The forthcoming West Midlands Combined Authority: a threat to local democracy

The policy of both the Tories and Labour is for the spread of Combined Authorities (CAs). One is planned for Birmingham and the Black Country. The spread of devolution to CAs marks a fundamental change in the model of local government in England, and a further threat to local democracy. Here are some briefing notes on the developments and dangers that lie ahead for workers and their unions, for service users, and for citizens.

The Greater Manchester Combined Authority was established in 2011. Combined authorities were established in the Sheffield City Region, West Yorkshire, the Liverpool City Region, and the North East in April 2014. Greater Manchester has since been granted a number of additional powers and funding streams by the Government. In addition, CAs are being proposed for areas including Derbyshire, Nottinghamshire, Cambridgeshire, the Tees Valley, Greater Bristol, PUSH (Portsmouth, Southampton and the Isle of Wight), Oxfordshire, Buckinghamshire and Northamptonshire (as one unit).

The forthcoming West Midlands Combined Authority

The formation of the Birmingham and Black Country CA – which is likely to be known as the West Midlands CA, and includes Solihull and possibly Coventry – has been slow, partly because of disputes between Birmingham and the four Black Country authorities, but is now under way. The Kerslake Review makes a strong recommendation, with a very short timescale:

 Recommendation 10

A combined authority governance review based on an authority formed of at least in the initial stage the core functional economic area of Birmingham, Dudley, Sandwell, Walsall, Wolverhampton and Solihull should be completed by July 2015. Once this has happened the Government should begin to engage in a dialogue about further devolution. Based on the experience of other combined authorities we recommend that the following proposals should be adopted:

  1. wherever possible decisions should be reached by consensus, if a vote is required each member should appoint a single representative and decisions should be taken on the basis of one member one vote;
  2. the secretariat should be based outside of Birmingham City Council;
  3. the Government wants to see seamless working between Local Enterprise Partnerships and combined authorities. To ensure enterprise retains a strong voice in economic strategy, the chairs of both the Black Country and Greater Birmingham and Solihull Local Enterprise Partnerships should be invited to join the board of the new combined authority. (p13)

Greater Manchester CA

As is well known, the devolution of powers to CAs has gone much further in the case of Greater Manchester (GMCA). According to the case study of Manchester by Jonathan Carr-West in a new pamphlet by Compass 1:

In November 2014 the chancellor of the exchequer and the leaders of the ten local authorities in Greater Manchester signed a historic agreement which devolved new powers and funding to the combined authority and a newly created elected mayor.

 The combined authority will take on responsibility for business support budgets and apprenticeship grants, and will get the opportunity to be a joint commissioner with the Department for Work and Pensions for the next phase of the Work Programme.

 Meanwhile the mayor will receive powers including:

  • responsibility for a devolved and consolidated transport budget
  • responsibility for franchised bus services
  • powers over strategic planning
  • control of a new £300 million housing investment fund
  • control of a reformed earn-back deal, within the current envelope of £30 million a year for 30 years.

 A further announcement in February 2015 put £6 billion of health funding under the control of the combined authority.

 These proposals are designed to drive economic growth by improving transport infrastructure, creating a locally bespoke skills and employment programme and allowing Manchester to keep the proceeds of investment and growth. They also aim to improve public services, by enabling integration at a local level to support joined up, preventative services and ensuring that this is not hampered by silos between different budgets.

The proposal to allow Manchester to keep the proceeds of growth means that from April 1 2015 GMCA can retain 100% of any additional growth in business rates above expected forecasts. But how much that is depends on what the predicted long term growth rate is. Greater Manchester raises almost a billion pounds in business rates each year, so a 5% increase in growth above the forecast would produce some £50m.

 But notably what is absent from this model of structural devolution is fiscal devolution – the ability of the CA to raise its own taxes, which leaves it still dependent on government grants for the vast majority of its funding.

The Manchester model raises two fundamental issues: the consequences for services, and therefore for their users and their employees, and the issue of local democracy (which the Compass article ignores).

The meaning of the Greater Manchester deal for the NHS

John Lister has examined this in an article in the Morning Star 2:

As the dust clears a week after George Osborne’s bombshell announcement that £6 billion in health and social care spending is to be “devolved” to the emerging Greater Manchester Combined Authority (GMCA), it is still unclear exactly what is being proposed.

 Is the NHS budget — and even major NHS and foundation trusts — to be handed over lock, stock and barrel to control by local government, or not? Is an elected mayor, who will not be elected until 2017, but replaced in the interim by an appointee, to have control, as some say, or not?

 Will it become, as the enthusiasts of the Socialist Health Association claim, a new MHS — a Manchester Health Service, separate from the NHS and somehow belatedly sprouting some form of democratic accountability?

 Or will it, as Manchester City Council leader Sir Richard Leese told Channel 4 News, remain part of the NHS? Will the new bodies controlling Greater Manchester’s health budget really be able to make changes in the terms and conditions of NHS staff — as the memorandum claimed? Or will national agreements remain?

 The GMCA had already been given control of transport, housing and the skills budget — but the £6bn for health and social care is a much bigger prize, eagerly accepted by the eight Labour leaders and by leaders of the other two Greater Manchester councils as well as local clinical commissioning groups (CCGs), none of them troubling even to enquire as to the views of those they supposedly represent, still less the population of Greater Manchester.

 Cautionary notes sounded by shadow health secretary Andy Burnham — warning of the implications of a “two-tier health service,” and a “Swiss-cheese effect in the NHS whereby cities are opting out” — were brushed aside equally by careerist Labour councillors and many of his Manchester Labour MP colleagues. But it seems Burnham’s response was much closer to the popular view on the ground.  This is not so much devolution as abdication of responsibility and passing the buck.

John Lister continues:

Let’s not forget, either, that the new scheme unveiled by Osborne completely ignores the structures so controversially imposed with no mandate by his Tory colleague Andrew Lansley in the Health & Social Care Act.

Once again a major change is being imposed from the top downwards with no discussion whatever with local CCGs created by the Act or the GPs who were supposedly to be put “in charge.” Instead a number of CCG chairs have signed up, irrespective of the views of the GPs they supposedly represent.

 Health and wellbeing boards, the council bodies set up under the Act which are supposed to link social care with public health and wider health services, were also ignored. They are not even mentioned until page 10 of the memorandum, which simply declares: “Local HWBs will agree strategies and priorities … within their districts and in the context of the GM wide strategy and local priorities.” Many localities will certainly find their priorities overruled by the “GM wide” bodies that are really in charge.

 The GMCA has effectively taken over the role of one of the strategic health authorities that were scrapped by Lansley’s Act, but it will also have control over social care budgets and quite possibly even less democratic accountability than the old SHAs, since it seems unlikely the high-powered decision-making will take place in open session or publish board papers. They will carry on as they began.

 A new “Health and Social Care Devolution Programme Board” will be set up — with three bureaucrats from the GMCA, three from Greater Manchester’s CCGs, an undisclosed number from the 15 NHS and foundation trusts serving Greater Manchester and bureaucrats from NHS England and the Department of Health.

The parcelling out of NHS contracts into large geographical CA packages could make them more accessible to private sector takeover, including by American companies which could gain access through the Transatlantic Trade and Investment Partnership, particularly if CAs face further savage budget cuts.

The question of local democracy

The other issue raised by CAs is the question of local democracy, and that is what I want now to concentrate on. There are two aspects, both exemplified by Greater Manchester: the lack of democracy in how the CA is being set up, and the lack of democracy in its constitution. Both are strongly criticised by Lisa Nandy, MP for Wigan, in her article in the New Statesman (27 February 2015): ‘Real devolution has to come from public consent, not Whitehall diktat’ 3:

The Greater Manchester devolution deal took a lot of people by surprise. Negotiated behind closed doors and announced to the media, it has led to heated debate among the public, charities and community groups, many local councillors and Members of Parliament. Two years ago, in a public referendum Manchester residents had rejected a Mayor but now with a new deal on the table – much more significant and covering the whole of Greater Manchester – the public have been cut out of the conversation.

 But, as ministers told me when I asked questions about this in Parliament, the public will have a say – through the ballot box. Only, as it turns out, they won’t. Not until 2017 at the earliest, although the Mayor, who will be appointed in June, can serve until 2019 before an election must be called.

 In the meantime we’ve learnt through the media that £13.5m of public money is being spent on transforming Manchester Town Hall’s bureaucratic structure ready for the appointed Mayor, or “eleventh leader” to start work immediately. Ministers have confirmed to me that no thought has yet been given to public scrutiny or involvement. And a consultation to consider the impact of these huge, sweeping changes on local communities ran for just three weeks, wasn’t advertised and had only 12 responses, 10 of them from the local authority leaders who brokered the deal in the first place.

 Despite the fact that it closed just a week ago, the consultation didn’t even mention the NHS once let alone the transfer of responsibility and billions of pounds of NHS funding that was announced and signed by George Osborne today, just weeks ahead of the general election. Even if ministers did agree to consult on it now, it makes you wonder what they would be consulting on, since once again the deal has been done without any input from the public.

 No wonder there’s such concern amongst people across Greater Manchester. The BBC visited my constituency in Wigan recently and reported public responses to the proposals ranged from bafflement to anger. With today’s deal over health and social care, that concern has been amplified.

 Devolution can and should bring significant benefits to regions like mine. Decisions should be made closer to people, with greater local accountability, putting people and communities in the driving seat about choices that affect their lives. Real devolution – pushing power down to local areas, communities and families – gives us the chance to move away from a style of government based on ‘doing to’ rather than ‘doing with’ and draw on the talent we have in our region. It gives us the chance to pull together with charities, local businesses and community groups rather than commissioning services through big block contracts run by huge private companies.

 But at best this deal, as George Osborne has constructed it, appears to transfer power from an unaccountable group of officials in Whitehall, to another group in Manchester town hall. With councillors across Greater Manchester lacking detail about their future role, the risk is it will level up power, taking decisions from a local to a regional level, where currently there is no direct accountability, and enable the centre to hold their hands up when problems arise and say “it is not my problem” – the exact words used by Nick Clegg in Parliament a few weeks ago when I asked why a deal that was supposed to empower the people had cut out them out altogether.

 There are voices that argue that despite the lack of democratic accountability, public involvement or thought given to scrutiny and challenge, this is a step forward. They are right to point out that currently holding Whitehall to account is far too difficult. But surely we shouldn’t accept that there is only a binary choice between an unaccountable structure in London or another in Manchester. There is an alternative, as Andy Burnham has set out – a properly funded and locally accountable NHS that hands greater power to people and guarantees the public ethos at the core of the NHS. On that basis, devolution could be transformative for this country and its people.

 But for now, democracy has become an afterthought. It’s time to put the people back into the picture, by strengthening local accountability, providing communities and councillors with the tools and resources they need to scrutinise and challenge those who hold power and ensuring no individual can hold such power without facing an election first. Instead of backroom deals about our public services, decided without us, behind closed doors, let’s build our public services with the best asset we have; the people.

The Greater Manchester model retains the 10 local authorities but creates a new top tier of local government, an executive ‘Cabinet’, comprising the new elected mayor and the 10 council leaders, two-thirds of whom can exercise a veto over the mayor. The mayor will be elected directly by the electorate in 2017.

An anti-democratic model of devolution

This model of devolution is the opposite of one based on increased local democratic participation. It is actually a move to transfer power upwards from local authorities to new and less democratic regional bodies even more removed from public influence. Oldham council leader Jim McMahon (Manchester Evening News 18 March) says ‘this still looks very much like the transferal of financial responsibility and political blame to councils for what is likely to be the continued decline and withdrawal of vital local services which people rely on. But this new bureaucratic structure has the advantage for council leaders of making them even less subject to the popular pressure that the cuts generate. There is no equivalent, for instance, even of the London Assembly, where at least elected assembly members can challenge the Mayor in debate and veto some decisions.

Will school education be transferred from local authorities to CAs?

The CA devolution plans don’t affect local school systems at present, but there are already some voices within the Labour Party advocating their incorporation. Compass has just produced the final report of its Inquiry into Education (‘supported by the NUT’). It says ‘responsibility for providing school places should lie with clusters of local authorities operating at a scale that supports strategic decision-making.’ Regarding Local Education Plans, ‘Larger areas, such as Greater Manchester, might be the right scale for strategic planning for skills and economic development as well as for local education planning and governance.’ (Appendices p3). And ‘Overseeing the plans and holding to account education providers, including councils, would be the job of a new body, a local education board.’ It would ‘operate at a level above single local authorities’ (p4). John Bolt, secretary of the Socialist Educational Association, asks in his blog Education for Everyone ‘Is Devo-Manc radical enough? And why are schools left out?’ (12 March). And Graham Clayton, a leading member of the SEA, calls in the March issue of the SEA journal Education Politics for new Regional Education Boards to replace existing local authorities. Bolt and Clayton both link their proposals to the Labour Party’s policy of regional Directors of School Standards.

This model raises issues both of effectiveness and of democracy. There may be a case for it – perhaps strongest for remunicipalised FE – but it needs thorough discussion in the education, local democracy and trade union arenas. The danger is that, like other aspects of CAs, it removes local school education even further from local democratic participation in policy-making and accountability.

The West Yorkshire CA – the model for the West Midlands CA?

The GMCA deal depended on the 10 councils accepting an elected mayor, on which Osborne insisted. The West Yorkshire CA councils have rejected an elected mayor and got a devolution deal but with fewer powers and funding, according to the Financial Times 15 March.4

Leeds will receive significant new powers without accepting an elected mayor, as the chancellor seeks to promote his “northern powerhouse” project in the final Budget before the election…

 The West Yorkshire combined authority, led by Leeds, has been locked in talks with the Treasury for months about a devolution deal, with councils’ refusal to accept an elected mayor a sticking point.

 The Leeds deal is likely to be similar to that offered to Sheffield last year, but to fall short of the £1bn agreement with Greater Manchester, which has accepted an elected mayor from 2017. Mr Osborne has been clear that central government will not relinquish significant powers unless recipients agree to an elected mayor.

 The West Yorkshire combined authority is made up of six councils including Bradford and York, which do not want to be governed by a mayor from Leeds.

 “It’s a partial deal,” said one person involved in the negotiations. But “the dogs have been called off” by the Treasury, he added.

 The deal should include control of the region’s skills budget and a greater say over welfare, with a vague commitment to explore the option of an elected mayor.

 A government “local growth” deal has already handed West Yorkshire about £650m of spending.

Labour’s alternative

Of course, it may be Labour in office in May, not Osborne. In February the Labour Party released its proposal to devolve economic power and funding in England, heralding it as ‘the biggest devolution of economic power and funding to England’s city and county regions in a generation’. This is how the acting chief executive of Centre for Cities, an independent research organisation, analyses it 5:

The proposals, which build on much of the analysis and recommendations set out in Lord Adonis’s report, will be available to ‘all city and county regions that have a coterminous Combined Authority and reformed Local Economic Partnership’. The document states that power and funding worth at least £30 billion over five years will be devolved, covering the policy areas of:

 Employment support – city and county regions would commission the Work Programme, getting the long term unemployed back to work

  • Transport and Housing – local and regional infrastructure funding would be devolved to city and county regions, and more powers to work with local bus and train networks to drive improvement
  • Skills – city and county regions would be allocated funding to commission 19+ further education provision based on local commissioning plans
  • Business support – funding for business support and enterprise projects would be devolved to city and county regions, in return for matched private sector funding and/or in-kind contribution

 Labour also proposes to allow places to retain 100 per cent of any additional business rates raised through supporting businesses to expand.

 Before looking at how Labour’s proposals differ from those of the Conservatives and the Liberal Democrats, it’s worth noting the elements that are the same in all three approaches. The most obvious similarities are:

  •  The need for economic development strategies and service delivery to be organised at the functional economic area (FEA) level
  • The central role given to Combined Authorities and LEPs as the respective public and private bodies to organise economic development at the FEA level
  • The recognition that the policy issues that matter to creating successful local economies are skills, transport, housing, employment support and business support
  • The need for collaboration between local actors – local authorities, businesses, universities – and between those local actors and national actors – government, Network Rail, Highways Agency, etc.
  • The absence of any proposals around fiscal devolution.

So if that’s how the three approaches are similar, how do they differ? There are six main features that set Labour’s apart:

  •  Labour would introduce an English Devolution Act within a year of coming to power, which would enshrine in legislation the devolution of power and funding. Links can be drawn here with the proposal in our Cities Manifesto for a Cities and Prosperity Act, setting out a presumption in favour of devolution. This is markedly different from both the Conservatives’ and the Liberal Democrats’ approach, with neither proposing this type of enabling legislation.
  • Labour would make a universal offer covering county as well as city-regions available to all places that wish to take it up and are able to meet their criteria. This approach is similar to the Lib Dem ‘Devolution on Demand’ proposal, but different from the Conservatives’ plans, which suggest a continuation of the deal-based approach. The movement towards a universal combined authority based approach is significant: it offers a lot more certainty to places, and provides a much clearer incentive structure, because right now, whilst the deal-based approach has advantages, it’s considerably more difficult for places to figure out what the real rules of the game are.
  • Labour – like the Liberal Democrats, but unlike the Conservatives (or more accurately the Chancellor) – would not require places to introduce a directly-elected mayor in order to get the devolution offer.
  • Labour would allow places to retain 100 per cent of the increase in business rates. At the moment, places are only able to keep a proportion of any increases. The exact position of the Liberal Democrats and Conservatives is unknown on this issue.
  • Labour would require combined authorities to formally pool economic development funding and functions across their local area. This goes further than the Liberal Democrats and the Conservatives, which both encourage places to do this, but leave the final decision up to them.

Labour are also open to possibility of local government reorganisation. Unlike the ‘pearl-handled revolver’ threat issued by Eric Pickles, Labour are prepared to support authorities in two-tier areas to become ‘Virtual Unitaries’. The Liberal Democrat position on local government reorganisation is not clear yet.

 The gist of Labour’s proposals is welcome, and this announcement certainly puts them back in the devolution game. What we need next is the detail beneath each of these headlines. After all, as all those involved in the city deal process have found, the devil is always in the detail.

 When this detail emerges, it will need to resolve, at least, the following issues:

 Whether combined authorities or LEPs are the more prominent institution for driving growth at the city/county region level. Obviously, both will need to work together but one will need to lead if progress is to be made.

 How will combined authorities, particularly the beefed-up versions proposed by Labour, address the democratic deficit question? Most council leaders are ward councillors, elected by approximately 1,500 people. Their democratic legitimacy to make decisions at the city/county level (which would affect not only the people in their local authority, but the voters in several other local authorities) is well below what could be considered to constitute a directly-elected mandate.

 In headline terms, the policy areas outlined are the ‘right’ ones for combined authorities to focus on. The missing policy area is strategic planning, which is a big omission. The ability of combined authorities to integrate and coordinate land-use planning with housing and transport will be critical for getting the city/county-region to function as a coherent place. This is the key lesson from London, and one that should be heeded.

 How will the £30bn be allocated? There are several ways of doing this – on a per capita basis, on a growth or need basis, on a first-come-first-served basis, etc. Some combined authorities already exist, and would be able to use some or all of the money tomorrow. Others are in the process of being established, and will take a while to get themselves to the position where they can meet the criteria laid down by Labour. Others still are miles away and may never get there. For an economic growth-minded devolutionist like me, this is a perfectly acceptable state of affairs. For a national government concerned about national coverage and committed to ‘fairer funding’, this presents a challenge and one that has the potential to derail their devolution plans.

 My final thought is about money and scale. £30bn of funding sounds like a lot; because it is. But if you remember that approx. £23bn gets spent by the public sector in Greater Manchester every year, that the cost of building Crossrail 2 in London would be around £20bn, that the transport proposals included in the One North prospectus amount to between £10-15bn, and that the annual budget for all of local government in England is around £100bn, suddenly £30bn over five years doesn’t sound quite so impressive.

 Even more significantly, Labour’s proposals – like those of the Conservatives and the Liberal Democrats – say nothing about fiscal devolution: giving city (and county) regions more control over the money raised and spent in their areas. But as we have discussed on many occasions, structural devolution without fiscal devolution threatens to empower cities as toothless tigers.

 As welcome as the Labour Party’s proposals are, they and the other parties have a long way to go on the devolution journey if we are to create an economy and society where people and places have more control over the issues and money that affects their daily lives. The progress we are seeing is promising, but until the detail is on the table, we remain no closer to the end goal of driving widespread growth and prosperity.

What is our alternative?

The principle is clear: these new regional bodies in local government have to be democratically accountable to elected local councillors in a regional assembly. The assembly could be directly elected, as is the London Assembly or the Welsh Assembly. (Wales has a popular of 3 million, not that much bigger than GMCA’s 2.7m or WMCA’s 2.5m.) Or it could comprise a selection of councillors from the constituent councils. An example, described in a current consultation paper by Birmingham City Council about the future of local governance in the West Midlands conurbation, is Greater Lyon in France, which has a population similar to the WMCA. It is governed by an assembly of 155 councillors from the councils in the metropolitan area. Clearly this sort of model could apply here, with for example a WMCA Assembly comprising some councillors from each of the 10 councils on a proportional political and numerical basis.

In addition to an elected regional assembly, the WMCA should also have powerful regional scrutiny committees to hold the executive to account, run by councillors but with the involvement of lay members with relevant expertise and interests as appropriate.

Richard Hatcher

14 April 2015

 References

  1. Jonathan Carr-West (Chief executive of the Local Government Information Unit). ‘Lesson from the local’. In Finding Our Voice – Making the 21st Century State. March 2015. Edited by Gabriel Chanan and Neal Lawson. Compass. http://www.compassonline.org.uk/wp-content/uploads/2015/03/Compass-Finding-Our-Voice-Final1.pdf
  2. John Lister, ‘Tory spending devolution to Manchester spells disaster for NHS’, Morning Star, 17 March 2015. http://www.morningstaronline.co.uk/a-28b8-Tory-spending-devolution-to-Manchester-spells-disaster-for-NHS#.VQhAwI6sWAg
  3. Lisa Nandy. ‘Real devolution has to come from public consent, not Whitehall diktat’. New Statesman 27 February 2015. http://www.newstatesman.com/politics/2015/02/real-devolution-has-come-public-consent-not-whitehall-diktat
  4. Andrew Bounds. ‘Leeds to gain new powers without elected mayor’. Financial Times 15 March. http://www.ft.com/cms/s/0/64f6a828-cb0e-11e4-8ad9-00144feab7de.html#ixzz3VbHeEWom
  5. Andrew Carter. ‘Labour’s Devolution Plan’. Centre for Cities. 20 February 2015. http://www.centreforcities.org/blog/labours-devolution-plan/

 

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