Deputy Prime Minister speech: delivering the regional renaissance

Deputy Prime Minister Nick Clegg gave a speech at an event jointly hosted with the Centre for Cities on 29 October 2012.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Nick Clegg

Check against delivery

It’s a pleasure to be here to launch the second wave of City Deals.

Some people doubted we’d deliver one wave of deals, let alone two.

Yet, here we are: another building block of the UK’s regional renaissance falling into place.

Another step towards a rebalanced economy. Where every part of the UK - so not just London and the South East, but every part - drives strong and lasting growth.

Ten days ago I was up in Stockton, at an extremely successful plastics factory, announcing the third tranche of our Regional Growth Fund: £7bn of further public and private investment across the country to support dozens more businesses and hundreds of thousands more jobs.

A few weeks before that, Vince Cable and I set out plans for the first ever National Business Bank. This time at a West Sussex factory, where they’re building the world’s greenest supercar.

Last month I was at the AMRC in Rotherham: now part of a new national network of technology centres which are keeping the UK at the cutting edge in renewable energy, high value manufacturing, the life sciences, digital technologies.

I’ve been to small, high-tech firms in Chelmsford, to major wind turbine projects in Huddersfield; precisely the kinds of companies that will benefit from our Green Investment Bank which started giving out loans this year.

And if you travel around the country, like I do, if you visit these businesses, you see that, yes, we have a long way to go; rebalancing our economy is a big job. But we are on the right path - and that should embolden us to go further and faster, as we seek to drive prosperity right across the UK.

The Coalition is not the first government to seek regeneration outside of the capital.

Labour had a lot of good intentions here - they spent a lot of money, for example, on fixing up some of our big city centres.
But there is a profound difference in the Coalition’s approach, in my approach: we understand that this isn’t just about money.

You can’t revive the regions just through handouts from Whitehall. Certainly not now, when the Treasury’s coffers are bare.
And even if we did have lots of money, the previous approach was fundamentally flawed.

Revenues from the financial services sector were recycled round the rest of the country through the long arm of the state, creating the illusion of strong, national growth.

Jobs were created - but in an unbalanced way, over-relying on the public sector, funded by tax receipts from the City of London.

And we’ve seen what happens when the conveyor belt breaks - as it did, spectacularly, in 2008:

Those tax receipts fall, the money stops flowing and the whole country feels the consequences as the public sector contracts and jobs are lost.

This nation is made up of 100,000 square miles; it cannot rely so heavily on one.

So we need a stronger, more resilient economy, built on the backs of industrious and independent cities.
Communities able to stand on their own two feet.

And that depends on one thing above all else: power.

The freedom for cities to carve out their own economic destinies.

Freedom which becomes even more important when we are having to see through some very difficult cuts.

And we need every community to be as creative and innovative as possible in order to generate growth; responding to their specific challenges, playing to their unique strengths.

That’s the principle at the heart of the first round of City Deals.

Take Sheffield’s deal - described by the Chief Executive of Sheffield City Council, John Mothersole, as ‘truly devolutionary and game changing’.

John has said, again, to quote him: ‘we need to address the perversity [Sheffield] face[s] where we do actually  have skilled jobs for young people but we just need more skilled young people.’

So instead of Whitehall bureaucrats deciding how the city’s skills funding should be spent, under the terms of the Deal, local employers will get a proper say.

Ensuring the local economy gets the skills and apprentices it needs.

Take Manchester’s ‘earn back scheme’: Manchester’s ten councils will pool their money to invest in the major infrastructure upgrades needed to make the area as attractive as possible to business.

And when that infrastructure draws in new business they’ll be able to keep hold of some of the national taxes those companies pay.
So instead of the Treasury spending that money on something else, somewhere else, it goes back to Manchester, to be reinvested in Manchester. Giving the city a real incentive to attract growing firms and entrepreneurs.

That is unprecedented.

And it’s real decentralisation - decentralisation over money.

Central government cutting the purse strings - the bit that’s been missing for so long.

These City Deals are about reforming our politics to help rebuild our economy.

Political and Constitutional reform doesn’t begin and end in Westminster.

It’s about central government getting out of the way to put local people in the driving seat. Because they are best placed to deliver jobs and growth.

Part of a new politics to drive the new economy.

Unsurprisingly, the old politics doesn’t always take kindly to handing back power in this way.

As you can imagine, the central government machine can be reticent about relinquishing control.

It’s very easy to paint a picture of obstructive bureaucrats.

But the problem is systemic: Whitehall works in silos; it’s split into neat departmental empires; and when, to give you an example, you ask departments to work across their budgets in order to consolidate funding streams to the cities, you can send the entire system into a spin.

So I’d like to pay special tribute to Greg Clark for helping overcome that and for his excellent stewardship of the deal process.

And thanks to the perseverance of many individuals - many in this room.

We’ve successfully pushed central government out of its comfort zone: signing eight core city deals, which will create 34,000 apprenticeships and 175,000 new jobs.

We’ve been so successful, in fact, that I can confirm today that when the core cities can demonstrate success showing clear progress against the objectives in their plans, we’ll reopen the negotiation process to see if further power can be transferred.

We’ve always said that the first deals would be the beginning, not the end.

Which brings me to Wave 2.

I can announce that we are extending the offer of a deal to twenty further cities and towns - the next logical group.

The next fourteen biggest city regions, plus the six fastest growing city regions, outside of London.

These city regions, working with their Local Enterprise Partnerships, will have three months to put forward initial proposals on how to tackle the single most important barrier to growth in their area.

The best will be invited in to negotiate a deal.

Those deals will see the cities given a core package of powers and freedoms - building on the common features of Wave 1. Along with specific arrangements, which will vary from place to place.

As before, government stands ready to devolve real powers, including over budgets.

But there are two things I need to stress:

First: this is a competition. Not every city or town is guaranteed to sign on the dotted line.

We will only agree deals where we see proposals that are radical, ambitious, and transformative enough to drive real growth.
Second: this is a two-way street. With new powers come new responsibilities.

For example, different councils may need to: overcome sharp political differences to work together locally to prioritise growth; reduce regulation to provide an attractive environment for business investment.

Involve the local private sector to help deliver local priorities.

And, as they implement their deals and invest in major projects, all councils will have to spend wisely, as the whole country does more with less.

And, of course, with new freedoms come high expectations too:

Be bold; be innovative; we want you to take a sky’s the limit approach.

Wave 1 were the trailblazers. Their ingenuity and drive have made it possible to have this second round.

But Wave 2 will help decide whether this level of decentralisation goes from being the exception to the norm.

Personally, I’d like to see a deal for every area that can make it work.

The Coalition has given extra powers to Scotland, to Wales, to the core cities, now we’re offering it to the Wave 2 cities.

It’s a kind of quiet, British revolution. And by 2015, I would like every part of Great Britain to feel like it has significantly more freedom than in 2010.

In this round we’ve had to prioritise the next set of areas most critical to national growth - which is why we’re still talking about cities.

But there is no reason why this should be an urban phenomenon.

I recently met with a Cornish delegation, for example, who have a lot of ideas for boosting local growth but who need greater autonomy to do it.

I know that other areas - Essex, Cumbria - are working up similar proposals with their Local Enterprise partnerships.

And I’m absolutely clear: we mustn’t end up with two tier decentralisation, where urban areas flourish and rural communities are left behind.

So, while it’s too early to talk exactly about a third Wave might look like, I very much see this as a step in a journey.

And where other areas have ideas for their communities I would urge them to come to Whitehall with that vision. To help keep up pressure on the government machine.

This kind of decentralisation has never had this momentum before.

This is a rare opportunity to rewire our political system, to unleash the grassroots genius that will take our economy from strength to strength.

I know the people in this room will join me when I say: it’s an opportunity that must not be missed.

Thank you very much.

Published 29 October 2012