Liverpool goes for growth: City Deal and mayoral strategy link with LEP to boost economic development areas

On 8 December 2011 the Government launched Unlocking Growth in Cities, which set out the terms for a programme of city deals - binding agreements which enable cities to negotiate the devolution of the specific powers, resources and responsibilities required to meet locally-determined economic and social objectives. We have been clear that we are determined to work flexibly to promote growth, to encourage local initiative and willing to transfer significant powers to cities.

The Government has now considered the proposals brought forward by Liverpool for a 'City Deal' in response to this challenge. The Government recognises it represents an ambitious economic package aimed at driving growth in Liverpool, and that it is an important part of the City's response to Lord Heseltine and Sir Terry Leahy's "Rebalancing Britain" report on the Liverpool economy.

The Government has approved the following proposals from Liverpool as a 'City Deal':

1. Subject to HM Treasury clearance of a business case and agreement with the Local Enterprise Partnership, the Government will designate a new Enterprise Zone covering the City Fringe Buffer Zone and Central Business District. The growth in Business Rates income from the Enterprise Zone will go to the Liverpool City Region Local Enterprise Partnership, in line with the Government's wider Enterprise Zone policy and our ambition to see a city-region wide approach to growth and regeneration. The Government recognises that Liverpool has ambitious plans to develop five further priority economic development areas (proposed Mayoral Development Zones) in the city, and their ambition to reinvest rates retained from this new Enterprise Zone within the city. Any retention of Enterprise Zone business rates by the city council will need to be negotiated between Liverpool and the Local Enterprise Partnership.

2. The creation of what Liverpool propose to term a Mayoral Investment Board that will oversee the city's economic and housing strategy as well as oversight of the development of Home and Communities Agency's land assets and other economic development priorities including those linked to the Enterprise and proposed Mayoral Development Zones. This arrangement will be based on the principle that the Home and Communities Agency will retain legal ownership and accountable body status for current Home and Communities Agency assets.

3. The Department for Work and Pensions will work with Liverpool to develop welfare pilots to deliver a localised programme of support for people leaving the Work Programme and in particular include a 'youth contract' pathfinder. It is expected that this will improve the benefit claims experience for customers while making efficiency savings for both the City and the Department for Work and Pensions; increase the numbers of claimants moving into work; and reduce benefit fraud and error.

4. A Secondary School Investment Plan funded by the Council for up to twelve new build secondary schools, including at least six new academies. These schools will be subject to the normal Academy converter application process and once in place, the Council will not be part of their ongoing governance or financial management. Liverpool have made clear their commitment to ensure that the schools in the city support the local skills agenda and the local economy. The Government therefore expects the Council to be proactive and work with the schools, the private sector and the universities in Liverpool to help them develop specialisms and identify and attract appropriate sponsors.

5. The Government is prepared to support initiatives that boost economic growth and development. The Department for Communities and Local Government (DCLG) already supports economic development in local authorities and is therefore prepared to work closely with the City as Liverpool implements its vision for economic development. As part of that close working, the Department for Communities and Local Government will contribute £75 million over the remaining years of the spending review period, subject to a strong, robust business case, to be cleared by HM Treasury, demonstrating clear value for money.

6. The Government set out in 'Unlocking Growth in Cities', that where cities want to take on significant new powers and funding streams, they will need to demonstrate strong, accountable leadership, an ambitious agenda for the economic future of their area, effective decision-making structures, and private sector involvement and leadership. The appropriate governance structure may be different for each city, and no city deal is conditional on having any particular governance arrangement. However, the Government believes that directly elected mayors are one way of providing the strong, visible and accountable leadership so, subject to approval by the Council, the Government can confirm that a move towards a directly elected mayor and the creation of a Mayoral Development Corporation would satisfy its requirements as regards governance arrangements to strengthen leadership and accountability in Liverpool City Council.

The Government places great importance on Local Enterprise Partnerships to drive economic development, and therefore expect Liverpool to continue to work closely with the Liverpool City Region Local Enterprise Partnership and neighbouring authorities to ensure their support for this 'City Deal' and to take it forward as well as future decentralisation packages covering the Local Enterprise Partnership area.

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