Expert: more powers for English cities welcome, but 'innovative thinking' needed to attract funding

Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com, was commenting on the announcement of a planned 'City Devolution Bill', which will be included in the Queen's Speech legislative programme for the newly-elected UK government. The plans, announced by chancellor of the exchequer George Osborne in his first speech since re-election, will allow other city areas to follow the lead of Greater Manchester and take over responsibility for local policy from Westminster, overseen by a directly-elected mayor.

Hart said that the extension of Osborne's plans to create a 'Northern Powerhouse', announced by the chancellor last summer, "would not be an easy transition" for any city that chose to implement it, and would require "a degree of political buy-in from local government".

"The thinking behind what has been dubbed the 'Northern Powerhouse' remains admirable - local empowerment and economic regeneration," he said. "The need to rebalance the economy is a national need - it is for the benefit of those in London and the South just as much as those in the North."

"However, the big issue is how this is going to be achieved given that the plans will necessitate massive long-term investment in the region's infrastructure, at a time when public spending will be significantly cut. Longer term international finance conditions – including potential Chinese investment – would seem to offer good opportunities, but our policymakers need some innovative thinking in order to attract that cash to the North of England," he said.

The proposed City Devolution Bill would give participating cities greater control over local transport, housing, skills and healthcare along with "the levers you need to grow your local economy and make sure local people keep the rewards", Osborne said. Those cities would be required to elect a "metro-wide mayor" to work with local councils and act as a "single point of accountability" for any decisions, Osborne said.

"I'm not interested in any more half-way house deals," he said.

"There's a reason why almost every major world city has an elected mayor: it's a proven model that works around the globe. It's a powerful point of accountability. A person vested with the authority of direct election. It makes the devolution of multi-billion pound budgets, and powers from policing to housing, possible," he said.

The chancellor also announced that Jim O'Neill, the former Goldman Sachs economist who chaired the City Growth Commission into how cities could be empowered to shape their own economies, had been appointed as the new commercial secretary to the Treasury.

Leaders of the 10 local authorities within Greater Manchester are due to appoint an interim mayor for the city region later this month, ahead of its first election for an elected mayor in 2017. As part of the deal, which was agreed at the end of last year, the city region will take over responsibility for policing, skills, housing and transport, as well as control over a £6 billion health and social care budget.

However, devolved city-wide administrations would remain limited in what they could do, particularly in relation to major infrastructure, said Jonathan Hart.

"Devolution will assist local transport and housing, but the very largest nationally significant infrastructure schemes such as HS2 need approval by government 'hybrid bills', which are examined in parliament by a mix of public and private bill procedures," he said.

"For example, if HS3 – the proposed east-west rail link to complement HS2 – were to go ahead it would certainly need the involvement of parliamentary agents, probably both to promote and oppose. So, devolution would work only to a certain point. Central government will always need to be involved especially on economic and social nationally significant infrastructure projects," he said.