Is the West Midlands about to steal the initiative on devolution?

Not gonna lie, we're starting to run out of stock images of the West Midlands. Image: Getty.

Every ministerial speech at last week’s Conservative Party Conference was peppered with praise for Andy Street – the party’s new candidate to be mayor of the West Midlands in 2017. It now appears a second devolution deal for the area is close to being agreed, this time focusing on allowing the region to retain more of the tax generated locally to reinvest in housing and infrastructure.

Although details of this latest proposed deal remain sketchy, and there has been no official confirmation from central government, any deal that marked a progression in the financial freedoms available to local areas would be hugely significant.

Despite the devolution deals agreed to date, the UK remains overwhelmingly centralised, with UK cities having limited say in the big decisions that shape their future. The level of taxes controlled locally or regionally in the UK is roughly 10 times less than in Canada, seven times less than in Sweden, and nearly six times less than in Germany.

But potentially just as significant is that it is the West Midlands which is now being touted as the area likely to receive fiscal devolution – as opposed to Greater Manchester, which has to date led the way with the most expansive and ambitious devolution deal of all those agreed.

The prime minister has been at pains to differentiate her approach to economic development outside of London from that of her predecessors, and to emphasise that the Northern Powerhouse – while important – is not the be all and end all for her government. And if the aim is to demonstrate this broader focus, there are a number of good reasons for the government to shift its focus to the West Midlands.

For starters, the area itself is large, with significant economic potential. The West Midlands Combined Authority comprises 12 authorities (including non-constituent members), is home to roughly 4m people, and boasts an £80bn a year economy. Having struggled for decades to shake off its post-industrial hangover, Birmingham city centre saw private sector jobs growth of 17 per cent between 1998 and 2011, and is now home to 40 per cent of the UK’s national conference trade, as well as Europe’s second largest insurance market.

In addition, unlike those mayoral races in Manchester and Liverpool, the Conservatives could feasibly win in the West Midlands in 2017. Labour’s lead over the Conservatives in the region was less than ten points at the 2015 General Election, and in the year since, this gap could have narrowed even before local campaigning begins.

The politics of England's city regions. Click to expand. Image: Centre for Cities.

In the spiritual home of the Labour “right”, the region’s traditional Labour voters may be turned off by its more recent leftward shift and the second leadership success of Jeremy Corbyn in the last twelve months. Furthermore, turnout will almost certainly be lower in May 2017 than in the general election. If, as usual, younger people (who are more likely to vote Labour) do not turn out, but older people (who largely lean to the Conservatives) do, that could help to tighten the race between the two leading parties and give Andy Street a real chance of victory.

A Conservative mayor of the West Midlands may also shift the political dynamic of devolution. Much of the Northern Powerhouse agenda and devolution to Greater Manchester was shaped by the close relationship and trust shared between Manchester City Council CEO Sir Howard Bernstein and George Osborne. But with the former retiring and the latter now on the backbenches, it is conceivable that, should he win, the future of the devolution agenda could instead be shaped by Andy Street’s relationship with Phillip Hammond and Theresa May.

Of course, we shouldn’t get carried away. The political leaders of the West Midlands have come a long way in a very short space of time in order to reach common agreement on a devolution deal and establish the West Midlands Combined Authority. But in terms of the strength and longevity of local institutions and the powers currently included in their deal, Greater Manchester remains the leading light of UK city devolution.

Yet there are signs that this could change in the months and years ahead. Should the West Midlands secure an ambitious second devolution deal which includes new fiscal powers, and should the Conservatives triumph in the region in 2017, then Greater Manchester may find it is no longer alone in the vanguard of UK city devolution.

Such increased competition would be good news for those keen to see devolution remain at the top of the political agenda – and if it leads to greater economic control being transferred to Greater Manchester, the West Midlands and other big city-regions, then it would be good news for the national economy too.

Ben Harrison is director of communications at the Centre for Cities, on whose blog this article was previously published.

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What's actually in the UK government’s bailout package for Transport for London?

Wood Green Underground station, north London. Image: Getty.

On 14 May, hours before London’s transport authority ran out of money, the British government agreed to a financial rescue package. Many details of that bailout – its size, the fact it was roughly two-thirds cash and one-third loan, many conditions attached – have been known about for weeks. 

But the information was filtered through spokespeople, because the exact terms of the deal had not been published. This was clearly a source of frustration for London’s mayor Sadiq Khan, who stood to take the political heat for some of the ensuing cuts (to free travel for the old or young, say), but had no way of backing up his contention that the British government made him do it.

That changed Tuesday when Transport for London published this month's board papers, which include a copy of the letter in which transport secretary Grant Shapps sets out the exact terms of the bailout deal. You can read the whole thing here, if you’re so minded, but here are the three big things revealed in the new disclosure.

Firstly, there’s some flexibility in the size of the deal. The bailout was reported to be worth £1.6 billion, significantly less than the £1.9 billion that TfL wanted. In his letter, Shapps spells it out: “To the extent that the actual funding shortfall is greater or lesser than £1.6bn then the amount of Extraordinary Grant and TfL borrowing will increase pro rata, up to a maximum of £1.9bn in aggregate or reduce pro rata accordingly”. 

To put that in English, London’s transport network will not be grinding to a halt because the government didn’t believe TfL about how much money it would need. Up to a point, the money will be available without further negotiations.

The second big takeaway from these board papers is that negotiations will be going on anyway. This bail out is meant to keep TfL rolling until 17 October; but because the agency gets around three-quarters of its revenues from fares, and because the pandemic means fares are likely to be depressed for the foreseeable future, it’s not clear what is meant to happen after that. Social distancing, the board papers note, means that the network will only be able to handle 13 to 20% of normal passenger numbers, even when every service is running.

Shapps’ letter doesn’t answer this question, but it does at least give a sense of when an answer may be forthcoming. It promises “an immediate and broad ranging government-led review of TfL’s future financial position and future financial structure”, which will publish detailed recommendations by the end of August. That will take in fares, operating efficiencies, capital expenditure, “the current fiscal devolution arrangements” – basically, everything. 

The third thing we leaned from that letter is that, to the first approximation, every change to London’s transport policy that is now being rushed through was an explicit condition of this deal. Segregated cycle lanes, pavement extensions and road closures? All in there. So are the suspension of free travel for people under 18, or free peak-hours travel for those over 60. So are increases in the level of the congestion charge.

Many of these changes may be unpopular, but we now know they are not being embraced by London’s mayor entirely on their own merit: They’re being pushed by the Department of Transport as a condition of receiving the bailout. No wonder Khan was miffed that the latter hadn’t been published.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.