The West Midlands Combined Authority declined to approve mayor Andy Street’s budget. What happened?

Tory mayor of the West Midlands Andy Street last year. Image: Getty.

A Birmingham Labour councillor on the budgetary rows in the Midlands.

At its last meeting on 12 January, the West Midlands Combined Authority (WMCA) board voted that it was “not minded to approve the mayor’s budget, including a Council Tax Precept of £10.80”.

This was a first for the board, which is made up of regional council leaders – a vote that had split down party lines. And while the revised Budget proposals demonstrate that a compromise has been reached in the intervening weeks, that the vote was lost has not been without consequences for the WMCA, the relationships that underpin it or the region’s investment plan.

In our response to the Budget, the WMCA Overview & Scrutiny Committee said:

The current situation where the CA Board refused to agree the proposed mayoral budget does not resonate with the level of partnership and collaboration required for the Combined Authority to achieve its strategic objectives.

It’s easy to scoff at this – “It’s politics!” – but trust matters, even in political organisation. Collective investment from partners across the region – in cash or in kind – unlocks value, and locks in commitment. When trust dies, partners are less likely to collectively invest in that way.

That doesn’t mean that there shouldn’t be political battles on how resources are raised and used, particularly while Council Tax endures as a way of funding places. But the basic principle is that we work together to create a bigger pie to divide up. My fear is that the events of the last few weeks run the risk of the pie shrinking. 


Let’s look at how the budget proposals have changed in the last month. The easiest starting point is the Mayoral Precept, a slight addition to council tax intended to fund the mayor’s office. That was projected to raise £7.5m. Now, there will not be one in 2018-19.

Part of the slack has been picked up by the Transport for West Midlands Levy – which the seven constituent authorities of the WMCA invest into collectively. Having underspent in 2017-18, all seven were due to share a rebate of £265,000, but they will now invest this straight back into the mayor’s office. The rest of the mayor’s office will be funded by drawing on the part of the £2m Mayoral Capacity Fund that had been destined to bolster the operations of the wider WMCA, and by removing a further £47,000 from the operational budget. 

This will see the mayor’s office funded to £832,000 – 7 per cent lower than last month’s proposal of £888,000, firmly in compromise territory. This arrangement cannot be repeated – the Mayoral Capacity Fund is otherwise destined to help the West Midlands deliver its industrial strategy, and there is no guarantee of a levy underspend/increase to create the headroom. 

The precept was also due to fund ‘Network Resilience’, to £572,000: this will now be covered by an increase in the transport levy of the same amount. Birmingham, the most populous of the Constituent Authorities, will pay £225.000 of that increase. 

With the mayor’s office and resilience covered, that leaves the most substantial segment left to cover: £6m that was destined for the investment programme, which is now deferred until next year. 

To summarise, instead of raising new local money from citizens via the Mayoral Precept, the money has either been replaced – broadly speaking – with the money that citizens have already invested via Council Tax, Business Rates and general taxation; or the spending has been deferred until 2018-19. In a year when many councillors in the Constituent Authorities are facing local elections, you can understand the tactical rationale for voting down the precept – but it hits the bottom line of already stretched council budgets. 

We can also conclude from the above that the WMCA’s ability to deliver its Strategic Economic Plan will be hampered by a lack of capacity within itself and a short-term reduction in its investment income – although the board has been assured that this doesn’t put the wider capital programme at risk in the round.

However, there is a risk that the Treasury – which factored in a “local contribution” (that is: the precept) when striking the first devolution deal, may claw back some of the ‘gain share’ revenue after the first gateway review – a funding stream currently coded as ‘amber’ in the Investment Programme, with the associated capital projects:

So whatever their reasons for voting down the precept, it is vital that the leaders of the constituent authorities and the mayor work together to secure the funding. With a potential ‘no deal’ Brexit looming, the challenges for the West Midlands are for us all to face.

Claire Spencer is Labour councillor for Moseley & Kings Heath on Birmingham City Council.

 
 
 
 

Infrastructure populism: on the politics of building big, or failing to

When it comes to infrastructure, they’re all all talk. Image: Getty.

It is famously said of Italian dictator Benito Mussolini that at least while he was dragging his country into a war in which over half a million of his citizens died, he was also making sure the trains ran on time. The murdering fascist wasn’t all bad: he did sort out Italy’s railways.

Now, shockingly, it turns out this is all complete claptrap and Mussolini actually did very little to improve the rail system. Popular beliefs to the contrary are all just part of the fascist myth that he built up around himself to validate his governance.

It’s fake news, but the widely believed claim strikes to the core of a bigger issue: politicians hijacking transport as an easy way to connect with voters. Because, despite Chris Grayling’s best efforts, getting from A to B is an aspect of modern life that can hardly be ignored; effective roads are required to keep the population fed and public transport needed to get people to work.

Like Mussolini before him, this is something Donald Trump has recognised. Among the cries of “lock her up” and “bad hombres”, a key part of his presidential election campaign was a promise to ramp up infrastructure investment. Trump was fed up that other countries “look at our infrastructure as being sad”. As someone who has tried to use Amtrak, the US domestic rail service, I’ve got to say I agree with him.

But it’s easy to complain; it’s following through with a solution that’s the real problem. Only 13 per cent of the $1.5trn Trump hopes to raise is going to come from federal purse, with the rest funded by… erm… something else. It’s in this delivery that this went from being a realistic promise of change to just saying what people want to hear.


On this side of the pond, we have a similar problem: Boris Johnson. A politician who regardless of the issue in question will suggest the answer is an absurd, massive infrastructure project in thinly veiled efforts to grab headlines and deflect from any helpful debate.

His stint as London mayor was dominated by such ill-thought out infrastructure projects. The new Routemaster buses and the Emirates Cable Car were a big waste of money. Aborted suggestions include the Garden Bridge Project, which managed to waste another £46m in public money without even being built, and the Thames Estuary Airport.

More recently, on the prospect of a hard Brexit and lorries queuing up the M20, Johnson proposed a road bridge between England and France. To solve the issue of a hard border between the Republic of Ireland and Northern Ireland, he called for another sea-crossing bridge. You get the idea.

So for Johnson, big projects are a cure-all for difficult problems, which can catch the headlines and allow any reasoned criticism to be easily be framed as not “believing in Britain”. 

Unlike Johnson and Trump, the Hungarian President, Victor Orban, has managed to follow through with his big projects. Unfortunately, they have nothing to do with infrastructure. He has instead spent hundreds of millions of Euros on building football stadiums around the country all to the delight of football-mad Hungarians. This, in a country with one of the worst poverty rates in Europe.

In his 2006 study on the future of high-speed rail in the UK, the director of News Corporation and former CEO of British Airways, Sir Rod Eddington, warned against being “seduced by ‘grands projets’ with speculative returns.” His message was intended for politicians but, in a world of Trumps, Johnsons and Orbans, is surely a lesson that should be learnt by everyone.