The seven West Midlands metropolitan councils submitted their bid for a Combined Authority on 4 September. It has not been discussed by any of the councils in a public meeting and is supposedly secret, but a leaked copy was published in the Coventry Telegraph.
Under the proposed agreement some powers would be in the hands of a directly elected Mayor, who would chair the WMCA, and some in the hands of the CA ‘Cabinet’ comprising the seven council leaders, with the Mayor as Chair. There is opposition to a directly elected Mayor from many councillors – and of course it was rejected in a referendum in Birmingham in 2012 – but it has been accepted because it is the precondition of the devolution the council leaders want.
The principal attraction of a WMCA for the council leaders and the business representatives in the three West Midlands Local Enterprise Partnerships (LEPs) is the control of the additional funding it would attract. These powers are very largely about investment for business for economic growth. They include direct investment in business development, investment in improving the regional infrastructure that business needs, and increased control over the formation of the workforce. These are key policy priorities of central government which will be devolved to the WMCA to implement.
In addition the bid includes a section on ‘Transforming public services and closing the public funding gap’. This section remains largely undeveloped, but it clearly opens the door to future cuts and privatisations.
The WMCA is a hegemonic project designed to incorporate local councils, and in particular their leaders – and six of the seven are Labour – into the government’s agenda. To achieve that it needs to transform the local state and further undermine what remains of local democracy.
Funding gains in the WMCA bid
The bid anticipates access to a number of funding streams:
The Mayor would be able to raise the council tax without holding a referendum but would need an “electoral mandate”. According to an example in the bid document, a £10 annual council tax levy on Band D properties would raise £6m a year and support £78m of investment.
The WMCA would have control over a number of funding streams for business support services, including growth hubs; enterprise start-up; business growth – all national growth support activities; inward investment – UKTI funding; export trade services – funding linked to UK TI; visitor economy; access to finance; employment and skills; innovation; regional growth and HMG capital grant funding for business support; and £50m to implement the National Pathfinder for innovation (pp12-14).
The Mayor would have control of a £1.3 billion ten-year transport investment fund. This would include the creation of a single commissioning body for transport infrastructure projects, including bus franchising, and the integration of bus and rail networks.
The WMCA would have control of a £500 million housing loan fund. The council leaders are promising to deliver at least 30,000 more new homes across the West Midlands over the next ten years than had been planned.
The Mayor would have devolved Strategic Compulsory Purchase Powers under the Acquisition of Land Act 1981.
These funding opportunities in the bid have been added to by the subsequent announcement by Osborne on 5 October regarding business rates. It contains three powers for councils, one of them just for CAs:
- Councils can cut business rates. According to an analysis in the Financial Times, they are unlikely to do so because they need the money, but richer councils might.
- Combined authorities with elected mayors will be able to increase business rates by up to 2% to fund investment in infrastructure schemes. All they need is a majority vote of business members of the relevant LEP. According to the WMCA bid, ‘we estimate that every £1m of additional growth above the agreed baseline could finance £13m of capital investment. Exceeding the baseline by 1% could support £65m…’ (p4). A 2% SBR (Supplementary Business Rate) would generate around £30m a year, which would support capital expenditure of up to £400m (p5).
- Councils will be able to keep 100% of any additional business rates income raised through economic growth. Until now, they could only keep half of this additional income. This provides an incentive for councils try to attract businesses.
‘Transforming the education, employment and skills system’ (p10)
In addition to devolved powers over funding the WMCA would also have increased powers over the formation of the workforce from age 16, including school sixth forms as well as FE, based on ‘an employer-led approach to meeting demand for skills’ (p11).
‘The Government will … work with the WMCA to achieve:
- Develop a wider review of FE provision across the CA which includes all 16+ provision including 6th forms…
- Alignment of all Government driven or commissioned activity with the WMCA Employment & Skills Strategy and Outcomes Framework directed by a private sector led Employment & Skills Board
- Alignment of EFA funded activity with the wider strategy and work towards greater involvement of the WMCA with the commissioning and shaping of 16-19 provision’ (pp10-11. Emphasis in original)
In this context the WMCA would control the adult skills budget and the national careers service budget.
‘Transforming public services and closing the public funding gap’ (p17)
‘The constituent members of the WMCA… will collaborate to transform public service delivery across the area.’ (p3)
The heading of this section of the bid opens the door to alarming future policies by the WMCA but the bid contains, apart from establishing ‘the future governance arrangements for police, fire and rescue services’, specific proposals only on the issue of what it calls ‘troubled individuals’. The bid says ‘The government will devolve the following powers to the WMCA:
- access to data to develop a system ‘to identify individuals with multiple vulnerability (eg no to substance misuse, mental health and homelessness services, frequent users of A&E, frequent police call outs) and also track the benefits of working differently with this cohort’
- freedom to organise youth offending services across the WMC A
- reform youth justice in order to develop a ‘whole place’ approach that quantifies youth justice spending and implements a more effective prevention model’ (p18)
Power in the WMCA: the transformation of the local state and the undermining of local democracy
The WMCA destroys the system of local government based on local councils democratically accountable to local citizens through elected councillors. The WMCA does this in two ways. One is by imposing a directly elected Mayor with significant personal powers, accountable only in direct elections every four years with no right of removal and no constraints by local councils. The other is by in effect severing the link between the council leaders and their councils (let alone the electorate). The key absence is a WMCA elected assembly capable of holding the council leaders – and the Mayor – to account. Nor are there WMCA-wide Scrutiny Committees. It is a complete illusion to think that the WMCA ‘Cabinet’ members will go through a process of referring key policy proposals back to their councils and scrutiny committees for debate and amendment (let alone for public consultation), and then devise an amended joint policy proposals for it in turn to go back to local councils for ratification. The reality will be that power over the WMCA will lie in the hands of just eight largely unaccountable people – the ‘Cabinet’ members and the Mayor.
But the WMCA doesn’t just destroy, it also constructs new forms of hegemonic power through the further integration of business into the process of local government, filling the gap left by the marginalisation of local councillors. In particular, the representatives of the LEPs will be in effect additional members of the ‘Cabinet’, sitting in meetings and shaping policy – including exercising a veto if necessary – on behalf of the government that pulls the financial strings.
For an elected West Midlands Combined Authority Assembly
We have been and remain opposed to a directly elected Mayor because we understand the political project of the Tories that it is an instrument of. But while we should continue to make the argument it is too late, I think, to have a realistic campaign to try and stop it.
The key demand, which it is realistic to develop a campaign around, is an elected West Midlands Combined Authority Assembly (which could be constituted in various ways) with the powers to hold the Mayor and ‘Cabinet’ to account. This taps into the strong popular desire for local democracy, for a voice in the decisions that shape people’s lives, and as a demand it remains credible, indeed becomes more urgent, as the democratic deficit of the WMCA becomes more evident in practice.
This was the position taken by Birmingham Trades Union Council on 4 June this year. It resolved that ‘the WMCA represents a fundamental change in the model of local government in England, represents a threat to public services, their users and workers, and further undermines local democracy’ and called for ‘The creation of an elected WMCA Assembly, comprising either directly elected members or councillors from the constituent councils, in either case to be on the basis of proportional representation.’
The Financial Times article is at http://www.ft.com/cms/s/0/e866ac2a-6c31-11e5-aca9-d87542bf8673.html#axzz3oABvxBth