Questioning the WMCA on economic growth and local democracy

The final ‘West Midlands Combined Authority Devolution Agreement’ was published on 17 November, as was a summary document ‘WMCA Devolution Agreement: Key Points’. (See http://www.westmidlandscombinedauthority.org.uk/.) There are two sorts of questions to ask about the agreement. One set concerns the claimed benefits. (Here we focus on Economic Growth and Employment.) The other concerns questions of public consultation and participation and local democracy.

Why these two issues are so vital to question is explained in new research into the arguments made for Combined Authorities by the New Economics Foundation:

 ‘An overriding focus on economic growth currently threatens to de-rail devolution by encouraging local governments to promise economic outcomes they could struggle to deliver, outcomes which are not necessarily in the residents’ best interests.

Presently the debate on devolution neglects the democratic transformations that could make devolution worthwhile. In this research, we map arguments in favour of devolution produced by central government, local government, thinktanks, and civil society groups between 2011 and 2015.

 Key findings

  • Of the arguments made for devolution, 41.6% focus on achieving economic growth as the main justification for devolving power.
  • Only 12.9% of arguments make the case for devolution in order to shift power, strengthen democracy, and increase citizen involvement in decision-making.
  • Just 7.4% of arguments address inequalities in wealth and power between regions.
  • Environmental sustainability is part of just 0.8% of arguments.
  • Only 2.9% of arguments address the potential downsides and risks of devolution.
  • Local governments in particular seldom consider the impact of devolution on democracy, discussing democratic outcomes less than central government or think-tanks.’

(‘Democracy: the missing link in the devolution debate’, Lyall, Wood and Bailey, http://www.neweconomics.org/publications/entry/democracy-the-missing-link-in-the-devolution-debate, 3 December 2015)

We will see how the case for the WMCA is an extreme reflection of these findings of the New Economics Foundation.

Economic Growth and Employment

 The main argument for the WMCA is that it will create economic growth. Key Points says the following:

 Half a million new jobs

The deal will enable the delivery of the Super SEP across all three LEPs, which has the potential to help support the creation of up to 500,000 new jobs. (p3)

(The SEP is the Super Strategic Economic Plan, combining the 3 individual LEPs’ plans.)

Note that the claim in the headline is qualified in the first sentence: ‘help support’ ‘up to’. But the question is, what economic analysis is this claim based on? Where is it published? Where can we read it? Why it is essential to question these claims is because, according to Adrian Bua, Research Assistant at the New Economics Foundation:

‘the evidence of devolution as a driver of economic growth, convergence in social and regional inequalities and is pretty thin.  For example, one analysis of devolution concluded that the evidence in favour of such links is very weak and another found a moderately negative relationship. It seems that this evidence is overlooked by the general consensus in favour of devolution amongst policy makers.’ (http://cura.our.dmu.ac.uk/2015/11/04/devolution-deals-three-risks/, 4 November)

The Devolution Agreement has a section on ‘Supporting and Attracting Business and Innovation’ (paras 34-36). However, it doesn’t spell out any strategy for economic development. Instead it summarises a series of measures that the government will offer the WMCA to support economic growth through, for example, advice and governance structures involving business representatives. So for example they would ‘Work together on an appropriate portfolio of investable urban regeneration projects which government would help promote to appropriate international investors’ (para 34).  There is no evidence provided of what urban regeneration projects, where they would be in the West Midlands, which international investors might want to invest and on what basis, or whether these projects meet local needs and whether local people want them.

The New Economics Foundation says that ‘Environmental sustainability is part of just 0.8% of arguments’, and the green economy as an area of potential economic growth is entirely ignored in the case for the WMCA. In fact there is not a single mention of the words ‘green’ and ‘environment’ in the documentation at all.

Key Points does however make particular claims for the economic benefits of HS2. The WMCA will have ‘The power to make HS2 benefit the people of the West Midlands. The HS2 Growth Strategy alone will create an additional 100,000 new jobs.’ (p3) This sentence is ambiguous: are they saying that HS2 will create 100,000 new jobs in the West Midlands alone? But in any case what economic analysis is this claim based on? Where can we read it?

The Devolution Agreement refers to ‘the Combined Authority Shadow Board’s HS2 Growth Strategy’, but the only information it gives about what it comprises is to say that ‘the government agrees to support the Curzon Street Enterprise Zone and approves the business case’ (para 18).

The fact is that the government’s whole economic case for HS2 makes inflated claims based on spurious analysis. According to the Stop HS2 campaign:

‘the Government has been using the September 2013 KPMG report, commissioned by HS2 Ltd to bolster support for HS2. The report cost HS2 Ltd £242,000 and invented a brand-new untested methodology to claim HS2 would create £15bn of economic benefits per year. The methodology has been widely criticised, including by two different former advisors to HS2 Ltd. Even the KPMG report itself states on p83: “We recognise that this approach does not have a firm statistical foundation”.’ (http://stophs2.org/facts)

The Agreement also has a section on ‘future employment support, from April 2017, for the hardest-to-help claimants’ (paras 29-31). The WMCA will ‘co-design’ this with the Department for Work and Pensions (DWP). But in fact all the power will be in the hands of the DWP:

‘DWP sets the funding envelope’

‘DWP set the high-level performance framework’

‘in the event employment support for this group is delivered through a contracted-out programme…DWP sets the contracting arrangements…’

‘Providers will be solely accountable to DWP’ (para 31)

It is a perfect example of how the claims that the new Combined Authorities represent decentralisation disguise the reality that they are a new form of highly centralised power, with the Treasury under Osborne holding the whip-hand. (It is symptomatic that the Agreement is between the WMCA and the Treasury, not the DCLG.)

Public consultation and participation and local democracy

 ‘Devolution is a chance to open up politics and renew our democracy’ say Labour’s shadow ministers for Local Government Jon Trickett and Steve Reed (Huffington Post 15 November). The resolution on devolution passed at September’s TUC conference calls for devolution proposals to ‘have real democratic accountability at their heart’.

But according to the New Economics Foundation ‘the debate on devolution neglects the democratic transformations that could make devolution worthwhile’. ‘Only 12.9% of arguments make the case for devolution in order to shift power, strengthen democracy, and increase citizen involvement in decision-making.’ As we will see, this issue is scarcely mentioned in the WMCA agenda and is absent from its practice.

The WMCA Launch Statement (6 July) has a page headed ‘The consultation process on the creation of the West Midlands Combined Authority’ (p18). It says:

‘The decision to proceed with the creation of a West Midlands Combined Authority is rightly in the hands of the elected leaders of the local authorities of the West Midlands. It is an important decision in which a variety of stakeholders have views which need to be fully taken into consideration. There will therefore be a process of consultation and engagement between now and the formal launch of the West Midlands Combined Authority in April 2016.’

What has been this ‘process of consultation and engagement’ since July? Certainly in Birmingham there has been none at all open to the public.

The WMCA Devolution Agreement of 17 November says ‘Final agreement is conditional on the legislative process, the Spending Review, further public engagement, agreement by the constituent councils, and formal endorsement by the Shadow Board and Ministers early in the New Year. (p4) So far there no plans announced for ‘further public engagement’ between now and April.

In fact the whole issue of public engagement is entirely absent from the Devolution Agreement (apart from one mention of consultation by the Mayor about the franchising of bus services, p7).

Concern about the lack of consultation has been expressed by Healthwatch Birmingham. Candy  Perry, Interim CEO, said

‘The proposed deal should enable the new Authority to focus on important issues like homes, jobs and skills – all of which play a part in improving the health and wellbeing of Birmingham people. We are keen to work with system leaders to ensure the public are at the heart of service redesign more now and in the future as a result of this deal.’ (http://healthwatchbirmingham.co.uk/news/historic-devolution-agreement-reached-for-the-west-midlands/)

They continue ‘We will be asking relevant members of the WMCA about the consultation process to ensure plans are made with peoples’ views in mind.’

But the WMCA operates on an entirely different basis. In the Agreement, under the section headed ‘Delivery, Monitoring and Evaluation’, it says ‘The West Midlands Combined Authority…is accountable to local people for the successful implementation of the devolution deal’ (para 53). What form will this accountability take? The most effective form would be accountability to an elected West Midlands Assembly (as in London). (See BATC website July 20, October 3, November 10.) But the answer in the Agreement is very different:

‘The provisions of this deal will be monitored by a Steering Group of senior officials from the Combined Authority Shadow Board and government, and private sector LEP representatives, meeting at least quarterly, with any issues of concern escalated to Ministers and Leaders to resolve, in keeping with the letter and spirit of this deal.’ (para 61)

A closed group of WMCA and government officials and business representatives from the LEPs. No voice at all for the citizens of the West Midlands, for trade unionists, for users of services, for local communities. Symptomatically there is not a single mention of trade unions in any of the WMCA documents.

There is one potential opportunity in the Agreement for a form of accountability. It says ‘The proposed Combined Authority would have Overview and Scrutiny arrangements’ (para 7). This could be an opportunity for representation of citizens, communities, the unions and service users. But there is no sign at all that the WMCA has any interest in opening up its closed bureaucratic structures to wider participation.

 

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