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14 | 23RD - 29TH OCTOBER 2015 | UTILITY WEEK Policy & Regulation Market view T he concept of the City Deal came from the desire to empower local areas to drive economic growth by putting greater resources and financial freedoms in the hands of local leaders. Taking local responsibility for both funding and account- ability for outcomes is part of the wider devolution agenda. This drive for more local control of resources, something which demands inno- vative business and economic models, is familiar to those in the energy industry. Here we are seeing the trend toward local accountability and control played out in the form of local energy companies and commu- nity generation. The original City Deal concept was ini- tiated in late 2011 and was the result of bespoke agreements between city regions and central government. This is a rapidly evolving policy agenda that has now been drawn together within Department of Com- munities and Local Government's Cities and Local Growth Unit. Government is now looking to accelerate a "wider and deeper" second round devolution deals to generate growth and productivity, such as the "Devo Manc" agreement announced last November. There is growing consensus that the UK has historically underinvested in infrastruc- ture. This is evident in many areas, for exam- ple the average condition of our transport infrastructure or our power generation capa- bilities. This underinvestment creates drag on our economy, and the devolution agenda is designed to find new modes of closing investment gaps by empowering cities to make the choices and investments that are right for their citizens. There are now 26 deals either approved or in progress, so the City Deal concept has been, so far at least, a success. This sweep- ing change came from completely fresh thinking about the importance of infrastruc- ture to our physical and economic wellbeing (individually and collectively) and how cities and nations can deliver high quality infra- structure to support economic growth. Clearly, how we get our water, heat and power is one of the significant strands of any city's ability to fulfil that goal and serve its citizens. What is a City Deal? Central to these deals is a clear set of "offers" made by the local authority in return for a number of "asks" of central government. A number of deals have been agreed with English cities as well as a bespoke tri-partite deal between Glasgow City and the Scottish and UK Governments. Most of the large deals (that is, those with a fully funded £1bn-plus infrastructure fund) feature: • A "fund approach" for delivering infra- structure, which consolidates available central funding sources with a significant degree of "self-help" (that is, local fund- ing contributions). • Prioritisation of fund investments based on jobs and productivity across a signifi- cant economic geography. • Payment by results. This is a new way of thinking about how transformational infrastructure investment is delivered, linked to local self-help. • Robust local governance and delivery arrangements. The aim of an economically focused infra- structure fund is to boost economic growth over the counterfactual (that is, what would have happened without the fund) within a defined geographic area. The cities developing these funds are aiming for a step-change in the scale of investment (as well as the approach to pri- oritisation and governance) which ensures every penny has the maximum impact on growth. They are also looking to make this step-up permanent. The truth is that investment creates a (largely) one-off step-up in jobs and produc- tivity, rather than a permanent shi in the City Deals explained The government is seeking to re-energise English cities by devolving powers traditionally the preserve of central government. Amy Marshall and Jonathan Turton explain how it works. Wave 1 City Deals The first City Deals were agreed with the "core cities" of England, the eight biggest cities outside London: • Greater Birmingham • Bristol Region • Greater Manchester • Leeds City Region • Liverpool City Region • Nottingham City Region • Newcastle Region • Sheffield City Region The government forecasts that wave 1 will create 175,000 jobs and 37,000 new apprenticeships over the next 20 years. Sheffield City Deal A new, directly elected Sheffield City Region mayor has the following powers and func- tions devolved from central government: • responsibility for a consolidated, devolved transport budget; • responsibility for franchised bus ser- vices;. • responsibility for an identified network of local authority roads; • powers over strategic planning; The Sheffield City Region Combined Author- ity, working with the mayor, will receive the following powers: • control of a £30 million a year funding allocation over 30 years; • responsibility for chairing an area-based review of 16+ skills provision; • joint responsibility with government to co-design employment support for the harder-to-help claimants. • more effective joint working with central government to boost local area trade and investment. "Central to these deals is a clear set of 'offers' made by the local authority in return for a number of 'asks' of central government."