I am glad that the city deal has. I was concerned by the suggestion of the noble Lord, Lord Greaves, about the expansion of areas and Manchester connecting with Newcastle. As a Liverpool fan, for football reasons alone, that is something that we would want to park.
Coming to noble Lords’ points, I first reassure your Lordships on where we are on city deals. As the noble Lord, Lord Greaves, said, it is not a one-size-fits-all proposal. City deals are about bespoke solutions unlocking local growth and trialling different and innovative approaches. Perhaps it would not be appropriate for every single trial to be rolled out wholesale to every single council across the country. That said, the Government have a strong record of commitment to the localist agenda and are working directly with local authorities to provide the powers and support that
they need. Where local models and city models make sense, I say to my noble friend Lord Jenkin that we will seek to make them more widely available.
On what we have already done with local authorities, we have given them greater control over their own budgets. First, an estimated 70% of income will be raised locally, compared to 50% to 60% under the current formula grant system. Secondly, from next April, councils will retain nearly £11 billion of business rates. Thirdly, the Government intend to devolve a greater proportion of future growth-related spending, based on the recommendations to which many noble Lords have alluded, as detailed in my noble friend Lord Heseltine’s recent, excellent review. My noble friend Lord Jenkin quoted my noble friend Lord Heseltine. We agree with him that local leaders and businesses are best placed to set the strategic direction of the area. He made a powerful case for increased devolution, and the Government agree with that.
Local people and businesses are better placed to take greater economic powers from central government, particularly in terms of funding and responsibilities, as the LEPs have. They can act as a stronger voice for local people, incorporating the local private sector. As several noble Lords have acknowledged, we have allocated funding. The Chancellor announced an additional £250,000 of capacity on top of the £625,000 core funding announced in September. So steps have already been taken, and I am pleased that noble Lords have acknowledged that.
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The Government have provided a response to the recommendations of my noble friend Lord Heseltine, in the Autumn Statement, which set out a direction for the devolution of government spending to local areas on the basis of strategic plans developed by local enterprise partnerships through creating a single funding pot for local areas, which will be available from April 2015. We will also publish a full response to the recommendations of my noble friend Lord Heseltine in the spring.
My noble friend Lord Jenkin referred to reporting back on the city deals. The first step is very much for the Government to present and publish a full response, as we intend, to the recommendations of my noble friend Lord Heseltine. Before we do that, we will work with the local enterprise partnerships and other stakeholders and partners to ensure that the links between the timing of spending reviews and the need for plans are made and understood.
The single funding pot will include specific areas, as per the recommendations in the report of my noble friend Lord Heseltine. The noble Lord, Lord McKenzie, highlighted some of these. The single pot will include transport, housing, skills—the important thing in getting people back to work—and local growth funding.
Different elements of the city deals package will continually be assessed and, as appropriate, we will look to extend them to local authorities as and when appropriate—indeed, to all local authorities when we believe that to be relevant. The Government will also consider reporting back on any measures that we are trialling in a city deal, when appropriate. I hear what has been said about the specific report but it is important
that we respond fully to the Heseltine report and then subsequently report back on the trialling on which we are taking part in the first and second wave. On behalf of the Government, I welcome the widespread support for city deals. Based on those assurances, I hope that my noble friend will see it as appropriate to withdraw his amendment.