The recent City Deals, in which powers were devolved to major cities, is just the start. The Government must do more to let go of central policies and funding streams, says Stuart Thomson.

The growth of urban areas is a worldwide phenomenon but the recent publication of figures from the 2011 census showed the largest increase in the population of England and Wales since records began in 1801. The population of the UK is on course to reach over 73 million by 2035.

While our population is currently growing at around 7%, London is growing at almost twice that rate, at 12%. Coping with over 10 million more people will clearly affect all forms of infrastructure, not least transport. This needs to be planned for now.

Part of the Government's answer to these challenges has been to devolve powers to cities themselves so that they can make the choices necessary for a successful future. This is a necessary but not sufficient step. The Government needs to realise that cities need more powers and less interference.

Cities are critical to future economic development and growth but they also need to be nice places to live, in order to attract the skilled workforce they want. City Deals have recently been agreed with all eight core cities - Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. Each deal is tailored to the needs of each city and provides the funds, powers and flexibility they need to achieve their aims. Transport features heavily in each of the deals (except Birmingham's). There are also agreements on new finance and investment streams, and an emphasis on employment and skill development, and business support services.

The City Deals include the devolution of transport powers and funding as well as powers over rail franchise management. Different models of governance apply to different cities, chosen to reflect local requirements and geographical and economic spread. There is a mix of mayors, combined authorities, and local enterprise partnerships (LEPs).

LEPs, being business-led, provide a commercial and entrepreneurial dimension to local decisions. They can feed business  needs directly into the decision-making process. However, the government appreciates that the LEPs have varied in quality and achievement, to date. This means that some areas are less plugged into business needs. As transport always ranks highly as a key priority for business this may affect how seriously it is treated as an issue.

The success of the first round of City Deals is critical for the prospects of further devolution.

It will also be important that a sufficient number and diversity of cities put themselves forward for the second wave. The Government needs to continue to drive City Deals forward if they are to be successful, and this means continuing to let go of previously centrally-controlled policies and funding streams.

It also needs to ensure that governance models are compatible with existing cross-border decision-making structures, such as ITAs and PTEs. Too often, the lofty aims of one government department fail to appreciate the realities of existing policies of another.

However, there remain a number of challenges which cities and government need to work through. The whole country needs London to continue to be a leading global city. Yet Londondominates our national economy in a way that few other cities across the globe do domestically. If there is to be a "rebalancing of the economy" and other cities are not to become second class we need to look at where investment is made.

Much of this is down to national decisions. If we stick to the traditional way of allocating finance and deciding on projects, spending will continue to go to London with other cities fighting for scraps from the table.

How larger-scale transport projects, what we used to think of as regional priorities, are to come forward and who will champion them has still to be fully addressed. The duty to co-operate in relation to sustainable development, introduced by the Localism Act, may help but it has yet to have any real impact.

There are also planning and spatial issues to address. These affect not just accessibility but also how attractive a city is to live and work in, which again affects its economics. There needs to be a discussion about the way that land is used, urban design issues, and maybe even the role of the green belt.

Cities cannot be allowed to act as a series of sole traders. Central government retains a role in insisting on joined-up thinking and providing a solid base for the cities to compete from.

While significant progress has been made, the government and the DfT must continue to consider the powers, structures and funding mechanisms which are needed to address the urban challenge. If the DfT really is working on a long-term vision for transport, the opportunity should be grasped to put cities at the vision's heart. Otherwise infrastructure, particularly transport, will not be up to the challenge.

This article was first published in September 2012 in Transport Times magazine.