Arguably the most important initiative in which Reilly was involved in the years leading up to the First World War was the founding of the Chair of Civic Design at Liverpool University, the first in the world. As with many of the schemes involving the educational and cultural life of Liverpool, William Lever was central to the establishment of the department, providing not only the financial means but also a good deal of the driving power behind the project. Reilly's own recollection of the founding of the department, as outlined in his autobiography, is characteristic in concentrating upon his own central role. Reilly recalled that

It is hard to ascertain exactly what the circumstances surrounding the initial idea for the chair were. As Myles Wright points out, it is unlikely that the scheme was set up with the speed Reilly relates. What is certain is that Reilly was responding to contemporary debates that had taken place over a number of years prior to the establishment of the department, calling for the development of a greater sense of public planning in the expanding towns and cities. The debates concerned the fundamental means by which cities should present themselves, and developed out of the conflict between the Gothic/Arts and Crafts axis, and the Neoclassicist/Beaux-Arts enthusiasts.

Throughout the nineteenth century the growing complexity involved in the development and running of urban areas called for increasing intervention by local government, leading to a system that provided for a range of local amenities.