to expand on what you define as "barriers to implementation"?

Mr Frater: That was in the West Midlands submission, was it?

Q522 John Cummings: That was in the Leeds submission. It says: "barriers to implementation" of the city-region policy have become apparent.

Mr Rogerson: I want to take one of the two examples that I have given. Let us say it was submissions to the Regional Development Agency around their investment priorities. Currently analysis in our case is at West Yorkshire level, so priorities for investment at West Yorkshire level then being put to the Regional Development Agency, but in the case of Leeds very significant numbers travel into Leeds from Harrogate and Selby, and I think 30 per cent of the workforce in Selby work within Leeds and York. What we are trying to do is to remove the impediment of having to undertake analysis and submit investment priorities by reference to areas that have no economic significance so far as the city-region is concerned. That is one example.

Dr Murphy: Could I add very specifically on transport. In our city-region area even relatively small transport schemes, but certainly the bigger ones, will have to go through anything up to nine different bodies for consultation and reference before a decision can be taken. One of our aspirations is that we will establish under the auspices of our executive board a transport board which will consolidate a lot of those organisations so that decisions can be taken more quickly, because if anything is holding back our city-region it is realising the full potential of our transport network, and often that happens almost inadvertently because of the length of the decision-making process and the consultation process. We have a very strong aspiration there for a transport board. Just answering the second part of your original question about is Government policy supporting what we are doing on city-region at the moment, for the present we are making the case and we are getting a hearing but we do want to say to Government we think this is a model that can work and will achieve its aims more quickly, aims that Government would probably support as well, than through the existing mechanisms that we currently use.

Q523 John Cummings: In a nutshell, if it is possible, what do you need from central Government and the regional agencies in order to improve the performance of your city-regions?

Mr Rogerson: I think we need acceptance of the argument that when looking at economic interventions, measures that impact on the function of the economy, the city-region level is the sensible spatial level at which to be considering such decisions. We hope that increasingly that view would be of interest across Government and not just within the departments and communities and local government, so there is an understanding of the issues and a readiness to take decisions that promote the more effective operation of functioning economies based around cities and city-regions.

Q524 John Cummings: Is Birmingham the same?

Dr Murphy: I very much echo those comments but, for example, very specifically in transport the ability to take decisions more quickly, perhaps in the housing area the need less so to reference all the time back into ODPM as it was for the bigger decisions, but that we should be given the trust and the freedom to go ahead and take those decisions ourselves because we probably all share the same outcomes that we are aspiring to. In due course, providing the governance mechanisms that we have put in place are robust enough, to have existing funding streams channelled through the city-region so that money can be deployed more effectively and more efficiently, but we appreciate there is a process to be undergone here before we might get to that.

Mr Frater: Could I just add a point on that. My authority was the pilot for the single pot Local Area Agreements. Within the city-region we are looking at a city-region area agreement. From our short experience on LAA so far there have been some interesting lessons, and the same would apply to city-regions. The first is that they do have the potential to provide real joined-up government. I know that is a much used phrase but there is already evidence of that. The Local Government Minister, Phil Woolas, is on public record on many occasions as referring to our LSP as "Team Telford". However, the potential has not been fulfilled because different Government departments are not pursuing the same agenda. They have important agendas of their own but they are not necessarily joined-up. If there was a willingness to let go of some of the decisions that, frankly, do not need to be made in Whitehall, to trust city-regions and, indeed, individual local authorities, I think much of the very sound policy that Government wishes to see implemented could happen, and that could happen at both the regional and local levels.

Q525 Mr Betts: What do you see as the key policy areas that you want the city-region to have strategies for and to deliver on? Is there agreement between the two of you?

Mr Rogerson: Certainly transport, skills and housing would be the three that ----

Q526 Mr Betts: That is housing strategy?

Mr Rogerson: Yes.

Dr Murphy: Certainly we are looking at those three areas. We would also look at competitive locations, inward investment and growth as a defined area in itself. We are also looking at innovation and enterprise as a separate area, and creativity and culture where we think city-region working can bring added-value to those processes that currently exist. Very much so transport, skills and employment and housing, as with Leeds.

Q527 Mr Betts: One of the issues, and we certainly raised it on our visit to the South West the other day, is this is all very well while you are at the stage of doing a bit of initial planning, and it all works very well while everyone is in general agreement, but what happens when one of the leaders of one of the authorities, or two of the leaders, decide that the direction of travel or the particular issue in question is not quite the one they want and they do not agree with it? Is not this whole process relying on so much consensus that in the end it is the lowest common denominator that is going to succeed?

Mr Rogerson: I think at this early stage there is a lot of truth in what you are saying. In the informal alliance of authorities in and around Leeds who are investing a lot of time currently in the analysis and the attempt to agree priorities you could have one walking away if the priorities did not accord with their own assessment but we have not met that. If the expectation from Government was made increasingly clear that - let us take transport - transport submissions would be expected to reflect city-region analysis then there are real incentives on authorities not to walk away because they gain nothing by that. I do think as the discussions grow and the agenda goes forward, while the arrangements currently rely on enthusiasm and, I suppose, enlightened self-interest on the part of all of the leading politicians, they will actually have something rather more concrete.

Q528 Mr Betts: We have passenger transport authorities and then one council representative will say, "We will vote for one of those there if we get one of those here". Is that not the sort of trade-off that is going to happen? That does not really deliver necessarily the best policy at the end of the day on an overall basis.

Dr Murphy: The governance arrangements that we are putting in place at our city-region will require a duty to act in the best interests of the city-region and also for those who are on the board to come with the delegated authority to take decisions. It is a process that we are going through and perhaps it will reflect some of the issues that Leeds are experiencing as well, that this is a journey we are on. However, in the recent past there has been specific evidence of decisions that are perhaps difficult and challenging for some authorities being taken across certainly seven of the eight authorities within the urban course of your region. For example, the development of Birmingham International Airport was undertaken by seven local authorities, the development of a Midland metro network was undertaken with spending decisions being taken by local authorities within that network and within that area which would never see the network come to them. There is a history within the West Midlands of decisions that are strategically taken where certain parties would not see a benefit or might actually feel threatened by that, so I think there is a basis for optimism here: this is actually moving forward with some of the work that has already gone on in the past and saying to Government that with a few more freedoms and flexibilities and the ability to channel money we can achieve more than we are currently doing.

Q529 Alison Seabeck: If in gathering additional autonomy you take a few more key decisions as a board, where does that ultimately leave the RDA and the regional assembly? Are they not going to be somewhat sidelined by the power of your decision-making and, if Government does decide to channel additional funding your way, what funding power you have?

Dr Murphy: That is certainly not the intention and that is why the executive board in the city-region in the West Midlands will have on it the chair of Advantage West Midlands, the chair of the Learning and Skills Council, the chair of the West Midlands Regional Assembly, because we see this as realising its full potential by working with all partners together. Again, perhaps if I can go back to the housing situation where the ONS figures are providing some very challenging household growth figures for some of the shires, many areas within the shires are prepared to accept some of that challenge but it is difficult to envisage, in accepting all of that challenge of household growth, that you have an urban core which is actively seeking to arrest its population decline and grow the population, so there is very much a mutual interest issue here between the regional assembly and the regional economic strategy of Advantage West Midlands to ensure that we are working together.

Q530 Mr Betts: I must say I do find that a little difficult to follow. When we talked to the West Midlands Partnership in Bristol there was quite openly talk from the local authorities saying, "If we work together on the sub-regional strategy which actually delivers on things like the local economy what on earth is the point of us also having the regional development agency sitting on top of all this?", and the answer that you therefore put the RDA chair on the same board does not really answer the question, "What is the purpose of the RDA involvement in that area?".

Dr Murphy: The RDA will cover an area that is much wider in terms of -----

Q531 Mr Betts: Oh yes, I see why it covers other areas, but -----

Dr Murphy: ----- in terms of its geography, but many of the strategies that the RDA are developing we would be supporting, and indeed have actively been supporting as well, but we believe that by bringing together this wider structure of city-region working we can add value to what is currently going on.

Q532 Mr Betts: But putting all the individual schemes up to the RDA for approval when you at local level have got common agreement about them, is that just not bureaucratic?

Dr Murphy: Well, no. In a way it will help the RDA spend some of its money perhaps more effectively as well, but in no sense is this seen as a way of replacing existing structures. We will work with existing structures to make sure that the decision-making process happens more rapidly and money is channelled more effectively and more efficiently than currently is the case. The RDA are quite happy to be on our board as well.

Q533 John Cummings: This question is to Birmingham. You identify weaknesses in current national spending programmes and you also argue that devolution of spending would perhaps help to reduce the competitiveness gap. Could you tell the Committee how you believe this would work?

Dr Murphy: For example, in the area of transport policy, if I give you the example of our main railway station at Birmingham New Street which by common assent needs redevelopment, certainly in terms of increasing its passenger capacity, we believe that by working as a city-region, eight authorities with four other partners on the board, we can turn round to Government with our transport board and say, "You will have the comfort of a wider structure here, a stronger structure, for taking and implementing a decision to develop that railway station, which then feeds into the transport priorities of the whole of the West Midlands region", because currently there are transport schemes in and around the West Midlands region which are not able to develop because of the additional capacity put on Birmingham New Street station, so the actual city-region working can help us get a decision taken on the development of one of the main railway stations at the core of the city-region which will then allow other public transport priorities to be developed and delivered much more quickly than they could be if we are having to wait a lot longer for that one particular railway station to have its passenger capacity increased.

Q534 Mr Betts: This question is to Birmingham and Leeds. What procedures would be needed to ensure that spending decisions made at the regional or sub-regional level were accountable?

Mr Rogerson: I think the constitutional issues are fairly readily addressed once it is clear what the nature of the devolution is that is being discussed.

Q535 Mr Betts: What procedures would you like to see in place?

Mr Rogerson: Currently, where the debate is very much around analysis, policy formulation and submissions to Government, I think the arrangements that are in place are adequate, but if it was questions about spending and prioritising that spending then I think there would have to be the sorts of formal agreements that we have with joint committees where people are locked in for a period and that agreement then deals with what happens if there is a disagreement between authorities and there is an accountable body and, as we are already familiar with doing, you can identify the decision-making process in respect of those particular functions. I do not see that there is anything holding -----

Q536 John Cummings: But, your decisions having been made and the procedures in place, how do you ensure accountability of such? Who would be responsible?

Mr Rogerson: It would be the executive of whatever the joint arrangements were. I would expect Government to want to be satisfied about that ahead of any devolution.

Dr Murphy: The structure that we have envisaged for our city-region is that there would be an executive board which would be responsible for delivering a city-region development plan, which had been agreed with partners and a city-region area agreement, hopefully, which had been agreed with Government, if that is the route the Government decides to go down. We would then have a scrutiny board which would comprise a representative number of councillors from the eight councils with the potential for co-optees as well whose job it would be to ensure that that jointly agreed city-region development plan, the city-region area agreement and the funding and budgetary decisions that followed from it were being followed and if we were acting outwith either of those that scrutiny board could call the executive board to account so the leaders of the executive board would be held to account. Similarly, we have had preliminary conversations with Members of Parliament to investigate whether they would wish to be associated with perhaps not the direct policy of monitoring and scrutiny but nevertheless informing the development of the city-region plan and we have had some very strong responses from Members of Parliament. They think that that might be a role for them, perhaps on an annual or bi-annual basis, to make sure that there was a wider accountability base, not just restricted to local authorities, that would make up the eight local authorities that are on the executive board with other partners but also that there would be accountability, if you like, coming from both ends. Similarly, we will be producing an annual plan which will be presented amongst others to the Young People's Parliament that exists within the West Midlands core so that other constituencies, if you like, would have an opportunity to at least comment on the decisions that we were taking.

Q537 John Cummings: Can you perhaps explain to the Committee your ideas of a city-region Development Fund? What support from Government would you require to make this happen?

Dr Murphy: In the first instance the aspiration for a city-regional Development Fund within our city-region would be fairly modest. It would be just rounding up some funding that we could put into a central pot to, if you like, pump-prime the organisation and the activities of the city-region Executive Board. However, in due course, if we were able to provide enough comfort to Government that our governance arrangements were robust and our decision making was robust enough to withstand the sort of question that was raised by the honourable Member about difficult decisions, then we would expect and hope that Government would be able to channel some of the existing funding streams through the city-region mechanism so that they could be deployed more efficiently and effectively, and potentially in due course look for new forms of funding, but that is a little way off in the future, I have to say.

Q538 John Cummings: The IPPR's recent report on city-regions produced a model for devolving budgets to city-regions, and it is estimated that the Birmingham city-region could have a budget of £675 million. What was your assessment of this proposal? Would the model they proposed work from your point of view?

Dr Murphy: The figures seem to be in a similar ball park. In due course we would envisage for our city-region that they may be on the slightly conservative side and the model is seen to be a workable one as well. We are at a fairly early stage of deciding how we would run this but it was a very welcome contribution to the debate. I have to say it was slightly overshadowed by the mechanism of having a directly elected mayor for a wider city-region, much wider than our city-region, as the mechanism for delivering all of this and that seemed to create more press interest than the rest of the body, the burden of the work that was in there, which was, as I say, a very useful contribution to the debate.

Q539 Alison Seabeck: Thank you very much for coming. We have run a little bit tight on time and there may be one or two questions we will put to you in writing but, equally, if there is information you feel you have not presented and you want to present, please do write to us and we will consider it. Thank you for coming.

Witness: Mr Dermot Finch, Director, IPPR Centre for Cities, gave evidence.

Q540 Alison Seabeck: Thank you very much for coming and apologies from the Chair for her absence. She is in Iran. Could you state for the record your name and position please?

Mr Finch: My name is Dermot Finch. I am Director of the Centre for Cities at IPPR, the Institute for Public Policy Research.

Q541 Alison Seabeck: In your evidence you talk about a definition of cities which excludes a number of small urban areas like Stoke, for example, and we have heard some very positive comments about Stoke and its developments from the previous witnesses. The Government too has not really defined what a city-region is, or not tightly defined it. How would you define a city-region and where do you feel you have common ground with current Government thinking in the area?

Mr Finch: On the first point, I think there is quite a degree of consensus on the definition of a city-region, certainly from an economic standpoint. City-regions are effectively the economic footprint of a city and we usually speak about them in terms of major core cities and their economic footprint. In Manchester's case, for example, it is the reach of Manchester, looking at, for example, retail or travel to work areas, business to business linkages, housing markets. Those individual maps are not exactly the same, which leads to some confusion, but essentially it is how far you and I might travel to work into Manchester from a wider economic area; hence the phrase "economic footprint". There is a good degree of consensus about that, not just from us but also the Treasury published a report alongside the Budget in March giving some further details on those sorts of definitions, so I think we are reaching some agreement on that. What is more difficult and contentious, of course, is the political ramifications of city-regions and how one gives institutional form to city-regions in a political sense, how one might empower them and which entities would take that forward. I am very happy to discuss that, of course, but that is where there is contention and debate. Most people agree for the most part that it is useful to look at cities through the lens of city-regions because you get a better sense of their economic imprint. For example, it is much more useful to look at Manchester in that way because Manchester City Council is very small, is very tightly bounded, and in no way represents the economy of Manchester.

Q542 Alison Seabeck: You obviously take the view that basically seven English cities are suitable for devolved funding powers. Are you not concerned that, as with the core cities, this will develop resentment in other areas which are outside of the influence of those core cities, for example, the South West, Cumbria?

Mr Finch: Yes.

Q543 Alison Seabeck: There are huge swathes where this will have potentially not the impact that we expect in other much more closely packed areas.

Mr Finch: This is a very difficult issue for ministers who naturally find it hard to be selective about things like this. However, we would argue that if you are serious about financial devolution, if you are going to try and do that to the same degree in all areas at the same time, you are not going to devolve very much because you are always going to be constrained, with all due respect, by the Tauntons and Carlisles of this world when at the same time big cities like Manchester, like Birmingham, like Leeds, from whom we have just heard, have the capacity to take on more powers and should not be constrained by the fact that there are smaller places outside their economic reach. We would urge ministers to be bold on this and accept that the economic potential of our bigger cities is not being realised and devolving powers to them will benefit not just them but the surrounding areas around them as well.

Q544 John Cummings: On the questing of spending and taxation, Mr Finch, the case you make for major city-regions appears to focus strongly on the importance of devolved budgets and local fund-raising powers. Could you tell the Committee why you believe these are so important? Do you not think that city-regions could be governed successfully without any or all of the powers that you advocate?

Mr Finch: The report that we published in February, City Leadership, was the result of a year-long process of research and stakeholder interviews in places like Liverpool, Birmingham and Barnsley, and the number one problem that we identified from local government agencies, from local businesses and that was even acknowledged from central government departments was the issue of fragmented funding streams, the fact that, for example, in Liverpool to deliver a not very big project, £30 million or so, involved dozens of different funding streams collected from different agencies. This is a real problem and a barrier to economic development in our cities. Therefore, the most attractive proposal that we were able to put forward was to say, would it not be more effective at the right scale, at the city-region level, to bring together funding streams to avoid the need to go round all these different agencies and get pockets of funding and put them together? The response from our research was that that would be the number one benefit from our set of proposals.

Q545 John Cummings: Could you tell the Committee what you believe the importance to be of formal city-region contracts and how that would work? Who would be responsible for enforcing it? Would it be central Government or would it be the local electorate?

Mr Finch: That builds on your previous question, so I can go straight into that. We gave some quite specific proposals on how one would bring these funding streams together at a city-regional level and we gave the examples of Greater Manchester and Birmingham, and we looked at existing funding streams such as the one you touched on earlier of £675 million. Let me break that down for you. Some of that consisted of regional funding allocations, for example, on things like housing and transport. Some of it was from the learning and skills councils in the city-region. Other bits were EU funding streams. Bringing all those together added up to £675 million. The economic case for bringing those funding streams together is compelling but you are very unsure about who would run that. We say that would you need an entity at the city-region level to bring in the necessary amount of accountability. We argue that a directly elected mayor covering the city-region area would be the most efficient and effective way to spend that money. We have heard some perfectly valid proposals for executive board type arrangements which would bring together the component local authority districts within a city-region. In Manchester they have made good progress in doing that with Birmingham, as we have just heard, following not far behind. Our main question about that type of arrangement is this. Can representatives of individual local authority districts take the very difficult decisions over allocating resources across a city-region in a way that a mayor can? If you have a difficult set of decisions about where to place transport funding, for example, are you able to do that with a coalition of politicians representing their own constituents? We have doubts about that but we think that these arrangements should be given a fair wind and we think ultimately that the best model would be, as in London, a directly elected mayor. That model would be accountable, transparent and able to take difficult decisions like that.

Q546 Lyn Brown: Why do you think there is so little enthusiasm for directly elected mayors?

Mr Finch: I question that. When we published the report there was a very healthy debate about it. I would not characterise the support as being little or marginal or lacking in enthusiasm. It is one of those issues that really gets people going, frankly, and people have strong views on either side. There is definite nervousness and caution, certainly on the part of the cities themselves, and it is not difficult to work that out. Incumbent politicians are unlikely to vote for a new governance model that may see them no longer in power. That is one of the issues and we understand that. Equally, in Whitehall ministers are reluctant to get bogged down in new governance arrangements which would take people's eye off the economic growth ball and all the rest of it and we understand that, but it is important to put the case across for city-regional mayors and that is what we are doing. The reason we are doing it is partly because of accountability for transparency reasons but also because we think it is a quid pro quo of getting the powers that we think are necessary. Big cities need those powers. They are best placed to take decisions on transport. In order to get that done you need transparent, clear forms of governance, so, if you like, it is the consequence of our analysis that says that cities need more power.

Q547 Lyn Brown: Let me push you a little bit further on that. Why do you think that one person being in charge of an area is better for democracy, legitimacy and transparency than a federated approach?

Mr Finch: Of course, there are different types of mayoral model and in our research we did not go into specific mayoral model breakdowns. There is, of course, a whole range of different cabinet type arrangements where a mayor is elected from amongst individual cabinet members. There is the Ken Livingstone, Mayor of London, model that we have heard about, and so the first answer to your question is that there are different types of mayoral model, but the more fundamental answer is that some of the problems we were hearing earlier that Mr Betts asked about, which were around what would happen if there were disagreement amongst the local authority leaders within a city-region, are the sorts of problems that an executive board would come up against, so inertia would occur if it was difficult to take those sorts of decisions. A mayor would be much better at that. The mayor would have the mandate and the power to take those sorts of decisions. There is a debate to be had about this but the benefit of having a directly elected mayor is that you know who is in charge. The business community understands who is in charge and so do voters. It is much clearer. Some of the descriptions we have heard of other arrangements frankly get so confusing and opaque that it is very difficult for people to understand who is running what.

Q548 Lyn Brown: One of the other policy papers that has come from IPPR recently, and I might be wrong on this one, is around double devolution, I believe. Is it IPPR?

Mr Finch: Double devolution first of all was David Milliband's phrase when he was in ODPM, but the Smith Institute published a book recently that I contributed to on the whole notion of double devolution.

Q549 Lyn Brown: I suppose what I am trying to tease out here is whether or not you think that the need for an approach around double devolution, the need to re-engage communities, to understand communities, local authority areas, people, in terms of their needs in a small area is in any way negated or compromised by the idea of a mayor of a large authority covering a large distance and often with very different communities.

Mr Finch: We believe that the two go hand in hand. It is very difficult to do one half of double devolution without the other. To try and say that you are going to devolve lots of power to neighbourhoods and communities without first of all giving power from Whitehall to town halls I think is a stretch, so within the context of an empowered Greater Manchester, for example, where across nine or ten or 11 local authority districts you have got real power to take decisions on transport, on skills, on the things that really matter to people and affect their daily lives, then you can start talking about, "Within that context let us decide how to involve parishes and local communities in their own issues". That makes sense but within a disempowered city-region that is quite difficult, so I believe the two go hand in hand.

Q550 Mr Betts: The real politics of this are that only you and the Prime Minister believe in more elected mayors.

Mr Finch: That is very kind of you.

Mr Hands: There may be others.

Q551 Mr Betts: But this is the reality of talking to people in the city-regions at present. There is actually no enthusiasm at all for directly elected mayors. If we are going to get the concept off the ground we need to take it forward with the commitment of people who are actually involved in the process.

Mr Finch: I think the mayoral debate nearly always gets derailed and distracted and gets on to discussions about personalities and knee-jerk reactions about whether one likes a mayoral model or not. The way that we have gone about the mayoral debate is to say that first of all cities need more power. They need those economic powers at their level and, where city-regions exist for political purposes, certainly at that level. There are then questions about existing governance arrangements once you have agreed that and we believe that if you say to people, "Would it not be better if your local politicians clubbing together could work with a powerful mayor who could take decisions for Greater Manchester?", you are getting on to a more informed debate. Just saying, "Do you want a mayor or not?" is not a terribly well informed way to get the question answered.

Q552 Mr Betts: But the reality, if somehow we are going to get looped in: you can only have the devolution of these powers and the spending responsibilities if you get an elected mayor, is that the whole process is effectively going to freeze because there is not that commitment to an elected mayor. You are then going to have to have primary legislation go through here defining all the powers that are going to be given to the mayor and how it is going to work with the different local authorities. We are five years away from anything happening, are we not?

Mr Finch: We readily admitted when the report that we published came out that we did not expect any of this to happen overnight, but what would be quite interesting would be if a city-region opted for the mayoral model and therefore provided something of an exemplar outside London to see what would happen to overcome some scepticism. We do not expect that overnight but it is certainly possible over the medium term to overcome of this institutional inertia. Remember, the current arrangements are not perfect. If anybody has a problem with the mayoral model I perfectly understand that, but they would then need to defend the current arrangements as being the best that we can do. I would focus my questioning on that. I do not think the current arrangements are good enough.

Q553 Lyn Brown: So what is wrong with the current mayoral model?

Mr Finch: In London?

Q554 Lyn Brown: Indeed.

Mr Finch: It does not have enough power.

Q555 Mr Hands: I actually think there is a lot more support for directly elected mayors than there is for regional government but that is probably for a separate inquiry. My question is more about what happens if city-regions are created. Let us say we take your example of Manchester and Birmingham. What happens to the residual parts of that regional assembly area and the regional assembly? In the case of the north west region let us say you create a Greater Manchester city-region. What in your view should then happen to the regional assembly? Should it still be there? Should it remain non-elected? How is that going to work?

Mr Finch: First of all, there are moves afoot on this already, and certainly the Association of Greater Manchester Authorities are working together already in what you could call almost a shadow form of some type of city-regional governance, which, of course, we welcome, and what we would like to see, of course, is the North West Development Agency develop that relationship with those local authorities around Greater Manchester and agree with them a list of things that they could do and be funded to do on their own. That would be our preferred way forward. Whether or not they eventually choose to have a mayor is for them to decide but we welcome those moves. For those areas outside the Greater Manchester authorities, and they are numerous; they go all the way up to places like Carlisle and Blackburn and all the rest of it, local politicians and national ministers need a bit of resolve to explain why those local authorities are being asked to work together. Not everybody is in the Greater Manchester city-region because, going back to our earlier discussion, the economic footprint of Manchester does not extend throughout the north west, and there is some logic there. Existing institutions like regional assemblies, like RDAs, like local learning and skills councils - there is a whole layer of regional institutions, it is not just regional assemblies - clearly need to be flexible and responsive to any new city-regional entity. That has not happened yet. There would be questions about regional assemblies but they do perform a role at the moment which would change. It would certainly have to change if Greater Manchester had devolved authority over large funding streams.

Q556 Mr Hands: Do you think they would survive? In my view there would be a certain credibility crisis. Let us say the north west area, the assembly and the RDA and everything else, suddenly lost the Greater Manchester region, in my view - and I am not from the north west - there is already a slight identity crisis for regional assemblies after what happened in 2004. Do you think this might actually be a body blow to the credibility of that body if they were to lose their biggest city-region within it?

Mr Finch: My response to this would be that each region as currently constructed needs to start differentiating itself from its neighbour. The north west has got two pretty big cities in it, Liverpool and Manchester. That is different from the south west of England. Therefore, the regional development agency in the north west ought to look different from the regional development agency in the south west; ditto for the regional assembly, and what we must try and get away from is a sort of identikit approach to regions and accept that the north west, Yorkshire and the Humber, the north east, have different economic make-ups, different sizes of city and numbers of cities, and there should be a differentiation between them. That would be my general approach there.

Q557 Mr Hands: So in conclusion on that specific point, do you see that there would be a future for a non-elected north west regional assembly minus Greater Manchester?

Mr Finch: Potentially, but there would be questions about what that would have oversight of within the Greater Manchester region. You would have to work out whether it had any oversight at all and what it would do for the rest of the region. Our general point is that city-regions like Greater Manchester should help RDAs do their job. They should be able to help raise, for example, the economic performance of that region because they would have devolved powers, they would have more power to get the job done and help the region's economic growth overall. There are going to be institutional consequences to that and, sure, regional assemblies are in amongst that.

Q558 Mr Betts: You have been critical of the Northern Way for failing to prioritise key investments. What do you think is wrong and can we learn any lessons from other similar approaches that have been taken in the West Midlands and the south west?

Mr Finch: I think the Northern Way includes too many differently constructed city-regions. If I were starting from a blank sheet I would have the Northern Way as the M62 corridor from Liverpool through Manchester to Leeds. That is the fulcrum, if you like, of the northern economy. Those three cities are the three main ones in the north. They are what we would call city-regions: a big core city in the middle, a big economic imprint, hinterlands around them, clearly driving the northern economy forward. Including other city-regions of a smaller scale, all those geographically divorced from it, for example, in the north east, makes it very difficult to have a coherent strategy, so one of my problems with the Northern Way is that it includes too many bits. The other is that, of course, if the Northern Way's component big three cities had devolved powers, if they were able to take big decisions on transport, et cetera, then the Northern Way would really gain momentum but at the moment it is an operation understandably run by the three RDAs rather than the big three cities in it and I would like to see a shift from the three RDAs leading it to the lead cities. I think that would give it more focus and better results.

Q559 Mr Betts: Apart from you leaving Sheffield out -----

Mr Finch: Yes.

Alison Seabeck: Thank you very much, Mr Finch. Clearly, if anything occurs to you which you think we should have mentioned please do get in touch with us and we may have further questions for you in writing.