City deals, decentralisation and the governance of local infrastructure funding and financing in the UK

Pub. Date
05 August, 2015


As a longstanding and integral element of the capital stock in the economy, the critical importance of infrastructure to productivity and output growth has been accentuated in the context of globalisation, technological advances and shifting social demands. The global financial crisis and economic downturn have focused attention on the role of infrastructure renewal and development in economic recovery. New and adapted funding and financing models are emerging, shaped by the ‘financialisation’ of infrastructure as an alternative asset class. Fiscal consolidation has reinforced the efforts of governments to reduce expenditure and indebtedness, attract private sector capital, and reduce taxes to stimulate economic activity. Central dilemmas in this emergent context in the UK are how infrastructure will be funded and financed, and how it will be governed given the uneven moves towards decentralisation and localism across the UK. This article reflects upon a comparative analysis of the 28 ‘City Deals’ agreed between UK government, Scottish government and city-regional groupings in England and Scotland since 2011. The City Deals have sought to incentivise local actors to identify and prioritise ‘asks’ of UK and devolved governments, fund, finance and deliver infrastructure and other economic development interventions, and to reform city/city-region governance structures to ‘unlock’ urban growth. The analysis demonstrates that City Deals are reworking the role of the UK state internally and through changed central-local and intralocal (city-regional) relations. Regional and urban public policy is being recast as a process of deal-making founded upon territorial competition and negotiation between central national and local actors unequally endowed with information and resources, leading to highly imbalanced and inequitable outcomes across the UK. As a template for public policymaking in an emergent and decentralising context, deal-making raises substantive and unresolved issues for governance in the UK that are especially pertinent as the new Conservative government at Westminster pledges to widen and broaden this approach as a central component of its future devolution strategy and policy.