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.

 
 
 
 

Could modular housing help Britain build the homes it needs?

Pre-fabricated housing being moved into position in Los Angeles in 2012. Image: Getty.

We’ve got ambitious government targets, an appetite to build and huge numbers of people who need housing. But we’ve known all this for some time, yet we are still in the same situation – a housing crisis.

So let me start with an obvious yet uncomfortable truth - relying solely on traditional construction methods will not halt the housing crisis. This isn’t a comment on the traditional product or its processes, more a reiteration of a well-known fact: skills capacity is also at crisis point. 

It’s a stalemate situation. In 2016, the Joseph Rowntree Foundation released a report on the relationship between housing and employment. The report found that neighbourhood investment creates a sound basis for employment, and that affordable rent provides a greater incentive for people to work.

One relies to some degree on the other. After all, a home is about so much more than bricks and mortar. So why aren’t we jumping at the chance of doing things differently to get out of this impasse?

The UK is something of an outlier when compared to many of our continental neighbours. Areas like manufacturing have seen steady productivity growth over the last twenty years, allowing more economic growth with the same or fewer number of workers. However, the UK construction sector has seen productivity flat line for the past two decades. This limits growth, and means a loss of more than £100bn a year of economic benefit.     

There are alternative products and processes we can take advantage of – but we seem to be simply dipping our toes in the water. Personally, I think we’re suffering from a lack of confidence. We need confidence in the quality of modular products (which, clearly, from our recent YouGov research, the public doesn’t have). We need confidence in the durability of MMC (modern methods of construction) products.

And we need confidence in the sector that the intention of modular suppliers is to add to capacity, not to replace traditional processes.

This is why my team are currently working with a range of modular and MMC suppliers to robustly compare and contrast a range of housing products. It’s a live research project in Gateshead that will monitor and evaluate the build process and lifestyles on offer through a range of different construction methods – including traditional. The homes will be for affordable rent and tenants will be involved in the ongoing evaluation.


So why are we doing it? If we make this research available to other developers perhaps as a sector we can make more confident and informed decisions about new construction methods.

Because while MMC is being used across the sector, we’re not using it at scale. And its scale that we need to affect change: 300,000 homes is no small number, after all. (What’s more, according to a survey by the Royal Institution of Chartered Surveyors, only 12 per cent of surveyors believe we can hit that target – another confidence boost needed).

 MMC isn’t as affected by the crisis in construction skills capacity. It’s an entirely different skillset. So it’s not about skilled tradespeople jumping ship.

You could almost envisage two different pathways into housebuilding. Studies have told us that millennials are purpose-driven, and therefore most likely to be attracted to organisations that are driven by purpose. So maybe that’s how we have to think about careers in construction.

There may be two distinct pathways being formed with two distinct skillsets – but ultimately, both are responding to the housing crisis. Perhaps that’s the draw. And having increased opportunities may well see an increase in people working in the sector overall. 

We’re not competing in a crowded marketplace. There is a desperate need for more homes. We need to embrace every construction method available to us and work collaboratively to meet the government’s targets.

Let’s keep the end goal in mind and not be restricted with the way we’ve always done things. It’s time to take a different approach.

Mark Henderson is chief executive of the housing association Home Group.

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