Abstract
How urban infrastructure is funded, financed and governed is a central issue for states at the national, city-regional and city scales. Urban infrastructure is being financialised by financial and state actors and transformed into an asset in the international investment landscape. Local governments are being compelled by national state and financial institutions to be more entrepreneurial in their infrastructure funding and financing and to reorganise their governance arrangements. This article explains the socially and spatially uneven unfolding and implications of urban infrastructure financialisation and local government attempts to implement more entrepreneurial practices and governance forms. The empirical focus is the City Deals in the UK: a new form of urban governance and infrastructure investment based upon negotiated central–local government agreements on decentralised powers, responsibilities and resources. The continued authority of the highly centralised UK national state, its managerialist institutions and conservative/risk-averse administrative culture have constrained urban infrastructure financialisation and entrepreneurial urban governance in the UK City Deals. Situated in their particular spatial, temporal, political-economic and institutional settings, financialisation is understood as a socially and spatially variegated process and urban governance is interpreted as the articulation and mixing of new entrepreneurial and enduring managerialist forms.
Introduction
Governing the funding and financing of urban infrastructure is a central concern for states across the world at the national, city-regional and city scales. Mounting pressures have been constructed by national and local state and financial actors to renew and develop urban infrastructures. These stresses include: ageing and physical deterioration of existing assets and systems; increasing public and private demands for higher levels of more integrated, sophisticated and sustainable services; and growing expectations of urban infrastructure to enhance national economic productivity and competitiveness (OECD, 2014; Picot et al., 2015). Estimates of infrastructure investment required to enable economic growth globally are huge and urban-focused, in some analyses increasing from US$2.6 trillion in 2013 to US$4.8 trillion by 2030 (McKinsey & Company, 2013). Following the global financial crisis and Great Recession, the potential contributions of urban infrastructure to economic recovery have been rediscovered alongside state actor efforts to reduce expenditure and indebtedness under austerity and fiscal consolidation (Schäfer and Streeck, 2013).
Simultaneously, urban infrastructure has become embroiled in the current episode of financialisation (O’Neill, 2013). It is being unevenly transformed by financial and state actors from a public good into an asset within the international investment landscape (Inderst, 2010). Existing and new private and/or state actors – including pension, private equity and sovereign wealth funds – are incorporating urban infrastructure into their investment portfolios (Thrower, 2017). Instability, volatility, uncertainty and low interest and growth rates mark the international economy following the 2008–2009 crisis (IMF, 2017). Financial actors have been attracted by infrastructure’s particular economic and investment characteristics: fixed assets providing essential collective services with long-term, relatively predictable and stable revenue streams capable of supporting high levels of debt, and yielding attractive and less volatile returns insulated from swings in business cycles and markets (Brown and Robertson, 2014). New and reformed existing instruments and governance arrangements have proliferated and been adapted by financial and state actors to configure and govern the funding and financing of urban infrastructures (see, for example, Peck and Whiteside, 2016; Strickland, 2016; Ward, 2013; Weber, 2010). In the often monopolistic provision of critical services such as energy, transport and water, national and local states play multiple roles as customers, guarantors, (co-)investors, partners and/or regulators for investors in urban infrastructure (O’Neill, 2017). Local governments especially are being drawn into novel, often untried and uncertain, long-term relationships and arrangements with financial institutions in the current period of financialisation and under conditions of national austerity (see, for example, Ashton et al., 2014; Farmer, 2014). The substance, pace and ramifications of such changes are revealing gaps in our understanding and knowledge. This article aims to explain the socially and spatially uneven unfolding and implications of urban infrastructure financialisation and local state attempts to implement more entrepreneurial governance forms.
The empirical focus is the City Deals in the UK. City Deals are a new form of urban governance involving infrastructure investments based upon negotiated agreements between central and local governments on decentralised powers, responsibilities and resources. City Deals were introduced in the UK from 2011 by the Conservative and Liberal Democrat coalition government. They were formulated in the aftermath of the 2008 crisis and shaped by the UK national government’s public finance deficit reduction priority and ambition for enhanced decentralisation to enable cities to boost economic growth and recovery. City Deals involve national government in negotiated agreements with over 30 – and rising – city-regional groups of local governments in England, Scotland, Wales and, in due course, Northern Ireland. UK national government actors have used City Deals to incentivise coalitions of local state actors at the city-regional scale to develop visions, strategies and priorities – especially for funding and financing urban infrastructure – and reform governance structures to ‘unlock’ city-regional growth (Cabinet Office, 2011: 1). In the UK and internationally, City Deals are a novel and experimental kind of central–local government relation, public policy-making and urban governance. Further, the City Deal concept has been promoted (e.g. Clark and Clark, 2014), sold (e.g. KPMG, 2012) and has attracted international interest in Australia, the Netherlands and the US (see, for example, Burton, 2016; Katz, 2016; KPMG, 2014; Prinssen, 2016). This first national comparative study of the UK City Deals provides a critical case to explain how, why, where, when and for whom the governance of urban infrastructure funding and financing is transforming, and to interpret its wider conceptual and theoretical ramifications. The argument is that the continued authority of the highly centralised UK national state, its managerialist institutions and conservative/risk-averse administrative culture has constrained urban infrastructure financialisation and entrepreneurial urban governance in the UK City Deals.
The next section engages critically with research on urban infrastructure financialisation and governance. It distinguishes funding from financing, identifies characteristics of infrastructure financialisation and introduces a framework to understand the articulation and overlapping of existing and established managerialist and new and emergent entrepreneurialist practices and techniques governing urban infrastructure funding and financing at the city and city-region scale. The following section introduces the City Deals and traces the co-existence and inter-relations of entrepreneurial and managerial governance in their origins, anatomy and roll-out across the UK since 2011. The next section examines the funding, financing and governance of urban infrastructure in the City Deals. It demonstrates the uneven extension and nature of infrastructure financialisation and the articulation and overlapping of governance forms with both managerialist and entrepreneurial characteristics. The conclusions summarise the empirical findings and draw out their wider conceptual and theoretical contributions. Situated in particular geographical and temporal contexts and political-economic and institutional settings, financialisation is understood as a socially and spatially variegated process: designed, negotiated and managed by multiple actors. Urban governance is conceptualised as the uneven and overlapping articulation of emergent entrepreneurial and enduring managerialist forms.
Financialising urban infrastructure and the articulation of entrepreneurial and managerialist urban governance
Urban infrastructure is a growing focus for financial and local state actors in the contemporary period of financialisation (O’Neill, 2013). While a contested concept, financialisation refers to ‘the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies’ (Epstein, 2005: 3). Recent conceptualisations of financialisation have moved on from somewhat all-encompassing initial formulations (Leyshon and Thrift, 2008). Current thinking works with more measured, nuanced conceptions that recognise its social, spatial and institutional constitution, unevenness, implications and limits (Aalbers, 2015; Christophers, 2015; Keenan, 2017; Sawyer, 2016). Conceptualising a process of financialising urban infrastructure provides a way to grasp the uneven and variegated ways in which financialisation unfolds. Financialisation is designed, negotiated and managed by multiple financial and state actors in geographical and temporal contexts and political-economic and institutional settings (Sawyer, 2016; Strickland, 2016).
Urban infrastructure is being financialised by financial and state actors for several connected reasons. Infrastructure has particular attributes aligned with the demands of financial institutions: essential service provision to people and organisations (e.g. physical flows such as broadband, energy and transport, and public goods such as education and healthcare); long-term time horizons; high capital intensity; stable cash flows and ability to support high debt levels; less volatile returns; state involvement either as direct clients (e.g. via fixed-term concessions) or proximate to transactions (e.g. via regulatory agencies); natural monopolies (e.g. via network characteristics, capital intensity or public policy); and generally low technological risk (Inderst, 2010). Low growth and interest rates coupled with uncertainty in the wider international economy have improved infrastructure’s relative position for investors compared with other assets such as bonds, commodities and equities. National and local governments have been searching for new ways of funding and financing infrastructure, often involving the private sector, while trying to reduce public expenditure and debt. For some, financialisation is transforming urban infrastructure from a public good into an alternative asset class for financial actors and states in the international investment landscape (Inderst, 2010). Others are more cautious because of infrastructure’s heterogeneity across different sectors with varying risk, return and maturity profiles (Thrower, 2017).
Work on urban infrastructure financialisation has revealed the changing long-term ownership and control of assets and revenue streams, the shifting relations and dependencies between national and local states and private actors and the ramifications for urban planning and service provision (see, for example, Allen and Pryke, 2013; Ashton et al., 2014; Farmer, 2014). But research has only begun explaining how the financialisation of urban infrastructure is unfolding in particular national and local contexts, and how it is relating to changes in the governance of infrastructure funding and financing (see, for example, Guironnet and Halbert, 2014; Halbert and Attuyer, 2016; O’Neill, 2013; Strickland, 2016; Weber, 2010).
Two contributions are made to this endeavour that respond to calls not to ‘black box’ finance in engaging financialisation (Christophers, 2015: 191). An important distinction is between the funding and financing of infrastructure. Funding is where the money comes from to pay for the infrastructure over time. Funding provides the revenue streams that repay the costs of financing (e.g. interest on debt, dividends to equity holders) and meet the up-front costs of infrastructure construction (Maxwell-Jackson, 2013). Funding is typically from taxes (e.g. general taxation), user fees (e.g. tolls on bridges) or other charges (e.g. payments for utility services). Financing is how the capital is assembled and structured to enable the investment to proceed; the packaging up of infrastructure projects by actors with risk, return and maturity profiles to attract financial institutions to provide investment capital (Allen and Pryke, 2019). The contemporary problem for urban infrastructure is funding and the provision of relatively stable, secure and predictable annual cash flows to pay for the costs of financing infrastructure projects (Maxwell-Jackson, 2013). While there exists a surplus of investment capital globally in an era of low interest rates, stagnant growth and uncertainty, financial institutions still seek infrastructure projects structured to deliver their desired returns, risks and maturities. Reducing public expenditure and debt under austerity, national and local governments are keenly searching for and open to ways to secure private sector capital to fill their infrastructure gaps. Reflecting and reproducing infrastructure financialisation, such conditions have stimulated innovation in new funding and financing practices, alongside the persistence and adaptation of old ones. These range from existing and established ‘tried-and-tested’ techniques to emergent and newer, innovative practices (Table 1).
Infrastructure funding and financing practices.
Source: Adapted from Strickland (2016: 18).
As the process of urban infrastructure financialisation unfolds and extends in geographically and temporally differentiated ways across cities internationally, analysis risks getting disorientated in its diversity. To assist interpretation for broader understanding and explanation, it is helpful to outline generalisable characteristics to help identify infrastructure financialisation (Table 2). They are not a fixed template or rigid check list to enable empirical analysis to conclude whether or not certain urban infrastructures are financialised in a cut and dried manner. Given the understanding here of financialisation as a variegated and unevenly unfolding process shaped by multiple actors, the characteristics provide a heuristic to help discern and explain the extent and nature of financialisation in particular empirical cases.
Characteristics of infrastructure financialisation.
Source: Adapted from Strickland (2016: 39), drawing upon Ashton et al. (2014); Farmer (2014); Guironnet and Halbert (2014); Halbert and Attuyer (2016); O’Neill (2013); and Weber (2010).
Urban infrastructure holds a central and longstanding position in urban governance research. This is because the local state plays a key role, alongside other actors, in the provision of collective consumption goods and infrastructural services to enable economic and social activities in urban areas (Hackworth, 2002; Jonas et al., 2010). The state retains this integral role in infrastructure to underpin capital accumulation due to its large-scale capital investment requirements, long-term time horizon, monopoly and competition issues, externalities and other market failures – all of which call ‘for some combination of finance capital and state engagements’ (Harvey, 2012: 12). Urban infrastructure financialisation consequently has profound implications for urban governance. Yet, work is only beginning to explain how local governments are being drawn into new or changed and long-term relationships with financial institutions in urban infrastructure funding and financing, and identifying their implications for urban development, governance and planning (see, for example, Ashton et al., 2014; Farmer, 2014; Weber, 2010).
An enduringly influential framework connecting the funding, financing and governance of urban infrastructure is Harvey’s (1989) conception of urban governance transformation from managerialism to entrepreneurialism. Innovations and experiments propagated by actors in contemporary infrastructure financialisation closely intersect notions of entrepreneurial local states. Building upon earlier ‘entrepreneurial cities’ ideas (Judd and Ready, 1986; Kirlin and Marshall, 1988), urban entrepreneurialism was defined as a changing governance form distinct from the preceding urban managerialism. It was more enterprising, innovative and ‘speculative in execution and design’ in its focus upon economic growth and competitiveness (Harvey, 1989: 7). Urban entrepreneurialism was characterised by coalitions and partnerships of public, private and civic actors, efforts to secure increased shares of surpluses redistributed from national governments and – significantly given contemporary financialisation – risk absorption and speculation by the local state. Urban infrastructure was central to such entrepreneurial governance. Land and property were treated as financial assets in this earlier period of financialisation. Common consumption-orientated development strategies were pursued (cultural, entertainment and retail hubs; convention centres; major event bids; waterfront redevelopment). City actors sought to construct distinctive and competitive urban locations and built environments attractive to globally mobile businesses and people as well as public sector functions.
As the situation from which urban governance was transforming in the post-war period, urban managerialism was characterised by the ‘rationally planned and co-ordinated’ provision of urban facilities and services (Harvey, 1989: 7). Local state agency was primarily engaged in delivery and management, and focused upon addressing social need and collective consumption rather than economic growth and competitiveness. Urban managerialism was led and orchestrated by the state at especially the national as well as the local level, following Keynesian fiscal strategies and guided by socially and spatially redistributive principles (O’Neill, 2018). Urban infrastructure played an integral role in managerial governance. It provided the physical assets and public goods for urban populations such as transport and utilities, and the public capital stock underpinning economic activities. Portrayed as the counterpoint to entrepreneurial governance, urban managerialism was deemed by implication less enterprising, innovative and speculative. Deindustrialisation, tertiarisation, economic crisis, internationalisation, suburbanisation, erosion of the urban economic and fiscal base and rising indebtedness were interpreted as undermining urban managerialism. Persistent and recurrent since the early 1970s, transformation towards urban entrepreneurialism was generated and accelerated by capital accumulation, circulation and intensified inter-urban competition.
While not as pervasive and regularly revisited as urban regime theory (Lauria, 1996; Jonas and Wilson, 1999; Pierre, 2014), Harvey’s (1989) ‘prophetic’ (Paddison, 2009: 1) thesis endured and informed influential work in several areas (McCann, 2017). These strands included: the urban political economy of neoliberalism and state rescaling (e.g. Brenner, 2003, 2004; Hackworth, 2002; Peck et al., 2013; Raco and Gilliam, 2012; Ward, 2011); the rise of the ‘entrepreneurial city’ marked by speculative economic renewal and heightened socio-spatial inequalities (e.g. Boyle and Hughes, 1994; Jessop, 1997; Leitner, 1990; MacLeod, 2002); and, recently, the emergence of austerity, financialised and speculative urbanisms (e.g. Davidson and Ward, 2014; Peck, 2012; Peck and Whiteside, 2016; Ward, 2013).
What few critiques emerged pointed to urban entrepreneurialism’s use as a ‘preface’ rather than a comprehensive analytical, methodological and explanatory framework (Hall and Hubbard, 1996; MacLeod, 2002; Wood, 1998: 120). Voices cautioned against its conception as a template or binary transition model between identifiable forms rather than a historical and contradictory process with less clear-cut and separable changes (Peck, 2014). Critics questioned the underplaying of the role and agency of local state actors and the overstating of the capacity of business interests (Valler, 1996), and its limiting conceptions of institutional forms centred on the local state and/or public-private partnerships (Wood, 1998). Challenges were articulated too against the idea that over time and space entrepreneurial would eventually eradicate managerial governance (Hall and Hubbard, 1996).
Further shortfalls in the framework are evident since the 1980s, warranting critical re-engagement in the current episode of urban infrastructure financialisation. The original thesis recognised early on aspects of financialisation that have since accelerated and extended. These include the centrality of funding and financing, the risks of the ‘quagmire of indebtedness’, the utilisation of land and property as financial assets, intensified inter-urban competition and the focus upon activities with ‘the strongest localised capacity to enhance property values, the tax base, the local circulation of revenues, and … employment growth’ (Harvey, 1989: 13, emphasis in original). But only in Harvey’s (2015: 177, 178) later work appears recognition of the current ‘special’ episode of ‘global financialisation’ and the enhanced ‘pressure asserted by finance’. Important characteristics are identified but not elaborated with clear bearings upon infrastructure financialisation and urban governance, including: the distinctive character of the ‘exponential growth’ (Harvey, 2015: 100) of finance’s sectoral and spatial reach and extension; the ‘phenomenal acceleration’ (Harvey, 2015: 178) in the speed of capital circulation and turnover; and the emergence of novel institutional actors, instruments and practices. Contemporary financialisation is interpreted as accelerating and deepening the process whereby the use values of fixed capital locked in place in urban infrastructure are being transformed into exchange values and rendered liquid and mobile by ‘capitalization’ (Harvey, 2012: 11). Urban infrastructures are increasingly being categorised as financial assets with revenue streams transacted as instruments of speculation by financial institutions and local states. This article addresses the gap by connecting the current episode of financialisation to its implications for urban infrastructure funding and financing and entrepreneurial and managerial governance forms. Work has begun on this task, such as Peck’s (2014: 400) conception of ‘“defensive” entrepreneurialism’ arising because ‘under conditions of entrenched financialization, governmental incapacitation, and normalized austerity, a pattern of selective risk taking has given way to one of systemic exposure to risk’.
A further shortfall concerns the question of whatever happened to urban managerialism in the wake of this governance transformation. Recently, Harvey (2015: 144, 18) emphasised the persistence of ‘increasingly entrepreneurial local state or regional metropolitan apparatuses’ and their involvement in myriad new and evolving ways to facilitate urban fixed capital formation in financialisation especially in austerity where the ‘fiscal capacities of the state are put to the test’. Urban managerialism, though, appears somewhat lost from the picture in recent decades. This raises the possibility that it has been eradicated by more entrepreneurial forms (Hall and Hubbard, 1996). Managerialism seems often consigned to a Keynesian-Fordist past (O’Neill, 2018); or just used as the situation from which urban governance has transformed as studies became pre-occupied with changes over continuities. Research appears dominated by comprehending the open-ended and evolving dimensions of urban entrepreneurialism and its expansive and varied role for the local state with other actors (see, for example, Clark and Gaile, 1998). Yet, in holding this specific focus for an extended period, the persistence, evolution and mutation of forms of managerialist urban governance have been largely overlooked. The potential co-existence, articulation and overlap of both managerialist and entrepreneurial governance forms have been relatively neglected.
In the current episode of financialisation, relationships between national and local state and financial actors have not only or simply positioned business as dominant and left governments as hollowed-out and passive dupes in thrall to financial interests. Indeed, Harvey (1989) acknowledged that the transformation was contradictory, partial and uneven across a range of geographical scales, and marked by risk and uncertainty as local governments speculated on urban investments amidst economic volatility. Gaps are, however, evident in two areas. The conception of urban managerialism in Harvey’s (1989) original account is somewhat under-specified and narrow. It was missing important national and local aspects of the ‘modern infrastructural ideal’ (Graham and Marvin, 2001: 43), including: direct mostly national government roles in planning, funding, financing and delivering infrastructure; the construction of centralised, monopolised, standardised and equalised national infrastructure systems; and the demonstration of national state power and geographical widening of social access to services, employment, modernisation and societal progress (Graham and Marvin, 2001; Helm, 2013). Much of the research on urban governance transformation has been undertaken in decentralised states (e.g. the US, Canada and Australia) (Hackworth, 2002; Ward, 2011). Mature, centralised states such as the UK with established governance systems, central–local relations and public finance arrangements require more attention to examine transformations or their absence in the current period. Such states provide appropriate experiences for the examination of the relations between innovative, experimental entrepreneurialism and customary, traditional managerialism in funding, financing and governing urban infrastructure at the national and local levels.
Urban infrastructure financialisation provides a timely opportunity to investigate its socially and spatially uneven unfolding and implications, and to examine local state efforts to implement more entrepreneurial practices and governance forms amidst enduring and mutating managerialism. Differentiated by the variegations of national political economies and capitalisms internationally (Peck and Theodore, 2007) and their roles in shaping pathways of financialisation (Lai and Daniels, 2016), national governments retain pivotal roles in governing urban infrastructure funding and financing. Their agency is evident in their relations with local governments, their authority over licensing, planning, taxation rights and the purposes, levels, timescales and investments in collective infrastructure provision (Jonas et al., 2010; O’Neill, 2013). A new framework is proposed to help understand the evolution of urban infrastructure funding, financing and governance. Existing and established approaches are distinguished from emergent and newer ones across key dimensions (Table 3). The framework is offered as an entry point to identify and explain characteristic dimensions and how they might be articulating, overlapping and hybridising. It is not meant only to provide a means to document a simple, binary and clear-cut transformation from existing/established managerialism to emergent/new entrepreneurialism.
Approaches to governing infrastructure funding and financing at the city and city-region scale.
Source: Authors’ research.
Researching the UK City Deals
This first national comparative study of 31 of the City Deals agreed to date in England, Scotland and Wales provides a theoretically-informed assessment of financialisation and national and local state actors in funding and financing urban infrastructure. It builds upon existing studies of particular City Deals (e.g. KPMG, 2014; Strickland, 2016; Waite et al., 2013) and specific infrastructure funding and financing instruments and practices (e.g. Strickland, 2013; Ward, 2011; Whiteside, 2013). The continued agreement of further City Deals in the UK into 2017 presented a research challenge to keep up with this policy-in-motion. The methodology, research design and empirical data collection strategy was informed by the ‘distended case approach’ (Peck and Theodore, 2012: 24). This method tries to move beyond the discrete, individual and isolated case study. It seeks to understand and explain what is going on over time within and between the multiple cases by relating them to each other and situating them within their political-economic and institutional contexts. The research activity comprised three connected elements: i) an ongoing review of secondary sources to supplement and corroborate the primary data (e.g. City Deal proposals and agreements; local government, central government, think-tank and interest group documents; specialist press coverage); ii) a rolling programme of 35 semi-structured, in-depth interviews with key actors representing different public and private institutional interests at specific spatial levels started in January 2014 (e.g. elected members and officers in local government in cities and city regions; civil servants and advisers from central and devolved government, government agencies, interest groups and think-tanks; executives in private sector consultancies); and iii) authors’ participation in public policy consultations, debates and fora (e.g. engagement with the UK National Infrastructure Commission; meetings with financial institutions; responding to Scottish Parliament and Welsh Assembly Committee City Deal enquiries). Challenges with this approach included situating the City Deals amidst national and local political change (e.g. UK General Elections in 2015 and 2017), obtaining details of infrastructure funding and financing arrangements and being unable to undertake evaluation of City Deals given their recent introduction and long-term timescales.
Underpinned by the conceptual discussion, the empirical data were analysed along three related dimensions. The origins, anatomy and roll-out of the City Deals were established, tracing their entrepreneurial and managerialist attributes and evolution. The infrastructure funding and financing practices in the City Deals were identified (Table 1). Their characteristics were then assessed against the framework of infrastructure financialisation (Table 2). The governance forms in the City Deals were determined and related to the funding and financing analysis using the framework of existing/established and new/emergent approaches (Table 3). Drawing upon the preceding critique, the analysis avoided a strong conception of binary transformation between forms of urban infrastructure funding, financing and governance. Instead, underpinned by the central argument, the empirical material interpretation sought to understand and explain the presence as well as the articulation, overlap, hybridisation and inter-relations of existing/established managerialist and newer/emergent entrepreneurialist approaches. The overall aim was to provide a plausible explanatory account of the extent, nature and substance of changes in the financialisation and governance of urban infrastructure funding and financing in the UK City Deals.
The City Deals in the UK
The City Deals are a new form of negotiated agreement between national and local governments on decentralised powers, responsibilities and resources. City-regions were identified as integral to the UK national government’s economic growth and recovery ambitions following the 2008 crisis and recession. The city-region scale was prioritised to foster agglomeration economies, increase productivity and growth and support institutional co-ordination and policy intervention (Ahrend et al., 2014; Cheshire et al., 2014). While initially England-focused, City Deals were formulated as a national policy for: building a more diverse, even and sustainable economy. As major engines of growth, our cities have a crucial role to play. But to unlock their full potential we need a major shift in the powers available to local leaders and businesses to drive economic growth. We want powerful, innovative cities that are able to shape their economic destinies, boost entire regions and get the national economy growing. The aim of these deals is to empower cities to forge their own path, to play to their own strengths and to find creative solutions to local problems. (Nick Clegg, then Deputy Prime Minister, Foreword, Cabinet Office, 2011: iii)
The city deal-making process involved groups of local governments at the city-region scale being invited by national government to articulate, negotiate and agree ‘strategic’ and ‘transformational’ propositions and reforms in powers, resources and savings in various policy areas (Table 4). Reflecting its potential contributions to economic growth and historical under-investment in the UK, ‘infrastructure financing was critical to the City Deals. It was consistently top of the priorities that the cities identified’ (Official, Core Cities, authors’ interview, 2014).
City Deals (Wave 1) programmes.
Source: Adapted from NAO (2015: 16).
The origins of the City Deal lie in a Conservative Party critique of New Labour’s ‘top-down’ and ‘command state’ centralism (Clark and Mather, 2003), ‘new public management’ and ‘payment by results’ mechanisms (e.g. HM Government, 2011), the practices and lexicon of commerce and finance, transactional politics in the US and then Secretary of State for Cities Greg Clark’s (1992) PhD thesis on incentive payment systems: The deal-making approach is in the political DNA of Greg Clark and other coalition ministers. It is about offers and making deals … Greg was quite critical of the [New Labour] notion of earned autonomy, and didn’t want formal KPIs [Key Performance Indicators], but the cities had to give something back for a Deal. (Civil servant, Cities and Local Growth Unit, Cabinet Office, authors’ interview, 2014)
In addition, the Core Cities – an interest group for the largest urban local governments in England outside London plus Cardiff and Glasgow – had long critiqued the UK’s highly centralised governance and public finance system as out of line with those of comparable OECD countries (Table 5). Identifying the political opportunity, Core Cities successfully lobbied for an amendment to what became the 2011 Localism Act to enable the designation of ‘Urban Economic Growth Areas’. In tune with the national austerity strategy and devolved city-region focus, the amendment sought enhanced powers and resources for the largest city-regions to increase growth and employment, and reduce welfare spending. What became City Deals sat within a political-economic context dominated by the UK government’s fiscal consolidation priority. Sub-national development was articulated as particular versions of ‘decentralisation’, ‘localism’ and ‘rebalancing’ (Pike et al., 2016a). These principles aimed to shift power to local communities and business, enable places to tailor approaches to local circumstances, and provide incentives for local growth across the UK (Cabinet Office, 2011; Department of Business, Innovation and Skills, 2010).
Taxation revenue attributable by government level as % of GDP, 2013.
Source: Calculated from OECD revenue data (OECD, 2015).
The Core Cities amendment in the 2011 Localism Act provided the legislative basis for the ‘Wave 1’ City Deals in England (Table 6). Each city-regional grouping put together proposals as the basis for bi-lateral negotiations with national government to agree their City Deal. The deal-making was asymmetrical from the outset in terms of information, knowledge and power: local parties did not know what would be accepted in advance; no formal criteria against which to assess the proposals were used; and national government retained the authority to agree the deal or not. The central quid pro quo comprised enhanced devolved powers, responsibilities and resources in return for contributing to local growth, public service delivery reforms and expenditure reductions. Tied to the politics of a new mayoral governance model, Liverpool City Council agreed the first City Deal in February 2011, followed by Liverpool City Region and the rest of Wave 1.
City Deals Waves 1, 2 and 3.
Source: Own elaboration from Cabinet Office data.
‘Wave 2’ City Deals followed in 2012 following a national government invitation to 20 of the next largest cities/city-regions. In contrast to Wave 1 and reflecting the formalisation of the deal-making process, Wave 2 City Deals included a ‘core package’ of powers to address common challenges and a ‘bespoke’ element to reflect particular city issues. Of the 20 cities in Wave 2, 18 agreed City Deals in early 2014. The remaining Bournemouth and Poole and Milton Keynes City Deals were incorporated into Local Growth Deals agreed with their Local Enterprise Partnerships (LEPs) (Pike et al., 2015). A more open-ended ‘Wave 3’ involved tri-partite agreements between the UK, local and devolved Welsh and Scottish governments (Waite, 2016). Wave 3 began amidst the politics of the 2014 Scottish independence referendum with the Glasgow Clyde Valley City Deal. In later instalments, City Deals have been agreed for Cardiff Capital Region, Aberdeen, Inverness/Highlands, Edinburgh and South East Scotland, and Swansea Bay. By 2016, 31 City Deals had been signed (Figure 1), covering 51% of the population, 45% of the Gross Value Added (GVA), 51% of the jobs and 45% of the enterprises in Britain (Figure 2).
City Deal areas (as of June 2016) (see Table 3 for City Deal areas).
Population and economic ‘footprints’ of the 31 City Deals, 2016.
Similarities and differences are evident when comparing the City Deals. Wave 1 were pilots with more openness to new and previously untested proposals. They were considered more ‘comprehensive’ and ‘ambitious’ because the national Cities Policy Unit was ‘able to get greater changes out of departments in those early stages’ (local government officer, Wave 2 City Deal, authors’ interview, 2014). Wave 2 rolled out a more formalised and conservative approach as ‘the departments had caught up and were less prone to accept radical change’ (local government officer, Wave 2 City Deal, authors’ interview, 2014). Wave 3 introduced the new dimension of devolved politics, policy and tripartite negotiations (Waite, 2016). Wave 1 deals were uneven in their engagement with LEPs, whereas Wave 2 deals worked more closely with them. Wave 2 proposals were limited and complicated by Local Growth Deals and LEP policy operating with different geographies (Marlow, 2014). The average number of local governments per deal was similar, from six in Wave 1, four in Wave 2 and just over five so far in Wave 3. Wave 1 deals had tightly drawn geographical boundaries whereas Waves 2 and 3 deals encompassed wider geographies. Waves 1 and 2 incorporated competition and co-operation between local actors but ‘the government did operate a lot of competitive process … which in their view improves quality’ (official, Core Cities, authors’ interview, 2014). Even once agreed and announced, all three Waves of City Deals evolved further as the negotiating loci for local actors shifted from the renamed Cities and Local Growth Unit and HM Treasury to government departments and, in Wave 3, the devolved governments.
Reflecting the asymmetrical nature of the bargains struck between national and local governments, the City Deals are marked by a highly uneven geography of agreed powers, flexibilities and funding allocations. These outcomes reflect the imbalances of power between the national and local parties, the deal-making process, negotiations between the actors and differentiated local proposals. Given their size and political importance, Wave 1 and 3 City Deals generally contained wider packages of devolved powers, responsibilities and resources compared with Wave 2 – although Cambridge and Preston were markedly larger given their transport infrastructure components. Based on the only publicly available data on funding announced by the actors involved in the City Deals, analysis cannot verify whether or not and to what extent such funding is actually ‘new’ and additional or re-packaged from existing programmes. Working with this data constraint and with the suspicion that other national programmes in the current period are simply re-presenting existing funding commitments (see, for example, Lee (2017) on the ‘Northern Powerhouse’), a snapshot of the scale and geographical differences in per capita allocations reveals substantial variations. Deals with large infrastructure components in the larger city-regions secured the highest funding levels (Figure 3). Given their modest size, levels of infrastructure funding in the City Deals were effectively only additional to other funding sources. However, the UK government’s fiscal consolidation priority meant: ‘the net impact of reductions in public sector funding far outweigh the positive impact of positive funding coming into the city through a City Deal’ (local government officer, Wave 1 City Deal, authors’ interview, 2014). Transport infrastructure resources agreed in four City Deals have in all but one case been exceeded by reductions in the spending power of participant local governments (Table 7).
‘New funding’ (for all projects) by selected City Deal (£ per capita).
Transport Board funding and reductions in local government spending power.
Local Transport Boards, which are comprised of local councillors and are based on city-region and LEP geographies, were allocated 10-year funding packages as part of the City Deals in their areas.
Source: Own elaboration from Department for Transport and Department for Communities and Local Government data.
City Deals demonstrate the articulation and overlap of entrepreneurial and managerialist governance. Entrepreneurial dimensions have been intensified as the City Deals have been key elements in the UK government’s ‘spatial liberalism’ (Clarke and Cochrane, 2013). This approach has emphasised enterprise and a more ‘business-like’ and ‘commercial’ outlook for local government, ‘innovation’, ‘bespoke’ proposals tailored to local conditions, private sector-led growth and engagement (especially via the LEPs), local government funding reduction and reform and – discussed below – some speculative yet circumscribed experiments in infrastructure funding and financing (Cabinet Office, 2011; Department for Business, Innovation and Skills, 2010). Inter-urban competition has been promoted amongst places, encouraging use of their ‘sharp elbows’ to secure the most advantageous deals (local government officers, authors’ interviews, 2014).
Yet, the City Deals are not only a manifestation of a wholesale transformation towards entrepreneurialism and local state dominance by business and especially financial interests. City Deals are a centrally-designed and nationally orchestrated policy and governance device used by national government to exert tight control, management and reform with limited devolved powers and resources. Reflecting a belief that ‘cities like the deal-making approach. It gives them agency’ (personal communication, Civil Servant, Cities and Local Growth Unit, 2015), national government actors have used deal-making to compel local actors, shaping and channelling their behaviours in centrally orchestrated directions. Local governments have been engaged in trying to construct bespoke strategies and policies tailored to local circumstances, formulating and presenting new ideas as ‘innovations’, taking on wider responsibilities and risks and signing up to medium and long-term delivery and reform commitments under austerity. Deals were only secured locally following lengthy and detailed negotiations and when aligned with national priorities, policies and positive assessments of their enhanced and ‘transformative’ contributions to city-region growth and public expenditure reductions.
‘City dealing’ (Waite, 2016) introduces something new in mixing and mutating elements of managerialist and entrepreneurial practices. City Deals demonstrate the emergence of ‘informal’ governance with decision-making lacking codified protocols and procedures, and the potential of being shaped by social relationships, webs of influence and patronage (Ayres, 2015). Such new policy-making practices are characterised by experimentation, ‘fast discourse’ and the relatively rapid brokering of ‘confidential bargains’ (Moran and Williams, 2015: 1) between national government and multiple local state actors. They favour and narrow involvement down to those actors willing and able to cope with limited consultation and deliberation, and ‘compressed time scales’ (Jessop, 2008: 194). Such governance differs from the more formalised and structured agreements set within clear constitutional frameworks with demarcated separation of powers characteristic of managerialism and practised between city, state and national tiers in federal systems such as Canada (Donald, 2005) and centralised systems such as France (Green and Booth, 1996). This UK version of city deal-making has emerged and flourished amidst the administrative bureaucracy, formalised policymaking protocols, institutional constraints, political accountability and scrutiny characteristic of narrower conceptions of urban managerialism (Leonard, 1982).
Funding, financing and governing urban infrastructure in the City Deals
Across the City Deals, infrastructure financialisation has been uneven and limited, and both managerialist and entrepreneurial governance traits have been articulated and mixed. A range of infrastructure strategies and initiatives are evident with economic, social and environmental purposes, focused upon specific sectors and geographical scales, and involving new, adapted and existing funding and financing strategies, instruments and practices (Table 8). Funding and financing practices demonstrate elements of financialisation, tempered by centralised national control, risk aversion and fiscal consolidation. Some of the larger City Deal groups have engaged new financial actors, especially international consultancies, in economic assessment of the growth and tax base benefits of infrastructure investment. These appraisal, cost-benefit quantification and prioritisation techniques have been used to create ‘objective’ ‘business cases’ to ‘pitch’ to national government in the deal-making negotiations. Local actors have made substantial claims. In their areas, 12 of the largest City Deals are estimated to generate an additional £14.6 billion or 4% of total GVA, and over 407,400 jobs or 5.2% of total employment.
Infrastructure funding and financing in the City Deals.
The original Greater Manchester ‘Earn-back’ mechanism was subsequently replaced by long-term grant funding of the kind agreed by Greater Cambridge and Glasgow Clyde Valley.
Source: Own elaboration from City Deals, and Marlow (2014).
Compelled by national government and funding reductions, local actors have tried to extend and initiate private sector participation in urban infrastructure investment. Private involvement is evident in city centre, property and retail-orientated schemes (e.g. ‘Liverpool One’), pension fund and insurance fund investments (e.g. Legal and General Insurance Fund, Newcastle), bilateral public-private partnerships (e.g. Kier Sheffield LLP) and international investment attraction (e.g. prospectuses targeting sovereign wealth funds in Birmingham). The scale and reach of such efforts have been uneven and limited, falling far short of a financialised situation of complete alignment, outright control and/or dependence upon private financial actors and markets. This is because of differential capacity, conservative attitudes and legal constraints upon risk management and speculation in local and national government following negative historical experiences with complex financial instruments (Tickell, 1998), and the contentious UK histories of privatisation and public-private partnerships (Shaoul et al., 2012; Whitfield, 2010).
Local actors have proposed new funding and financing instruments involving greater risk and reliance upon enhanced urban economic performance and tax base expansion. Most drew upon international ‘value capture’ practices (Peterson, 2009), adapted to the UK’s centralised institutional context. These ‘invest and return’ instruments were based upon: i) prioritising investment projects based upon their positive net impacts upon GVA and employment in specified geographies (e.g. the city-region or smaller sub-city area); and ii) sharing the benefits of additional growth through locally particular reforms to the central–local fiscal settlement within the national public finance system. The ‘earn-back’ model in Greater Manchester, for example, sought an agreement with central government to create a 30-year revenue stream by retaining locally a share of the additional taxes generated by increased local economic growth. This revenue stream would then be used to borrow against to provide up-front investment in local infrastructure to facilitate the increase in economic growth. Any further funds yielded from the arrangement would then be ‘recycled’ into further infrastructure investment. Elsewhere, Tax Increment Financing-based schemes were agreed in Newcastle, Sheffield and Nottingham, allowing borrowing up to £150m for infrastructure investment against the retention for 25 years of 100% of business rate income growth above a specified base level. Evident too were securitisation and borrowing against existing assets (e.g. via Special Purpose Vehicles in Greater Birmingham and Solihull) and/or revenue streams (e.g. user charges such as the River Tyne tunnel tolls). Integrated ‘economic and strategic investment funds’ were used to pool and recycle funds from multiple sources. These financial vehicles sought to demonstrate ambition, create scale and articulate long-term ‘pipelines’ of ‘investable’ infrastructure projects attractive to external public and private investors (e.g. Preston, South Ribble and Lancashire, Leeds City Region). While encouraging innovation and competition in the City Deals, national government actors were cautious and risk averse in agreeing new instruments, however. After lengthy negotiations, several were revised and replaced with more traditional and manageable central to local grant transfers (e.g. Greater Cambridge’s ‘gain-share’) or faced limits on their flexibilities (e.g. Bristol and the West of England’s ‘Growth Incentive’ business rate retention scheme). In Wave 2, new local proposals were even rejected due to their novelty, uncertain risks and precedents (e.g. Sunderland City Council’s bid locally to hypothecate or earmark, recycle and transfer corporation and other business tax revenues from industrial to city centre sites).
Lastly, with austerity, reductions in revenue grants from national government, and public finance system reforms, local actors sought to adapt existing and new instruments and practices. Strategies involved utilising assets, leveraging balance sheets and cash reserves and generating revenue streams to pool investment capital for urban infrastructure. The national Business Rate Retention scheme has been used to aggregate business rate revenues for capital investment in the City Deals (e.g. Bristol and West of England, Leeds). New sources of revenue and capital funding earmarked for infrastructure include specific proportions of increases in council taxes (e.g. Greater Manchester), new taxes (e.g. the workplace parking levy in Nottingham), bond issuances (e.g. the ‘Bristol Bond’) and external finance (e.g. European Investment Bank loans). Public assets have been assessed for sale, leverage, development and/or minimisation of liabilities. Revenue generating assets have been retained and developed rather than sold off (e.g. Bristol Property Board, Birmingham Public Asset Accelerator, Nottingham District Heating Company, Newcastle and Manchester Airports) (Cumbers, 2012; O’Brien and Pike, 2016). Increasing local government indebtedness and risk has resulted from close central management of the City Deals. HM Treasury’s phased allocation of funding in the City Deals through interim ‘gateway reviews’, and the requirement for balanced annual spending profiles, have forced local governments to borrow to invest in infrastructure up-front in the expectation of stimulating future economic growth and tax revenues to repay the borrowing. This centralised administration has displaced the risks of speculative investment and debt repayment from the national to the local state.
National finance ministry HM Treasury utilised its dominant role in UK economic policy and public financial management, negotiating City Deals to deliver economic growth and public expenditure savings. HM Treasury worked closely with the cross-departmental Cities and Local Growth Unit to achieve central control in orchestrating, negotiating and rolling out the City Deals under austerity and departmental funding and staff reductions. The Unit provides advice to the city-region teams and negotiates the City Deals for national government. It is a new institution simultaneously trying to manage centre–local relations, support new ‘investment-led’ approaches and techniques and overcome civil service inertia: ‘one of the big lessons is co-design … you need a cities unit working hand in hand with places. Making policy in Whitehall terms is complex, and it fuels the temptation of Whitehall to say no’ (official, Cities and Local Growth Unit, Cabinet Office, authors’ interview, 2014).
Within the highly centralised UK governance system, central–local and inter-local relations have been rescaled to the city-regional level through the City Deals. National government prioritised the city-regional scale as ‘functional economic areas’ to exploit the economic potential of under-bounded city cores (e.g. Bristol, Glasgow, Newcastle and Nottingham), maximise the economic growth of wider urban areas and improve policy co-ordination (Department of Business, Innovation and Skills, 2010). For national government, the City Deal provided a powerful device compelling local actors to conform to its preferred model of city-region-scale Combined Authorities, ideally with directly-elected ‘metro-mayors’ (Tomaney et al., 2017), and business involvement through the LEP: ‘Anybody that doesn’t have a governance structure that will make it work isn’t getting a City Deal’ (official, Cities and Local Growth Unit, authors’ interview, 2014).
Demonstrating the limits of this centralised national managerialism, however, the City Deals did not simply enable the top-down imposition of local governance models by national actors. Political and institutional geographies, histories and stages of local co-operation, and the agency of local actors in the informal deal-making negotiations, shaped a range of City Deal governance arrangements (Table 9). At the start of Wave 1 and bypassing the need for a referendum, Liverpool City Council agreed the first City Deal with a mayor, a Mayoral Development Corporation, and an additional £75m funding for economic development, employment and education projects. Several of the former metropolitan county councils embedded their City Deals within new Combined Authorities, although not always with a directly-elected metro-mayor. Greater Birmingham and Solihull used the existing LEP governance arrangement prior to later formation of a Combined Authority and metro-mayor. Other areas have established an Economic Board. Effectively pioneering Wave 3, local actors in Glasgow initiated their City Deal negotiations directly with the UK central government and, amidst the politics of the independence referendum campaign, agreed the deal and joint committee structure with the UK and Scottish governments.
Governance models in the City Deals.
Elections for new ‘metro-mayors’ took place in May 2017, with the exception of Sheffield City Region, which is looking to hold elections in 2019.
Joint Committees established for City Deals in England are created under the 1972 Local Government Act. Joint Committees in Scottish City Region Deals are created under the terms of the Local Government (Scotland) Act 1973. In Wales, the Local Government Act (1972), Local Government (Wales) Act 1994 and the Local Government Act 2000 provide the legislative basis for City Deals in Wales to establish Joint Committees.
Source: Authors’ research.
Conclusions
This article aimed to explain the socially and spatially uneven unfolding of the financialisation of urban infrastructure and local state efforts to construct more entrepreneurial governance forms. Through its managerialist institutions and conservative/risk-averse administrative culture, the highly centralised UK state has exerted continued authority and constrained urban infrastructure financialisation and entrepreneurial governance in the City Deals. Analysis demonstrates that financial and state actors are extending the financialisation of urban infrastructure and introducing governance forms with entrepreneurial characteristics unevenly. New, financialised and more speculative relations, strategies, instruments and practices are evident with socially and spatially differentiated and uncertain outcomes. Local government actors are being compelled into new risk-sharing relationships and contractual dependencies with national government and private actors, increased and higher levels of borrowing and heightened fiscal reliance upon the economic performance and tax base of their city and city-regional economies. Existing and new financial actors, including private capital and sovereign wealth funds, are engaging with local government in the search for investment opportunities and financial returns from the financing and development of urban infrastructure assets and capture of their revenue streams. Wider and growing use of new and adapted financial instruments and practices is evident including: investment-based, future-orientated and speculative economic growth strategies; the creation of institutional vehicles for larger scale and longer-term investments; and the securitisation and borrowing against assets, (future) tax revenues and national government grants to create current fiscal capacity for up-front infrastructure investment and longer-term debt repayment from expected future growth and financial returns. Local governments have sought to convince national government of the merits of their City Deal proposals. More sophisticated economic analysis, modelling and forecasting approaches and tools have been developed and often purchased by local government from private actors such as international consultancies. These techniques involve ex ante appraisals of economic costs (e.g. project finance, debt service for borrowing) and benefits (e.g. employment creation, GVA growth, tax base expansion) to enable prioritisation of long-term urban infrastructure investments. Local government actors then deployed these analyses in ‘business cases’ in attempts to secure additional devolved flexibilities from national government, justify the use of new financial instruments and articulate their potential ‘value for money’ and outcomes. Such activities are unevenly transforming urban infrastructures from public goods into financial assets, and tying the future fiscal fortunes of cities and city-regions more closely to the performance of their urban economy and tax base.
Examination of the City Deals demonstrates too that the financialisation of urban infrastructure funding and financing and deployment of entrepreneurial kinds of governance are articulating and mixing with established practices and institutional forms. New instruments are being used alongside the continued deployment and adaptation of existing instruments, techniques and governance arrangements. Neither a wholesale transformation nor unchecked advance of infrastructure financialisation and urban entrepreneurialism are evident. Traditional and tried and tested forms of borrowing, debt and grants from national government remain central, albeit mobilised in longer-term and more ‘investment-led’ approaches sometimes with new financial actors. Local government actors remain constrained and/or reluctant to engage in large-scale forms of financial innovation, risk-taking and experimentation by their knowledge, capacity and limited devolved powers and responsibilities in the UK’s centralised governance system. Why are local states varying in the extent and nature of their involvement in financialising urban infrastructure? Contrasting its more advanced forms in the more decentralised governance system in the US (Peck and Whiteside, 2016; Strickland, 2016; Ward, 2011), infrastructure financialisation in the City Deals has been limited and attenuated by the highly centralised governance and public finance system, managerialist institutions and often conservative/risk-averse political and public administrative culture in UK national and local government. National government’s fiscal consolidation priority and central control precluded stronger fiscal decentralisation because of fears concerning limited local knowledge and capacity, financial mismanagement and profligacy, unchecked borrowing and risk taking by local governments; constraints reinforced by the eroded capacity and expertise in national and local government following public expenditure reductions under austerity (Pike et al., 2016b); the number of civil servants (Full-Time Equivalents) in central government being reduced by 26% since 2006 (NAO, 2017). Different institutional histories and cultures across and within local government too influenced attitudes to change, innovation and risk.
Further questioning the ‘narratives of financialization … as scripts of linear, uninterrupted, ineluctable development’ (Christophers, 2015: 194), the conceptualisation of financialisation here is not as a monolithic, over-powering and all-consuming juggernaut rolling into town and financialising everything in its path. Financialisation is a socially and spatially variegated process: designed, negotiated, managed and regulated by multiple state and private actors in different geographical and temporal contexts and political-economic and institutional settings (Sawyer, 2016; Strickland, 2016). Neither urban infrastructure nor the local state have become wholly and simply financialised. Instead, actors are embroiled in a process in which they are actively financialising and being financialised in their relations with other actors in socially and spatially uneven ways. While work has begun (see, for example, Halbert and Attuyer, 2016), much further conceptual, theoretical and international comparative empirical research needs to investigate how urban infrastructure and governance are being financialised in the global North and South.
The UK City Deals reveal that the roles of the state in governing urban infrastructure funding and financing are not being simply eroded, hollowed-out or undergoing a wholesale transformation towards entrepreneurial governance. Instead, dimensions of both entrepreneurial and managerialist governance forms are being articulated by local government actors within the UK’s highly centralised governance system. Within national and local governments, finance functions are ascendant and extended. Local actors are proposing, negotiating and agreeing the City Deals, supported by underpinning economic analysis and modelling and the growing but uneven involvement of private financial actors. Central–local and city-regional relations are only to a degree being shaped by rescaling in the City Deals. This is because of constraints imposed by the UK’s centralised governance system, despite devolution and localism rhetoric and incremental reforms in England, and wider UK devolution. Local government has been afforded highly conditional and limited fiscal powers and flexibilities in raising and deploying tax revenues for infrastructure in the City Deals. It remains largely funded through multiple and fragmented transfers and channels determined and distributed by national government. Horizontal state rescaling is evident in the formation of city-regional governance arrangements between local government actors in the City Deals, but these are under national government purview and influence.
Informal deal-making between the centre and the groupings of local governments has been prioritised by national government as the mode of engagement and resource allocation. Orchestrated and determined by national government actors, this informal governance has required narrow and self-selecting groups of local state officials and politicians to present as ‘entrepreneurial’ and ‘innovative’ to mobilise, articulate propositions and negotiate. But the process and outcomes have been managed and agreed on largely national government terms and timetables. The resulting City Deals have turned central–local state relations into tactical and lop-sided bargains between national and local parties unequally endowed with information, knowledge and power. Socially and spatially uneven and uncertain outcomes have resulted. Negotiated dialogue between national and local governments enables their representation by actors as enhanced local empowerment, innovation, self-help and reduced reliance on national government through more locally-led funding, financing and risk-bearing. Yet, the nature of the deal-making has meant the deals have proven difficult to cohere and fix as governance arrangements. Local governments have experienced problems including lengthy delays in negotiations, and failures to agree local propositions, innovative mechanisms morphing into conventional grants and national government departments re-negotiating and even reneging on previously agreed Deal elements. Moreover, the closed and opaque character of City Deal-making raises fundamental accountability, transparency and scrutiny questions (Pike et al., 2016a).
Building upon frameworks articulating transformations between ideal types, the conceptualisation of urban governance here acknowledges their heuristic value. But it conceives of their co-existence and articulation to allow for blurring, overlap and partial evolutions as well as the hybridisation of characteristic forms in particular spatial and temporal settings (Peck, 2014). Deterministic narratives explaining linear, singular and discrete transformations from urban managerialism to entrepreneurialism propelled by wholesale financialisation and the emasculation of the local state by private financial interests at the behest of national states are unconvincing. Processes of change are messy, nuanced and subtle as well as difficult, slow and even intractable. The articulation, overlapping and hybridisation of entrepreneurial and managerialist governance concepts, strategies, arrangements and practices are the result of attempts by actors to financialise and govern urban infrastructure funding and financing.
Footnotes
Acknowledgements
The research upon which this article is based was undertaken as part of the UK Economic and Physical Sciences Research Council (EPSRC) and Economic and Social Research Council (ESRC) Infrastructure BUsiness models, valuation and Innovation for Local Delivery (iBUILD) research centre (grant no. EP/K012398/1). We are grateful for the collaborative working especially with Andy Brown, Chris Rogers, Richard Dawson, Stephanie Glendinning, Phil Purnell and Claire Walsh. Earlier versions of this research were presented at the Regional Studies Association Winter Conference (London, 2014), American Association of Geographers Conference (Chicago, 2015), KU Leuven Seminar (2015), National Institute of Economic and Social Research Seminar (London, 2015), Sheffield Political Economy Research Centre Conference (2015), ESRC Policy Scotland seminars (Edinburgh, 2015, and London, 2016) and iBUILD events in Birmingham (2015) and Leeds (2015). The authors are grateful for the questions and feedback from participants, especially Duncan MacLennan and David Waite, comments on an earlier draft from John Tomaney, discussions with Tom Strickland and Graham Thrower and to the editors and reviewers for their engagement and advice. The usual disclaimers apply.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.