Not-for-profit organisation, The Work Foundation, has said the government has reached a “watershed” in its economic development policy.

Laura Williams, senior researcher at The Work Foundation, said following yesterday’s announcement: “Compared with the tentative local government White Paper last autumn, today’s review announcement may mark something of a watershed. It looks as if the over-centralised British state is finally listening to the advice of successful cities about what really enables local economies to thrive.

“The government may now be ready to breathe life into the ‘city region’ idea, encouraging groups of local authorities to work together across institutional and geographical boundaries - reflecting the way people actually live and businesses operate rather than the accidents of bureaucratic history.

“The new government seems to be changing tack. It has fired a shot across the bows of struggling institutions – from regional assemblies to the Learning and Skills Councils – and demanded a bonfire of the strategies at regional level. Now, regional and local authorities will be obliged to pursue a single strategy across linked policy areas by bringing together the work of lots of separate agencies (from the Highways Agency to Job Centre Plus).

“While this new clarity will be welcomed, there remain questions about capacity. Different city regions have better leadership and vision than others. The new, more flexible set-up is likely to mean different decision-making systems will operate in different areas.”