Three to four ‘city deals’ handing new powers and financial levers to cities expected in March

Liverpool council is to vote next week on adopting a directly elected mayor for the city as part of a deal between the city and central government that could bring forward a £130m investment pipeline.

Liverpool council said it would vote on introducing the mayoral model on 7 February. Labour has 62 of the 90 seats on the council and a move to the mayoral model would require a two-thirds majority.

The move follows negotiations between the city leaders and government as part of deputy prime minister Nick Clegg’s ‘city deals’ agenda, which aims to devolve new powers, freedoms and financial levers to England’s eight largest urban economies outside London.

A source close to the ongoing negotiations said it was likely that around three to four cities would have deals agreed by the time of the Budget in March, with those likely to include Greater Manchester, Leeds and Liverpool.

However, the source cautioned that with pressure on government to demonstrate results, ministers were focusing overly on the “number” of deals, rather than their “quality”.

“I’m worried that they won’t be substantive agreements if things are pushed along too quickly,” the source said.

He added that there was also too much focus on “governance” issues, such as the mayoral model, rather than focusing on the real issue that many of the regional cities were in a “very weak economic position”.

This week Liverpool council said it’s deal would lead to the creation a single investment programme of public and private funds, initially worth £130m, but with the potential to grow to £500m - £1bn.

The council said the mayoral model would offer the government “the clear accountability and influence required to justify the devolution of the new powers to the city”.

Under the deal, the new mayor’s powers and responsibilities would include a growth package driven by the first Mayoral Development Corporation outside London, the council said.

The council said the package would include:

  • a new enterprise zone for North Liverpool and the Central Business District which would offer incentives for companies to set up business in Liverpool;
  • the ability to capture the entire benefit of any growth in business rates across five other key economic areas of the city, which could be used to support further economic development in the city;
  • a new investment board which would bring together all of the city’s assets such as land, commercial and residential buildings, including assets formerly owned by regional development agency for the north-west
  • control over the investment of business rates generated as a result of the new Enterprise Zone to be reinvested to encourage further economic growth;
  • Developing a new approach to welfare reform in Liverpool which includes investment in specific skills that match the jobs that are available in the city.

The council said the move to fast track a mayor for the city was aimed it giving it a “competitive advantage” over the other regional cities, which will hold referendums on 3 May to determine whether they adopt the mayoral model.