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Can network governance deliver energy transitions in the cities of Europe?

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Timea Nochta

It seemed that last year the NFCCC Paris Agreement finally reached a breakthrough after a long period of continuous failure of climate change negotiations between nation states. However, the Trump presidency is already threatening to withdraw from the commitment made only a few months ago. In this context, climate action and emissions mitigation on the sub-national level is more important than ever, even if managing low-carbon transitions in cities and regions is far from a straightforward process. In addition to issues related to knowledge deficit (i.e. uncertainty about locally relevant climate change effects, lack of reliable statistical data on emissions and consumption), municipalities also have to deal with constant cuts to their authority and financial and human resources due to the recent proliferation of austerity policies, further decreasing their capacity to facilitate low-carbon development.

As a consequence, more and more local authorities in Europe are beginning to engage in collaboration with higher levels of government, civil society and market actors to build commitment and to create a joint agenda for local transitions. Initiatives based on stakeholder integration, collaborative management, partnerships and networks are expected to provide opportunities to tackle the emerging problem of low-carbon transitions by creating space for interaction and multi-sectoral co-operation between various organisations; by facilitating informed decision-making based on knowledge exchange and deliberation between stakeholders; and by building engagement for achieving the negotiated goals.

However, governance processes (and their transformations) do not take place in a vacuum. Cross-national differences in terms of governing structures, techniques and belief systems (i.e. logics of appropriateness) have an impact on to what extent and in what ways new ideas and governing mechanisms get employed in certain realities on various scales. Evidence for geographical variation with regards to public sector reforms has been found both in relation to the adoption of new public management-inspired tools and techniques and more recently to the emergence of new public governance.

Despite such evidence, the academic research on managing sustainability transitions (as well as international agreements and European recommendations) largely neglects the potential consequences of spatial variation of institutional legacies in Europe in which transition networks must function. Consequently, we know very little about the real-world potential for governing low-carbon transitions via networks in different places.

Analysis of governance networks relevant to sustainable energy transitions in three European cities from three different countries, including Birmingham (UK), Budapest (HU) and Frankfurt-am-Main (DE) has confirmed that indeed networks are being instrumentalised in diverse ways in different places. Governance networks in the three cities were analysed and evaluated according to three characteristics: network formulation, embeddedness and structure & coordination. In terms of network formulation, networks exist as formal organisations in two out of the three cases, namely Birmingham and Frankfurt. In Budapest, plans are currently being drawn up for an advisory group to be set up as part of a collaborative initiative between municipal utility companies and council departments. Network formulation was influenced by the existence or absence of ambitious CO2 reduction targets relative to the national commitments. Setting such targets inferred not only the inevitability to taking action locally, but also the necessity to build new energy infrastructure as well as change the architecture of that which already exists.

In terms of embeddedness, it was found that the networks’ ability to engage stakeholders from the local energy regime correlated with the municipalities’ level of authority over energy systems. In the United Kingdom, local governments are excluded from the socio-technical regime of energy supply. This led to difficulties in coordinating the development and delivery of local low carbon energy agendas in Birmingham, due to little local level leverage over the available partners (national and multinational corporations) who possess the required technical and economic capabilities to assist in implementation. In contrast, the municipal energy company owns and operates energy infrastructures in Frankfurt; whereas in Budapest only the heat networks are organised on the local level. Differences in terms of embeddedness of the network in the energy regime impacts both network structure and the energy transition. Diverse networks driven by horizontal relationships and overlapping responsibilities were found in Birmingham, which translated into a transition process characterised by innovative, but small-scale pilot projects. In Frankfurt, the transition process appeared rather smooth and advanced compared to the other two cities due to a hierarchical relationship between the Energy Agency and the rest of the network. A traditional hierarchical relationship based on authority continues to exist in Budapest, where energy transition is confined to retrofitting existing but inefficient infrastructure.

In conclusion, the analysis demonstrated that governance via networks was increasingly seen by local authorities as an appropriate mechanism to manage sustainability transitions. However, different institutional legacies had an impact on the characteristics of network formulation, embeddedness and structure and coordination. The role of network management has been highlighted in facilitating low carbon transitions via networks: strong co-ordination has been linked with higher potential for upscaling pilot projects into city-wide change.

 

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Timea Nochta is a Ph.D. researcher based at INLOGOV who is investigating the potential for managing urban energy transitions via network governance in European cities.  Her research is funded by Climate KIC, Europe’s largest public-private innovation partnership aimed at addressing the challenge of climate change, and is supported by one of the KIC’s flagship projects, ‘Transition Cities’. 

Pickles’ Shock-horror News: Biggest Councils Have Biggest Tax Arrears

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Chris Game

Communities and Local Government Secretary Eric Pickles is famed for his sensitive news antennae. I wonder therefore just what – in a week dominated by revelations of his party’s and government’s moral flakiness on the whole tax collection business – persuaded those antennae that it would be a good time to attack local authorities’ tax collecting record.

Actually, I don’t wonder.  I assume that, as with the many other Pickles’ Passions – from council newspapers and biscuits at meetings (bad) to street parties and weekly bin collections (good) – he just can’t stop himself.

Councils’ uncollected taxes and hoarded revenue reserves have become Pickles’ winter perennials – a reassuring sign of approaching spring – and three league tables of the supposedly guiltiest councils were duly posted by the DCLG last Tuesday.

As a Birmingham City Council taxpayer, I was naturally interested to note that Birmingham featured prominently on two of these naughty lists – first of the 10 councils with highest council tax arrears, and fourth of those with highest non-ringfenced reserves – and, to be honest, slightly surprised that it didn’t register at all on the third. Doubtless to the minister’s disappointment, DCLG hadn’t found a single “surplus fixed asset, not directly occupied, used or consumed in the delivery of services”.

There’s no attempt to percentagise these lists, or acknowledge that there might just possibly be some relationship with, say, the size or relative deprivation of councils’ populations.  So Pickles’ shock-horror story amounts to large councils having bigger tax arrears, reserves, etc. than small councils.

It’s hardly headline stuff, but Local Government minister, Kris Hopkins, was determined we should share his boss’s outrage. During that same day’s Commons debate on the recent local government finance settlement, my and the University’s Birmingham, Edgbaston MP, Gisela Stuart, had questioned the fairness and sustainability of Birmingham’s share of that settlement. In customary Commons style, the minister, rather than answer that tricky question, preferred to tell the House about the council’s tax arrears:

“I am afraid that poor leadership in Birmingham and the fact it has not collected some £100 million in council tax arrears may explain some of the issues it is facing. Stronger leadership and the ability to carry out the simple function of placing a charge on an individual and collecting it will assist it” (col.671).

In the heat of the moment, Hopkins omitted to explain that this arrears figure was a cumulative one covering the whole 21-year life of the council tax, or that it includes costs incurred in collecting unpaid taxes. Nor, even more unfortunately, was there time for Gisela Stuart or anyone else to observe that the biggest councils have not only the largest cumulative tax arrears, but also, equally unsurprisingly, the largest tax receipts.

For, by Hopkins’ reasoning, Birmingham’s having collected £63 million more last year in council tax and non-domestic rates than any other English authority outside London presumably reflects rather positively on the quality of its political leadership (Table 5).

Returning from Planet Hopkins to the real world, the key statistics – and they are key – are those for tax collection rates: not pounds collected but percentages collected of the total sum due.

The 2013-14 council tax collection rate for all English authorities was 97%, ranging from shire districts’ 97.9% to 95.4% for Inner London boroughs and Birmingham’s most obvious comparators, the 36 metropolitan districts. Birmingham’s 95.3%, therefore, was fractionally below the met district average, but, as it happens, second highest among the 10 large authorities in the DCLG’s naughty list – behind only Croydon (96.2%) and way ahead of the coalition’s current favourite Labour council, Manchester (91.7%).

Certainly not the disgrace, then, that its heading of the naughty list suggested, but yes: both improvable and costly. If ever decimal places matter, it’s here. Though respectable nationally, Birmingham’s 95.4% collection rate was lowest of the seven West Midlands metropolitan districts – behind Solihull (98.6%) and, in a perhaps less expected second place, Sandwell (98%), ranked 9th most multiply deprived of England’s 326 local authorities against Birmingham’s 13th.  With each percentage point worth nearly £3 million, if Birmingham had achieved even Sandwell’s rate, it would have collected an additional £8 million – and a similar sum each year.

The DCLG’s non-ringfenced reserves naughty list is even more contestable. There is no set or professionally agreed formula for an ‘appropriate’ level of reserves, or for the balance between earmarked/ringfenced and unallocated reserves. But when CIPFA (Chartered Institute of Public Finance and Accountancy) asserts that councils increasing their cash reserves “is essential for protecting frontline services” and finance officers advise that, with council funding over the next few years being exceptionally uncertain, it’s only prudent to set aside reserves in anticipation, it’s hard for councillors – and should be for Pickles – to argue otherwise.

Birmingham’s prominence on this particular list – again, a consequence of its sheer size – is just perverse, given repeated warnings by the council’s external auditors about the councils’ reserves being, if anything, too low. In fact, last month’s Annual Audit letter noted specifically a concern regarding the “relatively low levels of general fund reserves (£85.8 million compared to a revenue budget of £3.5 billion)” (p.7).

Returning to tax collection, if there are numbers of individual councils that find it difficult to, as the minister put it, “carry out the simple function of placing a charge on an individual and collecting it”, what should we make of Her Majesty’s less than exhaustively tenacious Revenue and Customs (HMRC)?

One of HMRC’s helpful ancillary services – or hostages to fortune – is its annual report detailing all the taxes it doesn’t collect: in 2012-13 just the £34 billion – or 6.8% of the total it should have managed.  In other words, all but the very worst council tax collection rates exceed the average managed by the people whose sole job is tax collection.

If we take that most “simple function” of individual taxation, English local authorities failed to collect £734 million (3%) in council tax, while HMRC failed to collect £14.2 billion (5.3%) in income tax, NI contributions and capital gains tax. From businesses, councils failed to collect £478 million (2.1%) in non-domestic rates, while HMRC failed to collect £12.4 billion (10.9%) in VAT, and £3.9 billion (8.7%) in corporation tax.

As Matthew, the Galilean tax collector-turned-gospeller, might have put it: You hypocrite, Pickles; first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.

game

Chris Game is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

The future is Intercommunality – yes, but with whom?

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Chris Game

Rom com/date movies aren’t really my thing, so my excuse for watching the recent Words and Pictures was that I was a captive plane passenger – and that the ever-watchable Juliette Binoche was playing a rheumatoid arthritic abstract painter and prep school art teacher. The title refers to the silly challenge she charily accepts from alcoholic poet turned plagiarising English teacher, Clive Owen, to ‘prove’ whether Words or Pictures are more meaningful.

One of the Owen character’s numerous obnoxious ways of irritating colleagues is with his show-off polysyllable game: I’ll give you a five-syllable word, you give me one of six syllables, etc. Binoche, at least initially, won’t play, which, while entirely understandable, I personally found slightly disappointing, as I could SO have helped her.

For starters, I know that the seven-syllable word most frequently used conversationally was calculated (don’t ask!) to be, not homosexuality, which was one of the commoner guesses, but telecommunication – followed pleasingly by the one that describes INLOGOV: interdisciplinary. In the near future, though, it will surely be intercommunality – at least in local government conversations, most of which currently seem focused on Combined Authorities (CAs).

At present, we have just five: Greater Manchester, very much first off the blocks in 2010/11, followed earlier this year by West Yorkshire, Liverpool and Sheffield City Regions, and the North-East. But over the past fortnight alone, quite apart from the general ‘Please sir, can we have some of whatever Scotland’s getting’ pleas, we’ve had almost daily reports of CA discussions – among five Tees Valley councils, all 14 in Lancashire, some or many in Hampshire, six in West London, and four (or maybe five, six, or more) in the West Midlands, all seeking, through the formation of CAs, to grab some of the devolution goodies that Greater Manchester negotiated with George Osborne in exchange for a directly elected metro-mayor.

Of course, only in the UK could it possibly be deemed nationally newsworthy that a number of contiguous local authorities were thinking of working together in the interests of more efficient service delivery. I’m no specialist, but even I recall back in 2007 a whole book of country case studies of Inter-Municipal Co-operation in Europe (ed. by Hulst & van Montfort), demonstrating what a widespread phenomenon it had become in much, if not most, of Europe.

One reason I recall it is that it appeared around the same time as an article by Josie Kelly (Aston U) entitled ‘The Curious Absence of Inter-municipal Co-operation in England’ – a curiosity, I felt, that evaporated quite quickly, once you considered surely the single most basic explanation: namely, the structure and sheer scale of our local government.

With that in mind, let me start this brief backstory with a few figures on scale. England’s population is 54 million, and we have 326 unitary or lower-tier district authorities, with an average population of 165,000. The equivalents in France, population 66 million, are 36,700 lower-tier communes, average population 1,800.

Most communes date back to the 1789 Revolution, and the French are very attached to them – voting for their councillors and mayors in roughly twice the numbers we do. Successive Presidents tell them this ‘millefeuille’ structure of micro-communes is outdated, inefficient and must be reformed, but French citizens care more than us and they resist. No enforced mergers, humongous ‘local’ authorities, arbitrary boundary lines on maps, and meaningless council names for them.

So, French governments were forced to develop a compromise: intercommunal cooperation. By a mix of threats and incentives, communes were persuaded to group themselves into some 2,500 cooperative communities of varying shapes and sizes.

Biggest, most integrated, and with most powers and fiscal autonomy, are 16 urban communities (communautés urbaines) for the largest metropolitan areas. Smaller urban areas have communautés d’agglomération, and rural areas, without an urban core of 15,000 residents, have communautés de communes, which account for the great majority of the total.

With its ultra-local communal structure, France’s network of inter-municipal co-operation is one of Europe’s most extensive. But Spain has its mancomunidades (municipal associations), Italy its Unioni di Comuni (municipal unions), Germany Zweckverbände, and so on. As in so many things European, it is we who are the real exceptions. England’s enormous and largely self-sufficient local authorities, and their minimal responsibility for what in many countries are still public utilities, mean that our insularity has extended to a near absence of formal inter-municipal co-operation.

But the future, we’re told, will be different. The future is partnership working in general, and Combined Authority intercommunality in particular – which is fine, unless you happen to live, as I do, in Birmingham. First, you find you’ve missed out on the possibility of living in a regional Powerhouse, like a good chunk of ‘the North’ apparently will be. And second, it’s far from clear exactly who, when the music stops, we’ll be communing with.

Our problem, as ever, is Manchester. I had occasion last year to puncture its pretensions to be ‘Britain’s second city’ but now, it seems, it’s become English government’s José Mourinho, the special one. Worse, like Chelsea’s manager, it not only has a powerful and supportive backer, but is also pretty smart itself.

That smartness was seen in the city council’s being first to utilise Labour’s 2009 Local Democracy, Economic Development and Construction Act by orchestrating the creation of a Greater Manchester Combined Authority. The Act’s chief purpose was to set up local authority leaders’ boards to replace the abolished Regional Chambers, but it also provided for the creation of combined authorities covering multiple, contiguous local authority areas. In fact, the GMCA recreated the Thatcher-abolished 10-borough Metropolitan Council, by pooling newly devolved powers on public transport, skills, housing, regeneration, waste management, carbon neutrality and planning permission.

Though conceived under Labour, the GMCA’s establishment dates from 2011 and, perhaps surprisingly for an invariably Labour-dominated body, its principal backers have been Coalition ministers and most notably northern MP and Chancellor, George Osborne. Manchester especially has consistently opposed elected mayors, the Government’s proclaimed condition for further devolution. Nevertheless, it was the GMCA’s 2012 City Deal that included a ground-breaking ‘earn back’ tax provision, enabling it to recoup annually from government up to £30 million from increased business rates for reinvestment in a revolving infrastructure fund.

None of the other seven 2012 City Deals – even Liverpool’s, announced on the very day the city council took the decision itself to have an elected mayor – were as expansive, and the reason seemed inescapable. Though called City Deals, ministers had to negotiate any regional dimension they involved, not with a statutorily based, politically led, service-delivering CA, but with Local Enterprise Partnerships (LEPs) – voluntary, business-led, minimally resourced alliances of councils and businesses that help coordinate local economic development. More than talking shops, but not serious intercommunality.

You didn’t need a weatherman to know the wind direction. City-based LEPs, particularly where wholly or largely coterminous with a former metropolitan county, began negotiating for CAs, and, as noted above, there are now four more, leaving the West Midlands as the only ex-met county without one. Meanwhile, both major parties claim to see CAs, rather than ever larger merged councils, as the best vehicles to implement their vague, fluctuating, but still important devolution plans. For the present, though, the dealer’s chair is still occupied by George Osborne – yes, this is definitely Treasury, not DCLG, stuff – and first bidder for the next wave of devolution deals was once again Greater Manchester.

This time a price tag came with the Chancellor’s ‘Northern Powerhouse’ deal – a required and reluctantly agreed directly elected metropolitan mayor. The £1 billion of devolved funding and services s/he will share with the CA, while unremarkable in many EU countries, constitutes a big deal here, and everyone else desperately wants one too. The problem is that not everyone has Greater Manchester’s nicely polycentric coherence – seven of its nine surrounding boroughs sharing borders with the core city; or its unambiguous identity, its established record of intercommunal cooperation, and, above all, its undisputed name.

Demonstrably, the West Midlands doesn’t, which is why the recent stream of feverish announcements from local council leaders has seemed half-baked, unconvincing, and – who knows? – even potentially self-defeating. First, a West Midlands CA of Birmingham and the four Black Country boroughs (Dudley, Sandwell, Walsall, Wolverhampton – all Labour), with Coventry (Labour) an unsigned probable, but Solihull (Conservative, and Coventry’s only contiguous borough) an unsigned reluctant, which raises questions at the very least about an integrated transport policy.

Then, there are the Worcestershire and Staffordshire districts in the Birmingham/Solihull LEP and those in Coventry/Warwickshire LEP – apparently, they’re maybes or haven’t-yet-been-askeds. An elected mayor, twice rejected by Birmingham, is an unmentionable, and as for the name – the obvious but toxic Greater Birmingham? West Midlands? Birmingham City Region? Mercia?? Nobody is keener than I on the devolution of significant powers and fiscal discretions to our cities and city regions, but even I would take some convincing about somewhere that couldn’t make up its collective mind on its area, composition, name or form of governance.

gameChris Game is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

A reply to Fraser Nelson: the only thing astonishing is how little power local authorities have

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Catherine Staite

Fraser Nelson’s article on Birmingham City Council last Friday was a very disappointing offering from an experienced journalist and a reputable paper – more Daily Mail then Daily Telegraph. 

It was riddled with inaccuracies.

Birmingham City Council does not have ‘astonishing power’. What is astonishing is how little power local authorities have, even in big cities.  Central government has as iron grip on local government. Money – how it is raised and spent – and policy – the thinking which underpins those choices – are the two key levers of government and central government controls them both.

The average amount of local authority income derived from Council Tax is 16%.  Council Tax is a regressive tax based on 1991 property valuations and bears no relation to the real costs of providing local public services.  LAs cannot increase CT by more than 2% without a referendum, for which they must pay.

The remainder of their income is made up of rents, fees and charges (local authorities can’t make a profit) and business rates (which central government gathers and re-distributes to a national format).  The remainder comes from grants from central government. BCC’s take from Council Tax is only 7.5% because of poverty and property values, which means it is disproportionately dependent on central funding, which has been cut by 35% since 2010.

The gap between rising demand and falling resources is getting wider by the minute in Birmingham, just like it is in Chicago.  The difference is that Chicago can run a deficit of billions – and has done so for the last ten years.  BCC has to balance its books.  It is still obliged to deliver over 1700 statutory duties – from trading standards to disposal of the dead to the protection of children. Year by year it has less and less room to manouvre.

What is really astonishing is that Birmingham and other local authorities still manage to deliver very good services. A recent Ipsos Mori poll showed satisfaction remains high.  That is because authorities have protected frontline services in spite of losing 15% of their jobs since 2010.

Splitting up Birmingham City Council would make no sense at all. The comparison with Manchester is entirely spurious.  The geography and demography of the ten unitary authorities in the Greater Manchester area is very different to Birmingham but the success of that area is built on collaborative upscaling not on separatism. They have banded together to create a Combined Authority. It’s the only way to get the economies of scale and critical mass to compete, bring growth and deliver infrastructure.

The West Midlands is not made up of unitary councils – it is a mixture of unitaries and two tier areas – encompassing counties and districts.  This makes it harder for Birmingham and the wider West Midlands to emulate Greater Manchester’s collaborative progress.  In Birmingham, some services are run at a neighbourhood level, and a district structure helps support better engagement and differentiation but there is nothing to be gained by splitting the city.

Birmingham is a global city, competing with Chicago, Melbourne and Guangzhou and dividing it up would be a nonsense.  Last week senior people from Birmingham City Council were in China, drumming up business for the city.  Would Beijing be interested in talking to Kings Heath District Council? I think not.

Blaming Birmingham City Council for the architectural failings of the 1950s is like blaming David Cameron for Suez.  It’s entirely pointless. Most cities have some 1950s and 1960s monstrosities but Birmingham is being very successful in transforming the city centre. The Bull Ring works, New Street Station is being transformed and whatever Prince Charles thinks about the new library, I think it is truly amazing.  It is beautiful and original.  What is more important is that it works.  Hundreds of thousands of people have flooded through its doors and librarians have had to work hard to keep up with the huge rise in demand for books.  That is the real measure of its success.

People hark back to the happy days of Joseph Chamberlain who as Mayor in the 1870s and thereafter transformed the city and created the legacy of civic splendor, including the University of Birmingham.  The difference between then and now is that he did have ‘astonishing power’ because he had control of both the money and the policy.  In spite of the herculean efforts of Lord Heseltine, central government controls the big money for skills, growth and infrastructure.  It is to the credit of Birmingham that they have done so much with so little.

Poverty is indeed a problem in Birmingham but not one which the city council can solve. National policies drive national poverty which is then concentrated in big cities. Birmingham is super-diverse and has a high proportion of young people.  Ethnic minorities and the young have been disproportionately effected by the recession.  Central government’s cuts to benefits to vulnerable people are shunting the costs of poverty onto local government at a time when they have few resources with which to respond.

Child protection is a stark example of this phenomenon.  Most child abuse has its roots in poverty, drug and alcohol addiction, domestic violence and mental illness.  Local government cannot solve all those ills alone.  Every serious case review and every inquest highlights a very simple lesson.  Children can only be protected when all the key agencies work together – schools, GPs, mental health services, the police, the hospitals – as well as children’s social care.  Cuts in public sector funding have a knock on effect on child protection.  West Midlands police cannot attend all the case conferences they should.  It is in those circumstances that children fall through the net.

Somehow it is always the Council that gets the blame.  They do hold the ring in a complex network of agencies, professionals and responsibilities – but they cannot always be expected to hold the blame.

Catherine Staite

Catherine Staite is the Director of INLOGOV. She provides consultancy and facilitation to local authorities and their partners, on a wide range of issues including on improving outcomes, efficiency, partnership working, strategic planning and organisational development, including integration of services and functions.

Birmingham – second city’s acceptable, but second most unequal?

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Chris Game

Google “Birmingham – Britain’s second city” and you get 110,000 results; for “Birmingham – Britain’s third city” just three – all ignorant, obviously prejudiced, or both. By contrast, “Manchester – Britain’s second city” gets 895 results, only just outscoring “Manchester – Britain’s third city” with 866. QED – unofficial as the title is, if there’s going to be a second city, it’s Birmingham. Simples!

Except it’s not – not if you live and work in Birmingham, anyway. In vox pops and even proper opinion polls, Manchester more often than not edges it – and, as you may sense from the opening paragraph, we can get ever so slightly defensive about it. Which is why, if we’re offered ‘second city’ status, we generally welcome it – if only to stick it to Manchester.

Second most unequal city, however, is altogether different; and second most unequal city in the second most unequal country in Europe sounds, to me anyway, awful. Yet statistically that’s what Birmingham is.

Latest evidence comes in Cities Outlook 2013, the annual report on the economic performance of UK cities by the urban policy think tank, Centre for Cities. Now in its sixth edition, Cities Outlook is wide-ranging and influential, having played a major part in promoting the key role of cities, and particularly city-regions, as drivers of economic growth and recovery.

For policy purposes, this city-region emphasis is understandable, but it does make the title, Cities Outlook, a bit misleading. For it’s not in fact a comparative survey of 64 UK cities and their respective local authorities, but of 64 things called PUAs – Primary Urban Areas, or the built-up areas of cities, which may cover a whole bunch of authorities.

It’s fine for studying trends over time, but less so for comparing, say, Coventry and Birmingham, because Coventry PUA is the city, with its population of 319,000, while Birmingham PUA includes Dudley, Sandwell, Solihull, Walsall and Wolverhampton – and a population of 2.4 million. So you have to keep remembering: ‘Birmingham’ is actually Birmingham-plus.

Though entitled Cities Outlook 2013, the report’s data were collected back when we fondly imagined we were emerging from a mere double-dip recession, rather than slithering into a triple-dip one. The report assesses how its 64 city/PUA economies weathered the two dips, which in Birmingham’s case could be described as OK-ish. Not great; we’re in the half of cities more, rather than less, severely affected in both recession periods; but there are plenty of places that economically have had it much worse.

The trouble with OK-ish is that, while it may be mildly reassuring, hovering just below mid-table in any league doesn’t get you many headlines. So I tried looking for measures where Birmingham was near the top or bottom of a table.

In itself, of course, it’s easy. In any table measuring sheer quantity, Birmingham-plus is so large that it’s got to be right up there. Not surprisingly, we have the second highest population, second highest public and private sector employment, second largest housing stock, and second grossest CO2 emissions.

Not helpful. We need things measured in percentages or ratios – like inequality.  Cities Outlook uses a proxy indicator for inequality, dividing its cities into neighbourhoods with average populations of 1,500 and counting the percentages of Jobseeker’s Allowance (JSA) claimants in each neighbourhood. A city’s inequality is the gap between the neighbourhood with the highest JSA claimant percentage – assumed to be the poorest or most deprived – and that with the lowest.

In November 2012, the highest Birmingham-plus neighbourhood claimant rate was 24.1% and the lowest 0.4%, giving a gap of 23.7%, second only to Glasgow’s 25.4%. Obviously, there are other possible measures – household income, for example, or even personal wealth, as in last week’s other circumstantial inequality evidence, the Birmingham Post Rich List (see below). But JSA disparities are easier and less contentious. If you accept, as most statisticians do, their broad validity, Birmingham is currently the most economically unequal city in England, and second most unequal in the UK.

Though inequality isn’t directly related to size, large cities are almost bound to be more unequal than medium-sized and smaller ones, and six of the 10 largest cities are indeed among the 10 most unequal. London, though, was only 7th, Newcastle 9th, Manchester 13th and Liverpool 23rd, all with inequality gaps of less than 20 per cent. The truth is that, just as several of the smallest cities – Hastings, Gloucester, Ipswich – are by no means the most equal, the largest don’t have to be as unequal as some of them are.

And essentially the same is true of nations. There are numerous measures of national income inequalities, and, if you’re into visual aids, one of the most vivid depictions of Britain’s extreme economic inequality is that based on the regions into which, for statistical purposes, EU nations are divided: NUTS (Nomenclature of Units for Territorial Statistics). The NUTS 3 level comprises ‘small regions’, the UK’s 139 consisting mainly of upper-tier and unitary authorities.  For each NUTS 3 region the average individual Purchasing Power is calculated and standardised (PPS), and a country’s income inequality is the difference between its highest PPS region and the lowest.

game table

Source: Office for National Statistics

The UK national average PPS is 110.6, that in the highest region (Inner London – West) 596, and in the lowest regions (Wirral and West Wales) 57 – a tenfold inequality that is almost twice that in Germany and France, three times that in Italy and Spain, and five times that in Denmark, Finland and Sweden.

Dramatic as these ratios are, it should be emphasised that they are derived from workplace, rather than residential, data: individuals’ incomes are related to where they work, not where they live. The much more widely used measures of national income inequality are those based on the Gini coefficient or ratio, developed by the Italian sociologist, Corrado Gini. He was Mussolini’s favourite statistician, with some dubious ideas about nations having life cycles, and ‘young’ nations fulfilling their destiny by expanding at older nations’ expense, through a combination of wars and cross-breeding with younger races.

Happily, his stats were less flaky, and the Gini coefficient of national income distribution is widely used around the world, generally based in more developed countries on disposable, post-tax income. Data are collected through household surveys, and the coefficient runs from a hypothetical zero or perfect equality, where everyone has exactly the same income, to a similarly hypothetical 1, where one person has the lot.

In the latest statistics published by the 34-nation OECD (Organisation for Economic Co-operation and Development), the overall coefficient is 0.31, and the range extends from Slovenia (0.24) and Denmark (0.25), through the US (0.38) and Turkey (0.41) to Mexico (0.48) and Chile (0.49). Taking the EU-27 alone, highest is Portugal’s 0.35, closely followed by the UK on 0.34.

So Birmingham is the second most unequal city in the second most unequal country in the EU – which doesn’t altogether surprise me, but certainly isn’t something I’d want to celebrate. Nor the OECD, who are pretty clear what their figures represent: “High income inequalities typically imply a waste of human resources, in the form of a large share of the population out of work or trapped in low-paid and low-skilled jobs.”

Yes, I can see that, but then I’m not one of the 50 on the Birmingham Post’s West Midlands Rich List, published by pleasing coincidence in the same week as Cities Outlook. The net worth of the lucky 50 rose last year by just the 13.8% or £3.46 billion. That’s right, the single-year increase of these 50 mainly-male Midlanders alone equalled Birmingham City Council’s total budget, or roughly half of the real-terms funding loss of all English councils put together over the 2011-15 spending cycle.

Which, say our business leaders, is “very good news … [for] with wealth creation goes job creation and this is to be applauded.”  You can almost hear Thatcher, can’t you: “Our job is to glory in inequality”.  Remember the trickle-down theory? The rich perform a public service by getting richer still, because their prosperity would automatically trickle down to the poor. There are many still waiting for that trickle to reach them, and who must be relieved that the City Council’s ‘living wage’ policies at least sound as if they make sense.

game

Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political  leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

Huge Whitehall battle over mayoral powers, reveals Heseltine

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There was no camouflage flak jacket, no ceremonial mace to brandish, no Downing Street front door through which theatrically to exit a ministerial career, but who needs props, if, like Michael (now Lord) Heseltine, you’re one of the great headline-makers of your political generation. He managed it again at last week’s University of Birmingham Mayoral Debate, and against the odds.

For a start, the event seemed set up more as a rally than a debate – bringing together “leaders and representatives from business, education, politics, and the community, to discuss the benefits that an elected mayor could bring to Birmingham”.  Once Catherine Staite had set the scene and identified some of the key arguments , the views of the remaining speakers – Lords Heseltine and Adonis, and CBI Regional Director, Richard Butler, a late replacement for Petra Roth, elected mayor of Frankfurt, one of Birmingham’s partner cities – ranged, though not in order of speaker, from enthusiasm to evangelism.

Mayor Roth’s absence was unfortunate.  By comparing her own experience – Mayor since 1995, and previously a member of the Hesse Land (state) parliament – with the varying powers and responsibilities, terms of office, election and recall provisions of Germany’s other major city mayors, she could have broadened the discussion and maybe even provided a headline or two. Instead, Patrick Wintour, Political Editor of The Guardian and Chair of the debate, looked to and was well served by Lord Heseltine, British politics’ answer to Sunset Boulevard’s retired silent-film star, Norma Desmond: “I’m still big; it’s the stages that got smaller”.

The prompt was a question from Councillor Sir Albert Bore, former Leader of Birmingham City Council, Leader of its now minority Labour Group, but here a mere member of the audience.  One of Labour’s earliest and strongest mayoral supporters and an aspiring future candidate, Councillor Bore asked when Ministers were going to indicate explicitly the additional powers that could be transferred to cities voting for elected mayors in the May referendums: “The Government should come clean about what powers are on offer [to mayoral cites]. If they are no more than to a current council leader, they risk losing the referendums to a No vote”.

There was no imperative for Lord Heseltine to say anything of substance. He could have treated the question as rhetorical, or left it to the other panellists – but, of course, he couldn’t resist. He couldn’t, he confided conspiratorially, reveal too much, and indeed he didn’t. He said enough, though, to give Patrick Wintour his headline: “Whitehall battling to avoid losing power to mayors, says Heseltine” .

There was a “huge battle” among Ministers, Heseltine intimated, over how much extra power should be granted to elected mayors across almost all relevant functions: money raising, transport, welfare, strategic planning, and economic policy. Some ministers – and no doubt their civil servants – aren’t keen on transferring anything of significance. The Lib Dems further complicate an already dual-track policy deriving from different sections of the Localism Act. Pro-decentralisation, but anti-mayors, they want devolved powers for any city able to make a case, regardless of its form of governance. Cameron, according to Andrew Rawnsley in Sunday’s Observer, doesn’t want anything too radical, that could be attacked as yet another U-turn.  Oh yes, and the theoretical enforcer, Greg Clark, Minister for Decentralisation and Cities – responsible for the ‘City Deals’ policy that is the chief source of grief for Councillor Bore and other mayoralists – isn’t even able to punch the weight of a full Cabinet member, let alone take on the PM.

City Deals were introduced in last December’s Cabinet Office prospectus, Unlocking Growth in Cities – . The Government would work with individual cities to achieve a series of genuine two-way negotiated agreements that would enable cities to do things their way. The prospectus accordingly set out an “illustrative menu of bold options” (pp.8-9) that Ministers would be willing to discuss as part of the deal-making process – greater freedoms to invest in growth, the power to drive infrastructure development, new tools to help people acquire skills and jobs. In return, where cities wished to take on significant new powers and funding, “they will need to demonstrate strong, visible and accountable leadership and effective decision-making structures” (p.2 – emphasis added) – this last clause being universally understood as code for having an elected mayor.

In addition, “other than as part of a city deal negotiation, the Government does not intend to reach any view about specific powers that might be devolved.” (para.10 – emphasis again added)

The logic is sound, and the localist intent probably sincere. A mayoral system and the mayor (or leader) personally will determine the details of any city deal; the system will be determined by the referendum; so the content of the eventual deal cannot be known, let alone announced, before the referendum. Councillor Bore’s point, however, is equally irrefutable: without knowledge of the nature of the deal, voters may lack the incentive to vote for a mayoral system in the first place.

So is there a way out of this closed circle, or ways of signalling to voters the kinds of powers an elected mayor could bring to their city? Perhaps. First, Whitehall hostilities notwithstanding, the Government could do – maybe in the March 21st Spring Budget – what many were hoping for in its January response to its mayoral consultation, What can a mayor do for your city?, and give some indication of what mayoral cities specifically might expect from its “illustrative menu” of city deal options.

Though not comprehensive – with no mention of additional sources of revenue funding, or of police and fire services, for example – it was a wide-ranging list, much too lengthy to be reproduced here. However, it included: a single consolidated capital pot, rather than multiple funding streams; access to an additional £1 billion Regional Growth Fund; new infrastructure funding through Tax Increment Financing; devolution of local transport major funding and responsibility for commissioning rail services; devolution of Homes & Communities Agency spending and functions; and the creation of City Apprenticeship Hubs and a City Skills Fund, enabling adult skills to be tailored to the needs of employers.

No matter how enticing the list, though, it doesn’t in itself answer Councillor Bore’s question. The closest we can get to that is the one mayoral city deal that has been negotiated and publicised so far – with Liverpool. The Labour Council are bypassing the referendum process and moving straight to the election of a mayor in May, and have negotiated a deal that the Leader, Joe Anderson, hitherto a critic of a purely city mayor, feels is something both to shout about and campaign on.

The key elements of the Liverpool deal comprise:

  • A new Environmental Technology Zone, with the resulting growth in business rate income going to the LEP and five priority economic development areas (Mayoral Development Zones), and the Government prepared to add a further £75 million for economic development backed by a strong business case;
  • A Mayoral Investment Board to oversee the city’s economic and housing strategy, pooling Home & Communities Agency and other local land assets to drive economic growth;
  • Welfare Pilots, developed in collaboration with the Department for Work & Pensions, to deliver a programme of support for young people leaving the Work Programme, and a ‘Youth Contract’ pathfinder;
  • A Secondary School Investment Plan to build 12 new secondary schools, to help support the local economy and skills agenda.

The total package, according to the Council’s report, could bring the city close to £1 billion.  Multiplying up for Birmingham, with more than double Liverpool’s population, gives a number that will surely strike most people as rather more than “a few crumbs from the Westminster table” – to quote Lord Digby Jones’ recent dismissal of the value of a city mayor (Birmingham Post, March 1). Obviously, it would help mayoral campaigners and voters alike, if Ministers were prepared to support the policy they are pushing on cities with something more explicit and authoritative, but even now we have a lot more material to work with than just a few months ago.  

 

Chris Game

Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.