West Midlands Combined Authority Order 2016

Lord Kennedy of Southwark Excerpts

Monday 6th June 2016 Lords Chamber

[Lord Kennedy of Southwark (Lab)]

My Lords, the order is to approve a combined authority for the West Midlands in the area comprising Birmingham, Coventry, Dudley, Sandwell, Walsall and Wolverhampton, as the Minister said. It is an area that I know well as I lived in Coventry for many years in the 1990s.

This is one of a number of such arrangements that are in various stages of being approved, the most advanced of which is the combined authority for Greater Manchester. I should say at the outset that I am generally in favour of the devolution of power, but there are potential problems with the proposed arrangement that we in this House need to explore before we approve the order. The National Audit Office has questioned the proposals, saying that they are “untested” and may not work. In fact it said that the arrangements were experimental, and that does not seem like a good way to proceed. Perhaps the Minister can respond directly to that point. The NAO went on to say that,

“the government's approach to English devolution still has an air of charting undiscovered territory”.

It is fair to say that the West Midlands deal is complex. There are the constituent councils at the core of the deal. There are the non-constituent councils such as Nuneaton and Bedworth, Tamworth, Cannock Chase, Telford and Wrekin and, I believe, Redditch. There is the prospect of other non-constituent councils such as Stratford-on-Avon, and all the other authorities which are not involved at all, such as North Warwickshire, Bromsgrove, Rugby, Warwick, and others, which all surround the West Midlands conurbation, and the various LEPs, which the Minister referred to.

It is fair to say that it could be seen as a bit disjointed and confused and not at all like the deals we have seen in Greater Manchester. Could the noble Baroness, Lady Williams of Trafford, comment on that and on the position regarding devolution deals in the counties of Warwickshire, Staffordshire, Shropshire and Worcestershire? If they are going to seek any sort of devolution deal, how will that be effected when some of the authorities are part of this deal? Maybe the Minister will say that as a non-constituent member it is not a problem and they can become a constituent member of a deal in their respective county. Again, however, that leaves a confusing picture, which I am grateful to the National Audit Office for highlighting. Can the noble Baroness also tell us something further about the proposed accountability arrangements for this devolution deal?

The other body that looked at the West Midlands Combined Authority, and in particular the way it is being established, is the Secondary Legislation Scrutiny Committee of your Lordships’ House in its 35th report, which questions the use of secondary legislation to bring about major policy change such as this. In particular it questions the consultation process, and on reading the report the committee has a point. A three-week online consultation does not seem adequate when you consider the power that this authority will have, and in particular the elected mayor. It is proposed that the election for that post will take place next May, although I accept that that is not part of this order. The committee suggested a minimum of six weeks for a consultation exercise of this nature, and I agree. In addition, having the consultation available only online disadvantages those sections of the community that are not e-enabled. I have some sympathy for the notion that for a consultation of such magnitude leaflets should also have been delivered to every home in the constituent council area.

There is also the issue of support in the local community for these arrangements; certainly Coventry—an area I know very well—appeared to be in this limited consultation the coolest when it came to the whole proposal. Can the noble Baroness, Lady Williams of Trafford, comment on the relative inadequacies of the consultation in respect of this proposed combined authority? Like the National Audit Office, the Secondary Legislation Scrutiny Committee comments that the proposed inclusion of non-constituent councils will add to the complexity and highlights even further the changes to local government structures that are being taken forward through secondary legislation. The committee used the term “combination creep” to describe what it saw in the proposed West Midlands deal.

Although the order does not bring forward the election of a mayor for the combined authority—I agree heartily with the comments of my noble friend Lord Hunt of Kings Heath in that respect—when that order comes to this House, which I am sure will happen in the next few weeks, will the Minister confirm who will vote for this mayor? Will it just be the electors in the constituent council areas or are the non-constituent council areas involved as well? I assume not, but it would be useful to have the Government’s thinking on this as well.

Although I have raised a number of points, I am supportive of devolution generally, and where it can be made to work it is great. But I feel that this is a bit like trying to run before you can walk. We have not even had a mayoral election in Greater Manchester, the concept has not been allowed to bed down, and we are already seeking to create even more complex structures with no evidence of how this will work in the future. That is the thrust of the points raised by the National Audit Office and the Secondary Legislation Select Committee, and I very much concur with those sentiments. I will be grateful if the Minister can respond to my points at the end of the debate but if she cannot, a letter will be absolutely fine.

[Baroness Burt of Solihull (LD)]

My Lords, I am grateful for the opportunity to welcome this order today, notwithstanding and quite accepting the comments made by the noble Lord who is the spokesperson for Labour.

The order brings together the West Midlands. It lets local government think beyond its normal boundaries, and strategically, for our region. We need to look at our competitiveness—digital, manufacturing and in other areas. We need a strategy for our skills, we need proper broadband, and transport links are very overcrowded and need to be much better. We are a manufacturing region: 38% of our GVA is in manufacturing—that includes the supply chain—and we have problems.

I am very concerned about the difference in the relative wealth of the various local authorities. Birmingham is, for want of a better expression, broke. Fortunately, other local authorities are not in such a bad position. However, I want to ask about the LEPs. There is no formal mechanism for them to consult the business community. I am always thinking about local authorities but a key player in this will definitely be business, which will have a pivotal role.

The CBI has no regional representation in the West Midlands and the chambers are fragmented. We need a West Midlands chamber of commerce. We are criticised for our lack of productivity, which the West Midlands Combined Authority shadow board says is low. It is if you take GVA over the total population, at £20,137 per head, but if you take GVA over those in work it goes up to £45,000, so we do not want to be criticised purely because we have an unemployment issue in the area. We could be a lot more productive if we had better broadband, better transport and a better skills base.

I have a few questions for the Minister. I am glad that I am not the only one who is confused about what the voting rights will be for non-constituency members and what role those members will play. On scrutiny, what part will minor parties play? Will they have a voice as well? There are a lot of smaller parties in the West Midlands. Today I have learned that the Secretary of State, the right honourable Sajid Javid, is the official sponsor of the Midlands engine. Perhaps the Minister will comment on whether she has seen any evidence of the Midlands engine in the Midlands.

Finally, Sajid Javid is apparently responsible for bringing together a politically neutral coalition of West Midlands MPs. How is he getting on?

--- Later in debate ---

[Lord Beecham (Lab)]

My Lords, I record my local government interests and very much endorse some of the remarks made by my noble friends. Given the extension of the area now to parts not actually connected to the major authorities in what was the county of the West Midlands metropolitan area, we are apparently seeing a revival of what was the Anglo-Saxon kingdom of Mercia, part of the heptarchy about which I recall reading in my copy of the Anglo-Saxon Chronicle some considerable time ago. There is an interesting expression of view about this. The NAO report identifies this, with the local geography, and states in terms:

“The devolution deals agreed so far involve increasingly complex and administrative and governance configurations, and there are risks around alignment with the administrative geographical areas for other linked policies”.

That is certainly reflected in the view of the Secondary Legislation Scrutiny Committee, which states:

“We would also comment that the apparent ‘combination creep’ of the West Midlands arrangements to involve non-constituent councils must add to the complexity, and highlights even further the far-reaching impact of the changes to local government structures which are being taken forward through secondary legislation”.

An example of that is contained very graphically in the order which we are dealing with tonight—the precursor to the devolution deal, which is presumably the object of the Government and perhaps those who are signing up to it. The order says that:

“A decision on a question relating to any of the matters specified in sub-paragraph (6) requires both … a unanimous vote in favour by all members appointed by the constituent councils, or substitute members … present and voting on that question … and … where members appointed by the non-constituent councils or appointed from the Local Enterprise Partnerships have been given voting rights by resolution … a simple majority of all members of the combined authority who are entitled to vote on the question to be decided (including substitute members, acting in place of those members) present and voting on that question at a meeting of the Combined Authority”.

That is a wonderfully crystal-clear administrative process which everybody no doubt is expected to understand and implement. It illustrates the complexity of some of these proposals.

I want to refer to the financial issue because we have heard little about that thus far. The Government have already made clear their intention to make additional investment funding available. That sounds rather good. We are told that in the north-east there will be, over 30 years, some £30 million a year added—that is £900 million to the North East Combined Authority. Gateshead at the moment has decided not to participate in a joint authority so there will potentially be a hole in the middle of our new doughnut. That aside, even if it is not part of this deal, it is only £30 million a year of capital investment between six councils. That is £5 million a year per council. It is peanuts. It is nothing in comparison to the vast amount of money that has been lost to local government in the region.

The same goes elsewhere. The NAO report has a table of the amount of additional investment involved in the devolution deals. It expresses that both in gross and per capita terms. It is quite interesting to look at how much the per capita annual amounts run to. In the West Midlands it will be £13 per head. That is towards the bottom end of the range. The region that will get the most is the West of England with £27 per head. My own region will get £15 a head. The smallest, rather surprisingly one might have thought given the fanfare of publicity about it, will be Greater Manchester, which will get only £11 a head.

The total, which is the more interesting point in many ways, for the 15.5 million people who will be included in the areas being considered will be £246 million a year. That is not a great deal of money given the size of the population but it pales into insignificance from the existing funding which comes from the annual growth fund, which is £461 million. The total capital spending of constituent local authorities is £4.4 billion. This is a tiny fraction added to what is currently being spent. The notion that somehow there will be a great revolution in terms of investment in these areas is complete nonsense. It is a very modest addition to what is currently being spent.

There is another question, of course: how are these combined authorities and their services to be financed—in revenue, not capital, terms—since local government will essentially now have to depend on business rates? How will that system work? What elements of redistribution will ensure that those areas with a smaller business rate base will not be disadvantaged in what they will be able to gather from their local businesses compared with better-off authorities? What redistribution methods are the Government examining and when will we have an indication of how they will play out in practice?

I am certainly sympathetic to the notion of devolution, but I am concerned, to use a phrase that I have perhaps overworked in this place, that we may see an example of the Government passing the buck but not the bucks. On the face of it, from the figures in the NAO report, that is certainly likely. We have to recognise that authorities are being put in an invidious position. As my noble friends have pointed out, it is all very well to say that they do not have to have a mayor, but if they do not have a mayor they do not get the deals. That is the reality. Pretty crude blackmail is being applied. It is unfortunate, because we ought to be able to move to a more devolved system of government, entrusting locally elected, responsible people with decision-making in their area, in partnership with the Government.

I make another plea, as I have often made in this House and elsewhere, that the Government think again about their relationships with these areas and revive what a Conservative Government introduced more than 40 years ago—one of its leading Secretaries of State is in his place—when we had government regional offices, where all departments in government eventually came to be represented in an area and a constructive, constant dialogue was made between the local authorities and the various branches of government. If we are to have any kind of devolved system, we need to look again at reinstating that provision.

I hope we can make progress. I entirely endorse what my noble friends Lord Hunt and Lord Kennedy said about the undesirability of imposing a mayoral system on these areas—particularly given what was said about a police and crime commissioner elsewhere—when the mayoral role will now absorb that of the police and crime commissioner, and presumably, if the Home Secretary has her way, of the fire service as well. An enormous amount of power will be concentrated in that single pair of hands. That is a matter of concern as well. I hope that we will see some progress here.

I raised my final concern in connection with another order some time ago affecting the Sheffield region, where district councils from the counties of Nottinghamshire and Derbyshire were keen to be involved because they are in Sheffield’s economic area. Therefore, for some purposes, as with the district councils in this order, they can have a connection, in this case with what we can crudely call the West Midlands, for economic and transport purposes, but will still have their connection with their own county councils—it might be a unitary council in the case of Shropshire—for other services. Yet, health and social care may well come on the agenda. They could find themselves in a position where they are between two counties. My suspicion—I may be too suspicious about this—is that this will create a backdoor reorganisation of local government and we will have new kinds of unitary authorities not corresponding to the present pattern. That is a concern to many Conservatives in local government, as well as some of the rest of us. It would be interesting if the Minister were able to comment on how the Government will approach such suggestions—it is fairly clear from the Sheffield experience that they are likely to endorse them—that would lead ultimately to a reconfiguration of local government on a scale that we have not seen in the last 25 years or so. That is creeping up on us and has not been adequately explored or debated.

[Lord Kennedy of Southwark]

My noble friend just reminded me that I should have declared my own local government interests. I do so now before the end of the debate: I am a local councillor in the London Borough of Lewisham.