West Midlands Combined Authority Board Annual General Meeting (AGM)

Date: 10 June 2016

Time: 11.00 am Public Meeting? YES

Venue: Hall 4, The International Convention Centre, Broad St, Birmingham B1 2EA

Membership

Constituent Members Non-Constituent Members

Birmingham City Council Black Country LEP City of Wolverhampton Coventry and Warwickshire LEP Coventry City Council Greater Birmingham and Solihull LEP Dudley Metropolitan Borough Council Telford and Wrekin Council Sandwell Metropolitan Borough Council Cannock Chase District Council Solihull Metropolitan Borough Council Nuneaton and Bedworth Borough Council Walsall Metropolitan Borough Council Redditch Borough Council Tamworth Borough Council

Observers Awaiting Membership Observers

North Warwickshire Borough Council West Midlands Police and Crime Commissioner Shropshire Council West Midlands Fire and Rescue Authority Stratford on Avon District Council Warwickshire County Council

Quorum for this meeting shall be at least one member from five separate constituent councils.

Information for the Public

If you have any queries about this meeting, please contact the democratic support team: Contact Jaswinder Kaur Tel/Email 01902 550320 [email protected] Address Combined Authority, Civic Centre, 1st floor, St Peter’s Square, Wolverhampton WV1 1RL Agenda

No. Item Presenting Papers

1. Meeting Business Items

1.1 Appointment of Members to the Combined Keith Ireland Attached Authority 2016-2017

1.2 Appointment of Chair Keith Ireland None

1.3 Appointment of Vice-Chair Chair None

1.4 Apologies for absence Chair None

1.5 Declaration of Interest (if any) Chair None

1.6 Chairs Opening Remarks Chair None

1.7 Membership of the Combined Authority – Keith Ireland Attached Current Membership

1.8 Calendar of Key Meetings 2016-2017 Keith Ireland Attached

The Board is asked to approve the planned cycle of key meetings.

1.9 Forward Plan Keith Ireland Attached

The Board is asked to approve the forward plan.

2. Combined Authority Governance

2.1 Approval and adoption of the Constitution, Keith Ireland Attached including appointment of statutory officers and Member allowances

2.2 Appointment of Members & Chairs/Vice Chairs Keith Ireland Attached of Statutory Committees

2.3 Appointments to Outside Bodies 2016-2017 Keith Ireland Attached

2.4 Governance Arrangements Keith Ireland

a. governance arrangements for Councillor, Attached LEP representatives and others

b. governance arrangements for officers Attached 2.5 Portfolio Arrangements Keith Ireland To Follow

2.6 Implementing the Devolution Agreement – Keith Ireland Attached Provision for Mayoral West Midlands Combined Authority

2.7 New Applications for Membership Keith Ireland

a) North Warwickshire Borough Council – Attached Non-Constituent b) Warwickshire County Council – Non- Attached Constituent c) Consider any further requests for To Be Tabled If membership received subsequently to Required the agenda being issued

3. Combined Authority Strategic Framework

3.1 Approval of the Strategic Economic Plan Martin Reeves Attached Sarah Middleton

3.2 Approval of the Strategic Transport Plan Laura Shoaf Attached

3.3 Approval of the Assurance Framework Martin Reeves Attached Sarah Middleton

4. Combined Authority Commissions

4.1 Mental Health Commission Update Norman Lamb Presentation

4.2 Land Commission Update Jan Britton Verbal Update

4.3 Productivity and Skills Commission Update Sarah Middleton Verbal Update

5. Combined Authority Financial Framework

5.1 2016-2017 Combined Authority Budget James Aspinall Attached

5.2 Treasury and Investment Programme Financing James Aspinall Attached Report

5.3 Establishment of a West Midlands Combined Jan Britton Attached Authority Investment Board

6. Any Other Business

6.1 None Notified 7. Date of Next Meeting

7.1 Friday 22 July 2016, 11:00 – 14:00, Council Chamber, Birmingham Council House, B1 1BB Agenda Item 1.1 [PUBLIC]

Board Meeting

Date Friday 10 June 2016

Report title Appointment of Members to the Combined Authority 2016 – 2017

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision

The Combined Authority Board is recommended to note:

1. The current Membership of the West Midlands Combined Authority as detailed in Appendix A.

2. The current Observers to the West Midlands Combined Authority Board as detailed in Appendix B.

Page 5 [PUBLIC]

1.0 Purpose

1.1 To note the Members nominated and appointed by the Constituent Councils, Non- Constituent Councils and Local Enterprise Partnership’s (LEPs) to the Combined Authority, including their substitutes.

2.0 Background

2.1 In accordance with the Order to establish the Combined Authority (West Midlands Combined Authority Establishment Order 2016) the Constitution Members of the Combined Authority are required to be appointed yearly at the AGM.

3.0 Information

3.1 Appendix A details the nominations to the West Midland Combined Authority from the Constituent and Non Constituent Councils, the Black Country, Coventry & Warwickshire and Greater Birmingham & Solihull LEPs. Appendix B details the nominations to the West Midlands Combined Authority from those authorities/bodies that hold Observer status.

4.0 Financial implications

4.1 In accordance with the West Midlands Combined Authority Establishment Order 2016, no allowances are to be paid to Members of the West Midlands Combined Authority.

4.2 In accordance with the West Midlands Combined Authority Establishment Order 2016 travel and subsistence allowances are to be paid to Members of the West Midlands Combined Authority.

5.0 Legal implications

5.1 The membership is set out in accordance with the Establishment Order 2016 for the Combined Authority and with the Constitution for the Combined Authority.

6.0 Equalities implications

6.1 No implications arising from this report.

7.0 Schedule of background papers

7.1 The West Midlands Combined Authority Order Establishment Order 2016: http://www.legislation.gov.uk/ukdsi/2016/9780111146576/pdfs/ukdsi_9780111146576_en.p df

7.2 Constitution of the West Midlands Combined Authority: https://westmidlandscombinedauthority.org.uk/media/1171/ca-draft-constitution-24-5-16.pdf

Page 6 [PUBLIC]

Appendix A – West Midlands Combined Authority Membership 2016 – 2017, as at 10 June 2016

Nominating Body WMCA Member WMCA Substitute

Birmingham City Council Cllr John Clancy Cllr Brett O’Reilly Cllr Ian Ward Cllr Stuart Stacey

City of Wolverhampton Cllr Roger Lawrence Cllr Andrew Johnson Cllr Peter Bilson Cllr John Reynolds

Coventry City Council Cllr George Duggins Cllr O’Boyle Cllr Abdul Khan Cllr Kevin Maton

Dudley Metropolitan Cllr Pete Lowe Cllr Judy Foster Borough Council Cllr Patrick Harley Cllr Les Jones

Sandwell Metropolitan TBC – Council meeting 14.06.16 TBC - Council meeting 14.06.16 Borough Council TBC – Council meeting 14.06.16 TBC - Council meeting 14.06.16

Solihull Metropolitan Cllr Bob Sleigh Cllr Ted Richards Borough Council Cllr Ian Courts Cllr Robert Hulland

Walsall Metropolitan Cllr Sean Coughlan Cllr Rose Burley Borough Council Cllr Lee Jeavons Cllr Diane Coughlan

Black Country LEP Stewart Towe Ninder Johal

Coventry & Warwickshire Jonathan Browning Nick Abell LEP

Greater Birmingham & Andy Street TBC Solihull LEP

Cannock Chase District Cllr George Adamson Cllr Gordon Alcott Council Cllr John Kraujalis

Nuneaton & Bedworth Cllr Dennis Harvey Cllr Julie Jackson Borough Council

Redditch Borough Council Cllr Bill Hartnett Cllr Pat Witherspoon

Tamworth Borough Council Cllr Steve Claymore Cllr Danny Cook

Telford & Wrekin Council Cllr Shaun Davies Cllr Richard Overton

Note: Constituent Members must remain in the Majority by Law, to achieve this currently there are two Constituent Members per Constituent Council. Future Non-Constituency Membership may therefore result in the requirement for three Constituent Members to ensure the Constituent Members remain in the majority. Page 7 [PUBLIC]

Appendix B - West Midlands Combined Authority Observers 2016 – 2017, as at 10 June 2016

Nominating Authority/Body WMCA Member WMCA Substitute

Stratford-on-Avon District Council Cllr Chris Saint Cllr Stephen Thirlwell (awaiting formal membership but application approved)

Shropshire Council (awaiting formal Cllr Malcolm Pate Cllr Steve Charmley membership but application approved)

West Midlands Police & Crime David Jamieson Jonathan Jardine Commissioner

West Midlands Fire & Rescue TBC – Fire & Rescue TBC - Fire & Rescue Service Authority Meeting 27.06.16 Authority Meeting 27.06.16

Page 8 Agenda Item 1.7 [PUBLIC]

Board Meeting

Date Friday 10 June 2016

Report title Membership of the West Midlands Combined Authority

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for noting:

The Combined Authority Board is asked to note:

1. The approved Membership of the Combined Authority as at 10 June 2016, including Constituent Members, Non-Constituent Members and Observers.

Page 9 Agenda Item 1.7 [PUBLIC]

Approved membership of the Combined Authority as at 10 June 2016

Authority/Body Status Birmingham City Council Constituent Member

City of Wolverhampton Council Constituent Member

Coventry City Council Constituent Member

Dudley Metropolitan Borough Council Constituent Member

Sandwell Metropolitan Borough Council Constituent Member

Solihull Metropolitan Borough Council Constituent Member

Walsall Metropolitan Borough Council Constituent Member

Black Country Local Enterprise Partnership Non-Constituent Member

Coventry & Warwickshire Local Enterprise Non-Constituent Member Partnership

Greater Birmingham & Solihull Local Enterprise Non-Constituent Member Partnership

Cannock Chase District Council Non-Constituent Member

Nuneaton & Bedworth District Council Non-Constituent Member

Redditch Borough Council Non-Constituent Member

Tamworth Borough Council Non-Constituent Member

Telford & Wrekin Council Non-Constituent Member

Stratford-on-Avon District Council Observer – awaiting formal membership but application approved Shropshire Council Observer – awaiting formal membership but application approved The West Midlands Police and Crime Observer Commissioner West Midlands Fire and Rescue Authority Observer

Page 10 Agenda Item 1.8

West Midlands Combined Authority

Programme of Scheduled Key Meetings 2016-2017

Meeting Time June July August Sept October November December January February March April May June 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 Member & LEP Representative Meetings

WMCA AGM 11:00 - 14:00 9 Page 11 Page WMCA Board 11:00 - 14:00 10 22 19 16, 30 14, 28 11 2, 16 20 3, 17 3, 17 7, 21 12, 26 23 Scrutiny 10:00 - Committee 12:00 17 23 9 10 16 Audit 10:00 - Committee 12:00 8 21 27 28 Transport Delivery 14:00 - Committee 16:00 4 TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC TBC

Notes: 1. The other Councillor/LEP representative meetings will be scheduled once the key meetings have been approved.

2. The schedule of officer meetings will be issued once the key Councillor and LEP representive meetings has been approved. This page is intentionally left blank Agenda Item 1.9

Forward Plan of the West Midlands Combined Authority Board

Date Title Lead Lead Officer Aim Member

Governance CA Mayoral Consultation TBC Jan Jennings Approval Appointments to Committees, Sub- TBC Keith Ireland Approval Committees and Working Groups Constitution update TBC Keith Ireland Update Parliamentary Order / Scheme feedback TBC Keith Ireland Update

Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update Jan Britton Devolution Deal (2) Negotiations Update TBC Mark Rogers Update Midland Engine Update TBC David Sharif Update

Commissions 22 July Land Commission Terms of Reference TBC Jan Britton Approval Productivity and Skills Commission TBC Sarah Middleton Update Mental Health Commission Update TBC Sarah Norman Update

Strategic Framework Strategic Economic Plan Board TBC Martin Reeves Approval Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval

Delivery Finance Update TBC James Aspinall Approval Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval Transport Delivery TBC Keith Ireland Approval

Governance CA Mayoral Consultation TBC Jan Jennings Update Constitution update TBC Keith Ireland Update Parliamentary Orders TBC Keith Ireland Update

Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update Jan Britton 19 August Devolution Deal (2) Negotiations Update TBC Mark Rogers Update

Commissions Land Commission Update TBC Jan Britton Update Productivity and Skills Commission TBC Sarah Middleton Update Mental Health Commission Update TBC Sarah Norman Update

Strategic Framework Strategic Economic Plan Board TBC Martin Reeves Approval Page 13 Agenda Item 1.9

Date Title Lead Lead Officer Aim Member Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval Physical Activity strategy TBC Martin Reeves Update

Delivery Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval Transport Delivery TBC Keith Ireland Approval

Governance CA Mayoral Consultation outcome TBC Jan Jennings Update Mayoral scheme / order feedback TBC Keith Ireland Update Membership update TBC Keith Ireland Update

Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update Jan Britton Devolution Deal (2) Negotiations Update TBC Mark Rogers Update

Commissions Land Commission Update TBC Jan Britton Update 16 Productivity and Skills Commission TBC Sarah Middleton Update September Mental Health Commission Update TBC Sarah Norman Update

Strategic Framework Strategic Economic Plan Board TBC Martin Reeves Approval Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval Communications and Engagement Plan TBC Martin Reeves Approval

Delivery Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval Transport Delivery TBC Keith Ireland Approval Finance Update TBC James Aspinall Approval

30 To be confirmed September

Governance Membership update TBC Keith Ireland Update

Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update 14 October Jan Britton Devolution Deal (2) Negotiations Update TBC Mark Rogers Update

Commissions Land Commission Update TBC Jan Britton Update

Page 14 Agenda Item 1.9

Date Title Lead Lead Officer Aim Member Productivity and Skills Commission TBC Sarah Middleton Update Mental Health Commission Update TBC Sarah Norman Update Strategic Framework Strategic Economic Plan Board TBC Martin Reeves Approval Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval

Delivery Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval Transport Delivery TBC Keith Ireland Approval Growth Company Options Paper TBC Martin Reeves Approval

To be confirmed 28 October Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update Update Jan Britton Devolution Deal (2) Negotiations Update TBC Mark Rogers Update

Commissions Land Commission Terms of Reference TBC Jan Britton Approval Productivity and Skills Commission TBC Sarah Middleton Update Mental Health Commission Update TBC Sarah Norman Update 11 November Strategic Framework Strategic Economic Plan Board TBC Martin Reeves Approval Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval

Delivery Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval

To be confirmed 2 December

Devolution Devolution Deal 1 – Implementation TBC Martin Reeves / Update Update Jan Britton Devolution Deal (2) Negotiations Update TBC Mark Rogers Update 16 December Commissions Land Commission Terms of Reference TBC Jan Britton Approval Productivity and Skills Commission TBC Sarah Middleton Update Mental Health Commission Update TBC Sarah Norman Update

Strategic Framework

Page 15 Agenda Item 1.9

Date Title Lead Lead Officer Aim Member Strategic Economic Plan Board TBC Martin Reeves Approval Health and Wellbeing Board TBC Sarah Norman Approval Public Service Reform Board TBC Nick Page Approval

Delivery Portfolio Reports (sequencing TBC) TBC TBC TBC Investment Board TBC Paul Dransfield Approval

Page 16 Agenda Item 2.1 [PUBLIC]

Board Meeting

Please note: The finalised report, containing the proposed Transport Delivery Committee Allowance Scheme (Appendix A) will be issued week commencing 6th June 2016.

Date Friday 10 June 2016

Report title Approval and adoption of the Constitution, including appointment of statutory officers and Member allowances Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve and adopt the Constitution of the Combined Authority.

2. Delegate amendments to the Constitution to the Monitoring Officer, in consultation with the Chair.

3. Confirm the previous decisions of the Combined Authority Shadow Board regarding Statutory and other officer appointments, as set out in in section 4.0 of the report.

4. Confirm the Transport Delivery Committee (a sub-committee of the Combined Authority Board) Allowance Scheme, proposals set out in Appendix A of the report.

5. Approve the payment of Travel and Subsistence Allowances for the Overview and Scrutiny and Audit and Standards Committees, as set out in paragraph 5.3 of the report.

6. Authorise the Clerk to the Combined Authority to arrange for Independent Reviews of Allowances to be undertaken as necessary, for consideration by the Combined Authority Board. Page 17 [PUBLIC]

1.0 Purpose

1.1 This report recommends the Constitution for the West Midlands Combined Authority for approval and adoption. The full document is available online at: https://westmidlandscombinedauthority.org.uk/media/1171/ca-draft-constitution-24-5-16.pdf

1.2 The report also sets out the associated decisions required regarding appointments of officers and members allowances.

2.0 Background

2.1 The draft Order to establish a Combined Authority in the West Midlands was laid before Parliament in May 2016, for establishment on 10th June 2016.

2.2 The remit of the Combined Authority is the strategic economic development, regeneration and transport functions that can be better delivered collaboratively across the West Midlands Metropolitan Area. The Combined Authority will be a focused, strategic decision making body, with responsibility over those strategic issues where it is mutually beneficial for Constituent and Non-Constituent local authorities and the Local Enterprise Partnerships of the Black Country, Greater Birmingham & Solihull and Coventry, to work together.

2.3 The provision for a Mayoral Combined Authority is subject to separate consideration on this agenda.

3.0 The Combined Authority Constitution

3.1 As a statutory organisation, the Combined Authority requires a Constitution to be in place to describe how it will operate its functions. This has been developed by Legal officers from all authorities. The Constitution has been endorsed by all Constituent Councils at meetings in February/March 2016.

3.2 The full document is available online at: https://westmidlandscombinedauthority.org.uk/media/1171/ca-draft-constitution-24-5-16.pdf

3.2 The Monitoring Officer will keep the Constitution under review as there will be a requirement to make amendments as required, in consultation with the Chair, in the light of experience, operational requirements and policy development. It is recommended that the Monitoring Officer is delegated the ability to make amendments to the Constitution, in consultation with the Chair.

3.3 The Board is asked to approve and adopt the Constitution.

3.4 Governance arrangements for the Combined Authority are subject to separate consideration on this agenda and it is to be noted that those governance arrangements will supersede the Constitution; therefore the Constitution will be updated as appropriate by the Monitoring Officer, in consultation with the Chair, as delegated in paragraph 3.2 of this report.

Page 18 [PUBLIC]

4.0 Appointment of Statutory Officers

4.1 The Constitution of the Combined Authority provides for the appointment of Officers to the Combined Authority. At a previous meeting of the Combined Authority Shadow Board, recommendations were approved for the appointment of officers in anticipation of the Combined Authority Annual General Meeting.

4.2 The Combined Authority is asked to re-confirm the following Combined Authority officer appointments:

Statutory Head of Paid Service – Martin Reeves (based on Officer Sharing arrangements under section 113 of the Local Government Act 1972, 2-3 days a week, to be reviewed May 2017).

S151 Officer – James Aspinall (permanent appointment with the Combined Authority). Monitoring Officer – Keith Ireland (based on Officer Sharing arrangements under section 113 of the Local Government Act 1972, based on time required, to be reviewed May 2017).

Other Chief Operating Officer – Jan Britton (based on Officer Sharing arrangements under section 113 of the Local Government Act 1972, 2 days a week, to be reviewed May 2017). Clerk to the Combined Authority – Keith Ireland (based on Officer Sharing arrangements under section 113 of the Local Government Act 1972, based on time required, to be reviewed May 2017).

5.0 Member Allowances

5.1 The West Midlands Combined Authority (Establishment) Order 2016 specifies that no remuneration is payable to its members, other than allowances for travel and subsistence paid in accordance with a scheme drawn up by the Combined Authority. This however does not restrict payments to members of its committees/ sub-committees who are classed as co-opted members to the Combined Authority.

5.2 Transport Delivery Committee

Member Allowances were previously paid to the Transport Delivery Committee Members by the former West Midlands Integrated Transport Authority, now incorporated into the Combined Authority. The Allowances were determined as a result of an Independent Review of Allowances carried out in early in 2015. At its meeting of 18 March 2015 the West Midlands Integrated Transport Authority agreed the Allowances (Basic Allowance and Special Responsibility Allowance) for its Transport Delivery Committee. In May 2015 the Transport Delivery Committee Allowances were £227,000, it is proposed that for 2016 – 2017 the allowances are as detailed in Appendix A of this report, which reduces the allowances to £128,000.

Page 19 [PUBLIC]

Overview & Scrutiny Committee and Audit & Standards Committee

5.3 There are currently no comparable allowances for the Overview and Scrutiny and Audit and Standards Committee. Pending an Independent Review of Allowances it is recommended that only travel and subsistence allowances be paid in accordance with the scheme previously drawn up and agreed by the West Midlands Integrated Transport Authority.

5.4 With regards to any future Mayoral allowances, subject to approval of the Mayoral (elections) Order by each Constituent Council, payment of an allowance to the Mayor may be made, subject to and Independent Review. It is recommended for approval that a full Independent Review of any future Mayoral Allowances be carried out and reported back to a future meeting.

6.0 Financial implications

6.1 The allowances for the Transport Delivery Committee have been included within the Transport budget and levy. The outcome of the independent review will be incorporated into future budget requirements.

7.0 Legal implications

7.1 In relation to the Chief Operating Officer, the Constitution will require a future amendment to include an effective description for the role. There are no further legal implications flowing from the contents of this report.

8.0 Equalities implications

8.1 An initial equalities analysis has been carried out on the related documents to the establishment of the Combined Authority, having due regard to the equalities implications and there are no specific implications linked to the recommendations in this report. Any project/programmes to result from the establishment of the Combined Authority are subject to an individual equalities analysis. Following establishment on 10th June 2016 the Combined Authority is expected to meet the requirements of the Equality Act as a public sector body.

9.0 Schedule of background papers

Local Democracy, Economic Development and Construction Act 2009: http://www.legislation.gov.uk/ukpga/2009/20/contents Draft Order to establish the West Midlands Combined Authority 2016: http://www.legislation.gov.uk/ukdsi/2016/9780111146576/pdfs/ukdsi_9780111146576_en.pdf

Page 20 [PUBLIC]

Appendix A – Transport Delivery Committee Allowance Scheme

[The finalised report, containing the Transport Delivery Committee Allowance Scheme will be available week commencing 6th June 2016.]

Page 21 [PUBLIC]

Page 22 Agenda Item 2.2 [PUBLIC]

Board Meeting

Date Friday 10 June 2016 Report title Appointment of Chairs and Members of Committees

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision

The Combined Authority Board is recommended to:

1. Appoint the members nominated by the Constituent Authorities to the Transport Delivery Committee as detailed in Appendix A.

2. Appoint the Chair and Vice Chair of the Transport Delivery Committee.

3. Appoint the members nominated by the Constituent and Non Constituent Authorities to the Overview and Scrutiny Committee. In addition, appoint a Local Enterprise Partnership (LEP) nomination as detailed in paragraph 3.6, and as detailed in Appendix B.

4. Appoint the Chair and Vice Chair of the Overview and Scrutiny Committee.

5. Appoint the Membership of the Audit and Standards Committee, in accordance with paragraph 3.9, from the Constituent and Non Constituent Authority nominations, as detailed in Appendix C. In addition, appoint a Local Enterprise Partnership (LEP) nomination, as detailed in paragraph 3.9, and as detailed in Appendix C. Note: the Constitution will require amendment to reflect these decisions.

6. Agree to appoint an Independent Member to Chair the Audit and Standards Committee. To be advertised and approved at a later meeting. Page 23 [PUBLIC]

1.0 Purpose

1.1 To make appointments to the Transport Delivery, Overview and Scrutiny and Audit and Standards Committees.

1.2 To appoint the Chairs and Vice Chairs of the Transport Delivery and Overview and Scrutiny Committees and the Independent Chair of the Audit and Standards Committee.

2.0 Background

2.1 The West Midlands Combined Authority Establishment Order 2016 and Constitution require the establishment of an Overview and Scrutiny and Audit and Standards Committee additionally the Constitution requires the establishment of a Transport Delivery Committee.

3.0 Committees

Transport Delivery Committee

3.1 Nominations have been received from the Constituent Councils and are detailed in Appendix A. These have been received on the basis previously agreed by the Integrated Transport Authority: Birmingham have 7 Members and the other 6 Constituent Councils have 2 each, a total of 19 Members. There are no requirements for Substitute Members.

3.2 The Board is recommended to approve the nominations, and subsequently appoint a Chair and Vice Chair from the approved membership.

3.3 Allowances are payable to the Transport Delivery Committee and are the subject of a separate report elsewhere on this Agenda.

Overview and Scrutiny Committee

3.4 Nominations have been received from Constituent Councils, Non-Constituent Councils and Local Enterprise Partnerships, at Appendix B. The basis of nomination is one per Constituent and Non-Constituent Councils, and subject to paragraph 3.6 below one LEP nominee, together with a nominated Substitute Member.

3.5 The Board is recommended to approve the Member and Substitute nominations from the Constituent and Non-Constituent Councils.

3.6 In addition, the Board is recommended to appoint an additional one member from the LEP nominations together with their associated Substitute Member. This satisfies the requirement of the Establishment Order 2016, ensuring that majority of members on the Overview and Scrutiny Committee are members of the Constituent Councils and that each of the Constituent and Non Constituent Councils have at least one member appointed.

3.7 The Board is also recommended to approve a Chair and Vice Chair from the Constituent Members.

3.8 Travel and subsistence allowances will be payable to members.

Page 24 [PUBLIC]

Audit and Standards Committee

3.9 Nominations have been received from Constituent Councils, Non Constituent Councils and LEPs, at Appendix C. The basis of nomination is one per Constituent, Non Constituent Authority and LEP together with a nominated Substitute Member. It is recommended that the nominations are approved. Nominations of this volume require the Constitution to be amended, which will be carried out prior to approval and in line with procedure.

3.10 In addition the Board is recommended to appoint an Independent Member, who is not a member or officer of any of the Constituent Councils, as Chair of the Committee. The position of Independent Chair will be advertised as appropriate. The Vice Chair will be appointed by the Committee.

3.11 Travel and subsistence allowances will be payable to members.

4.0 Financial implications

4.1 The allowances for the Transport Delivery Committee, as detailed elsewhere on this Agenda for approval, have already been budgeted for as part of the Transport Levy.

4.2 The Travel and Subsistence payments for Overview and Scrutiny and Audit and Standards Committees will need to be met from the Constituent Authorities Contributions for the Combined Authority. The level of these payments will be those previously agreed by the ITA and Centro.

5.0 Legal implications

5.1 There are no further legal issues flowing from the contents of this report.

6.0 Equalities implications

6.1 An initial equalities analysis has been carried out on the related documents to the establishment of the Combined Authority, having due regard to the equalities implications and there are no specific implications linked to the recommendations in this report. Any project/programmes to result from the establishment of the Combined Authority are subject to an individual equalities analysis. Following establishment on 10th June 2016 the Combined Authority is expected to meet the requirements of the Equality Act as a public sector body.

7.0 Schedule of background papers

7.1 West Midlands Combined Authority (Establishment) Order 2016: http://www.legislation.gov.uk/ukdsi/2016/9780111146576/pdfs/ukdsi_9780111146576_en.p df

West Midlands Combined Authority Constitution: https://westmidlandscombinedauthority.org.uk/media/1171/ca-draft-constitution-24-5-16.pdf

Page 25 [PUBLIC]

Appendix A – Transport Delivery Committee Nominations

Constituent Councils

Appendix B – Overview and Scrutiny Committee Nominations

Constituent Councils Non-Constituent Councils LEPs

Appendix C – Audit and Standards Committee Nominations

Constituent Councils Non-Constituent Councils LEPs Independents

Page 26 [PUBLIC]

Appendix A – Transport Delivery Committee Nominations - 19

Nominating Council Transport Delivery Committee Members

Birmingham City Council Cllr Phil Davis Cllr Mohammed Fazal Cllr Kath Hartley Cllr Chaman Lal Cllr Keith Linnecor Cllr Robert Alden Cllr Timothy Huxtable

City of Wolverhampton Cllr Judith Rowley Cllr Daniel Warren

Coventry City Council Cllr David Welsh Cllr Pervez Akhtar

Dudley Metropolitan Borough Cllr David Stanley Council Cllr Paul Brothwood

Sandwell Metropolitan Cllr Roger Horton Borough Council Cllr Susan Eaves

Solihull Metropolitan Borough Cllr Ted Richards Council Cllr Diana Holl-Allen

Walsall Metropolitan Borough Cllr Adrian. Andrew Council Cllr Richard Worrall

Page 27 [PUBLIC]

Appendix B – Scrutiny Committee Nominations

Nominating Scrutiny Member Scrutiny Substitute Council/Body

Birmingham City Council Cllr Claire Spencer Cllr Zafar Iqbal

City of Wolverhampton Cllr Tersaim Singh Cllr Anwen Muston

Coventry City Council Cllr John Mutton Cllr Sucha Bains

Dudley Metropolitan Cllr David Sparks Cllr Steve Clark Borough Council

Sandwell Metropolitan TBC – Council meeting TBC – Council meeting Borough Council 14.06.16 14.06.16

Solihull Metropolitan Cllr Margaret Bassett Cllr Stuart Davis Borough Council

Walsall Metropolitan Cllr Ian Shires Cllr Eddie Hughes Borough Council

Black Country LEP Paul Brown Chris Handy

Coventry and Non-Nominated Non-Nominated Warwickshire LEP

Greater Birmingham and Non-Nominated Non-Nominated Solihull LEP

Cannock Chase District Cllr Paul Witton Cllr Darren Foley Council

Nuneaton and Bedworth Cllr John Glass Cllr Bill Hancox Borough Council

Redditch Borough Cllr Jenny Wheeler Cllr Nina Wood-Ford Council

Tamworth Borough Cllr Dr. Simon Peaple Cllr Patrick Standen Council

Telford & Wrekin Council Cllr Nathan England Cllr Shirley Reynolds

Page 28 [PUBLIC]

Appendix C – Audit and Standards Committee Nominations

Nominating Audit & Standards Audit & Standards Council/Body Member Substitute

Birmingham City Council Cllr Tristan Chatfield Cllr Sam Burden

City of Wolverhampton Cllr Collingswood Cllr Harbans Singh Bagri Coventry City Council Cllr John Mutton Cllr Sucha Bains

Dudley Metropolitan Cllr Rachel Harris Cllr Steve Clark Borough Council

Sandwell Metropolitan TBC – Council meeting TBC – Council meeting Borough Council 14.06.16 14.06.16

Solihull Metropolitan Cllr Angela Sandison Cllr Brian Holmes Borough Council

Walsall Metropolitan Cllr Keith Chambers Cllr Ian Robertson Borough Council

Black Country LEP Tom Westley TBC

Coventry and No nomination No nomination Warwickshire LEP

Greater Birmingham and TBC TBC Solihull LEP

Cannock Chase District TBC – Council Meeting TBC – Council Meeting Council 06.07.16 06.07.16

Nuneaton and Bedworth Cllr John Haynes Cllr Bob Copland Borough Council

Redditch Borough Cllr John Fisher Cllr Mark Shurmer Council

Tamworth Borough No nomination No nomination Council

Telford & Wrekin Council Cllr Rob Sloan Cllr Charles Smith

Independent Chair To be determined Not applicable

Page 29 [PUBLIC]

Page 30 Agenda Item 2.3 [PROTECT]

Board Meeting

Date Friday 10 June 2016

Report title Appointment to Outside Bodies 2016-2017

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve the continued membership of the West Coast Rail 250 Campaign for the financial year 2016 – 2017 at a cost of £1100.

2. That an elected Member be appointed to serve on the West Coast Rail 250 Campaign General Council and that a Councillor be appointed as substitute Member for the period ending with the Annual Meeting of this Committee in 2017.

3. That an elected Member be appointed to serve on the Midlands Connect Strategic Board for the period ending with the Annual Meeting of this Committee in 2017.

Page 31 [PUBLIC]

1.0 Purpose

1.1 This report seeks the appointed of elected Members to the bodies outlined below. Regarding the case of the West Coast Rail 250 Campaign, the Board is recommended to agree an annual subscription for the financial year 2016/17 and appoint

2.0 Bodies for Appointment/Subscription renewal

West Coast Rail 250 Campaign

2.1 West Coast Rail 250 is a campaign for the modernisation of the West Coast Main Line railway, which links directly London to Birmingham, Holyhead, Liverpool, Manchester and Glasgow. 39 local authorities and 22 other organisations along the West Coast Main Line (WCML) currently support the campaign. Membership enables local authorities to keep informed on the progress of the WCML upgrade and on many other matters relating to the policy and service issues on the line.

2.2 Membership entitles the Authority to nominate one Councillor to represent the 7 West Midlands Metropolitan District Councils as well as a substitute member. West Coast Rail 250 General Council meetings are generally held three times per year.

2.3 Previously the West Midlands held two memberships. One membership was provided through the West Midlands Joint Committee with a second through the Joint Transport Delivery Committee (TDC) of the West Midland Integrated Transport Authority WMITA. The cost of this joint membership was £1450.

2.4 At the West Midlands Joint Committee Annual meeting on 24 June 2015, Councillor Roger Lawrence – Wolverhampton City Council (or his substitute, Councillor Tahir Ali - Birmingham City Council) were appointed to serve on the West Coast Rail 250 Campaign General Council for the period ending with the Annual Meeting of this Committee 2016.

2.5 The Joint Transport Delivery Committee similarly appointed Councillor R Horton who also serves as the Vice Chairman to the Campaign General Council.

Midlands Connect

2.6 Midlands Connect is a £5 million collaboration with central government that brings together 28 local authorities and 11 Local Enterprise Partnerships from across the Midlands. 2.7 Together, the Midlands Connect Partnership and the Department for Transport are developing a transport strategy that identifies the major infrastructure projects needed to improve the connectivity of our region’s key locations so we can help drive economic growth and power the Midlands Engine. The strategy is due to be published in March 2017. 2.8 The West Midlands Integrated Transport Authority nominated Cllr Roger Lawrence – Wolverhampton City Council, as a Midlands Connect Strategic Board Member.

Page 32 [PUBLIC]

3.0 Financial implications

3.1 The annual Subscription Membership for the West Coast Rail 250 Campaign, £1100 will need to be met from the Transport Levy.

4.0 Legal implications

4.1 There are further no legal matters arising from this report.

5.0 Equalities implications

5.1 None arising from this report

6.0 Other implications

6.1 None arising from this report

7.0 Schedule of background paper

7.1 West Midlands Joint Committee Nominations and Subscription Report 2015/2016 – 24 June 2015

Page 33 [PUBLIC]

Page 34 Agenda Item 2.4a [PROTECT]

Board Meeting

Date Friday 10 June 2016

Report title Councillor and LEP Governance Arrangements

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision

The Combined Authority Board is recommended to:

1. Approve the draft Councillor and LEP governance structure and arrangements, set out in appendix A.

Page 35 1.0 Purpose

1.1 The purpose of this report is to seek approval of the Councillor and LEP representatives governance structure and arrangements, as detailed in Appendix A.

2.0 Background

2.1 The Councillor and LEP representatives governance arrangements set out the functions and operating procedures for all Boards/groups/committees operating within the Combined Authority.

3.0 Embedding the Governance Arrangements

3.1 The governance structure and arrangements will be kept under review and as required further reports will be presented to the Board for discussion and approval as governance arrangements begin to become embedded into the Combined Authority.

3.2 The Constitution will be updated as required to reflect the governance arrangements.

4.0 Financial implications

4.1 There are no financial implications resulting from this report.

5.0 Legal implications

5.1 The Constitution will be updated to reflect the governance arrangements and any further governance developments.

6.0 Equalities implications

6.1 An initial equalities analysis has been carried out on the related documents to the establishment of the Combined Authority, having due regard to the equalities implications and there are no specific implications linked to the recommendations in this report.

7.0 Schedule of background papers

7.1 Combined Authority Programme Board Meeting 27th May 2016

Page 36 Governance Framework

Strategic Leadership Who?  Councillors West Midlands Combined Authority Board  LEP Chairs  Observers

 Councillors Strategic Development Strategic Economic Plan Health and Wellbeing Public Service Reform  LEP Representatives Board Board Board  Public Sector Partners

Page 37 Page  Councillors Assurance  Independent Audit & Standards Committee Overview & Scrutiny Committee Appointments (Audit)

Policy Development and  Investment specialists  Councillors Delivery Investment Board  Advisers

 Councillors Public Service  LEP Representatives Transport HS2 Delivery Housing and Reform Public Service Arts & Culture  Private and Public Sector Delivery Programme Land Specialists Reform Working Group Committee Board  Private and Public Sector Skills and Housing Advisers Employability Health and One Public  Voluntary Sector Collective Troubled Wellbeing and Representatives Estate and Land Other Working Investment Fund Productivity Individuals and Mental Health  Trade Union Remediation groups or Boards Advisory Working Group Criminal Justice Working group Representatives Board as necessary Working Group Working Group  Employees Representatives

 Combined Authority Independent Commissioners Commissions Mental Health Commission Productivity & Skills Commission Land Commission  Councillors  Advisers West Midlands Combined Authority Board

Governance Type Strategic Leadership

Purpose Overall responsibility for developing and delivering the Strategic Economic Plan (SEP)

Overall responsibility for developing the strategy and delivering Public Service Reform (PSR)

Deliver the current devolution deal

To negotiate and deliver further devolution deals

Approval of future devolution deal development, to determine strategy on investment decisions

Allocating resources through the Combined Authority budget & income streams such as devolution deals

Determination of Transport strategy and spending priorities

To operate a Cabinet model with Constituent Member Leaders ‘sponsoring’ a portfolio

To consider and determine applications for Constituent, Non-Constituent and observer status

To work with partners to develop the Midlands Engine

To work with Government to develop and influence national policy

To set up the fees for membership

Accountable to Membership of the West Midlands Combine Authority

Membership • Two elected members from each Constituent Council • One elected member from each Non-Constituent Council • The Chair or one Board member from each Non-Constituent LEP Member

Observers • Police & Crime Commissioner • West Midlands Fire & Rescue Service

Version 2.0 June 2016 Page 38 • Stratford-on-Avon District Council (awaiting formal membership) • Shropshire County Council (awaiting formal membership) • Warwickshire County Council? • North Warwickshire

Chair • At the Annual General Meeting (AGM) a Chair will be elected - appointed by Constituent Members • At the Annual General Meeting (AGM) upto two Vice Chairs will be elected – appointed by Constituent Members.

Voting Any matters that are to be decided by the Combined Authority Board are to be decided by consensus of the Board where possible.

Where consensus is not possible the provisions of this section in the Constitution shall apply as follows:

Each Member of the Combined Authority Board is to have one vote and no Member including the Chair is to have a casting vote.

Subject to the requirements below any matter put to a vote will be decided on a show of hands. A decision will require a two thirds majority of Constituent Members appointed by Constituent Councils present and voting and where Members appointed by Non-Constituent Councils are permitted to vote a simple majority of all Members present and voting.

Note: if all Constituent Members are present (7) two thirds will be 5.

Any matters put to a vote concerning the matters set out below shall require a unanimous vote of all Members appointed by Constituent Councils present and voting:

i. approval of land use plans

ii. such other plans and strategies as determined by the Combined Authority

iii. financial matters which may have significant implications on Constituent Councils’ budgets

iv. approval of borrowing limits, treasury management strategy including reserves, investment strategy and capital budget of the Combined Authority

v. agreement of functions transferred by the Constituent Councils to the Combined Authority

Version 2.0 June 2016 Page 39 vi. any change of voting rights to all or any Member appointed by a Non-Constituent Councils

vii. approval of specific proposals for individual co-optees to the Combined Authority

viii. use of general power of competence within the Local Democracy Economic Development and Construction Act 2009, including in relation to spatial strategy, housing numbers and the exercise of any compulsory purchase powers

ix. establishment of arms-length companies

x. approval to seek such other powers as may be appropriate and any new powers granted by central government and imposed on the Combined Authority

xi. material amendments to the Constitution

xii. changes to transport matters undertaken by the Combined Authority.

For the avoidance of doubt unanimous will be construed to mean that all Members appointed by Constituent Councils present and voting, vote in favour of the relevant decision.

On the request of any Member of the Combined Authority, supported by two other Members appointed by separate Constituent Councils before a vote is taken, the voting on any question shall be recorded so as to show whether each Member present gave their vote for, abstained or against that question or did not vote.

A Member may demand that his/her vote is recorded in the minutes of the relevant meeting.

The proceedings of the Combined Authority are not invalidated by any vacancy among its Members or any defect in the appointment or qualifications of any Member.

Members appointed by Non-Constituent Councils will be entitled to vote on the matters set out below.

Members appointed by Non-Constituent Councils may vote on the following matters:

i. adoption of growth plan and investment strategy and allocation of funding by the Combined Authority

Version 2.0 June 2016 Page 40 ii. the Strategic Economic Plan strategy along with its implementation plans and associated investment activity being undertaken using funding provided to or by the Combined Authority

iii. the grant of further powers from central government and/or local public bodies that impacts on the area of a Non-Constituent Council

iv. land and/or spatial activity undertaken by the Combined Authority within the area of a Non-Constituent Council

v. public service reform which affects the areas of Non- Constituent Council(s)

vi. areas of Local Enterprise Partnership (LEP) activity relevant to the Non-Constituent Councils through geographical location or as part of a joint committee

vii. all Combined Authority matters concerned with education, employment and skills, enterprise and business support, access to finance, inward investment, business regulation, innovation, transport, environmental sustainability, housing, economic intelligence, digital connectivity and regeneration

viii. future use of business rate retention funding generated beyond that retained within new and existing Enterprise Zones

ix. specific decisions to bid for and allocate revenue and capital funding provided to or by the Combined Authority for use in economic development activities

x. investment activity related to transport and connectivity, not funded by the transport levy and current Maintenance and Integrated Transport blocks

Any vote including Members appointed by Non-Constituent Councils and other Non-Constituent Members will be carried on a simple majority subject to the requirement that there is a majority of two-thirds of Constituent Members, present and voting.

All decisions of the Combined Authority should be made in accordance with the following principles:

i. proportionality (meaning the action must be proportionate to the results to be achieved)

ii. due consultation (including the taking of relevant professional

Version 2.0 June 2016 Page 41 advice)

iii. respect for human rights

iv. presumption in favour of openness and transparency

v. clarity of aims and desired outcomes

vi. due consideration to be given to alternative options to guard against any form of predetermination in any decision making process

vii. the public sector equality duty.

Quorum No business shall be transacted at a meeting of the Combined Authority Board unless at least one Member from five separate Constituent Councils are present.

A meeting of the Combined Authority will not commence unless there is a quorum of Members present. If a meeting has not commenced within 15 minutes of the time specified on the summons and agenda, the meeting shall be postponed, unless the Clerk has announced to those present a valid reason for the delay.

If during any meeting of the Combined Authority Board, the person presiding at the meeting declares a quorum of Members is not present, the meeting will be adjourned for 15 minutes. If at 15 minutes, there is still no quorum present, the meeting shall be adjourned.

All business which would have been considered at the meeting or which has not been completed when the meeting was adjourned, shall stand referred to the next ordinary meeting unless arrangements are made for an extraordinary meeting to consider that business or the business, or part of it, is dealt with as a matter of urgency.

A meeting will not be considered inquorate where, the number of Members present falls below that specified above for the sole reason of a Member or Members being unable to act on an individual items because of the need to temporarily leave the meeting due to a conflict of interests.

Frequency The Board will meet at least monthly. It is anticipated that normally two meetings will be required each month to deal with business.

Allowances There shall be no Basic Allowance or Special Responsibility Allowance payable to any Member. The reimbursement of any travel or subsistence expenses will be the responsibility of the Combined Authority.

Version 2.0 June 2016 Page 42 Servicing The Combined Authority Governance team will support the Combined Authority Board.

Functions and Responsibility

The Combined Authority Board has ultimate responsibility for public transport (amongst other things to be set out) within the Combined Authority area, but may delegate responsibility for delivery as set out under the Local Government Act 1972.

Pursuant to the order the following provisions have effect as if the Combined Authority were a local authority for the purposes of these provisions:

i. Section 142(2) of the Local Government Act 1972 (the power to arrange for publication of information etc. relating to the functions of the authority)

ii. Section 222 of the Local Government Act 1972 (the power to instigate and defend legal proceedings).

The Combined Authority shall have the power to exercise any of the functions described in subsection 1(a) and (b) of section 88 of the Local Government Act 1985 (research and collection of information) whether or not a scheme is made under that section.

The Apprenticeships Skills, Children and Learning Act 2009 shall have effect as if the Combined Authority were a local authority for the purposes of section 84(2).

The Combined Authority is a Local Authority for the purposes of the Local Authorities (Executive Arrangements) (Meetings and Access to Information)(England) Regulations 2012.

Functions conferred on a Combined Authority by Local Government Legislation

The Combined Authority shall have such other powers and duties as are conferred on a Combined Authority by any enactment.

Without prejudice to the generality of the above, such powers and duties include:

i. the duty to appoint an officer to act as Head of Paid Service, a Monitoring Officer and an officer with responsibility for the administration of the Combined Authority’s financial affairs. Such officers will be appointed in accordance with the Combined Authority’s Employment Rules

ii. the power to borrow money

iii. the power to appoint staff and to enter into agreements with other local authorities for the secondment of staff. Staff will be appointed in accordance with the Combined Authority Employment Rules as set out in the Constitution

Version 2.0 June 2016 Page 43 iv. the power to acquire land by agreement or compulsorily for the purpose of any of its functions and to dispose of such land

v. the power to pay subscriptions to the funds of local authority associations

vi. the duty (without prejudice to any other obligation) to exercise its functions with due regard to the need to prevent crime and disorder, the misuse of drugs and alcohol or re-offending in the Combined Authority Area

vii. the power under Section 99 of the Local Transport Act 2008 to promote the economic, social and environmental well-being of its area

viii. the power under section 113A of the Local Democracy, Economic Development and Construction Act 2009 to do anything it considers appropriate for the purpose of carrying out any of its functions.

The Combined Authority is a local authority for the purpose of Section 101 of the Local Government Act 1972 (arrangements for the discharge of functions by local authorities).

The Combined Authority is a best value authority for the purpose of Section 1 of the Local Government Act 1999.

The Combined Authority is a public body for the purpose of the Freedom of Information Act 2000 and shall be registered as both “data controller” and “data processor” as defined by the Data Protection Act 1998.

The Combined Authority is a local authority for the purpose of the power of a Minister of the Crown to pay grants.

The Combined Authority has a statutory responsibility as Local Transport Authority (for the West Midlands) to set out and ensure the implementation of policies and strategy to co-ordinate and promote the use of public transport in the West Midlands.

Officers of the Combined Authority shall deliver the Combined Authority’s public transport policies.

The Combined Authority is responsible for:

Transport

i. High Speed 2 Connectivity package including the maximising of benefits of HS2 across the West Midland’s region

ii. formulating a long-term strategic vision for the West Midlands public transport system that is based on the vision of an integrated public transport system that contributes to the economic development of the West Midlands through a network of high volume public transport corridors

Version 2.0 June 2016 Page 44 ii. developing and championing the business case for a rapid transit network, including Midland Metro

iii. developing and championing the ‘Vision for Rail’ as part of the development of the rail network, in partnership with Network Rail and train operating companies

iv. operating a concessionary fares scheme and implementing the government’s National Concessionary Scheme and any local variations

v. championing and developing Smartcard integrated ticketing technology within the region

vi. developing bus travel, by championing the modernisation of the bus network in the region through a culture that focuses on bus passengers and their needs through the West Midlands Bus Alliance

vii. financially supporting subsidised bus services that are socially necessary, but not commercially viable

viii. providing an annual grant to enable the West Midlands Special Needs Transport Ltd to operate a ‘Ring & Ride’ service for people who have difficulty in using other public transport facilities

ix. developing sustainable policies for the promotion and encouragement of safe, efficient and economic transport facilities and services to, from and within its area, in partnership with public transport operators, the police and district councils

x. providing sustainable integration between public transport modes, including through the provision of interchanges, in order that a seamless network is developed across the region

xi. promoting and publicising the public transport network through the provision of travel information as part of the ‘Network West Midlands’ initiative

xii. constructing and maintaining bus stations and public transport infrastructure.

4. Economic Growth

The Combined Authority will have such well-being powers as are set out in sections 99 and 102A of the Local Transport Act 2008 in order to promote economic growth and such powers can be exercised in conjunction with general powers granted to the Combined Authority by virtue of Section 113A of the Local Democracy Economic Development and Construction Act 2009 (as amended by the Localism Act 2011).

The Combined Authority will exercise functions relating to economic growth including but not limited to:

i. Setting a Combined Authority strategic economic plan and investment strategy in consultation with the Non-Constituent Members

Version 2.0 June 2016 Page 45 ii. Ensuring effective alignment between decision making on transport and decisions on other areas of policy such as land use, economic development and wider regeneration.

iii. Using Combined Authority wide economic intelligence and analysis as a basis for strategic planning and coordination

iv. Acting as an accountable body for a range of devolved funding

v. Strategic decision making on the skills agenda across the West Midlands

vi. Providing a forum for local authorities to exercise the Duty to Cooperate in respect of strategic planning matters

vii. Coordinating inward investment activity through the development of a range of investment mechanisms. The Combined Authority has the General Power of Competence under Section 1 of the Localism Act 2011 and this will enable the Combined Authority to exercise powers in dealing with economic development and regeneration provided by the Local Democracy Economic Development and Construction Act 2009.

In order to carry out effective decision making in respect of the Combined Authority areas of responsibility, the Combined Authority may have dedicated committee/sub-committees/Boards or Working Groups having responsibility to exercise all or some of its functions.

The Combined Authority will have the ability to determine the composition and the scheme of allowances of any of its committees/sub-committees/ Boards or Working Groups, or any other body established by the Combined Authority.

Matters Reserved for Determination by the Combined Authority

The following functions of the Combined Authority will remain reserved matters for determination by the Combined Authority only:

i. setting its revenue budget for transport, including approving estimates of income and expenditure pursuant to s15 (1)(b) of the Transport Act 1968, determining the grants to be made to passenger transport companies under s13 of the Transport Act 1968, and the issue of a levy pursuant to the Transport Levying Bodies Regulations 1992

ii. determining the borrowing limits of the Combined Authority in relation to transport matters, pursuant to s3 of the Local Government Act 2003

iii. developing strategy policies for the promotion and encouragement of safe, sustainable, efficient and economic transport facilities and services and producing a Local Transport Plan/ Transport Strategy

iv. considering and approving the creation and development of Bus Quality Contract Schemes

Version 2.0 June 2016 Page 46 v. formulating general policies with respect to the availability and convenience of public passenger services pursuant to s9A (5) - (7) of the Transport Act 1968

vi. formulating policies in regards to a devolved rail franchise and West Midlands Rail Limited vii. appointment of Chair and Vice Chair of the Transport Delivery sub- Committee (which uses a working title of Transport Delivery Committee (TDC)) viii. responsibility for management and oversight of the Transport related Pension Fund(s) and the on-going maintenance and management of historic schemes

ix. monitoring the Combined Authority’s transport budget, pursuant to s15A (2) of the Transport Act 1968

x. allocation and prioritisation of any central government grants and any other form of funding

xi. transportation policy and strategy in respect of its functions detailed in any Paragraph above xii. to determine a scheme of allowances for any committees/sub committees/ Boards or Working Groups of the Combined Authority

Any of the functions set out above (with the exception of xii) may be referred to the Transport Delivery sub-Committee of the Combined Authority for it to make recommendations for consideration and determination by the Combined Authority.

Matters referred from the Combined Authority to the Transport Delivery sub-Committee of the Combined Authority to make recommendations to the Combined Authority Board.

The following functions of the Combined Authority will be referred to the Transport Delivery sub- Committee of the Combined Authority in order for it to make recommendations to the Combined Authority for decision:

(i) Policies that promote and encourage safe, sustainable, efficient and economic transport facilities and services; and then securing appropriate level of rail services through rail devolution

(ii) policy issues as determined by the Combined Authority within the Work Programme

(iii) the relevant elements of the Combined Authority’s revenue budget and levy

(iv) Bus Quality Partnership Schemes

Review To be reviewed June 2017

Version 2.0 June 2016 Page 47 Strategic Economic Plan (SEP) Board

Governance Type Strategic Development

Purpose The SEP Board will advise the Combined Authority Board on overarching economic strategy and narrative.

The SEP Board will prepare a Strategic Economic Plan and amend as necessary for approval by the Combined Authority Board.

Performance and evaluation of progress in delivering the Strategic Economic Plan

Accountable to Combined Authority Board

Membership 1. One Leader of a Constituent Council from each Local Enterprise Partnership (LEP) area 2. Chairs of the LEPs within the Combined Authority Area 3. One Leader of a Non-Constituent Council within the Coventry and Warwickshire LEP areas 4. One Leader of a Non-Constituent Council within the Birmingham and Solihull LEP area

The following officers will be entitled to attend to advise and report on the work of the Group:

a. Chief Executive, Combined Authority b. Executive Directors of the three LEPs c. Officers of the Combined Authority as necessary d. Representatives of external agencies commissioned to support the development of the SEP e. Other officers, representatives or officials of Government Departments, Councils or Agencies at their request or with the agreement of the Chair of the SEP Board.

Chair A Chair shall be appointed from the LEP Chairs by the Combined Authority Board. If necessary the role may be shared between one or more of the LEP Chairs, A Vice-Chair shall be appointed from the Constituent Members, by the Combined Authority Board.

Version 2.0 June 2016 Page 48 Voting All members of the SEP Board will have one vote.

Quorum The quorum for the SEP Boards meetings is one third of its members.

Frequency The SEP Board will meet monthly or more frequently if required to deliver the work.

Allowances No allowances to be paid.

Servicing The Chair of the SEP Board will arrange appropriate servicing for the SEP Board.

Functions

I. Establish a Strategic Economic Plan (SEP) for the Combined Authority area for the period 2015-2030 that provides a framework for and adds value to existing SEPs and builds the case for ‘Economy Plus’ through this ‘Family of SEPs’ and the devolution of economic and other powers necessary to achieve the objective of making the West Midlands the highest performing area in the Country outside of London.

II. More specifically the SEP Board will co-ordinate and take forward the necessary steps to establish & deliver the Super Strategic Economic Plan including:

a. Preparing and or amending the SEP for approval by the Combined Authority Board b. Ensuring it aligns with the broader Combined Authority programme and LEPs’ individual SEPs and programmes c. Reporting progress to the Combined Authority Board d. Provide policies and initiatives that can, if necessary, support the Midlands Engine proposals e. Provide a strategic steer to officers and receiving regular reports from them on SEP development f. Challenge the SEP proposals as they develop g. Make recommendations as appropriate on the resolution of any issues or policy conflicts that may arise in the course of SEP development or delivery h. Make recommendations to appropriate bodies and groups concerning the allocation or mobilisation of resource or commissioning of any external support to facilitate the development of the plan i. Ensure that appropriate consultation and engagement is taking place with:

• individual LEPs and councils • Government Ministers and Departments

Version 2.0 June 2016 Page 49 • key stakeholders including the business community, neighbouring LEPs and MPs.

III. Guide and make recommendations on the work and focus of the proposed Productivity and Skills Commission insofar as it relates to developing productivity within the private sector recognising that its remit will also involve consideration of the impact of public sector reform on ‘productivity’ within the public sector.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 50 Health and Wellbeing Board

Governance Type Strategic Development

Purpose Responsible for setting the overarching strategic vision for the West Midlands Health and Social Care economy.

Support the West Midlands to achieve its ambition of improving health outcomes for its residents as quickly as is possible, robust and inclusive governance structures need to be developed and put in place.

Membership Members

• Constituent and Non-Constituent members • Health representatives • Public Health representative

Chair The Chair will be appointed by the Combined Authority Board. A Vice Chair will be appointed by the Health and Wellbeing Board.

Voting All members of the Health and Wellbeing Board will have one vote.

Quorum The quorum for the Health and Wellbeing Board is one third of its members.

Frequency The Health and Wellbeing Board will meet monthly or more frequently if required to deliver the work.

Allowances No allowances to be paid.

Servicing The Health and Wellbeing Board will be serviced by the Combined Authority Governance Team.

Functions

I. To understand and influence the interdependent health and social care system within the West Midlands.

Version 2.0 June 2016 Page 51 II. To influence NHS spend in West Midlands in pursuit of West Midland priorities. III. To provide a focus on total public sector commitment to population health commitments. IV. To provide political leadership for major system reform. V. To influence and hold to account new national bodies which will have commissioning roles and play a major role in health and wellbeing in the West Midlands.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 52 Public Service Reform Board

Governance Type Strategic Development

Purpose To advise Combined Authority Board on Public Service Reform strategy and policy.

To co-ordinate strategy and working group activity and work programmes.

To present Public Service Reform models and proposals to the Combined Authority Board.

Accountable to Combined Authority Board

Membership Members

• Councillors • Local Enterprise Partnership (LEP) representatives • Public Sector Partners

Advisers

• PSR Programme Director • Officers of the CA constituent and non-constituent members • Advisers as necessary

Chair The Chair of the Public Service Reform Board will be nominated by the Combined Authority Board. The Vice Chair will be supported by the Public Service Reform Board.

Voting All Members of the Public Service Reform Board have one vote.

Quorum The quorum for the Public Service Reform Board meetings is one third of members.

Frequency The Public Service Reform Board will meet bi-monthly or more frequently as required to complete the business.

Version 2.0 June 2016 Page 53 Allowances No allowances to be paid.

Servicing The Chair of the Public Service Reform Board will organise appropriate servicing for the meetings.

Functions

The role of the Board is to ensure the successful delivery of a Public Service Reform programme. The Board will be responsible for investment, decision making, strategy and risk for Public Service Reform in the West Midlands.

The Public Service Reform Board will:

I. Lead and direct the development of critical enabling capabilities for public service reform, including workforce, digital, data, and research capabilities. II. Identify and exploit opportunities for integrated working and investment to ensure delivery of programme objectives III. Adopt and deliver the principles of PSR. IV. Provide strategic steer and direction to the PSR programme V. Oversee the delivery of the constituent programmes VI. Nominate named lead individuals to oversee and contribute to the delivery of specific work- streams within the overall programme VII. Request timely and regular updates and provide challenge to ensure progress is maintained and milestones are met VIII. Make investment decisions to support delivery of the portfolio IX. Ensure resources are allocated to enable successful delivery of the portfolio X. Drive a set of financial and non-financial benefits and efficiencies through the programme XI. Manage any risks to programme delivery and identify lessons learnt XII. Undertake key decisions and set priorities. XIII. Ensure coherence of PSR portfolio with the wider CA ambition (including the SEP) XIV. Report to and inform the CA on PSR

Review To be reviewed June 2017

Version 2.0 June 2016 Page 54 Audit and Standards Committee

Governance Type Assurance

Purpose To seek assurance that the finances, processes and risks of the Combined Authority are managed to a high standard of openness, integrity and accountability.

Membership One per Constituent, Non Constituent Authority and LEP together with a nominated Substitute Member

Accountable to Independent Committee

Chair The Combined Authority Board will appoint an Independent Member who is not member or officer of any of the Constituent Councils, as Chair of the Committee. The Audit Committee will appoint a Vice Chair.

Note: Until an independent Chair is appointed the Vice Chair will act as Chair

Voting All members of the Audit Committee will have one vote.

Quorum The quorum for the Audit Committee shall be 3 Committee members.

Frequency The Audit Committee will meet quarterly or more frequently if required to deliver the work.

Allowances No allowances to be paid. Expenses to be paid by the Combined Authority.

Servicing The Combined Authority Governance Team will support the Audit Committee.

Version 2.0 June 2016 Page 55 Functions

I. Reviewing and scrutinising the Combined Authority’s financial affairs. II. Reviewing and assessing Combined Authority’s risk management, internal control and corporate governance arrangements. III. Reviewing and assessing the economy, efficiency and effectiveness with which resources have been used in discharging the Combined Authority’s functions IV. Making reports and recommendations to the Combined Authority Board in relation to reviews conducted under paragraphs (a), (b) and (c) above.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 56 Overview and Scrutiny Committee

Governance Type Assurance

Purpose To ensure that decisions made by the Combined Authority, help make the West Midlands region a better place to live, work, study and do business.

To undertake call-in arrangements for the Combined Authority.

To make recommendations for appointment to the Combined Authority Board

Membership • One member of each Constituent Council • One member of each Non-Constituent Council • One LEP member • The Scrutiny Committee may not include any member of the Combined Authority Board or other committees, sub committees, boards or working groups.

Accountable to Independent Committee

Chair The Combined Authority Board will appoint the Chair and Vice-Chair from the Constituent Members.

Voting Each member of the Scrutiny Committee has one vote.

All matters coming or arising before the Scrutiny Committee shall be decided by a majority of the members of the committee present and voting on the matter.

No member of a Scrutiny Committee has a casting vote. If a vote is tied on any matter it shall be deemed not to have been carried.

All references to the Combined Authority should be taken as including a committee, sub-committee, board or working group of the Combined Authority with authority to consider and respond to reports and recommendations on behalf of the Combined Authority.

The Monitoring Officer shall, in consultation with the Chair of the Scrutiny

Version 2.0 June 2016 Page 57 Committee, determine whether a report or recommendation shall be considered by a relevant Committee, Sub Committee, Board or Working Group or the Combined Authority Board.

The scrutiny arrangements will therefore apply to the relevant Committees, Sub Committee and Boards or Working Groups of the Combined Authority as well as the Combined Authority Board itself.

Quorum The quorum for Scrutiny Committee meetings will be five members.

Frequency The Scrutiny Committee will meet quarterly. Any Scrutiny Review Groups will meet as necessary, to complete the business.

Allowances No allowances to be paid. Expenses to be paid by the Combined Authority.

Servicing The Combined Authority Governance Team will support the Scrutiny Committee and Scrutiny Reviews.

Functions

The Scrutiny Committee shall have the following functions:

I. review or scrutinise decisions made, or other action taken, in connection with the discharge of any functions which are the responsibility of the Combined Authority II. make reports or recommendations to the Combined Authority Board on matters that affect the Combined Authority area or the inhabitants of the area III. make reports or recommendations to the Combined Authority with respect to the discharge of any functions which are the responsibility of the Combined Authority.

Publishing Reports or Recommendations

The Scrutiny Committee may publish any report or recommendations.

In publishing a report or recommendations, the Scrutiny Committee:

• must exclude any confidential information • may exclude any relevant exempt information.

Where information is excluded, the Scrutiny Committee:

• may replace as much of the document as is necessary to remove confidential or exempt information and replace the information with a summary which does not disclose that information • must issue a summary, if, in consequence of excluding the information, the document published would be misleading or not reasonably comprehensible.

Version 2.0 June 2016 Page 58 In the exercise of its functions under part two of the Combined Authority’s Constitution the power of the Scrutiny Committee shall include the doing of anything which is calculated to facilitate, or is conductive or incidental to the discharge of those functions.

Notice

A Scrutiny Committee may by notice require the Combined Authority Board within two months of receiving any report or recommendations, to:

• consider the report or recommendations • respond to the Scrutiny Committee indicating what (if any) action the Combined Authority Board proposes to take • publish the response, if the Scrutiny Committee has published the report or recommendations.

The Combined Authority Board shall comply with any such notice given by the Scrutiny Committee under the terms of the Constitution.

Publishing a Response

In publishing the response, the Combined Authority Board:

• must exclude any confidential information • may exclude any relevant exempt information.

Where information is excluded, the Combined Authority may replace as much of the document as discloses the information with a summary which does not disclose that information, and if, in consequence of excluding the information, the document published would be misleading or not reasonably comprehensible.

Call-in of Combined Authority and Committee, Sub-Committee, Board or Working Group Decisions

Publishing Decisions

The Monitoring Officer shall publish details of the decisions of the Combined Authority Board and its committees, sub-committees, boards and working groups (where relevant) on its website and provide notice of those details to all Members of the Combined Authority Board no later than the close of business on the third clear working day following the day of the meeting at which the decision was made.

Scope

With the exception of any decision which the Combined Authority Board or a committee, sub- committee, board or working group has formally resolved as urgent, any decision of the Combined Authority may be called-in for scrutiny.

Version 2.0 June 2016 Page 59 Implementing Decisions

A decision on a matter dealt with under the urgency provisions contained in the Constitution or otherwise resolved by the Combined Authority Board or a committee, sub-committee, board or working group to be urgent may be implemented immediately.

Any other decision of the Combined Authority Board or a committee, sub-committee, board or working group of the Combined Authority may be implemented after 5.00pm of the fifth clear working day after the publication of the decision, unless it is called-in.

Process

Five members of the Scrutiny Committee to include at least one member from three different Constituent Authorities may call-in a decision of the Combined Authority for scrutiny by notifying the Monitoring Officer.

On receipt of a call-in request, the Monitoring Officer shall:

• notify the members of the Combined Authority Board or it’s committee, sub-committee, board or working group of the call-in • call a meeting of the Scrutiny Committee, to scrutinise the decision.

Scrutinising the Decision

The Scrutiny Committee must scrutinise the decision within 10 clear working days of the Monitoring Officer receiving the request for call-in. If it does not meet within this time or does not conclude its scrutiny of the decision, the decision will automatically take effect at the end of the period.

Where the Scrutiny Committee has scrutinised a decision, it may:

• endorse the decision • refer the decision back to the Combined Authority, committee, sub-committee, board or working group for reconsideration, setting out, in writing the nature of its concerns.

A decision which has been endorsed by the Scrutiny Committee may be implemented immediately.

Where a decision has been referred back, the Combined Authority, committee, sub-committee, board or working group shall reconsider the decision at its next ordinary meeting or at such earlier meeting as may be called to deal with the referral or dealt with under the urgency provisions within the Constitution, where the matter becomes urgent.

A decision will be urgent if any delay likely to be caused by the call in process would seriously prejudice the Combined Authority’s Constituent or Non-Constituent Member Authorities’ or the public’s interests.

A decision which has been recommended for re-consideration may not be implemented, except in accordance with the following section - ‘Reconsidering the Decision’.

Version 2.0 June 2016 Page 60 Re-considering the Decision

The Chair of the Scrutiny Committee or their nominee may attend the meeting which is re- considering the decision, to present the report or recommendations of the Scrutiny Committee.

The Combined Authority, its Committee, Sub-Committee, Board or Working Group may confirm, amend or rescind the decision.

A decision which has been confirmed or amended may be implemented immediately.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 61 Investment Board

Governance Type Policy Development & Delivery

Purpose Make investment decisions for the Collective Investment Fund and Land Remediation Fund and any other funds that the Combined Authority appoints Finance Birmingham to Fund Manage in the future.

Recommend these decisions to the Combined Authority Board for approval.

Membership Members

• 1 Independent Chair of the Investment Board • 3 Councillors • 3 Local Enterprise Partnership representatives • 1 Finance Birmingham representative (non-voting)

Advisers

• Finance Birmingham • Officers of the Combined Authority • Constituent Councils and Non-Constituent Councils.

Accountable to Combined Authority Board

Chair An independent chair shall be appointed by the Combined Authority Board. A Vice Chair will be appointed by the Investment Board.

Voting All Members of the Investment Board have one vote. The Combined Authority Board or funding organisation will have the power of veto.

Quorum The quorum for the Investment Board shall be three members.

Version 2.0 June 2016 Page 62 Frequency The Investment Board will meet monthly.

Allowances No allowances to be paid. Expenses to be paid by the Combined Authority. The Independent Chair will be remunerated if approved by the Combined Authority Board.

Servicing Finance Birmingham will organise appropriate servicing for the Investment Board

Functions

I. Finance Birmingham (FB) will manage the Collective Investment Fund and Land Remediation Fund within its existing permissions and consistent with its existing fund management models II. Finance Birmingham will advise the Investment Board on investments and then drawdown from the respective councils via an accountable body III. The decision to proceed with an investment will be taken by the investment board IV. Finance Birmingham will report quarterly to the Combined Authority Board of its performance against the objectives in the Investment Strategy V. Note further detail on functions will be presented to the July Combined Authority Board.

The Investment Board will:

I. Discuss investment proposals II. Provide appropriate challenge to investment proposals III. Make investment decisions for the Collective Investment Fund (CIF) and Land Remediation Fund (LRF) and any other funds that the Combined Authority appoints Finance Birmingham to Fund Manage in the future IV. Approve sponsored applications to be awarded funding V. Approve and oversee investments made via the Collective Investment Fund (CIF) and the Land Remediation Fund (LRF) VI. Make appropriate decisions and share responsibility for and uphold all decisions made by the Board VII. Report to the Combined Authority for final approval of the recommendations.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 63 Transport Delivery Committee

Governance Type Policy development and policy delivery

Purpose The Transport Delivery Committee will be a sub-committee of the Combined Authority Board.

The Transport Delivery Committee will be part of the Transport for West Midlands (TFWM) activities.

To provide oversight of operational delivery of transport across the West Midlands.

As requested by the Combined Authority Board or Leader with Transport responsibilities, advise on transport policy matters.

Be responsible for the discharge of specified transport functions delegated by the Combined Authority Board.

Accountable to Combined Authority Board via Transport Portfolio Holder

Membership Total 19 broken down as follows:

• Birmingham City Council 7 • City of Wolverhampton 2 • Coventry City Council 2 • Dudley Metropolitan Borough Council 2 • Sandwell Metropolitan Borough Council 2 • Solihull Metropolitan Borough Council 2 • Walsall Metropolitan Borough Council 2

Members will be nominated by their Council

Chair Appointment of the Chair and Vice Chair of the Transport Delivery Committee will be made by the Combined Authority Board.

Version 2.0 June 2016 Page 64 Voting Each member of the Transport Delivery Committee will have one vote.

All matters before the Transport Delivery Committee shall be decided by a majority of the members of the committee present and voting on the matter.

Quorum The quorum for the Transport Delivery Committee shall be seven members.

Frequency The Transport Delivery Committee will meet bi-monthly or more frequently as required to deliver the work.

Allowances Allowances to be paid in 2016-2017.

Servicing The Combined Authority Governance Team will support the Transport Delivery Committee.

Functions

The following functions of the Combined Authority will be referred to the Transport Delivery Committee of the Combined Authority in consultation with the member designated as lead member for transport in order that recommendations may be made to the Combined Authority Board for decision:

I. receive policies that promote and encourage safe, sustainable, efficient and economic transport facilities and services II. receive policy issues as specifically identified by the Combined Authority Board within the Work Programme III. the relevant elements of the Combined Authority’s revenue budget and levy IV. Bus Quality Partnership Schemes

The following functions of the Combined Authority will be delegated to the Transport Delivery Committee of the Combined Authority in order for it to determine, subject to the Transport Delivery Committee of the Combined Authority exercising these functions in accordance with any transport policies of the Combined Authority, the Local Transport Plan / Strategy, and the Combined Authority’s agreed transport budgets:

I. monitoring and overseeing the delivery of transport activities (including the power pursuant to s15 (6) of the Transport Act 1968) to such directions to officers of the Combined Authority as appears to the Transport Delivery Committee of the Combined Authority to be appropriate to secure the policy objectives of the Combined Authority II. ensuring that the Combined Authority secures the provision of appropriate subsided public passenger transport services under s9A (3) of the Transport Act 1968 III. considering and approving the creation and development of:

Version 2.0 June 2016 Page 65 a. Ticketing Schemes under s135 - 138 of the Transport Act 2000 b. Concessionary Travel Schemes under s93 - 104 of the Transport Act 1985 IV. determining what local bus information should be made available, and the way in which it should be made available, under s139 - 143 of the Transport Act 2000 V. ensuring the outcomes of the Transport Delivery Committee can be appropriately delivered from within the funding allocations approved by the Combined Authority Board VI. monitoring expenditure against its approved budget VII. approving and monitoring the Combined Authority minor transport works capital programme and the agreed budget for the scheme concerned VIII. monitoring performance against the agreed delivery plan and Local Transport Plan/ Transport Strategy IX. formulating, developing and monitoring procedures for public consultation of the Combined Authority’s transport policies X. considering issues arising from the implementation of schemes for the introduction of smart ticketing systems and state of the art technologies XI. determining the operation, performance, contract management and development of tendered bus services, bus stations/stops, and passenger transport services, under s10 (1) of the Transport Act 1968 and within the agreed Combined Authority budget.

Make recommendations to the lead member for Transport in connection with the Combined Authority disposing of, acquiring or developing any land related to transport outcomes.’

Review To be reviewed June 2017

Version 2.0 June 2016 Page 66 HS2 Delivery Programme Board

Governance Type Policy Development and Delivery

Purpose To focus on strategic matters that affect the delivery of the HS2 Growth Strategy

To ensure delivery of the HS2 Growth Strategy

Accountable to Combined Authority Board

Membership Members

• The Chair of the Greater Birmingham and Solihull LEP (acting as the chair of the Board) • The Leader of Birmingham City Council • The Leader of Solihull Metropolitan Borough Council • A representative from the Combined Authority representing Coventry and Warwickshire • A representative from the Combined Authority representing the Black Country • Non-Constituent Council Chief Executive Representative

Advisers

• The Chair of the HS2 Local Delivery Team • The Chairs of each of the Local Delivery Bodies/Vehicles • Senior representative from HS2 Ltd. • Senior representative from the Government Growth Unit • Other advisers as invited by the Chair

Chair The Chair will be appointed by the Combined Authority Board. A Vice Chair will be appointed by the HS2 Delivery Board.

Voting Each member of the HS2 Delivery Board will have one vote.

Quorum The quorum will be three members of the Board.

Version 2.0 June 2016 Page 67 Frequency The HS2 Delivery Board will meet monthly, or more frequently as necessary to undertake the business.

Allowances No allowances to be paid.

Servicing The HS2 Delivery Board Chair will organise appropriate servicing for the HS2 Delivery Board

Functions

The principle responsibilities of the HS2 Delivery Board are as follows:

I. to provide strategic leadership in the implementation of the Growth Strategy, owning the formulation of the Implementation Plan and its subsequent delivery. The Implementation Plan will define a prioritised programme of projects, their milestones; the input, output, outcome and benefit indicators that will be used to track delivery; and the resources being committed to ensure delivery II. identify and have an understanding of the principal risks associated with the implementation of the Growth Strategy and ensure that appropriate systems are in place which effectively monitor and manage those risks III. ensure that the necessary structures and resources are in place to enable the delivery of the Implementation Plan and to monitor and measure performance against the strategic outputs. This will include approving the remit and governance of the HS2 Local Delivery Team and any local delivery bodies/vehicles, including that of a Development Corporation where necessary IV. as part of establishing their prioritised investment programme bring forward business cases for individual transport projects for the Government to consider, where required in line with existing agreements and processes, including the interlinked Metro extensions to Brierley Hill and HS2 Interchange V. report on a bi-monthly basis to the Combined Authority Board on progress in the implementation of the Growth Strategy VI. ensure a communications program is in place which effectively communicates with government authorities, other stakeholders and the public VII. considers for approval business cases contained within the approved Implementation Plan for funding and other resource requests VIII. provide financial accountability and management function for the total investment package including approvals in accordance with any accountable body framework established for the Combined Authority and, or GBSLEP.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 68 Housing, One Public Estate and Land Remediation Delivery Board

Governance Type Policy Development and Delivery

Purpose To prepare a Housing, One Public Estate and Land Remediation Strategy for consideration by the Combined Authority Board to deliver the Housing, One Public Estate and Land Remediation Delivery Strategy.

Accountable to Combined Authority Public Service Reform Board

Membership Councillors member councillors Non-Constituent member councillors

Chair To be appointed by the Combined Authority Board. The Vice Chair will be appointed by the Housing, One Public Estate and Land Remediation Delivery Board.

Voting All members of the Housing, One Public Estate and Land Remediation Delivery Board will have one vote.

Quorum The quorum for the Housing, One Public Estate and Land Remediation Delivery Board meetings shall be one third of its Members.

Frequency The Housing, One Public Estate and Land Remediation Delivery Board will meet monthly or more frequently as required to deliver the work programme.

Allowances No allowances to be paid.

Servicing The Housing, One Public Estate and Land Remediation Delivery Board will be serviced by the Combined Authority Governance Team.

Version 2.0 June 2016 Page 69 Functions

I. To prepare a Housing, One Public Estate and Land Remediation Strategy for consideration by the Combined Authority Board to deliver the Housing, One Public Estate and Land Remediation Delivery Strategy II. Ensure compliance with the value, vision, mission of the Housing, One Public Estate and Land Remediation agenda III. Establish and implement strategic objectives of the board IV. Provide oversight, direction and constructive challenge V. Ensure that local priorities are reflected in the Housing, One Public Estate and Land Remediation agenda VI. Accountability for service delivery and performance VII. Identify and monitor risks which could affect the Board’s ability to deliver its objectives.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 70 Public Service Reform - Skills and Employment, Troubled Individuals and Criminal Justice Working Group

Governance Type Policy Development and Delivery

Purpose To advise Combined Authority Public Service Reform Board on Public Service Reform strategy and policy for skills and employment, troubled individuals and criminal justice.

Accountable to Combined Authority Public Service Reform Board

Membership Members

• Councillors • Public Sector Partners • Non-Constituent Council Chief Executive Representative

Advisers

• Public Service Reform Programme Director • Advisers as necessary

Chair The Chair of the Skills and Employment, Troubled Individuals and Criminal Justice Working Group will be nominated by the Public Service Reform Board. The Vice Chair will be supported by the Skills and Employment, Troubled Individuals and Criminal Justice Working Group.

Voting All Members of the Policy Development and Delivery Group have one vote.

Quorum The quorum for the Public Service Reform Board meetings is one third of members.

Frequency The Public Service Reform Board will meet quarterly or more frequently as required to complete the business.

Allowances No allowances to be paid.

Page 1 of 2 Version 2.0 June 2016 Page 71 Servicing The Chair of the Public Service Reform Board will organise appropriate servicing for the meetings.

Functions

The role of the Group is to ensure the successful delivery of a Public Service Reform programme.

The Policy Development and Delivery Group will:

I. Lead and direct the development of critical enabling capabilities for public service reform, including workforce, digital, data, and research capabilities. II. Identify and exploit opportunities for integrated working and investment to ensure delivery of programme objectives III. Adopt and deliver the principles of Public Service Reform. IV. Provide strategic steer and direction to the Public Service Reform programme V. Oversee the delivery of the constituent programmes VI. Nominate named lead individuals to oversee and contribute to the delivery of specific work- streams within the overall programme VII. Request timely and regular updates and provide challenge to ensure progress is maintained and milestones are met VIII. Make investment decisions to support delivery of the portfolio IX. Ensure resources are allocated to enable successful delivery of the portfolio X. Drive a set of financial and non-financial benefits and efficiencies through the programme XI. Manage any risks to programme delivery and identify lessons learnt XII. Undertake key decisions and set priorities. XIII. Ensure coherence of Public Service Reform portfolio with the wider CA ambition (including the Super SEP) XIV. Report to and inform the Public Service Reform Board

Review To be reviewed June 2017

Page 2 of 2 Version 2.0 June 2016 Page 72 Public Service Reform - Health and Wellbeing and Mental Health Working Group

Governance Type Policy Development and Delivery

Purpose To steer and provide governance for the Combined Authority’s work in relation to health, wellbeing and mental health.

Accountable to Public Service Reform Board

Membership • Combined Authority Board Members (Constituent & Non- Constituent) • LEP Chairs (Non-Constituent Members)

And as invited by the Combined Authority Board:

• Representative from NHS England • STP System Leaders • Representative from NHS Improvement • Representative from Public Health England • Experts by Experience • West Midlands Police • West Midlands Fire Service • Chair of the Mental Health Commission Steering Group • Mental Health Provider • Mental Health Commissioner • Department of Work & Pensions

Chair To be appointed by the Combined Authority Board. Vice Chair to be appointed by the Health and Wellbeing and Mental Health Working Group.

Voting Each member of the Board will have one vote.

Version 2.0 June 2016 Page 73 Quorum The quorum for the Health and Wellbeing and Mental Health Working Group meetings will be one third of members.

Frequency The Health and Wellbeing and Mental Health Working Group will meet monthly or more frequently as necessary to deliver the required outcomes.

Allowances No allowance will be paid. Non-Officer appointments will have travel expenses paid by the Combined Authority.

Servicing The Wellbeing Board will be serviced by the Combined Authority Governance Team.

Functions

I. To develop a Combined Authority wide approach to Health and Wellbeing II. To lead the implementation of the recommendations of the Mental Health Commission, monitor progress and address any obstacles that arise III. To lead the development of a Health devolution proposition and subsequently provide governance for its implementation

Review To be reviewed June 2017

Version 2.0 June 2016 Page 74 Arts and Culture Working Group

Governance Type Policy Development and Delivery

Purpose To produce a single integrated strategy for culture, creative and visitor economy, with clear links to proposals for skills, transportation and innovation for approval by the Combined Authority Board.

To oversee delivery of the Arts and Culture Strategy once agreed by the Combined Authority Board.

Accountable to Combined Authority Board

Membership Members

• 1 Member per constituent Member • 1 Member per Non-Constituent Member

Advisors

• Advisers will be invited as necessary

Chair The Chair will be nominated by the Combined Authority Board. The Vice Chair will be appointed by the Arts and Culture Working Group.

Voting All Members of the Arts and Culture Working Group will have one vote.

Quorum The quorum for the Arts and Culture Working Group meetings is one third of members.

Frequency The Arts and Culture Working Group will meet monthly or more frequently as required to complete the business.

Allowances No allowances will be paid.

Version 2.0 June 2016 Page 75 Servicing The Chair of the Arts and Culture Working Group will organise appropriate servicing for the meetings.

Functions

The Arts and Culture Working Group will:

I. Produce a single integrated strategy for culture, creative and visitor economy, with clear links to proposals for skills, transportation and innovation for approval by the Combined Authority Board. II. Oversee delivery of the Arts and Culture Strategy once agreed by the Combined Authority. III. Examine the national position regarding the funding of culture and the application of national cultural assets so that the Combined Authority has an appropriate level of resource to sustain and continue to grow and develop its provision IV. Develop and implement a single integrated strategy which connects effectively to plans to increase and retain investment, skills and visitors, through the Midlands Magnet V. Identify and exploit opportunities to ensure delivery of strategic objectives VI. Provide strategic steer and direction to the Arts and Culture agenda VII. Request timely and regular updates and provide challenge to ensure progress is maintained and milestones are met VIII. Ensure resources are allocated to enable successful delivery IX. Manage any risks to programme delivery X. Undertake key decisions and set priorities.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 76 Collective Investment Fund Advisory Working Group

Governance Type Policy Development & Delivery

Purpose To review and discuss investment proposals and the pipeline of investment opportunities for the Collective Investment Fund, and to monitor the development of those opportunities prior to any recommendations to the Investment Board by Finance Birmingham.

Membership Members

• Finance Directors, two from constituent member authorities and the Combined Authority Section 151 Officer • 3 LEP representatives, one from each LEP • 1 Finance Birmingham representative

Advisers

• Advisers as necessary

Chair The Chair will be appointed by the Combined Authority Board. The Vice Chair will be appointed by the Collective Investment Fund Advisory Working Group.

Voting Each member of the Collective Investment Fund Advisory Working group will have one vote.

Quorum The quorum for the Collective Investment Fund Advisory Working Group will be three members.

Frequency The Collective Investment Fund Advisory Working Group will meet monthly or more frequently as required to complete the business.

Allowances No allowances will be paid.

Servicing The Collective Investment Fund Advisory Working Group will organise appropriate servicing for the group.

Version 2.0 June 2016 Page 77 Functions

I. Finance Birmingham (FB) will manage the Collective Investment Fund within its existing permissions and consistent with its existing fund management models. II. Finance Birmingham will facilitate and support the Collective Investment Fund Advisory Working Group. III. The decision to proceed with an investment will be taken by the Investment Board, the Advisory Working Group will review the recommendations of Finance Birmingham before they are presented to the Investment Board. IV. Finance Birmingham will report quarterly to the Combined Authority Board of its performance against the objectives in the Investment Strategy.

The Collective Investment Fund Working Group will:

• Discuss investment proposals and the pipeline of investment opportunities. • Provide appropriate challenge to investment proposals before they are recommended to the Investment Board. • Receive updates from Finance Birmingham on the investments made via the Collective Investment Fund.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 78 Productivity Working Group

Governance Type Policy Development and Delivery

Purpose To drive the technical insight and create the framework for the Productivity Commission of the Combined Authority.

Accountable to Strategic Economic Plan Board

Membership Members

• Chief Executive of the Combined Authority • Chief Executive of Metropolitan Borough Council • 3 Local Enterprise Partnership representatives (LEPs) • District representative

Advisers

• Black Country Consortium Chief Executive • Skills and Education representative • Land Commission representative • Economic Development expert • Economic Data and Dynamic Economic Impact Model Representative • Public Service Reform representative

Chair The Chair will be appointed by the Productivity Working Group.

Voting All officers of the Productivity Working Group will have one vote.

Quorum The quorum for the Productivity Working Group will be three members.

Frequency The Productivity Working Group will meet fortnightly.

Allowances No allowances to be paid.

Version 2.0 June 2016 Page 79 Servicing The Productivity Working Group will organise appropriate servicing for the group.

Functions

The working group will:

I. Propose a framework against which the commission will be structured II. Draft and produce technical information reports required to underpin the work of the Productivity Commission, setting out challenges and weakness of statistical data sets available III. Draft and produce presentational summaries of the national, regional and West Midlands Combined Authority including 3 LEP level, the productivity and skills channels in the context of the West Midlands Combined Authority Performance Management Framework IV. To action and facilitate the local business data and research on sector specific needs which can help inform enquiry lines with particular references to the 5 drivers of productivity V. Draft for consideration the potential enquiries of the commission for the Combined Authority to consider and prioritise to enable the appointment of appropriate commissioners.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 80 Policy Development & Delivery Boards or Working Groups (Generic Descriptor)

Governance Type Policy Development & Delivery

Purpose To address a priority area of work on behalf of the Combined Authority Board.

Membership • Combined Authority Board Members (Constituent & Non- Constituent) • LEP Chairs (Non-Constituent Members)

And as invited by the Combined Authority Board:

• Nominated Councillor’s from within the Combined Authority (Constituent and Non-Constituent Councils) • LEP Board Members • Observer organisation representatives • Public Sector specialists and advisors • Private sector specialists and advisors • Government officials • Specialists and partners • Community representatives • Voluntary sector representatives • Trade Union representatives • Employee representatives • Independent Invitees

Chair To be appointed by the Combined Authority Board. Vice Chair to be appointed by the Combined Authority or individual Board or Working Group, as determined by the Combined Authority Board.

Voting Each member of the Board or Working Group will have one vote.

Quorum The quorum for the Board or Working Group meetings will generally be one third of members or as specified by the Combined Authority Board.

Version 2.0 June 2016 Page 81 Frequency Boards or Working Groups meet monthly or more frequently as necessary to deliver the required outcomes.

Allowances No allowance to be paid unless specifically determined by the Combined Authority Board. Non-Officer appointments will have travel expenses paid by the Combined Authority.

Servicing The Chair of the Delivery Board or Working Group will organise appropriate servicing for the meetings, unless agreed otherwise by the Combined Authority Board.

Functions

I. To develop a work programme in relation to a specific area of importance to the Combined Authority as determined by the Combined Authority Board II. To gain Combined Authority Board approval for the work programme III. To develop proposals to deliver against the work programme IV. To gain Combined Authority Board approval for the delivery plan V. To monitor delivery against the work programme as necessary VI. To report back to the Combined Authority Board on delivery against the agreed work programme.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 82 Mental Health Commission

Governance Type Combined Authority Commissions

Purpose The Mental Health Commission will focus predominantly on the working age population but will recognise the importance of getting the foundations right in childhood.

Accountable to Combined Authority Board

Membership Specialist Commissioners to be appointed to the Commission as required. Others appointed by the Combined Authority Board.

Chair To be appointed by the Combined Authority Board.

Voting All officers of the Mental Health Commission will have one vote.

Quorum The quorum for the Mental Health Commission meetings shall be one third of Commissioners.

Frequency The Commission will meet monthly or more frequently as required to deliver the work.

Allowances No allowances to be paid to Councillors or officers. Commissioners to be remunerated as approved by the Combined Authority Officer Board and Combined Authority Board as necessary.

Servicing The Chair of the Mental Health Commission will organise appropriate servicing for the Land Commission.

Functions

The role of the Mental Health Commission will be:

I. To assess the scale of poor mental health and wellbeing across the combined authority area and its cost and impact on public sector services, the economy and communities

Version 2.0 June 2016 Page 83 II. To review national and international research and best practice to establish what works best in addressing the impact that poor mental health and wellbeing has on public services, the economy and local communities. Establish the relative costs and benefits of the application of this evidence to the West Midlands III. To identify, and consider the outcome from, work currently under way and/ or being piloted in the West Midlands to improve mental health and wellbeing, including but not limited to Headstart, the NHS Vanguards IV. To make recommendations to both Government and the West Midlands Combined Authority on: • How public services should be transformed to reduce the impact that poor mental health and wellbeing have on public services, the economy and communities in the West Midlands, within the current resource envelope • How resources currently spent on managing and treating mental ill health can be re- directed to measures that keep people mentally well and enable recovery • The potential for a devo deal for mental health and wellbeing, and if appropriate specify the nature of a devo deal • The outcomes that can be delivered by public service reform, within existing resources, to address poor mental health and wellbeing and the impact on demand for public services and productivity

Review To be reviewed June 2017

Version 2.0 June 2016 Page 84 Productivity and Skills Commission

Governance Type Combined Authority Commissions

Purpose • To gather evidence and understand the full extent of the productivity and skills challenge across the 3 LEP geography of the West Midlands, • To understand the component causes of the productivity and skills challenge and the inter-relationships between them, including where differences exist between key sectors and industries • To make recommendations as to how these causes can be addressed at pace, taking a whole system approach, • To provide guidance and recommendations on the implementation of plans to be approved by the Combined Authority Board, • To propose monitoring systems to review the effectiveness of the work, • To ensure that skills needs are future proofed, forward looking and cognisant of technology changes.

Accountable to Combined Authority Board

Membership Eight Commissioners will be appointed from the private sector across a number of our priority industries, educational sectors and bodies.

Chair To be appointed by the Combined Authority Board.

Voting All members of the Productivity Commission have one vote.

Quorum The quorum for the Productivity Commission meetings shall be one third of members.

Frequency The Commission shall meet bi-monthly or more frequently as required to deal with business.

Version 2.0 June 2016 Page 85 Allowances No allowances to be paid to Councillors or officers. Commissioners to be remunerated as approved by the Combined Authority Officer Programme Board and Combined Authority Board as necessary (reasonable expenses only).

Servicing The secretariat of the Productivity and Skills Commission will organise appropriate servicing of the Productivity and Skills Commission.

Functions

The Commission will:

1. Establish how the applicability of existing international, national, regional and local work on productivity and skills issues and economic modelling can be applied in the West Midlands Combined Authority area context.

2. Confirm the economic role of key sectors and the 8 leading Combined Authority SEP Priorities and issues impacting on their economic performance and productivity. More specifically the Commission will co-ordinate and take forward the necessary steps to:

• Articulate specific barriers and, or opportunities for productivity improvement across public and private sectors, • In response to barriers identified articulate programme intervention requirements to promote economic growth. • As appropriate, carry out business led reviews of business support programmes and their effectiveness on productivity improvement, • To make specific reference to productivity differentiators, • To articulate specific Regulations impacting or contributing to productivity improvements, • To articulate supply chain opportunities, • To inform effective measurement and key productivity performance indicators.

3. Identify the key skills that we need to develop locally to drive productivity and specify how we can close the skills gap at an accelerated pace. The Commission will:

• Take a whole system approach, recognising and harnessing the role of local communities, businesses and public services, • Identify the key determinants of achievement for local people in relation to education, employment and skills, • Examine the current delivery and decision making infrastructure to test the extent to which it supports the pace of change required, • Explore the extent to which increases in productivity achieved through greater automation and a shift in the local industrial structure will affect demand for skills in terms of type and volume and outline the estimated timeframe for change.

4. In undertaking its work the Commission will:

Version 2.0 June 2016 Page 86 • Be led by Business Leaders as appointed by the Combined Authority Board and seek to ensure the continuing engagement and support for business in the implementation of its recommendations.(once approved by the Combined Authority Board). • Ensure significant company engagement across all sector groupings recognising their differing contributions and roles within the West Midlands economy • Make recommendations for interventions to improve productivity and skills enabling the delivery of the Combined Authority Strategic Economic Plan, • Be relevant and committed to the work of the Combined Authority, • Be supported by academic and research expertise, • Engage with and involve relevant intermediary organisations such as the Federation of Small Businesses, Engineers Employers Federation, Chamber of Commerce, Trades Unions and other Trade Bodies as appropriate, • Engage with and involve relevant Government departments and their delivery agents across the whole education, employment and skills system, • Take account of current policy direction, address issues and make recommendations for change or development where appropriate, • Be aware: • of the work of the other Commissions and any possible scope for joint recommendations and joint working, • of the extent to which joint working with wider West Midlands’ LEPs and Midlands Engine can contribute and further the objectives of the Commission. • and collaborate with other Combined Authority activity to ensure a joined up approach to the Skills and Employment agenda, • of the requirement to ensure that Combined Authority Board approves the recommendations of the Productivity and Skills Commission.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 87 Land Commission

Governance Type Combined Authority Commissions

Purpose Examine West Midlands land supply, and to consider what measures could be initiated and undertaken to ensure an improved supply of developable land from both a strategic and a regional perspective.

Accountable to Combined Authority Board

Membership Specialist advisors to be appointed to the Commission as required. Non-Constituent Council Chief Executive Representative (as appropriate).

Chair To be appointed by the Combined Authority Board.

Voting All members of the Land Commission will have one vote.

Quorum The quorum for the Land Commission meetings shall be one third of Commissioners.

Frequency The Commission will meet monthly or more frequently as required to deliver the work.

Allowances No allowances to be paid to Councillors or officers. Commissioners to be remunerated as approved by the Combined Authority Officer Board and Combined Authority Board as necessary.

Servicing The Chair of the Land Commission will organise appropriate servicing for the Land Commission.

Version 3.0 June 2016 Page 88 Functions

There are two premises underpinning the work of the Commission:

Premise 1: A sufficient supply of developable land for both employment and housing use is a pre-requisite for the delivery of the Strategic Economic Plan (SEP)

Premise 2: A shortage of sufficient developable land affects the productivity of the West Midlands region

The Commission will address four major questions:

1. What is the extent of the challenge?

• Establish the shortfall in the housing/employment land supply by reference to the Combined Authority SEP. This will draw heavily on the work undertaken by Peter Brett Associates, Oxford Economics and KPMG • Confirm the issues, in discussion with both relevant public bodies and the private sector, in establishing a sufficient supply of developable land • Identify the implications and risks of the shortfall for the West Midlands

2. What can we learn from historic delivery in the West Midlands?

• Contextualise the shortfall in terms of historical delivery across the West Midlands and other UK cities • Capture the learnings from successes and failures in the West Midlands, including assessing the track record of Action West Midlands (AWM) and other development enabling bodies.

3. What are the blockages to the delivery of developable land?

• Critically assess the historic and current experience of the West Midlands in delivering new housing/employment development and a sustainable supply of developable housing/employment land • Obtain and review feedback from Councils, developers, house builders and other consultees to identify, and weight the importance of, the real blockages to delivery

4. How can a sufficient supply of developable land in the West Midlands be secured?

• Evaluate the extent of which national and local tools are insufficient or not working effectively in the West Midlands context • Review and include examples of best practice and innovation drawn from other parts of the UK and other countries

Within this scope, the Commission is likely to want to cover the following lines of enquiry:

i. How to ensure a pipeline of a sufficient supply of developable land, which:

Version 3.0 June 2016 Page 89 • supports both the growth ambitions of local businesses, and the future diversification of the local economy • for which there is a review mechanism to adjust the pipeline to react to changing occupier, resident, and funder patterns.

ii. The role and potential impact of collaborative mechanisms which could be established under the auspices of the Combined Authority, including:

• the role of spatial planning • the delivery of physical and social infrastructure • the application of both private and publicly-sourced funding • the use of cross-subsidies between local authorities • the identification, prioritisation and fast-tracking of strategic sites • the delivery of local sites with regional significance • the creation of centres of expertise • the role of the LEPs within these mechanisms • the relationship between constituent and non-constituent authorities

iii. The extent of public sector land ownership and the means of unlocking these sites

iv. The relationship and tensions between brownfield, greenfield and Green Belt land

v. Collaboration between the public and private sector, including partnership models for delivering new development and the identification, pricing, mitigation and management of risk inherent in these models.

vi. The marketing of the West Midlands, including • dealing with cultural, reputational and legacy issues • creating the sense of “one place”, but with local differentiation • creating a simplified investment pathway for investors and funders

vii. The pros and cons of rendering unviable sites viable, including • ascertaining the extent of the viability challenge • international best practice in remediation.

viii. Is the planning system working in the West Midlands • the balance between reactive and proactive planning • the relationship between the Combined Authority SEP and statutory local planning • the explicit and implicit powers of local authorities (including CPO, LDO etc.) and the role these powers can play in the future • sharing and co-ordination of expertise • “use it or lose it” to address land banking • CIL and other planning obligations.

Version 3.0 June 2016 Page 90 Review To be reviewed June 2017

Version 3.0 June 2016 Page 91 This page is intentionally left blank Agenda Item 2.4b [PROTECT]

Board Meeting

Date Friday 10 June 2016

Report title Officer Governance Arrangements

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision

The Combined Authority Board is recommended to:

1. Approve the Officer governance structure and arrangements, set out in appendix A.

Page 93 1.0 Purpose

1.1 The purpose of this report is seek approval of the Officer governance structure and arrangements, as detailed in Appendix A.

2.0 Background

2.1 The Officer governance arrangements set out the functions and operating procedures for all Boards/groups/committees operating within the Combined Authority.

3.0 Embedding the Governance Arrangements

3.1 The governance structure and arrangements will be kept under review and as required further reports will be presented to the Board for discussion and approval as governance arrangements begin to become embedded into the Combined Authority.

3.2 The Constitution will be updated as required to reflect the governance arrangements.

4.0 Financial implications

4.1 There are no financial implications resulting from this report.

5.0 Legal implications

5.1 The Constitution will be updated to reflect the governance arrangements and any further governance developments.

6.0 Equalities implications

6.1 An initial equalities analysis has been carried out on the related documents to the establishment of the Combined Authority, having due regard to the equalities implications and there are no specific implications linked to the recommendations in this report.

7.0 Schedule of background papers

7.1 Combined Authority Programme Board Meeting 27th May 2016

Page 94 Officer Governance

Programme Board

Page 95 Page Management Board

Devolution Strategy Investment Advisory Public Service Board Group Committee

Strategic Transport Technical Appraisal Public Service Reform Officer Group Panel Executive

Other Professional Groups and Task and Finish Groups

As at June 2016 Combined Authority Programme Board

Governance Type Officer Leadership

Purpose To provide a forum for the officer Management Board to share appropriate proposals and decisions before consideration by the Combined Authority Board or other groups as necessary.

To receive relevant papers from officers, work streams, working groups, strategy groups, advisory groups or Boards as appropriate before seeking approval of the Combined Authority Board.

To ensure appropriate consideration of strategic and performance management activities of the Combined Authority.

Accountable to Combined Authority Board

Membership • Constituent Chief Executives • Non-Constituent Chief Executives • LEP Lead Officers • Combined Authority Statutory Officers • Combined Authority Directors • Combined Authority Head of Communications • Observer organisation Chief Executives • Advisers as invited.

Chair Chair - Clerk to the Combined Authority Vice Chair - Chief Executive of a Constituent member as nominated by the Chair

Voting All officers of the Programme Board will have one vote.

Quorum The quorum for the Programme Board meetings is one third of members.

Version 2.0 June 2016 Page 96 Frequency The Programme Board will meet monthly, or more frequently as required to deliver the work programme.

Allowances No allowances to be paid.

Servicing The Programme Board will be serviced by the Combined Authority Governance Team.

Functions

I. To provide a forum for the officer Management Board to share appropriate proposals and decisions before consideration by the Combined Authority Board or governance groups as necessary II. To receive relevant papers from officers, work streams, working groups, strategy groups, advisory groups or Boards as appropriate before consideration to the Combined Authority Board III. To ensure appropriate consideration of strategic and performance management activities of the Combined Authority IV. Delivery of the programme and the outcomes V. Defining acceptable risk profiles and thresholds for the work of the Combined Authority VI. Ensuring the programme delivers within agreed parameters (e.g. cost, time, quality, organisational impact, expected/actual benefits etc.) VII. Resolving strategic and directional issues between projects which may impact the progress. VIII. Ensuring integrity of the Benefits and there realisation IX. Providing assurance for operational stability and effectiveness through the programme delivery cycle X. Signing off significant products, documents and reports before submission to the Combined Authority Board.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 97 Combined Authority Management Board

Governance Type Officer Leadership

Purpose To ensure that the strategic objectives of the Combined Authority are delivered.

To ensure day to day operations of the Combined Authority are delivered To develop proposals for consultation with the Programme Board before being put before the Combined Authority Board

To represent the Combined Authority at an officer level

To undertake necessary work to ensure Delivery models are appropriate and meeting the policy objectives of the Combined Authority.

Accountable to Combined Authority Board

Membership • Chief Executive • Chief Operating Officer • Monitoring Officer • S151 Officer • Director of Investment • Director of Transport

Chair The Chief Executive will be the Chair of the Combined Authority’s Management Board

The Vice Chairs of the Combined Authority’s Management Board will be:

• Chief Operating Officer • Monitoring Officer

Voting All officers of the Management Board will have one vote.

Version 2.0 June 2016 Page 98 Quorum The quorum for the Management Board meetings is one third of its members.

Frequency The West Midlands Combined Authority Management Board will meet fortnightly or more frequently as required to complete the business.

Allowances No allowances to be paid. Travel expenses will be paid by the Combined Authority.

Servicing The Combined Authority Management Board will be serviced by the City of Wolverhampton or were this is not achievable, by the Combined Authority Governance Team.

Functions

I. To ensure the day to day operational activities of the Combined Authority are delivered. II. To ensure the policy framework set by the Combined Authority is delivered III. To develop proposals for consultation with the Officer Programme Board, Met Chief Executives and other forums as appropriate before consideration by the Combined Authority Board (including, structures, delivery models, performance management, budget, constitution, policies etc) IV. To represent the Combined Authority at an officer level as appropriate V. To ensure that performance and delivery are effective, monitored and reported to the Officer Programme Board, Met Chief Executives and other forums as appropriate before consideration by the Combined Authority Board VI. To prepare an Investment Strategy for consultation with the Officer Programme Board, Met Chief Executives and other forums as appropriate before consideration by the Combined Authority Board VII. To ensure any instructions by the Combined Authority or Chair or Vice Chair are dealt with appropriately and reported back to the Combined Authority Board VIII. To undertake all necessary work to ensure the West Midlands Combined Authority has delivery models appropriate to meet the policy objectives of the West Midlands Combined Authority IX. To undertake other activities as required by the business or the West Midlands Combined Authority Board.

Operating Principles

The guiding principles of operation for the Officers throughout the creation of the Combined Authority, which will continue in the operational delivery and policy formulation process are:

Version 2.0 June 2016 Page 99 a. Doing things properly - the right things in the right way b. Transparency c. Ensuring that the guiding principles set by Met Leaders on 28 April 2015 are adhered to:

• All Leaders are committed to working together to deliver the vision behind the Combined Authority • All communities will benefit from the Combined Authority, but not all communities will benefit at the same time or, in the same way • The Combined Authority should facilitate smarter investment decisions with better outcomes • The Combined Authority should deliver economic growth for the benefit of its communities • The Combined Authority should reform fragmented public services • The Combined Authority should ‘walk before it can run’ and the initial focus should be on small, but high impact, number of ‘early wins’

d. Ensuring that the West Midlands is at the heart of the business and at the heart of the way business is conducted e. To be accountable:

- To the Combined Authority Board - Through consultation and appropriate involvement of Met Chief Executives, LEP Lead Officers, District Chief Executives and other senior officers f. To involve as many officers as necessary to ensure the right skills are deployed doing the right things in the right way g. That meetings of the Management Board will not be a closed shop. If a Chief Executive feels that they need to attend then that will be an option open to them h. That the relevant lead officer or sponsor will be invited to present their report if they wish to i. That the agenda, reports and minutes of the meetings (with the exceptions of confidential minutes which will be restricted) will be available to all Programme Board Officers (of Council’s and LEP’s) j. That feedback from any consultees will be reported to the Management Board verbatim so that no officer(s) feel they have not had a chance to participate or comment on a topic k. To ensure collaborative and inclusive working to ensure the most effective outcomes for the West Midlands

Review To be reviewed June 2017.

Version 2.0 June 2016 Page 100 Devolution Strategy Group

Governance Type Officer Governance

Purpose To recommend devolution proposals to the Combined Authority Board

To be responsible for developing devo strategy, negotiations with Government, liaison with stakeholders, development of devolution implementation plans and co-ordination with relevant Combined Authority governance Boards and programme Boards

To liaise with the economic intelligence unit on monitoring and evaluation of devolution impact and outcomes.

Accountable to Combined Authority Programme Board

Membership Members

• Chief Executive of the Combined Authority • Chief Operating Officer • Chief Executives (or their representatives) of Constituent Members • LEP Lead Officers • Non-Constituent Council Chief Executive Representative

Advisors

• Internal and external policy and specialist advisors will be invited as required.

Chair Constituent Chief Executives will appoint the Chair of the Devolution Strategy Group.

Voting All officers of the Devolution Strategy Group will have one vote.

Version 2.0 June 2016 Page 101 Quorum The quorum for the Devolution Strategy Group meetings is one third of members.

Frequency The Devolution Strategy Group will meet monthly or as necessary to ensure devolution deals are ready and appropriately approved.

Allowances No allowances to be paid.

Servicing The Chair of the Devolution Strategy Group will organise appropriate servicing for the meetings.

Functions

I. Commission and co-ordinate internal and external work (drawing from the best in class internationally as well as nationally) to develop a long term strategy for devolution, bringing discussion papers and policy papers to the Programme Board and the Combined Authority Board as appropriate II. Maintain contact with lead officers in specific programme areas to ensure that devolution strategy is up to date and reflects the latest progress, challenges and ideas III. Maintain a dialogue with relevant government departments and officials and take forward specific proposals for further devolution as appropriate, including overseeing negotiation of further devolution agreements and putting proposals to government at key points such as budget and autumn statements IV. Co-ordinate the highest level implementation planning of agreed Devolution Agreements V. Develop a public prospectus for devolution; ensuring that the Combined Authority has a high profile and positive reputation in the wider debate on devolution and co-ordinate efforts to influence government policy in line with strategic priorities. VI. Brief the Combined Authority Programme Board on the programme and ideas. VII. Report to the Combined Authority Board on proposals and progress and seek authority for negotiations and acceptance of any devolution deals (which will then be subject to individual Council consideration).

Review To be reviewed June 2017

Version 2.0 June 2016 Page 102 Investment Advisory Group

Governance Type Officer Governance

Purpose To develop and implement the Combined Authority investment plan

To develop and monitor the risk management strategy against the approved investment plan including the financing strategy

To consider business cases for investment, programme deliverability and risk, and to implement the WMCA Assurance Framework

To report to the Combined Authority Board with strategy and recommendations.

Accountable to Combined Authority Investment Board

Membership Members

• Constituent and Non-Constituent Members • S151 Officer of the Combined Authority • Monitoring Officer of the Combined Authority • Representation from the 3 Local Enterprise Partnerships (LEPs) • Investment Director of the Combined Authority

(Group members must be independent of project sponsor).

Chair The Chair of the Investment Advisor Group will be appointed by the Constituent Member Chief Executives.

Voting All officers of the Investment Advisory Group have one vote in order to collate suitable recommendations

Version 2.0 June 2016 Page 103 Quorum The quorum for the Investment Advisory Group will meetings is one third of members.

Frequency The Investment Advisory Group will meet monthly or more frequently as required to complete the business.

Allowances No allowances to be paid.

Servicing The Chair of the Investment Advisory Group will organise appropriate servicing for the meetings.

Functions

I. Focus on programme appraisal but involved at every stage for continuity (strategic, outline, full) II. Review projects in relation to the Strategic Economic Plan (SEP) III. Consider PSR proposals including cost-benefit analysis and ‘filter’ assessment IV. Use DEIM as a tool for assessing strategic fit of programmes against WMCA priorities V. Make recommendations to the WMCA Management Board VI. Monitor and review Appraisal Panel performance and decision-making.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 104 Public Service Reform (PSR) Executive

Governance Type Policy Development and Delivery

Purpose Responsible for coordination of the PSR portfolio.

Leading design and implementation of the PSR strategy under the direction of the PSR Board (which accountable to the Combined Authority Board).

Accountable to Combined Authority Public Sector Reform Board

Membership Members

• Public Service Reform Programme Director • Public Service Reform Programme Leads • Public Sector Partners • Chief Executives or their representative • Non-constituent Chief Executive or their representative

Advisers

• Strategy and research • HR • Communications • Finance • Other advisers as necessary

Chair The Chair will be nominated by the Programme Board. The Vice Chair will be appointed by the Public Service Reform (PSR) Executive.

Voting All Members of the Public Service Reform Executive will have one vote.

Quorum The quorum for the Public Service Reform Executive meetings is one third of members.

Version 2.0 June 2016 Page 105 Frequency The PSR Executive will meet bi-weekly or more frequently as required to complete the business

Allowances No allowances to be paid.

Servicing Solihull Metropolitan Borough Council will provide administrative support to service the meetings.

Functions

The role of the PSR executive is to lead, design, facilitate and coordinate delivery of the PSR strategy and programme.

The Executive will:

I. Ensure agreement amongst stakeholders as to the Public Service Reform objectives and benefits II. Establish the Public Service Reform portfolio, supporting governance arrangements and constituent programme plans III. Ensure Public Service Reform portfolio meets its objectives and deliver projected benefits IV. Secure the necessary investment for the business change V. Oversee programme budget spend VI. Report to and advise the PSR Board VII. Oversee the formation of PSR strategy and policy VIII. Work with the West Midlands Health and Well Being Board and the Skills, Employability, Troubled Individuals and Criminal Justice Working Group

Review To be reviewed June 2017

Version 2.0 June 2016 Page 106 Strategic Transport Officers Group (STOG)

Governance Type Officer Governance

Purpose To provide integrated, co-ordinated and clear strategic transport advice to the Combined Authority Board, it’s Policy and Strategy Team, the Constituent Chief Executives and Constituent Leaders.

To act as the “Clearing House” for transport reports presented to Combined Authority Board.

To oversee the continued development and implementation of the Strategic Transport Plan and associated Delivery Plans.

To provide West Midland officer input to and oversight of Midlands Connect and West Midlands Rail.

To provide input to and oversight of the West Midlands Key Route Network.

Accountable to Combined Authority Board

Membership Members

• The Lead Transport officer for each Constituent Council • The Black Country Director of Transport • The Managing Director for Transport for West Midlands TfWM • Combined Authority Director of Corporate Services • Non-Constituent Council Chief Executive Representatives

Advisors

• Highways Agency, Network Rail, DfT representatives as required.

Chair The group will be chaired by the Chief Executive with responsibility for Transport, a vice chair will also be nominated by the group.

Version 2.0 June 2016 Page 107 Voting All members of the Strategic Transport Officers Group will have one vote. There will be no casting votes.

Quorum The quorum for Strategic Transport Officers Group meetings is one third of members.

Frequency Approximately eight times per year – or as often as required to deliver the work programme.

Allowances No allowances to be paid.

Servicing Serviced by the Combined Authority Governance Team.

Functions

• To ensure transport is effectively integrated with other policy areas including regeneration, housing, land use and economic development.

• Effectively liaise and link with the Local Enterprise Partnerships to ensure transport effectively supports their strategies for growth.

• To ensure the delivery of schemes of strategic importance for the Metropolitan area in line with the current West Midlands Strategic Transport Plan and future similar plans and policies.

• To oversee and advise on the development on a new transport strategies as required by the Combined Authority Board.

• To provide funding advice for the Metropolitan area that delivers the Combined Authorities Board’s strategic priorities.

• To interface with the Technical Advisory Panel and Investment Advisory Group

• To oversee and advise on the delivery of a West Midlands Transport Communication strategy which ensures the West Midlands speaks with one voice on transport.

• To support the Combined Authority Board in it’s monitoring of performance and efficiency of transport delivery.

• To consider the work programmes for the Transport Authority and its Policy and Strategy Team, thematic groups and Transport Delivery Committee.

Version 2.0 June 2016 Page 108 • To oversee the development and operation of the West Midland Key Route Network (WMKRN).

• To oversee the management of joint contracts in the West Midlands.

• To develop more efficient and collaborative working practices across the West Midlands Metropolitan area that deliver cost savings.

• To implement robust communication channels, through a regular summit bringing together officers from the districts and delivery partners to ensure that all partners are speaking with a single voice.

• To review regularly these terms of reference, the roles and functions of sub-groups, and other associated governance arrangements.

• To consider and approve a single unified response to consultation documents. Note: This will not preclude individual local authority responses being submitted.

• To oversee all matters relating to Midlands Connect and West Midland Rail as it affects the Combined Authority Area.

• To review asset management/ infrastructure and traffic management matters including highway and network management.

• To oversee and advise on the development and subsequent delivery of a Network Asset Management Plan for the West Midland Combined Authority Area Highway Network.

• To provide advice on any future bus franchising proposals.

• All reports, with the exception of standard financial monitoring reports, must be cleared through the Strategic Transport Board before consideration by the Constituent Chief Executives and the Combined Authority Board.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 109 Technical Appraisal Panel

Governance Type Officer Governance

Purpose To appraise project business cases and provide recommendations to the Investment Advisory Group.

Membership To vary depending on technical expertise required.

Chair [Need advice from Paul Dransfield]

Voting All officers of the Technical Appraisal Panel will have one vote.

Quorum The quorum for the Technical Appraise Panel meetings is one third of members.

Frequency As appropriate to conduct the business.

Allowances No allowances will be paid.

Servicing The Chair of the Technical Appraisal Panel will organise appropriate servicing for the meetings.

Functions

I. To consider project appraisals II. Review and assess business cases - project scoring and evaluation of business case documentation in line with Combined Authority adopted plans and strategies. III. To have regard and input into the DEIM IV. To operate and have regard to the Combined Authority Assurance Framework V. Appraisal Panel considers 'total impact' and not just Public Service Reform (PSR) or just economic considerations VI. Provide recommendations to the Investment Advisory Group (IAG) VII. Also responsible for project monitoring/evaluation on an annual basis VIII. Panel members must be independent of project sponsor

Review To be reviewed June 2017

Version 2.0 June 2016 Page 110 Version 2.0 June 2016 Page 111 Public Service Board

Governance Type Officer Governance

Purpose Provide leadership for the development of an aspirational vision for the transformation of public services in the West Midlands

Develop and implement an ambitious and transformational programme of organisational change to bring better frontline services at less cost.

Provide leadership in promoting a culture of 'joined up' public services across all agencies, ensuring that, at a strategic level, “joined up” priorities and outcomes are achieved.

Accountable to Independent Board recommending proposals for the Combined Authority Public Sector Reform Board.

Membership Members

• Constituent Member Chief Executives • Non Constituent Member Chief Executives (3) • Representatives of Public Sector partners across the region • A third sector representative

Advisors

• Internal and external policy and specialist advisors will be invited as required.

Chair Constituent Chief Executives will appoint the Chair of the Public Service Board.

Voting All members of the Public Service Board will have one vote.

Quorum The quorum for the Public Service Board meetings is one third of members.

Version 2.0 June 2016 Page 112 Frequency The Public Service Board will meet monthly or as necessary to ensure devolution deals are ready and appropriately approved.

Allowances No allowances to be paid.

Servicing The Chair of the Public Service Board will organise appropriate servicing for the meetings.

Functions

Set out below are some of the things which the Board will need to do in order to succeed. The list is not exhaustive.

• Providing leadership for the development of an aspirational vision for the transformation of public services in the West Midlands, to achieve economic growth and a better quality of life for citizens in the area through the provision of seamless public services at less cost. • Providing strategic direction to develop the public services reform agenda in the West Midlands. • Developing and implementing an ambitious and transformational programme of organisational change to bring better frontline services at less cost. • Providing leadership in promoting a culture of 'joined up' public services across all agencies. Ensuring that, at a strategic level, “joined up” priorities and outcomes are achieved. • Identifying opportunities to better use public expenditure in the West Midlands including identifying the potential for better aligning budgets, joint planning, resource allocation and shared investment agreements • Facilitating joined up working including conducting joint service reviews, sharing information, aligning planning and performance management processes and the development of joint investment agreements. • To act as agents for transformational change and championing new forms of public service delivery across the range of workforces. • To lead on the identification and agree future pipeline interventions and policy “deal” propositions, in order to pursue these with Government and other relevant public or private organisations. • To commission/establish other “task & finish” groups to deliver on the agreed work programme/agenda. • To ensure that mechanisms are in place to monitor, evaluate and review agreed priorities and that these are reported back to the Board on a regular basis. • To ensure a communications plan is developed in order to effectively communicate the Board’s objectives and priorities, and those of the institutions represented. • Recommending proposals to the Combined Authority Public Service Board as appropriate.

Review To be reviewed June 2017

Version 2.0 June 2016 Page 113 Version 2.0 June 2016 Page 114 Agenda Item 2.6 [PUBLIC]

WMCA Board Meeting

Date Friday 10 June 2016

Report title Implementing the Devolution Agreement – Provision for Mayoral West Midlands Combined Authority

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Consent to the draft Mayoral (elections) Order (Appendix A), providing for the election of a directly elected Mayor for the West Midlands Combined Authority (WMCA).

2. Delegate approval of any minor and drafting amendments of the Mayoral (elections) Order to the Chair of the Combined Authority, in consultation with the Clerk, for final consent.

3. Endorse the conclusion of the Governance Review (Appendix B) that the making of an Order to confer on the WMCA the additional functions in the draft Mayoral WMCA ‘functions’ Scheme (Appendix C), and the associated revisions to the governance arrangements, would be likely to improve the exercise of statutory functions in the West Midlands.

4. Consider for approval any further members of the Combined Authority, notified by the 10th June 2016, in addition to those identified in the Scheme.

Page 115 [PUBLIC]

5. Delegate minor and drafting amendments of the draft Mayoral WMCA ‘functions’ Scheme to the Chair of the Combined Authority, in consultation with the Clerk. This is to include any additional members agreed at the Combined Authority Board on 10th June 2016.

6. Approve the draft Mayoral WMCA ‘functions’ Scheme to be published and consulted on, pursuant to section 112 of the Local Democracy, Economic Development and Construction Act 2009, as amended.

7. Endorse the arrangements for public consultation on the proposals in the Mayoral WMCA ‘functions’ Scheme, delegating final approval of the consultation details and questions to the Chair, in consultation with the Clerk.

Recommendation(s) for noting:

The Combined Authority Board is asked to note:

1. The West Midlands Combined Authority devolution agreement.

Page 116 [PUBLIC]

1.0 Purpose

1.1 To seek the Combined Authority’s consent to the Mayoral (elections) Order, to be laid in Parliament, establishing the position and term for a Mayor for the West Midlands Combined Authority (WMCA). The Mayoral ‘functions’ Scheme is provided to the Combined Authority for approval alongside the Mayoral (elections) Order, to ensure that the proposed functions and powers of the Mayor can also be considered and approved for consultation, as once the Mayoral (elections) Order is approved by all Constituent Councils, the WMCA, and by Parliament, the position of Mayor is established.

2.0 Background

2.1 A Combined Authority is a statutory body that facilitates the collaboration and joint working between local authorities and Local Enterprise Partnerships (LEPs), to drive economic prosperity for the area. The Order to establish a Combined Authority in the West Midlands was laid in May 2016, the vesting of which will be the 10th June 2016.

2.2 Continuing Councillor and Officer support from all member authorities and LEPs is key, ensuring that operationally the close working relationship between the Councils, LEPs and WMCA continues.

3.0 The Mayoral (elections) Order

3.1 A condition of the devolution agreement is that a new directly elected Mayor for the West Midlands is a member and the Chair of the WMCA. The draft Mayoral (elections) Order makes provision for there to be an elected Mayor and for the first elections to take place in May 2017, for a three year term and four years thereafter. The Mayoral (elections) Order is appended to this report (appendix A) for consideration by the Combined Authority, with minor and drafting amendments delegated to the Chair, in consultation with the Clerk.

3.2 Subject to consent of all the Constituent Councils and the WMCA, it is anticipated that the Secretary of State for Communities and Local Government will lay the Mayoral (elections) Order before Parliament in June 2016.

4.0 The draft Mayoral WMCA ‘functions’ Scheme

4.1 The Mayoral (elections) Order does not deal with the functions and powers of the Mayoral WMCA, it provides only for the position and election of a Mayor for the Combined Authority. Therefore in conjunction with the Mayoral (elections) Order, a draft Mayoral WMCA ‘functions’ Scheme (appendix C) has been prepared for consideration by the Constituent Councils and the Combined Authority, which will be the subject of public consultation if approved by all Constituent Councils and the Combined Authority.

4.2 The Secretary of State must then take into consideration the proposed Mayoral WMCA ‘functions’ Scheme and consultation responses. A further Order (the Mayoral WMCA ‘functions order’), based on the Scheme, is then laid in Parliament. In relation to the transfer of any local authority function such transfer would require the consent of the Constituent Councils and functions would be run concurrently/jointly with the WMCA.

4.3 It is anticipated that the Mayoral WMCA ‘functions’ Order would be considered by Constituent Councils and the Combined Authority in September/October 2016, before being

Page 117 [PUBLIC]

laid in Parliament. The Mayoral WMCA current working timeline is detailed in paragraph 7.0 of this report.

4.4 Legal context

Section 113 of the Local Democracy, Economic Development and Construction Act 2009 (“the 2009 Act”), as amended by the Cities and Local Government Devolution Act 2016 (“the 2016 Act”) enables the Secretary of State, to make changes by Order in relation to the functions of an existing Combined Authority. Such changes can be made where the authority has carried out a governance review and concluded that conferring on the Combined Authority additional functions, to be set out in the Scheme, would be likely to improve the exercise of statutory functions in the Combined Authority’s area. The Scheme is then prepared, published and consulted on.

The 2016 Act makes provision for conferring additional functions on Combined Authorities established under Part 6 of the 2009 Act. Sub-section 1(2)(e) of the Devolution 2016 Act refers to “the principle that powers should be devolved to Combined Authorities or the most appropriate local level except where those powers can more effectively be exercised by central government.” Therefore the 2016 Act has amended the 2009 Act so that a Combined Authority is no longer restricted to the exercise of statutory functions relating to economic development, regeneration and transport.

4.5 The 2016 Act is enabling legislation and confers the specific Combined Authority and Mayoral powers and functions, detailed in the Governance Review and Scheme. The conferral of powers and functions onto the Combined Authority will be subject to Orders, which will require the consent of all of the Constituent Members and the WMCA. The 2016 Act also provides the legislative framework to address other issues, particularly in relation to governance. Whilst such issues are not an explicit part of the devolution agreement, the WMCA Orders will address such issues to ensure the efficient and effective operation of WMCA governance arrangements.

4.6 Additional governance arrangements in the Mayoral WMCA ‘functions’ Scheme will include additional members, in pursuit of the WMCA’s ambition to collaborate across the West Midlands geography. At the time of preparing this report, the agreed additional members are:

Stratford-on-Avon District Council Shropshire Council

The Combined Authority is asked to consider for approval any further members of the Combined Authority, notified by the 10th June 2016, in addition to those listed above. The Combined Authority therefore also asked to delegate minor and drafting amendments of the draft Mayoral WMCA ‘functions’ Scheme to the Chair of the Combined Authority, in consultation with the Clerk.

4.7 The review operates on the principle that devolution is not about taking powers away from Constituent Councils, but is about drawing down powers from central government or government agencies. Therefore, where the Scheme proposes that there should be conferred on WMCA functions of Constituent Councils (mainly in the area of skills and transport) these will only be exercisable concurrently or jointly with the Constituent Council and will be subject to agreed protocols, any deviation from this will be clearly listed.

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4.6 The proposal for the functions and powers that the Mayoral WMCA will exercise are outlined in the Scheme (appendix C). The powers and functions proposed in the Scheme are sought by the WMCA to enable a Mayoral WMCA, in conjunction with the Mayor, to deliver the Devolution Deal.

4.8 The Scheme is based on the establishment of an elected Mayor for the West Midlands Metropolitan area working as part of the Combined Authority, with a Cabinet of Council Leaders of the Constituent Councils and subject to local democratic scrutiny. The Scheme also outlines the importance of the collaboration across the three LEP geography as well as neighbouring councils across the West Midlands.

4.9 The Mayoral WMCA Cabinet will examine the Mayor’s draft annual budget and the plans, policies and strategies, as determined by the Mayoral WMCA, and will be able to reject them if two-thirds of the Mayoral WMCA Cabinet agree to do so. In the event that the Mayoral WMCA reject the proposed budget then the Mayoral WMCA shall propose an alternative budget for acceptance by the Cabinet, subject to a two-thirds majority of those present and voting. The Mayor shall not be entitled to vote on the alternative Mayoral WMCA proposed budget.

4.10 The Scheme details those functions that will be a Mayoral function, a joint Mayoral WMCA/Mayoral function and a Mayoral WMCA function, in summary:

 A Mayoral Function

Exercised by the Mayor, WMCA Cabinet does not have a vote or limitation on these functions unless explicitly stated.

- HCA CPO powers (with the consent of the appropriate authority(ies) - Grants to Bus Service Operators (Secretary of State to consult the Mayor) - Devolved, consolidated transport budget - Reporting on the West Midlands Key Route Network (WMKRN) (in consultation with the authorities) - Mayoral precept - Raising of a business rate supplement (in agreement with the relevant LEP Board(s) and the Mayoral WMCA) - Functional power of competence

 A Joint WMCA/Mayor Function

The responsibility of the Mayor but, for example, is maintained/managed by the Mayoral WMCA. These functions are the responsibility of the Mayor therefore matters in relation to the exercise of these functions by the Mayoral WMCA would be subject to the Mayor’s vote in favour:

- The West Midlands Key Route Network – The WMKRN is the responsibility of the Mayor but maintained and managed by the WMCA, powers and functions sought to achieve this are outlined in the Scheme (appendix C). Further joint WMCA/Mayoral transport functions sought are regarding bus re franchising and enhanced quality contracts. Page 119 [PUBLIC]

- Low emissions and clean air zones - the Mayor and the Mayoral WMCA will have the power, subject to proposals being brought forwards, to create low emissions and clean air zones, with the affected highway authority(ies) consent.

- Homes and Communities Agency (HCA) objectives and functions – Mayoral WMCA to exercise functions concurrently with the HCA to drive housing delivery.

- Arrangements, exercised jointly/concurrently with the Secretary of State, for the purpose of assisting persons to train for, obtain and retain suitable employment, and enter into agreement for the provision of ancillary goods and services.

 A Mayoral WMCA Function

Exercised by the Mayoral WMCA and not subject to the Mayor’s vote in favour, the Mayor votes as a member.

- Current WMCA powers and functions – contained within the WMCA establishment Order – i.e. transport functions currently undertaken by the Passenger Transport Executive (PTE), and economic development and regeneration functions. It is not appropriate that the Mayor is required to vote in favour as such functions are Local Authority functions, exercised concurrently/in parallel and with the Local Authorities.

- HS2 Growth: Development Corporations - The WMCA to have the ability to designate any area of land, with the consent of the local planning authority(ies) for the area(s) in the Mayoral WMCA Area, as a development area leading to the establishment, by Order, of WMCA development corporations. As per the devolution agreement, this would be a Combined Authority-led development corporation to deliver local growth.

- Matters reserved to unanimous Constituent Member voting – contained within the WMCA establishment Order and WMCA Constitution, agreement of such matters are subject to a unanimous vote of the Constituent Member.

4.11 It is to be noted that not all aspects of the West Midlands devolution agreement requires legislative change to implement, the Scheme details those that require legislative or regulatory change before they can be exercised by the Mayoral WMCA.

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5.0 Options considered and recommended proposal

5.1 The Combined Authority consents to the draft Mayoral (elections) Order, that the Secretary of State intends to lay before Parliament, to allow for an elected Mayor of the WMCA. The provision for an elected Mayor is a requirement of the devolution agreement.

5.2 The Combined Authority is recommended to approve the draft Mayoral WMCA ‘functions’ Scheme that outlines the proposals for the powers and functions of the Mayor and WMCA, to be published for public consultation.

6.0 Public Consultation

6.1 Consultation requirements

It is a requirement that a public consultation be undertaken in most cases where additional functions are to be conferred upon a Combined Authority. The consultation will relate to the proposals contained in the Mayoral WMCA ‘functions’ Scheme (appendix C) and led by the WMCA and the Constituent Councils, carried out on behalf of the Secretary of State, in order to inform his decision to lay the subsequent Order. It is proposed that, subject to agreement of the all Constituent Members and the Combined Authority, the public consultation is launched on 27th June, for an eight-week period.

6.2 Once the consultation period is complete, the WMCA is required to provide the Secretary of State with a summary of the consultation responses. The law requires that the Secretary of State must then be satisfied that no further consultation is required. There is no requirement for such responses to come back to the Constituent Councils or the WMCA before being submitted to the Secretary of State. However, it should be noted that the WMCA and the Constituent Councils are required to consent to any draft Order before it is laid before Parliament.

6.3 Consultation approach

The consultation is intended to seek views from the public and stakeholders on the additional functions proposed to be conferred on WMCA, following the devolution agreement, as set out in the Scheme.

6.4 Every resident, business and stakeholder in the West Midlands will have the opportunity to respond if they wish to do so. A number of organisations will also be contacted directly to invite them to make a response to the consultation.

6.5 The consultation will be led by the WMCA and the Constituent Councils and include key partners to raise awareness of the WMCA, the ambitions of the West Midlands and the benefits of devolution to Wolverhampton, the West Midlands and its residents. All Constituent Councils, the three LEPs and other partners, including non-constituent councils, will be asked to pass on the information they receive to their networks, stakeholders and local media to encourage participation in the consultation.

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6.6 Key messages to be reflected during the consultation include:

• that the proposed changes are not about taking powers from the individual Constituent Councils (all local authority powers would be exercised concurrently/jointly with the Councils) but are about gaining additional powers for the WMCA from central government;

• that the process of transferring / providing additional powers is being carried out in partnership with central government departments and agencies; and

• that the proposed changes are the first in a series of changes to powers for the West Midlands and that local people will have opportunities to comment on those future proposed changes.

6.7 The consultation will be conducted primarily through digital channels with consultation feedback gathered via the WMCA website. Proposed channels include:

 pro-active media releases and pro-active engagement of regional and local media throughout the consultation  web content for the WMCA website, including a feedback form  similar, but locally adapted content for local authority and partner websites  social media using WMCA channels  staff messaging.

6.8 Respondents will also be able to submit responses by letter or email should they wish to do so. Consultation documents and publicity materials will be made available in key local authority buildings.

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7.0 Current working timeline

Mayoral WMCA Timeline

May 2016 The Constituent Councils are presented with:

1. Mayoral (elections) Order, to create the position of a Mayor and allow for the election of a Mayor.

2. The Mayoral Combined Authority ‘functions’ Scheme, for approval to consult on the proposals in the Scheme.

June 2016 - Subject to Parliamentary approval, the Combined Authority is vested on the 10th June 2016. On vesting day the WMCA will be presented with:

1. The Mayoral (elections) Order - to create the position of a Mayor and allow for election of a Mayor only.

2. The Mayoral Combined Authority ‘functions’ Scheme - for approval to consult on the proposals in the Scheme. - Constituent Councils approvals dependent, the Mayoral (elections) Order will be laid in Parliament in June 2016. - Constituent Councils approval dependent, the Mayoral Combined Authority, ‘functions’ Scheme will be published and consulted on. (The indicative date for the consultation is that it will begin following the EU referendum, on Monday 27th June 2016.)

July – Aug Consultation on the proposals in the Scheme takes place (indicative 27th June – 2016 22nd August 2016).

Sep 2016 The consultation responses are collated and submitted to the Secretary of State and DCLG. The Constituent Councils are not required to consider the outcome of the consultation.

Sept - Oct - The Mayoral Combined Authority ‘functions’ Order is drafted based on the 2016 Mayoral Combined Authority ‘functions’ Scheme.

- The Mayoral Combined Authority ‘functions’ Order is presented to Constituent Councils for consent to lay the Mayoral Combined Authority ‘functions’ Order in Parliament.

Nov 2016 The Mayoral (elections) Order is in place at least 6 months before the election of an Mayor. Nov 2016 – Any further Orders required (Buses Bill etc.) are required to be in place by Feb 2017 February 2017 to allow sufficient time for Mayoral candidates to be fully aware of the powers of the elected Mayor and to prepare a Manifesto.

May 2017 First Mayoral election.

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8.0 Financial implications

8.1 Costs associated with the Consultation will be accommodated from within existing Council and Combined Authority Budgets.

9.0 Legal implications

9.1 The relevant legal implications are set out in the body of this report and there are no further legal flowing from the contents of this report.

10.0 Equalities implications

10.1 An initial equalities analysis has been carried out on the draft Mayoral WMCA Scheme, having due regard to the equalities implications of the draft Scheme. Any project/programmes to result from the Scheme are subject to an individual equalities analysis. Once established a Combined Authority is expected to meet the requirements of the Equality Act as a public sector body.

11.0 Schedule of background papers

11.1 The West Midlands Devolution Agreement

Cities and Local Government Devolution Act 2016: http://www.legislation.gov.uk/ukpga/2016/1/contents/enacted/data.htm

Local Democracy, Economic Development and Construction Act 2009: http://www.legislation.gov.uk/ukpga/2009/20/contents

Page 124 Agenda Item 2.6

Draft Order laid before Parliament under section 117(2) of the Local Democracy, Economic Development and Construction Act 2009, for approval by resolution of each House of Parliament.

DRAFT STATUTORY INSTRUMENTS

2016 No.

LOCAL GOVERNMENT, ENGLAND

The West Midlands Combined Authority (Election of Mayor) Order 2016

Made - - - - Coming into force in accordance with article 1

The Secretary of State makes the following Order in exercise of the powers conferred by section 107A of, and paragraph 3 of Schedule 5B to, the Local Democracy, Economic Development and Construction Act 2009(a).

The councils whose local government areas are comprised in the area of the West Midlands Combined Authority and the West Midlands Combined Authority have consented to the making of this Order.

A draft of this instrument has been laid before, and approved by a resolution of, each House of Parliament pursuant to section 117(2) of the Local Democracy, Economic Development and Construction Act 2009.

Accordingly, the Secretary of State makes the following Order:

Citation and commencement 1. This Order may be cited as the West Midlands Combined Authority (Election of Mayor) Order 2016 and shall come into force on the day after the day on which it is made.

Interpretation 2. In this Order— “the area” means the area of the West Midlands Combined Authority(b);

(a) 2009 c. 20. Section 107A and Schedule 5B were inserted by section 2 of the Cities and Local Government Devolution Act 2016 (c. 1). Section 117(2), (2A) and (3) was substituted by section 13 of the Localism Act 2011 (c. 20). Section 117 was amended by paragraph 24 of Schedule 5 to the Cities and Local Government Devolution Act 2016. (b) The West Midlands Combined Authority was established by the West Midlands Combined Authority Order 2016 (S.I. 2016/TBC).

Page 125 “the ordinary day of election”, in relation to any year, means the day which is the ordinary day of election in that year of councillors for counties in England and districts as determined in accordance with sections 37 and 37A of the Representation of the People Act 1983(a).

Election of a mayor 3.—(1) There is to be a mayor for the area. (2) The first election for the return of a mayor for the area is to take place on 4th May 2017. (3) Subsequent elections for the return of a mayor for the area shall take place— (a) on the ordinary day of election in 2020, and (b) in every fourth year thereafter on the same day as the ordinary day of election. (4) The term of office of the mayor returned at an election for the return of a mayor for the area— (a) begins with the fourth day after the day of the poll at the election for the return of a mayor for the area, and (b) ends with the third day after the day of the poll at the next election for the return of a mayor for the area.

Signed by authority of the Secretary of State for Communities and Local Government

Name Parliamentary Under Secretary of State Date Department for Communities and Local Government

EXPLANATORY NOTE (This note is not part of the Order) Part 6 of the Local Democracy, Economic Development and Construction Act 2009 (“the 2009 Act”) provides for the establishment of combined authorities for the areas of two or more local authorities in England. Combined authorities are bodies corporate which may be given power to exercise specified functions. Under section 107B(3) of the 2009 Act the Secretary of State may provide for there to be a mayor for the area of a combined authority with the consent of the constituent councils of the combined authority (each district council or county council whose area is within the area of the combined authority) and any existing combined authority. Paragraph 3 of Schedule 5B to the 2009 Act provides that the Secretary of State may make provision for the dates on which and years in which mayoral elections for the area of a combined authority may or must take place, the intervals between elections for the return of a mayor and the term of office of a mayor. Article 3 of the Order creates the position of mayor for the area of the West Midlands Combined Authority. Article 3 further specifies the term of office for the mayor for the area of the West Midlands Combined Authority, and the dates on which elections for the return of a mayor shall take place and the intervals between elections. A full regulatory impact assessment has not been prepared as this instrument will have no impact on the costs of business and the voluntary sector.

(a) 1983 c. 2. Section 37 was amended by section 17 of, and Schedule 3 to, the Greater London Authority Act 1999 (c. 29) and by section 60(1) of the Local Government and Public Involvement in Health Act 2007 (c. 28). Section 37A was inserted by section 60(2) of the Local Government and Public Involvement in Health Act 2007.

Page 1262 Governance Review

Review of West Midlands Combined Authority Functions and Governance Arrangements

May 2016

Page 127 Introduction

The Governance Review details the incorporation of the functions and governance arrangements required to deliver the first devolution agreement in the West Midlands

Creation of the WMCA

The West Midlands Combined Authority (the “WMCA”) will be established, Parliamentary approval pending, on 1st June 2016 under the WMCA Order 2016 (the “2016 Order”) pursuant to the provisions of the Local Democracy Economic Development and Construction Act 2009 (the “2009 Act”). The aim of the West Midlands Metropolitan Authorities in creating the WMCA was to ensure that the transport, economic development and regeneration functions across the West Midlands would be strategically coordinated and integrated. A Combined Authority also offers the platform for the devolution of powers to the WMCA, enabling the West Midlands to realise its full economic potential.

Membership of the WMCA

The seven West Midlands Metropolitan Authorities of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton are the “Constituent Councils” of the WMCA. The Non-Constituent Members are the three Local Enterprise Partnerships (LEPs) of the Black Country LEP, Greater Birmingham & Solihull LEP, Coventry & Warwickshire LEP and five Councils: Cannock Chase, Nuneaton and Bedworth, Redditch, Tamworth, Telford & Wrekin.

In addition to the incorporation of the functions and governance arrangements required to deliver the Devolution Agreement this Review also covers the addition of the following as Non-Constituent Members:

Stratford-on-Avon District Council Shropshire Council [other requests for membership will be considered up to the 10 June 2016]

Any additional members build on the agreed principle that collaboration across the West Midlands with both the LEPs and local authorities is a key part of the WMCA agenda and crucial to its success. The powers and functions required to deliver the devolution agreement are contained within the Mayoral WMCA ‘powers and functions’ Scheme. The Scheme requires approval by all Constituent Councils and public consultation.

The draft WMCA (Election of Mayor) Order 2016 made under the Cities and Devolution Act 2016 (the “2016 Act”) will establish the post of WMCA Mayor only and is dependent on each Constituent Council’s approval in May 2016. If this approval is given, the Parliamentary process will begin and the first Mayoral election will take place in May 2017. The Mayor will be a Member of the Mayoral WMCA and its Chair.

Page 128 Policy Context

In establishing the WMCA (see the WMCA website for the Governance Review published 26 October 2015), it was recognised by the West Midlands Authorities and the three LEPs that collaboration across the West Midlands would provide the most appropriate governance model for the local authorities to act together to deliver their economic development, regeneration and transport functions and aspirations. This stronger governance would deliver a more joined up strategic approach. Bringing together policy interventions in transport and the key economic drivers that will deliver enhanced growth. By working this way, members of a Combined Authority can deliver shared strategic priorities that are best addressed at a scale above local boundaries.

The area already had a good track record of collaboration between local authorities and the LEPs on issues that affect the area covered by the Constituent local authority areas of Birmingham, City of Wolverhampton, Coventry, Dudley, Sandwell, Solihull and Walsall. However, the governance needed to change if the West Midlands was to demonstrate stronger, more efficient and more effective delivery of economic development, regeneration and transport responsibilities.

We intend to create the most effective Combined Authority in the country in order to propel our economy to further growth than can be achieved at present. Working together across the West Midlands we will achieve far more than any of us could ever deliver separately.

Maximising growth and reducing the total cost of delivering public services cannot be led at a national level: devolving national programmes and funding streams to the WMCA will enable the WMCA to align those programmes and funding streams to local priorities, enabling a focus on game changing investment in growth and on taking demand out of the system through better joined up public services.

Further devolution from Central Government will strengthen the Combined Authority with additional powers. No existing powers will be taken from Local Authorities. Indeed, through devolution local councils and local leaders will be better able to exercise their democratic responsibilities through more influence over greater levels of public spending in their localities.

Page 129 Our Strategic Economic Plan Vision based on the WMCA and the devolution agreement (SEP+ Vision) envisages that in 2030, four years after the arrival of HS2, the West Midlands:

 Will be internationally recognised as a top 3 UK location to do business, boosting the UK’s global competitiveness.

 Will be home to 150,000 businesses, almost 20,000 more than today.

 Will have 5% higher productivity than the national average.

 Will provide local people of all ages with access to first class education and training. As a result our skills levels will be higher than the national average.

 Will be home to one of the biggest concentrations of advanced manufacturing and engineering in.

 Will have businesses of all sizes investing in innovation and Research & Development drawing on our world class support infrastructure, including our network of globally recognised research, economic intelligence and policy institutes.

 Will be a world leader in creating a low carbon economy.

 Will have a supply of first class employment land of national significance generated through the addition of 1,600ha. from brownfield land, the regeneration of which has transformed large areas.

 Will have transformed our approach to planning and urban design enabling us to increase the rate of house building while improving our environment and quality of life. As a result there will be a wide choice of housing with over 1.9m homes.

 Will have eliminated our £3.9bn deficit between taxes raised and public expenditure in the area through the Public Sector Reform programme.

Devolution, and more specifically, the powers to be drawn down through the Mayoral WMCA Scheme, will greatly improve the ability of the WMCA to deliver growth and reform for the people and businesses of West Midlands.

Page 130 The West Midlands Devolution Agreement

In recognising the considerable progress made to date and the great economic potential of the West Midlands, the Chancellor of the Exchequer and the 7 West Midlands Metropolitan Leaders and the three LEP Chairs signed on 17 November 2015, the West Midlands Combined Authority devolution agreement. It is the intention that this is the first of many.

In order to receive the funding, powers and functions within the devolution agreement the agreement is based on the establishment of an elected Mayor (“the Mayor”) for the West Midlands metropolitan area (the WMCA Area) - working as part of the Combined Authority with a cabinet of Council Leaders of the Constituent Councils and subject to local democratic scrutiny. However, given the importance of existing collaboration across the three LEP geography, as well as with neighbouring areas, the devolution agreement recognises that the wider partnership with business through the LEPs and with neighbouring councils across the West Midlands will be critical to success.

The Mayoral WMCA’s ambition through the devolution agreement is to increase competitiveness and productivity, create more skilled and better paid jobs, bring more investment into the area, reform public services and reduce the region’s welfare bill. It will deliver outcomes that matter to local people: more jobs, better training and improved skills, faster, more convenient and more integrated transport links and more new homes. It will drive these ambitions through its primary focus to improve the effectiveness and efficiency of transport in the area, the exercise of statutory functions relating to economic development and regeneration in the area, skills and employment and economic conditions in the area.

It will manage a significant programme of investment in transport and economic infrastructure, circa £8 billion over 10 years, and influence and align with Government investment, in order to boost economic development and regeneration.

The related interventions will have differential impacts across the Mayoral WMCA area - underpinned by the principle that all communities benefit, but not at the same time and not in the same way. The Mayoral WMCA will seek to achieve this by using evidence based objective means by which to assess interventions, or the design of interventions, so that these are aligned to our balanced economic outcomes for the Mayoral WMCA area.

Page 131 The Mayoral WMCA will continue to be focused, through the WMCA Strategic Economic Plan, on economic growth issues that will include, but are not restricted to:

 Setting the WMCA Strategic Economic Plan and investment strategy, in consultation with the LEPs and Non-Constituent Members of the Mayoral WMCA.

 Ensuring effective alignment between decision making on transport and decisions on other areas of policy such as land use, economic development and wider regeneration.

 Using WMCA wide economic intelligence and analysis as a basis for strategic planning and coordination.

 Acting as an accountable body for a range of devolved funding.

 Strategic decision-making on the skills agenda across the WMCA.

 Enabling the Mayoral WMCA to act as the forum for local authorities to exercise the Duty to Cooperate, in respect of strategic planning matters.

 Coordinating inward investment activity through the development of a range of investment mechanisms.

The directly elected Mayor for the West Midlands will act as Chair to the WMCA and will exercise the following powers and functions devolved from central government:

 Responsibility for a consolidated, devolved transport budget, with a multi-year settlement to be agreed at the Spending Review.  Responsibility for franchised bus services, which will support the WMCA’s delivery of smart and integrated ticketing across the Combined Authority’s Constituent Councils.  Responsibility for a new Key Route Network of local authority roads that will be managed and maintained at the Metropolitan level by the WMCA on behalf of the Mayor.  Powers to drive housing delivery and improvements in housing stock which will include the same competencies as the Homes and Communities Agency. The government will also work with the WMCA Land Commission.  The ability to place a supplement on business rates to fund infrastructure, with the agreement of the relevant local enterprise partnership boards, up to a cap.  The ability to set a Precept.

The WMCA will also receive the following:

Page 132  Control of a new additional £36.5 million a year funding allocation over 30 years, to be invested to drive growth.  Devolved 19+ adult skills funding from 2018/19, with the Shadow Board responsible for chairing Area Based reviews of 16+ skills provision.  Joint responsibility with the Government to co-design employment support for the hardest-to-help claimants.  Responsibility to work with the Government to develop and implement a devolved approach to the delivery of business support programmes from 2017 and deliver more integrated working together on investment and trade.

In addition under the devolution agreement the Government:

 Supports the ambition of the HS2 Growth Strategy and the emerging West Midlands Strategic Transport Plan, and commits to funding the Curzon Street Enterprise Zone extension in order to help deliver this strategy.  Commits to funding the Eastside Metro extension to Digbeth, subject to a business case, to support the first part of the HS2 Growth Strategy, and supports the work of the Shadow Board to develop a delivery plan, encompassing the Metro extensions from Curzon to Interchange and from Brierley Hill, in order to realise the full benefits of HS2.  Will work with the Shadow Board through the development of the second Roads Investment Strategy to explore options for reducing congestion on the strategic road network in the West Midlands.  Commits to support the programme of public service reform across the West Midlands, including working with the Shadow Board to consider the scope for further devolution of youth justice services. Further powers may be agreed over time and included in future legislation.

Legal Context

Page 133 Pursuant to articles 6 and 7 of the 2016 Order, on the creation of the WMCA, the West Midlands Integrated Transport Authority (WMITA) is abolished and all of its functions, property, rights and liabilities transferred to the WMCA. Prior to this the West Midlands Passenger Transport Executive (WMPTE) (‘Centro’) is transferred into the WMITA and as a result also subsequently transferred into the WMCA.

The 2016 Act (which was enacted on 28 January 2016) makes provision for conferring additional functions on Combined Authorities established under Part 6 of the 2009 Act. Sub-section 1(2)(e) of the 2016 Act refers to “the principle that powers should be devolved to combined authorities or the most appropriate local level except where those powers can more effectively be exercised by central government.” The 2016 Act has amended the 2009 Act so that a Combined Authority is no longer restricted to the exercise of statutory functions relating to economic development, regeneration and transport.

Section 111 of the 2009 Act allows for an existing Combined Authority to undertake a ‘review of one or more combined matters’ in respect of proposed changes to the Combined Authority.

Review of WMCA functions pursuant to section 111 of the Local Democracy, Economic Development and Construction Act 2009

Page 134 The Government and the WMCA have reached agreement that in order to improve the ability of the WMCA to deliver growth and reform for the people and businesses of the West Midlands, through the devolution agreement, a range of powers need to be devolved to the new directly elected Mayor and to the WMCA.

The position of directly elected Mayor is not a legal requirement of a Combined Authority but the Government are clear that there must be direct accountability to residents for the new powers and funding to be passed down to the Mayoral WMCA through the devolution agreement. Therefore a Mayor is in effect a condition of the devolution of those powers and funding that form the devolution agreement in order to provide the direct accountability required by Government.

To give effect to the agreement the WMCA is required to comply with and follow the procedures in the 2009 Act, as amended by the 2016 Act, to make any changes to existing Combined Authority arrangements. This is achieved by publishing this Governance Review and a Scheme. The Governance Review details the functions and governance arrangements that are more effectively and efficiently carried out by the Mayoral WMCA and the Scheme details additional functions, powers and membership. The Scheme will be the primary document for the detail of those functions and powers and will be consulted on.

The 2016 Act has made significant amendments to the 2009 Act to reflect the fact that a Combined Authority is now able to request the Secretary of State to make an order which will allow a Combined Authority to exercise any “function of a local authority” that is exercisable in relation to all or part of the Combined Authority’s area (i.e. Combined Authorities are no longer restricted to the exercise of local authority functions relating to economic development, regeneration and transport.)

The 2009 Act also allows a Combined Authority to request the Secretary of State to make an Order which will allow a Combined Authority to exercise a function of a “public authority” (e.g. The Secretary of State, the Homes and Communities Agency etc.) that is exercisable in relation to a Combined Authority’s area or confer on a Combined Authority, in relation to its area, a function corresponding to a function that a public authority has in relation to another area (e.g. functions of the Mayor of London / the GLA).

In addition Section 107 of the 2009 Act allows for a Mayor to be provided for the area of a Combined Authority and makes provision for:

 any function of a Combined Authority which has an elected Mayor (a “Mayoral Combined Authority”) to be a function only exercisable by the elected Mayor;  the costs of an elected Mayor for the area of a Combined Authority that are incurred in, or in connection with, the exercise of “Mayoral functions” to be met from precepts issued by the authority under section 40 of the Local Government Act 1992.

As part of this review of the functions of the WMCA under section 111 of the 2009 Act (the “Section 111 Review”), the WMCA has considered the various functions

Page 135 that the Government has agreed should be conferred on either the WMCA or the Mayor under the devolution agreement and whether there are any related additional functions that the WMCA should seek in order to enable the WMCA and the Mayor to exercise their devolved functions as effectively as possible.

As a result of the significant amendments to the 2009 Act made by the 2016 Act, the Section 111 Review carried out by the WMCA has also considered more generally whether there are any local authority functions that are exercisable within the West Midlands that would be more appropriately exercised at WMCA level and if there are any “public authority” functions that are exercisable within the West Midlands which could be more effectively exercised at WMCA level.

The Review has also considered:

 whether any of the functions that are currently conferred on the WMCA by the 2016 ‘establishment’ Order are functions that the WMCA proposes the new WMCA Order should seek to make “Mayoral functions” which are only be exercisable by the Mayor.  whether the additional functions that the WMCA proposes should be conferred on the WMCA should be WMCA functions or “Mayoral functions”; and  whether all of the additional functions that the WMCA proposes should be conferred on the WMCA should be exercised by the WMCA concurrently/jointly with the Constituent Councils or the public authority which has the function by virtue of any enactment;

The Government and the WMCA are in agreement that the powers which are to be conferred on the Mayor and on the WMCA will be more effectively exercised at a West Midlands level than by central Government. Detailed in the section below is the rationale behind the exercise of those functions, whether by the Mayor, the Mayoral WMCA with the support of the Mayor, or the Mayoral WMCA.

Powers and functions to be conferred on the Mayoral WMCA and the exercise of those powers and functions.

Governance Arrangements

Page 136 Mayor and Cabinet

The Mayor will be a member of the Mayoral WMCA and its Chair. This is specified in the devolution agreement and as above provides the direct accountability required by Government for the powers and functions being devolved to the Mayoral WMCA.

The Leaders of the Constituent Councils, who are members of the Mayoral WMCA, will hold the office of portfolio leads for aspects of the WMCA’s responsibilities, on the basis to be set out in its Constitution and in consultation with the Mayor and will be collectively known as the Cabinet operating with collective responsibility. Portfolio leads will be decided by unanimous vote of the Constituent Members.

The Mayor will propose the Mayor’s draft annual budget, which covers Mayoral functions. The Cabinet will examine the Mayor’s draft annual budget and the plans, policies and strategies, as determined by the Mayoral WMCA and will be able to reject them if two-thirds of the Mayoral WMCA Cabinet agree to do so. In the event that the Mayoral WMCA reject the proposed budget, then the Mayoral WMCA shall propose an alternative budget for acceptance by the Cabinet, subject to two-thirds majority of those present and voting. The Mayor shall not be entitled to vote on the alternative Mayoral WMCA proposed budget.

Voting

Proposals for a decision of the Mayoral WMCA may be put forward by the Mayor or any Member of the Mayoral WMCA. Any questions that are to be decided by the Mayoral WMCA, unless otherwise specified in the Mayoral WMCA ‘functions’ Scheme or the Mayoral WMCA Constitution, are to be decided by way of two-thirds majority of Constituent Members, and overall majority of all Members present and voting.

The voting mechanism and exercise of functions in the Mayoral WMCA is dependent on who is exercising the function, the Mayor or the Mayoral WMCA, the exercise of which are summarised below.

Mayoral functions

Mayoral functions will be devolved to the Mayoral WMCA by central Government, exercised by the Mayor and subject to the provisions in the Scheme:

Page 137  HCA CPO Powers – only exercisable by the Mayor with the consent of the Mayoral WMCA Cabinet Member(s) for the area(s) of the land to be compulsorily acquired.

 Grants to Bus Service Operators – The Secretary of State to consult the Mayor in making grants to bus service operators which operate services wholly or mainly within the Mayoral WMCA Area. This would provide WMCA with an early opportunity to engage on a formal basis with operators of the current commercial bus network, prior to the forthcoming Buses Bill.

 Devolved, consolidated transport budget – to enable greater surety of funding, more effective and efficient long-term asset management and procurement arrangements. To be exercised in accordance with the Cabinet’s ability to and examination of and ability to reject the Mayoral budget.

 Reporting on the West Midlands Key Route Network (WMRKN) – The WMKRN is the responsibility of the Mayor and is managed and maintained at the Metropolitan level by the WMCA on behalf of the Mayor. The Mayoral function element of the WMKRN is the duty to report to the Secretary of State an assessment of traffic flows, forecast growth and reduction targets in respect of the WMKRN, in consultation with the appropriate authority(ies).

 Mayoral precept – provisions are sought enabling the Mayor to raise a precept as provided for in the 2016 Act and to aid the delivery of the investment programme.

 Raising of business rate supplement – The Mayor will have the ability to raise a business rate supplement, with the agreement of the relevant LEP Board(s) and the Mayoral WMCA, up to a specified cap, for investment in specified projects, aiding the delivery of the investment programme driven by the WMCA Strategic Economic Plan.

 Functional power of competence – The Mayor will not have the general power of competence, however the Mayor should have, as an ancillary power, a functional power of competence, enabling the Mayor to do things appropriate or incidental to, or connected with, the Mayor’s functions and in order to aid the delivery of the investment programme.

Joint WMCA/Mayoral functions

A joint WMCA/Mayoral power is the responsibility of the Mayor, but for example is maintained/managed by the Mayoral WMCA. These functions are the responsibility

Page 138 of the Mayor therefore the exercise of the functions at Mayoral WMCA level are subject to the Mayor’s vote in favour:

 The West Midlands Key Route Network – The WMKRN is the responsibility of the Mayor but maintained and managed by the WMCA, powers and functions are sought to achieve this and are outlined in the transport section, below, and detailed in the Scheme. Further joint WMCA/Mayoral transport functions sought are regarding bus re-franchising and enhanced quality contracts.

 Low emissions and clean air zones - the Mayor and the Mayoral WMCA will have the power, subject to proposals being brought forwards, to create low emissions and clean air zones with the affected highway authority(ies) consent.  Homes and Communities Agency (HCA) objectives and functions – Mayoral WMCA to exercise functions concurrently with the HCA to drive housing delivery.  Arrangements, exercised jointly/concurrently with the Secretary of State, for the purpose of assisting persons to train for, obtain and retain suitable employment, and enter into agreement for the provision of ancillary goods and services.

Mayoral WMCA functions

Functions exercised by the Mayoral WMCA and not subject to the Mayor’s vote in favour.

 Current WMCA powers and functions – contained within the WMCA establishment Order – i.e. transport functions currently undertaken by the Passenger Transport Executive (PTE), and economic development and regeneration functions. It is not appropriate that the Mayor is required to vote in favour as such functions are Local Authority functions, exercised concurrently/in parallel and with the Local Authorities.

 HS2 Growth – The WMCA to have the ability to designate any area of land, with the consent of the local planning authority(ies) for the area(s) in the Mayoral WMCA Area, as a development area leading to the establishment, by Order, of WMCA development corporations. As per the devolution agreement, this would be a Combined Authority-led development corporation to deliver local growth.

 Matters reserved to unanimous Constituent Member voting – contained within the WMCA establishment Order and WMCA Constitution, agreement of such matters are subject to a unanimous vote of the Constituent Members. Powers and functions to be conferred on the Mayoral WMCA

Page 139 Transport

Current position under 2016 Order

The current WMCA’s transport functions are inherited from the former West Midlands Integrated Transport Authority and Passenger Transport Executive (WMITA and WMPTE (Centro)). These will remain WMCA functions.

Proposals for new Transport Functions

A high quality, efficient, effective and reliable transport network and infrastructure is a prerequisite in driving the economic prosperity of the area.

To achieve this, the Mayor will:

 Receive a multi-year devolved and consolidated local transport capital block allocation from Government for the area of the Mayoral WMCA (i.e. the areas of the Constituent Councils). This will support the delivery of a single asset management plan, working towards shared procurement of highways maintenance services across the Combined Authority’s Constituent Councils as practical, reflecting existing contractual and PFI arrangements.

 Receive powers for the franchising of bus services in the Mayoral WMCA area, subject to necessary legislation and local consultation. This will help to deliver integrated smart ticketing across all local modes of transport in the Mayoral WMCA area and align with the work of Midlands Connect on smart and integrated ticketing across the Midlands.

 Take responsibility for a new Key Route Network of defined local authority roads; the management and maintenance of which will be undertaken at the Metropolitan level by the Mayoral WMCA on behalf of the Mayor. This is in order to secure a consistent approach and to have oversight of the local roads that link key centres of growth and employment. Also to provide links to the Strategic Network are seen as critical for the expeditious movement of traffic both within and through the West Midlands to support our key aims of economic growth, productivity and job creation.

Consolidated multi-year local transport capital block allocation

The Government have agreed to the allocation of a 5 year capital allocation for highway maintenance and integrated transport improvements. Having longer term

Page 140 certainty of allocation will allow for improved network maintenance and management enabling greater efficiencies and effectiveness in procurement and improved asset management.

The allocation will be to the Mayor for subsequent distribution to the Constituent Councils. Allocation of the funding will be treated as part of the Mayor’s budget and therefore subject to Cabinet’s examination of and ability to reject the Mayoral budget, in accordance with the Scheme, A Mayoral function.

Public Transport and related infrastructure

To implement and deliver the above it is proposed that:

 The Secretary of State1 to make grants to bus service operators in relation to services which operate wholly or mainly in the Mayoral WMCA Area, to be exercised by the Secretary of State for Transport in consultation with the Mayor. The eligibility requirements for the grant would remain unchanged. This would provide the WMCA with an early opportunity to engage on a formal basis with operators of the current commercial bus network, prior to the new regime to be introduced by the forthcoming Bus Service Bill. A Secretary of State function, exercised in consultation with the Mayor.

 to strengthen the WMCA’s Safety and Security agenda and to provide our Safer Travel Police Team with similar powers to that of Transport for London, that exist to help secure effective working on our public transport network and related infrastructure, additional powers are required to be exercised as Mayoral WMCA functions, concurrently/jointly with the Constituent Councils to: - provide the ability2 to tackle smoking in public places, most specifically on buses and in enclosed bus stations; and - provide powers3 currently held by Local Authorities, NHS, social landlords, Police Forces and TfL in order to enable efficient action to secure Orders that apply across the whole of the Mayoral WMCA Area.

 to ensure a consistent approach to the enforcement4 of bus lane penalty charges etc. are applied.

The West Midlands Key Route Network (WMKRN)

1 Section 154 of the Transport Act 2000 2 Section 10 of the Health Act 2006 3 Anti-Social Behaviour , Crime and Policing Act 2014 4 Approved Local Authority for the purposes of Section 144 of the Transport Act 2000 - Bus Lane Contraventions (Penalty Charges, Adjudication and Enforcement) (England)Regulations 2005

Page 141 The WMKRN serves the main strategic demand flows of people and freight across the metropolitan area, and provide connections to the national strategic road network. The KRN handles a significant proportion of these flows, highlighting the importance of this network and the role it plays in supporting the economic growth objectives across the WMCA area. It also serves large local flows which use main roads and will need to provide good access for businesses reliant on road based transport. Around 60% of journeys to work by residents of the Metropolitan Area involved crossing a district boundary, giving weight to the need for a commonly agreed main road network to handle this movement more effectively.

In order for the WMKRN of local authority roads to be strategically managed and coordinated at the Metropolitan level, with joint Asset Management and Procurement, by the Mayoral WMCA, on behalf of the Mayor it is proposed that:

 the WMKRN be statutorily defined5 to enable Orders such as ‘Safer Vehicles’ and ‘Air Quality’ Orders to be uniquely identified for the WMKRN.

6  the Mayoral WMCA be a party to agreements as if they were a highway authority. The Secretary of State, Highways England and local highways authorities can enter into agreements with each other for the construction and improvement of roads for which one party to the agreement is the highway authority. This is important in connection with the Mayors strategic management and oversight role in relation to the WMKRN and coordinating the exercise of transport responsibilities. However, it should be emphasised that there is no proposal for the Mayoral WMCA to be the local highway authority or have powers in relation to the day to day operation or maintenance of such highways This will be a joint WMCA/ Mayoral Function with the effected highway authority(ies) consent.

 the Mayoral WMCA is provided with the power7 to enable it to undertake works on the WMKRN for Transportation purposes as if it were the highway authority, joint WMCA/ Mayoral Function with the effected highway authority (ies) consent.

8  the Mayoral WMCA is defined as a Street Authority for the WMKRN. This would enable the WMCA to develop a Permit Scheme, coordinate Notices etc. for the WMKRN. The receipt of notices, register, inspections etc. would still carried out by the Local Highway Authority. It would also enable eligibility for the 18% diversionary works contribution from utilities for non- metro Schemes. A joint WMCA/ Mayoral Function.  a duty9 be placed on the Mayoral WMCA, in consultation with the relevant local highway authorities, to report to the Secretary of State on an assessment of existing Traffic flows, forecast growth and reduction targets in respect of the WMKRN. A Mayoral Function

5 Road Traffic Act Regulations 1984 – General Interpretation of the Act – definition of WMKRN 6 Sections 6 and 8 of the Highways Act 1980 7 Section 62 of the Highways Act 1980 – General Power of Improvement 8 S49 of the New Roads and Street Works Act 1991 – The Street Authority and other Relevant Authorities 9 Section 2 of the Road Traffic Act Reduction 1997, subsections 1,2 and 3

Page 142  the WMKRN to be designated a civil enforcement area10 for moving traffic violations. A joint WMCA/ Mayoral Function

 that the Mayoral WMCA should exercise concurrently with the local 11 highway authority (the Constituent Councils) the functions in relation to road safety. This function relates to preparing and carrying out of a programme of road safety measures, including road safety studies, studies into accidents, accident prevention campaigns, advice as to the use of roads and on the construction of new roads, and arranging for the giving of practical training to road users. A WMCA non-mayoral function.

In addition the Mayor and the Mayoral WMCA should receive the following duties12 regarding the creation of Low Emission Zones and Clean Air Zones: - duty to cause a review to be conducted of quality for the time being, and the likely future quality within the relevant period, of air within the authority’s (WMCA) area and associated duties; - duty to designate air quality management areas; - duties in relation to designated areas; and - any other such duties that are appropriate in order to effectively deliver the Low Emission and Clean Air Zones.

This would be a joint WMCA/ Mayoral Function with the effected authority(ies) consent.

HS2 Growth

The Mayoral WMCA will deliver the objectives of the HS2 Growth Strategy. In order to manage risks and support delivery there will be a prioritised programme of projects with milestones, input, output, outcomes and benefit indicators that local partners will use to track delivery. In addition consideration will be given to the remit and governance of a Combined Authority-led Development Corporation to deliver the local growth. Functions to enable the effective delivery of the HS2 growth strategy are detailed in the Scheme.

Skills

Current position under 2016 Order

10 Section 74 and Schedule 8 of the Traffic Management Act 2004 11 Sections 39 (2) and (3) of the Road Traffic Act 1988 12 Sections 82 – 84 of the Environment Act 1985

Page 143 The Combined Authority is designated a local authority for purposes of section 84(2) of The Apprenticeships, Skills, Children and Learning Act 2009 (duty of the Chief Executive of Skills Funding to co-operate with local authorities in relation to apprenticeship training) and has duties and powers13 related to the provision of education and training for persons over compulsory school age.

Proposals for new skills functions

The importance of the existing collaboration between the three LEPs on employment and skills is recognised and central to the WMCA’s skills ambition. With this in mind the WMCA will begin to prepare for local commissioning which will allow the Mayoral WMCA to agree with providers the mix and balance of provision that will be delivered in return for the block funding, and to define how success will be assessed. It will develop a series of outcome agreements with providers, about what should be delivered in return for allocations in the 2016/17 academic year. This will replace the current system of funding by qualifications as providers will receive their total 19+ skills funding as a single block allocation.

For the 2017/18 academic year, and following the area review, the Government will work with the Mayoral WMCA to vary the block grant allocations made to providers, within an agreed framework. From 2018/19, there will be full devolution of funding. The Mayoral WMCA will be responsible for allocations to providers and the outcomes to be achieved, consistently with statutory entitlements. The Government will not seek to second guess these decisions, but it will set proportionate requirements about outcome information to be collected in order to allow students to make informed choices.

Employment

The Mayoral WMCA will work with the Department for Work and Pensions (DWP) to co-design the future employment support, from April 2017, for the hardest-to-help claimants, many of whom are currently referred to the Work Programme and Work Choice. The Employment and Skills Strategy for the three LEP Area will influence the co-design.

The respective roles of DWP and the Mayoral WMCA in the co-design will include:

 DWP setting the funding envelope, the Mayoral WMCA can top up if they wish to, but are not required to.

13 Duties under section 15ZA, 15ZB, 15ZC, 17A, 18A (1)(b), and the power under sections 514A and 560A of the Education Act 1996

Page 144  The Mayoral WMCA setting out how they will join up local public services in order to improve outcomes for this group, particularly how they will work with local Clinical Commissioning Groups/third sector organisations and NHS England/the Work and Health Unit nationally to enable timely health-based support.  DWP setting the high-level performance framework. The primary outcomes will be to reduce unemployment and move people into sustained employment. The Mayoral WMCA will have some flexibility to determine specific local outcomes that reflect the priorities outlined within the Employment and Skills Strategy and are complementary to the ultimate employment outcome (for example in-work wage progression).

Proposals for new employment functions

Pending the outcome of the above co-design it is proposed that the Mayoral WMCA should have the power14 to exercise functions concurrently with the Secretary of State to make appropriate arrangements for the purpose of assisting persons to train for, obtain and retain suitable employment, and enter into agreements for the provision of ancillary goods and services as a A joint WMCA/Mayoral function.

More and Better Homes

The Mayoral WMCA and its Constituent and Non-Constituent Councils will support an ambitious target for the increase in new homes, and will report annually on

14 Sections 2 and 10A of the Employment Training Act 1973

Page 145 progress against this target.

The objectives are:-  to improve the supply and quality of housing;  to secure the regeneration or development of land or Infrastructure;  to support in other ways the creation, regeneration and development of communities or their continued well-being; and  to contribute to the achievement of sustainable development and good design.

The Homes and Communities Agency (“HCA”) and the Mayoral WMCA will work together to develop a joint approach to strategic plans for housing and growth proposals for the area.

The Government will work with the Mayoral WMCA to support the West Midlands Land Commission. The West Midlands Land Commission will ensure there is a sufficient, balanced supply of readily available sites for commercial and residential development to meet the demands of a growing West Midlands economy. It will create a comprehensive database of available public and private sector land, identify barriers to its disposal/development, and develop solutions to address those barriers to help the West Midlands meet its goal to deliver a significant number of additional new homes over the next 10 years, and to unlock more land for employment use. The Mayoral WMCA will also be able to use their proposed Land Remediation Fund to support bringing brownfield sites back into use for employment and housing provision.

The Mayoral WMCA and the Government will continue to discuss the devolution of housing loan funds. We also intend to develop further a proposition on a Housing Investment Fund, for discussion with Government.

Proposals for new housing functions.

To enable the achievements of the objectives outlined in this section, including a power of HCA CPO and Mayoral WMCA exemption to mirror the HCA in relation to the provision of land and infrastructure for housing. It is proposed that the Mayoral WMCA be given the relevant powers15 of the HCA.

The functions set out in the above would be non-Mayoral functions with the exception of the specific HCA compulsory purchase powers in Section 9 of the Housing & Regeneration Act 2008 which would be a Mayoral function, but would only be exercisable by the Mayor with the consent of the Mayoral WMCA Cabinet Member(s) for the area(s) of the land to be compulsorily acquired. Land Commission

The devolution agreement provides that the Government will work with the WMCA Land Commission (the “WMCA Land Commission”). The WMCA will seek the

15 Section 2 of the Housing and Regeneration Act 2008 (limited to the WMCA Area) and sections 3 to 12, 17 and 18 of the Housing and Regeneration Act 2008

Page 146 appropriate legislative provision to allow the Secretary of State to make schemes for the transfer to the WMCA of “designated property, rights or liabilities of a specified public body” where such property is in West Midlands Area.

Supporting and Attracting Business Innovation

The Government has committed to working with the Mayoral WMCA and the Greater Birmingham & Solihull, Black Country and Coventry & Warwickshire LEPs to support the further development and implementation of the three LEP Integrated Business Support Ecosystem, an environment where business are enabled to start, grow and succeed through integrated and locally relevant support and access to finance, and in particular will:

 Review the Inward Investment resource location of regional (IST) staff across the three levels of: Partnership Managers; Business Development and Key Account Management teams. The aim will be to seek to agree options for co-location, under UKTI/IST management  Establish a joint governance structure with quarterly meetings attended by a Director level representative from both UKTI investment and the Mayoral WMCA.  Ensure a portion of the GREAT campaign budget for overseas based activity (the UK government’s campaign to promote the UK internationally) is aligned to appropriate West Midland’s sector strengths.  Continue devolved inward investment funding for the Drive West Midlands initiative with the Automotive Investment Organisation to be considered as part of the Spending Review, Export Strategy and future sector prioritisation work. This will determine whether funding should be continued until 2020.

On trade, the Government will:

 Ring-fence trade services resource within the Mayoral WMCA area based on an agreed export plan with a dual key approach to activities and reporting on outputs and outcomes to the Mayoral Combined Authority.  Develop an export plan between the Mayoral WMCA and UKTI HQ which will allow flexibility.

On other business services, the Government will:  Work with the Mayoral WMCA to develop a devolved approach to delivery of business support from 2017 onwards.  Work with the Mayoral WMCA to design a joint approach to enterprise start- up activity.  Consider the Mayoral WMCA access to finance needs and how these interact with national access to finance programmes, such as the British Business Bank.

Culture

Page 147 Current position under 2016 Order

The WMCA Order 2016 provides for the power16 to encourage visitors and provide conference and other facilities. This should remain a non-Mayoral function to be exercised concurrently with the Constituent Councils.

Proposals for new culture functions

The Mayoral WMCA to be further given the power17 to provide and support cultural activities and entertainments as a non-Mayoral function to be exercised concurrently with the Constituent Councils. The devolution of this power will assist in the promotion of the West Midlands thereby attracting business and innovation into the region.

Information Sharing Provisions

For the purposes of exercising Mayoral WMCA functions concurrently/jointly with the Constituent Councils or a public authority the WMCA needs to rely on the same information sharing gateways applicable to those authorities.

In most instances the relevant statutory provisions contain a local authority definition that does not specifically recognise a Combined Authority. Whilst some of the relevant functions have yet to be sought, the data sharing is required to enable the further development work agreed in the devolution agreement and the subsequent development of further schemes to seek transfer of additional powers.

For this reason it is proposed that the following enactments be amended to ensure the data provisions sought below apply to the Mayoral WMCA.

The Mayoral WMCA seeks application of the data sharing provisions outlined below. It should be noted that the current definition of a “local authority” does not include a Combined Authority18.

• If requested to do so, educational institutions will be obliged under section 14 Education and Skills Act 2008 (the “ESA 2008”) to supply relevant information about a student or pupil to the WMCA. • The Mayoral WMCA will have the power to seek the supply of information from other public bodies.

16 Section 144 of the Local Government Act 1972 17 Section 145 of the Local Government Act 1972 18 Section 65 of the Education and Skills Act 2008

Page 148 • The Mayoral WMCA will be able to rely on the information sharing provisions in section 17 ESA 2008 (primarily concerning the exchanges between local authorities and their service providers) and; in section 77 ESA 2008 to support local authorities to deliver their duties under section 68 ESA 2008, including such amendments, modifications and enactments of legislation governing information sharing.

The Mayoral WMCA to be able to share relevant information for education and training purposes between local authorities and their service providers and for similar exchanges between these bodies with the Secretary of State and/or their service 19 provider .

When exercising its functions to consider crime and disorder implications the 20 Mayoral WMCA seeks relevant authority status to enable it to share information in accordance with the provisions in sections 17A and 115 of this the Crime and Disorder Act 1998.

For the purposes of discharging environmental functions in relation to Mayoral WMCA’s air quality functions the provision21 to disclose prescribed information between relevant Ministers of the Crown, relevant agencies and local enforcing authorities is sought as the definition does not currently include a Combined Authority.

Current legislation enables the Secretary of State to make regulations allowing certain persons, including the Department for Work and Pensions, to share social security and employment and training information with other Government Departments and their service providers, certain types of local authorities and their service providers. The Mayoral WMCA seeks to be included in the definition of a ‘relevant authority’ in order to facilitate the exchange of information and training purposes.

The Mayoral WMCA seeks designation as a relevant authority22 in order to facilitate the exchange of information for employment and training purposes in order to share the following information:

23  Social Security Information  To enhance a person’s skills and qualifications with a view to improving their prospects of finding and retaining employment24  social security information or information relating to employment or training for the purposes of research, monitoring or evaluation25

The Mayoral WMCA seeks designation26 so as to enable the Secretary of State or a person supplying services to the Secretary of State, to supply relevant information to qualifying persons for certain purposes, including welfare services (which includes

19 Section 122 of the Apprenticeships, Skills, Children and Learning Act 2009 20 Part 1 Chapter 1 (1A) Crime and Disorder Act 1998 21 Section 113 of the Environment Act 1995 22 Section 72 of the Welfare Reforms and Pensions Act 1999 23 Regulation 13(1)(b)(iv) of the Social Security (Claims and Information) Regulations 1999 24 Regulation 13(1A) of the Social Security (Claims and Information) Regulations 1999 25 Regulation 13(4) of the Social Security (Claims and Information) Regulations 1999 26 Section 131 of the Welfare Reform Act 2012

Page 149 support, assistance including by means of a grant or loan or the provision of goods or services, advice or counselling to individuals with particular needs), and for these and for the use of that information.

27 The Mayoral WMCA seeks designation as a qualifying person in relation to:

 the provision of welfare services either as a local authority or as a person prescribed or of a description prescribed by the Secretary of State.

 the Secretary of State’s ability to supply relevant information for the purposes of identifying households eligible for support under a Troubled Families Programme, providing advice support and assistance to members of such households and for monitoring and evaluating such programmes

The Mayoral WMCA seeks Government’s support to use the following national administrative data sets in order to support our ambition to develop an integrated data system to improve outcomes for individuals with multiple indicators of vulnerability (unemployment, offending, substance misuse, poor mental health and homelessness) while respecting legal and other privacy concerns. These will include:

 The Prisons Database (held by the Ministry of Justice)  The Work and Pensions Longitudinal Study (held by the Department for Work and Pensions)

The Government can support the WMCA in analysing and interrogating health data sources to improve care whilst respecting legal and other privacy concerns. These will include:  Hospital Episodes Statistics, Mental Health Minimum Dataset (held by the Health and Social Care Information Centre)  National Drug Treatment Monitoring System (held by Public Health England)

Finance and funding

Current position under 2016 Order

The Mayoral WMCA will be funded through two main sources. In relation to its transport functions, the Transport Levying Bodies Regulations 1992, as amended, enable a Combined Authority to issue a levy to its Constituent Councils to fund “all those liabilities failing to be discharged by it which are reasonably attributable to the

27 Social Security (Civil Penalties) Regulations 2012

Page 150 exercise of its transport functions for which provision is not otherwise made”. The current arrangements for a Transport Levy will remain.

The WMCA 2016 Order also provides for a statutory recharge whereby the Constituent Councils are required to “meet the costs of the WMCA reasonably attributable to the exercise of its functions relating to economic development and regeneration.”

Proposals for new Financing Functions

Precept(s) for Mayoral functions

Under Section 5 of the 2016 Act a Mayoral WMCA becomes a major precepting authority for the purpose of the Local Government Finance Act 1992 (the “LGFA 1992”) and may issue a precept28.

It is proposed that the Secretary of State makes an Order to enable the Mayor to raise a precept in accordance with the Act, and to aid the delivery of the investment programme. The Order is to contain provision requiring the Mayor to maintain a fund in relation to receipts arising, and liabilities incurred and about the preparation of an annual budget in relation to the exercise of those general functions.

The Order for the costs of the elected Mayor to also include provision for:-

(a) the mayor to prepare a draft budget (b) the draft to be scrutinised by other members of the Combined Authority and its Scrutiny Committee (c) the making of changes to the draft as a result of such scrutiny (d) the approval of the draft by the Combined Authority (including a power to veto the draft in circumstances specified in the order and the consequences of any such veto) (e) the basis on which such approval is given.

The Cabinet will examine the Mayor’s draft annual budget and the plans, policies and strategies, as determined by the Mayoral WMCA, and will be able to reject them if two-thirds of the Mayoral WMCA Cabinet agree to do so. In the event that the Mayoral WMCA reject the proposed budget then the Mayoral WMCA shall propose an alternative budget for acceptance by the Cabinet, subject to a two-thirds majority of those present and voting. The Mayor shall not be entitled to vote on the alternative Mayoral WMCA proposed budget.

Levies

28 Section 40 of the Local Government Finance Act 1992

Page 151 The 2016 Act removes the restriction of levying for transport only enabling regulations to be made to enable a Combined Authority to be a levying body in respect of non-mayoral functions other than transport, provided that the Constituent Councils consent. It is proposed that provision is made29 to enable the Combined Authority to be a levying body in respect of all its non-Mayoral expenditure.

Borrowing

Previous legislation provided that capital finance applies to a Combined Authority as it applies in relation to a local authority, except that the power to borrow confers power on such a Combined Authority to borrow money for a purpose relevant to its transport functions only. Therefore the Mayoral WMCA is prevented from borrowing for the purposes of its economic development and regeneration functions and as a result one of the Constituent Councils would in effect need to borrow on Mayoral WMCA’s behalf. The Greater Manchester Combined Authority have found this approach to be unsatisfactory, administratively burdensome and inconvenient. For the West Midlands to also proceed in this way would be extremely unsatisfactory.

The 2016 Act remedies this difficulty. It amends previous legislation so that in addition to borrowing for transport functions, a Combined Authority may borrow in relation to “any other functions of the authority that are specified for the purpose of [section 23(5)] in regulations made by the Secretary of State”. Such functions include Mayoral and non-Mayoral functions.

Such regulations may only provide borrowing powers for a particular function of the Mayoral WMCA if all the Constituent Councils consent. It is proposed that the regulations should provide for the Mayoral WMCA to have borrowing powers in respect of all of its functions.

European Funding

The Mayoral WMCA will work with the Government to achieve Intermediate Body status for European Regional Development Funding and European Social Funding for the Greater Birmingham & Solihull LEP only, to complement other aspects of this devolution agreement.

Conclusion

29 S9 of the Cities and Local Government Devolution Act 2016

Page 152 It is considered that the conferral of additional functions on the WMCA and the associated governance changes, as recommended by this review and incorporated in the Scheme, would be likely to improve the exercise of statutory functions in relation to the area of the WMCA at the appropriate local level.

The functions and powers detailed in this Governance Review and Scheme would give effect to the devolution agreement and with this and future agreement of devolution deals, improve the ability of the WMCA to deliver growth and reform for the people and businesses of the West Midlands.

Page 153 This page is intentionally left blank Draft Scheme for the establishment of a Mayoral West Midlands Combined Authority

Introduction - Delivery of the Devolution Agreement and the involvement of a directly elected Mayor

The establishment of a West Midlands Combined Authority1 presented the opportunity to have a strong, shared voice for the West Midlands and to make a step change in the collective efforts to drive the economic prosperity of the area. Effective engagement with the Local Enterprise Partnerships (“LEPs”) and the wider business community remains critical to the delivery of this ambition.

In recognising the considerable progress made to date and the great economic potential of the West Midlands, as it performs increasingly strongly on growth, inward investment and exports together with the investment in HS2, a devolution agreement (the “devolution agreement”) has been negotiated with Central Government which supports the public and private sector of the West Midlands to fully grasp these opportunities.

This Scheme for a Mayoral West Midlands Combined Authority (Mayoral WMCA) builds on the existing West Midlands Combined Authority by providing the necessary powers and decision making necessary to deliver the devolution agreement.

The devolution agreement is based on the establishment of an elected Mayor for the West Midlands metropolitan area (“the Mayor”) - working as part of the Combined Authority with a Cabinet of Council Leaders of the Constituent Councils having identified portfolios (“the Cabinet” and “Cabinet Member”) and subject to local democratic scrutiny. It is not envisaged that the Cabinet holds separate meetings; the Cabinet is part of the Mayoral WMCA, of which both LEPs and Local Authorities are Members. The ‘Cabinet’ will make decisions on the relevant matters to the WMCA Area, particularly applicable in relation to the Mayoral functions, such as the examination of the Mayoral draft budget.

Given the importance of existing collaboration across the three LEP geography (a crucial economic geography for the West Midlands area), as well as with neighbouring areas, the devolution agreement recognises that the wider partnership with business through the LEPs and with neighbouring councils across the West Midlands will be critical to success.

Implementation of the devolution agreement will enable the West Midlands to tackle the economic and social challenges that the region faces. The devolution agreement includes powers to support adult skills provision and employment support, and the ability to create an integrated approach to local public transport, including a single smart ticketing system. Further powers may be agreed over time and included in future legislation, which will require further parliamentary Orders.

1 A Scheme for the establishment of the West Midlands Combined Authority was published on 26 October 2015. All definitions set out there in shall also apply to this Scheme unless otherwise specified.

Page 155 Section 1 - Establishment of the Mayoral West Midlands Combined Authority (Mayoral WMCA)

All of the provisions in this Scheme are in addition to the current Order to establish the WMCA and the Constitution of the existing WMCA.

1. A Mayoral WMCA will be established pursuant to Section 107A of the of the Local Democracy, Economic Development and Construction Act 2009 (the “2009 Act”) as amended by the Cities and Local Government Devolution Act 2016 (the “2016 Act”), Constituent Councils approval dependent. The Parliamentary process for the election of a Mayor in May 2017 will be required and is a separate process. This Scheme details the powers and functions that are being sought by the WMCA to enable the Mayoral WMCA, in conjunction with the Mayor, to deliver the devolution agreement.

Membership of the Authority

2. The directly elected Mayor for the West Midlands will be a Member and Chair of the Mayoral WMCA and will be subject to the Mayoral WMCA constitution. Until such time as the Mayor is elected, a Chair and up to 2 Vice Chairs will be appointed from the Constituent Members by majority.

3. Once elected, the Mayor will appoint a Deputy from one of the Constituent Members.

4. In addition to the current Constituent and Non-Constituent Members of the existing WMCA, the following new Non-Constituent Members will be appointed from the following Councils to the Mayoral WMCA:

 Stratford-on-Avon District Council  Shropshire Council  [10th June 2016 deadline has been given for consideration by the WMCA Shadow Board of additional membership]

5. The total membership of the Mayoral WMCA will comprise of two elected Members from each Constituent Councils, one of which must include the Leader of each Constituent Council, one elected Member from each of the Non-Constituent Councils, one representative from each of the three LEPs and the elected Mayor.

Draft Mayoral WMCA Scheme V7.1 Page 156 Mayor and Cabinet

6. The Leaders of Constituent Councils, who are Members of the Mayoral WMCA, will hold the office of portfolio leads for aspects of the WMCA’s responsibilities, on the basis to be set out in its Constitution and in consultation with the Mayor and will be collectively known as the Cabinet operating with collective responsibility. Portfolio leads will be decided by unanimous vote of the Constituent Members. 7. The Mayor will also delegate to portfolio leads such areas of Mayoral responsibility as agreed by simple majority of the Cabinet.

8. The Cabinet will examine the Mayor’s draft annual budget and the plans, policies and strategies, as determined by the Mayoral WMCA, and will be able to reject them if two-thirds of the Mayoral WMCA Cabinet agree to do so. In the event that the Mayoral WMCA reject the proposed budget then the Mayoral WMCA shall propose an alternative budget for acceptance by the Cabinet, subject to a two-thirds majority of those present and voting. The Mayor shall not be entitled to vote on the alternative Mayoral WMCA proposed budget.

9. If the Mayoral WMCA agrees, the Mayor may be paid an allowance subject to an independent review of the appropriateness and amount of such an allowance, subject to any statutory provision.

10. It is proposed that there should be provision to enable the Mayor to appoint one person as the Mayor’s political adviser and to provide for the terms and conditions of such appointment in accordance with Section 9 of the Local Government and Housing Act 1989.

Voting

11. Proposals for a decision of the Mayoral WMCA may be put forward by the Mayor, or any Member of the Mayoral WMCA. Any questions that are to be decided by the Mayoral WMCA, unless otherwise specified in this Scheme or the Mayoral WMCA Constitution, are to be decided by way of two-thirds majority of Constituent Members, and overall majority of all Members present and voting.

12. Mayoral functions will be devolved to the Mayoral WMCA by central government, exercised by the Mayor and subject to the provisions in this Scheme.

13. Mayoral WMCA/Mayoral joint functions are identified in Section 2 of this Scheme and are subject to the Mayor’s vote being included in the majority in favour with the two-thirds of the Constituent Member voting.

Draft Mayoral WMCA Scheme V7.1 Page 157 14. Mayoral WMCA functions, such as those contained within the WMCA establishment Order regarding transport and economic development and regeneration, are not subject to the Mayor’s vote being included in the majority in favour with the two-thirds of the Constituent Member voting. The items reserved for unanimous voting of the Constituent Members are also not subject to the Mayor’s vote in favour.

15. The specific issues that are reserved for unanimous Constituent Member voting, in addition to any further unanimous issues specified in this Scheme, are:

(a) approval of borrowing limits, treasury management strategy including reserves, investment strategy and capital budget of the Mayoral WMCA; (b) the conferral of further functions on the Mayoral WMCA; (c) voting rights for Members of the Mayoral WMCA appointed otherwise than from among the elected Members of the Constituent Councils; (d) the exercise of its functions in accordance with Section 113A of the Local Democracy, Economic Development and Construction Act 2009 (the “2009 Act”)2; (e) amendments to the standing orders of the Mayoral WMCA; and (f) such other plans and strategies as may be determined by the Mayoral WMCA and set out in its standing orders.

16. Any delegation of any Combined Authority function pursuant to Section 101 the Local Government Act 1972 is a matter for the unanimous decision of the Constituent Members only.

Overview and Scrutiny and Audit Arrangements

17. The joint Overview and Scrutiny arrangements and the Audit committee of the Mayoral WMCA will comply with the provision of S104 (9) of the 2009 Act and any subsequent regulations issued under the 2016 Act. The Audit Committee will include at least one independent person.

18. No Member of the Mayoral WMCA or its committees (other than the Overview and Scrutiny Committee) can be a Member of any Mayoral WMCA Overview and Scrutiny Committee.

(2) Section 113A was inserted by section 13 of the Localism Act 2011.

Draft Mayoral WMCA Scheme V7.1 Page 158 Section 2 - Functions Sought by the Mayoral WMCA

19. Existing WMCA transport and economic development and regeneration functions, provided for in the establishment of the WMCA, will remain exercisable by the Mayoral WMCA, not the Mayor. In order to deliver the devolution agreement, the Mayoral WMCA is seeking the additional functions detailed in this section. The mechanism for exercise of the function is highlighted and voting arrangements for those functions are in accordance with paragraphs 13-16 of this Scheme.

Transport

20. The powers and functions funded from the “ITA levy” are to remain as WMCA functions, funded by the “ITA levy”. There are no proposals to move functions funded by the “ITA levy” to Mayoral functions. Any reference to functions currently undertaken by Constituent Councils will be run either concurrently or jointly with the Mayoral WMCA.

Consolidated multi-year local transport capital block allocation

21. The Mayoral WMCA will receive a devolved and consolidated multi-year local transport capital allocation for the area of the Mayoral WMCA to enable greater surety of funding, more effective and efficient long-term asset management and procurement arrangements. A Mayoral Function, carried out in accordance with the Cabinet’s examination of and ability to reject the Mayoral budget, in accordance with paragraph 8 of this Scheme.

Public Transport and related infrastructure

22. It is proposed that the Secretary of State for Transport to make grants to bus service operators under Section 154 of the Transport Act 2000, in relation to services which operate wholly or mainly within Mayoral WMCA Area, be exercised by the Secretary of State for Transport in consultation with the Mayor. This would provide the WMCA with an early opportunity to engage on a formal basis with operators of the current commercial bus network, prior to and in expectation of the new regime to be introduced by the forthcoming Bus Service Bill. A Secretary of State function, exercised in consultation with the Mayor.

Draft Mayoral WMCA Scheme V7.1 Page 159 23. To strengthen our Safety and Security agenda the public transport Safer Travel Police Team will be provided with powers to ensure a consistent approach and more effective response on our bus network and related infrastructure. The powers sought below are to be concurrently/jointly exercised with the Constituent Councils, as Mayoral WMCA functions:

 The Bus Lane Contraventions (Penalty Charges, Adjudication and Enforcement) England Order 2005 - the Mayoral WMCA is seeking functions equivalent to those contained within Section 144 of the Transport Act 2000 (civil penalties for bus lane contraventions), allowing the Mayoral WMCA to be an approved Local Authority. The outcome would be to ensure a consistent approach to the enforcement, application of penalty charges etc. of bus lanes.

 The Health Act 2006 - to provide the Mayoral WMCA with the ability to tackle smoking in public places, specifically on buses and in enclosed bus stations.

 The Anti-Social Behavior, Crime and Policing Act 2014 - the powers contained within are currently held by Local Authorities, NHS, social landlords, Police Forces and Transport for London. The Mayoral WMCA is seeking equivalent functions to enable the Mayoral WMCA to efficiently secure Orders that apply across the whole of the Mayoral WMCA Area rather than at present in individual Constituent Council areas.

24. Bus re-franchising and enhanced quality contracts - the Mayoral WMCA is seeking enhanced powers to deliver integrated smart ticketing across all local modes of transport in the Mayoral WMCA Area. A joint WMCA/ Mayoral function.

The West Midlands Key Route Network (WMKRN)

25. The Mayoral WMCA is seeking functions equivalent to those contained within Part 1 of the Road Traffic Regulation Act. These functions would enable the WMKRN be statutorily defined, to enable Orders such as ‘Safer Vehicles’, ‘Air Quality’, “Moving Traffic Violation” Orders etc. to be uniquely identified for the WMKRN, or the equivalent provisions sought in order to allow the WMKRN of local authority roads to be strategically managed and coordinated at the West Midlands Metropolitan level, with joint asset management and procurement, by the Mayoral WMCA on behalf of the Mayor.

26. The Mayoral WMCA is seeking functions equivalent to the below, to be exercised by the Mayoral WMCA on behalf of the Mayor, concurrently with the Constituent Council on the WMKRN, unless otherwise stated:

Draft Mayoral WMCA Scheme V7.1 Page 160  Section 6 of the Highways Act 1980 (enabling the Secretary of State or Highways England to delegate to or enter into an agreement with a county council, metropolitan district council or London borough council in relation to the construction, improvement or maintenance of trunk roads.) It is proposed that the section should be modified to include the Mayoral WMCA in the authorities to which such functions may be delegated to support better integration between local and national networks, or the equivalent legislative provision in order to achieve the aim of better integration. A joint WMCA/Mayoral function.

 Section 8 of the Highways Act 1980 (enabling local highway authorities and Highways England to enter into agreements with other such authorities in relation to the construction, improvement, maintenance etc. of a highway for which any party to the agreement is the highway authority.) It is proposed that the section be modified to allow the Mayoral WMCA to be a party to such agreement as if it were a local highway authority, with the affected highway authority(ies) consent, or the equivalent legislative provisions in order to allow the WMCA to be party to such agreements. A joint WMCA/Mayoral function.

 Section 62 of the Highways Act 1980 - General Power of Improvement, or the equivalent legislative provisions to provide Mayoral WMCA with General Power of Improvement in respect of highways. This will enable the Mayoral WMCA, by agreement with local highway authority, to undertake works on the WMKRN for Transportation purposes as if the highway authority, with the affected highways authority(ies) consent(s). A joint WMCA/Mayoral function.

 The Mayoral WMCA is seeking functions equivalent to those contained within S49 New Roads and Street Works Act 1991 to enable the Mayoral WMCA to be defined as a Street Authority for the WMKRN, or the equivalent legislative provisions, in order to enable the Mayoral WMCA to develop a Permit Scheme, coordinate Notices etc. on the WMKRN. The receipt of notices, register, inspections etc. would still be carried out by the Local Highway Authority. The Mayoral WMCA would also enable eligibility for the 18% diversionary works contribution from utilities for non-Metro Schemes. A joint WMCA/Mayoral function.

 The Mayoral WMCA is seeking functions to place a duty on the Mayoral WMCA, in consultation with the appropriate authorities, to report to the Secretary of State an assessment of existing traffic flows, forecast growth and reduction targets in respect of the WMKRN. Section 2 of the Road Traffic Reduction Act 1997 sub sections 1, 2 and 3, or the equivalent functions in order to achieve the Mayoral WMCA’s duty to report. A Mayoral function.

 The WMKRN be designated a civil enforcement area for moving traffic contraventions Section 74 and Schedule 8 Part 2 (10) of the Traffic Management Act 2004, or the equivalent legislative provisions, so as to ensure the expeditious movement of traffic on the most critical local roads

Draft Mayoral WMCA Scheme V7.1 Page 161 across the West Midlands in terms of economic growth, productivity and jobs. A joint WMCA/ Mayoral function.

 The Mayoral WMCA is seeking functions equivalent to those contained within section 39(2) and (3) of the Road Traffic Act 1988, to have concurrently the power of a local authority to promote road safety and give road safety information and training. A joint WMCA/Mayoral Function.

27. The Mayor and the Mayoral WMCA will have the power to create Low Emissions Zones and Clean Air Zones, with the affected highway authority(ies) consent. A joint WMCA/Mayoral function.

HS2 Growth

28. The Mayoral WMCA will deliver the objectives of the HS2 Growth Strategy. In order to manage risks and support delivery there will be a prioritised programme of projects with milestones, input, output, outcomes and benefit indicators that local partners will use to track delivery. In addition, consideration will be given to the remit and governance of a Combined Authority-led Development Corporation to deliver the local growth.

29. It is proposed that the Mayoral WMCA should have functions equivalent to those of the Mayor of London under Part 8 of the Localism Act 2011 to designate any area of land, with the consent of the local planning authority(ies) for the area(s), in the Mayoral WMCA Area as a development area leading to the establishment, by Order, of WMCA development corporations (“WMCADCs”). A Mayoral WMCA function.

30. Section 202 of the Localism Act 2011 currently allows for the Mayor of London to decide that the Mayoral Development Corporation(s) should have certain planning functions in relation to the whole or part of the Mayoral development area. It is proposed that Section 202 of the Localism Act 2011 is modified to provide that this power should only be exercised by the Mayoral WMCA with the consent of the local planning authority(ies) for the relevant area(s), or the equivalent statutory provisions in order to ensure that the planning function is only exercisable with the consent of the local planning authority(ies) for the relevant area(s).

31. The Mayoral WMCA is seeking provision equivalent to those contained within Schedule 1 of the Land Compensation Act 1961 (relating to disregard of actual or prospective development in certain cases), so that land designated as a WMCA developmental area is treated in the same way as land designated as an urban development area.

Draft Mayoral WMCA Scheme V7.1 Page 162 Skills

32. The Mayoral WMCA will build on the existing collaboration between the three LEPs and begin to prepare for local commissioning which will allow the Mayoral WMCA to agree with providers the mix and balance of provision that will be delivered in return for the block funding, and to define how success will be assessed.

Employment

33. The Mayoral WMCA will work with the Department for Work and Pensions (DWP) to co-design the future employment support, from April 2017, for the hardest- to-help claimants, many of whom are currently referred to the Work Programme and Work Choice. The Employment and Skills Strategy for the three LEP Area will influence the co-design.

34. The Mayoral WMCA is seeking functions equivalent to the Secretary of State functions under Sections 2 and 10A of the Employment Training Act 1973, to be exercised concurrently with the Secretary of State to make appropriate arrangements for the purpose of assisting persons to train for, obtain and retain suitable employment, and enter into agreements for the provision of ancillary goods and services. A joint WMCA/Mayoral function.

More and Better Homes

35. The Mayoral WMCA is seeking the objectives and functions of the Homes and Communities Agency (“HCA”) under Section 2(1) (with a limitation to the West Midlands) and Section 3-12, 17 and 18 of the Housing and Regeneration Act 2008 (“H&R Act 2008”), to be exercised concurrently with the HCA. These functions, would be non-Mayoral functions with the exception of the specific HCA compulsory purchase powers as detailed in paragraph 38.

36. The objectives are:-  to improve the supply and quality of housing;  to secure the regeneration or development of land or infrastructure;  to support in other ways the creation, regeneration and development of communities or their continued well-being; and  to contribute to the achievement of sustainable development and good design.

Draft Mayoral WMCA Scheme V7.1 Page 163 37. The functions in paragraph 35 include functions enabling the achievement of the above objectives, including a power of HCA compulsory purchase in Section 9 of the H&R Act 2008 (subject to the authorisation of the Secretary of State). In respect of this section, in order to achieve the objectives above, the Mayoral WMCA should have the benefit of exemption from Section 23 of the Land Compensation Act 1961 enjoyed by the HCA under section 23(3)(d) of that Act.

38. The Mayoral WMCA is seeking functions contained in Section 9 of the H&R Act 2008, as a Mayoral function, only exercisable by the Mayor with the consent of the Mayoral WMCA Cabinet Member(s) for the area(s) of the land to be compulsorily acquired.

Supporting and Attracting Business and Innovation

39. The government commits to working with the WMCA and the Greater Birmingham & Solihull, Black Country and Coventry & Warwickshire LEPs to support the further development and implementation of the three LEP Integrated Business Support Ecosystem.

Culture

40. The Mayoral WMCA is seeking functions equivalent to those contained in Section 145 of the Local Government Act 1972 to provide and support cultural activities and entertainments, to be exercised concurrently with the Constituent Councils . This is in addition to the current WMCA function to encourage visitors and provide conference and other facilities. The devolution of the power to provide and support cultural activities and entertainments will assist in the promotion of the West Midlands thereby attracting business and innovation into the region. A Mayoral WMCA function.

Data Sharing

41. There will be a number of instances in connection with specified functions and powers, held by both the Authorities and the Mayoral WMCA, when various enactments enable or require that local or public authorities to share information with other persons or bodies and in particular enable / require those other persons or bodies to share information with the local or public authority. It is proposed that in such instances such enactments are amended to put the Mayoral WMCA in the same position as the local or public authority, or the equivalent legislative provision is utilised to ensure that the Mayoral WMCA is able to share such information.

Draft Mayoral WMCA Scheme V7.1 Page 164 42. Such enactments include for example:

 Sections 14, 16, 17 and 77 of the Education and Skills Act 2008;  Section 122 of the Apprenticeships, Skills, Children and Learning Act 2009;  Sections 17A and 115 of the Crime and Disorder Act 1998;  Section 113 of the Environment Act 1995;  Section 72 of the Welfare Reform and Pensions Act 1999;  Regulation 13 of the Social Security (Claims and Information) Regulations 1999;  Section 131 of the Welfare Reform Act 2012; and  Regulation 5 of the Social Security (Information-sharing in relation to Welfare Services etc.) Regulations 2012.

43. In addition the Mayoral WMCA is seeking functions to allow the Mayoral WMCA access to the following national data sets together with any subsequently identified data sets in order to progress those actions identified in the devolution agreement:

 The Prisons Database (held by the Ministry of Justice)  The Work and Pensions Longitudinal Study (held by the Department for Work and Pensions)  Hospital Episodes Statistics, Mental Health Minimum Dataset (held by the Health and Social Care Information Centre)  National Drug Treatment Monitoring System (held by Public Health England)

Draft Mayoral WMCA Scheme V7.1 Page 165 Mayoral Provisions

44. The functions which are to be Mayoral functions pursuant to the devolution agreement and the conditions under which they can be exercised by the Mayor are detailed throughout Section 2 and 3 of this Scheme, these are:

 HCA CPO powers (with the consent of the appropriate authority(ies)  Grants to Bus Service Operators (Secretary of State to consult the Mayor)  Devolved, consolidated transport budget  Reporting on the Key Route Network (in consultation with the authorities)  Mayoral precept  Raising of a business rate supplement (in agreement with the relevant LEP Board(s) and the Mayoral WMCA)  Functional power of competence

45. The Mayor will have responsibility for a devolved and consolidated transport budget and for a franchised bus service. As part of the Mayoral budget, the consolidated transport budget will be subject to the examination of the Cabinet and can be rejected if two-thirds of the Cabinet decide to do so, in accordance with paragraph 8 of this Scheme.

46. It is not proposed that the Mayor should have the general power of competence. However, the Mayor should have, as an ancillary power, a functional power of competence that is similar to the power under section 113A of the 2009 Act. This would enable the Mayor to do things appropriate or incidental to, or connected with, the Mayor’s functions and in order to aid the delivery of the investment programme.

47. The Mayoral WMCA is seeking functions equivalent to those contained within section 107E of the 2009 Act, that by Order of the Secretary of State the Mayor will be able to enter into a joint exercise arrangement for the exercise of functions pursuant to section 101(5) Local Government Act 1972.

48. The Mayor will arrange for the exercise of Mayoral functions by such persons permissible under section 107D of the Local Democracy and Economic Development Act 2009 where required to do so by unanimous resolution of the Constituent Council Members present and voting.

Draft Mayoral WMCA Scheme V7.1 Page 166 Section 3 - Finance and Funding

49. The WMCA will create a fully devolved investment strategy, covering all devolved functions and income streams in order to deliver the devolution agreement.

50. The 2016 Act makes provision for a Mayoral Combined Authority to act as a major precepting authority. It is proposed that the Scheme seeks to secure the provisions enabling the Mayor to raise a precept as provided for in the 2016 Act and to aid the delivery of the investment programme.

51. It is proposed that the Order seeks to secure the provisions set out in section 74 of the Local Government Finance Act 1988, to enable the Mayoral WMCA to issue a levy to its Constituent Councils for the expenditure of the Mayoral WMCA that is reasonably attributable contribution for all other non-Mayoral functions.

52. It is proposed that regulations are made pursuant to section 23 (5) of the Local Government Act 2003 to give the Mayoral WMCA borrowing powers for any purpose relevant to the exercise of its functions, both Mayoral and Mayoral WMCA.

53. The Mayor will have the ability, in consultation with businesses, with agreement of the relevant LEP Board(s) and the Mayoral WMCA, to raise Business Rate Supplement, up to a specified cap for investment in specified projects, aiding the delivery of the investment programme driven by the WMCA Strategic Economic Plan. The Mayoral WMCA will be a levying authority for the purposes of the Business Rates Supplement Act 2009 and the Constituent Authorities shall be deemed to be acting jointly through the Combined Authority in accordance with Section 2(3) of the Business Rates Supplement Act 2009.

54. The Mayoral WMCA will work with government to explore the options available to the region as it moves towards 100% business rate retention. The first step in that transition will see the Mayoral WMCA pilot a Scheme which will enable the Combined Authority to retain an agreed level of business rate growth that would otherwise have been paid as central share to government, above an agreed baseline, for an initial period of five years.

55. The Mayoral WMCA will work with the government to achieve Intermediate Body status for European Regional Development Funding and European Social Funding for the Greater Birmingham & Solihull LEP only, which will complement other aspects of the devolution deal.

Draft Mayoral WMCA Scheme V7.1 Page 167 Section 4 - Substructures and Internal Scheme of Delegation

56. The Mayoral WMCA may establish further joint committees or sub-committees and delegate powers and functions as considered by it to be appropriate, in accordance with its constitution.

Section 5 - Subsequent Reviews

57. There may be further reviews required in as further devolution deals are agreed.

Draft Mayoral WMCA Scheme V7.1 Page 168 Agenda Item 2.7a [PUBLIC]

Board Meeting

Date Friday 10 June 2016

Report title New Application for Membership - North Warwickshire Borough Council – Non-Constituent

Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Consider and approve the application for Non-Constituent Membership by North Warwickshire District Council.

Page 169 [PUBLIC]

1.0 Purpose

1.1 To consider and approve the application for Non-Constituent membership by North Warwickshire Borough Council.

2.0 Background

2.1 There is a window of opportunity to incorporate new members into the Combined Authority by the end of 2016. The new members are included in the Mayoral ‘function’s Scheme – to note, the proposed Mayor’s functions will only be exercised across the ‘area’ of the Combined Authority, i.e. the Constituent Councils. The Scheme is considered separately on this agenda.

3.0 North Warwickshire Borough Council

3.1 On 24th May 2016, North Warwickshire Borough Council approved Non-Constituent membership of the West Midlands Combined Authority

3.2 The Board are asked to consider and approve North Warwickshire’s Non-Constituent membership status.

4.0 Financial implications

4.1 Each Non-Constituent will contribute £25,000 for their Membership, this is the figure for 2016/17.

5.0 Legal implications

5.1 There are no further legal implications arising from this report.

6.0 Equalities implications

6.1 Not applicable

7.0 Schedule of background papers

https://www.northwarks.gov.uk/meetings

Page 170 Agenda Item 2.7b [PUBLIC]

Board Meeting

Date Friday 10 June 2016

Report title New application for Membership – Warwickshire County Council – Non-Constituent Accountable Chief Keith Ireland, Clerk to the Combined Authority Executive Tel 01902 55 4500 Email [email protected]

Accountable Keith Ireland, Clerk to the Combined Authority Employee Tel 01902 55 4500 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Consider and approve the application for Non-Constituent Membership by Warwickshire County Council.

Page 171 [PUBLIC]

1.0 Purpose

1.1 To consider and approve the application for Non-Constituent membership by Warwickshire County Council.

2.0 Background

2.1 There is a window of opportunity to incorporate new members into the Combined Authority by the end of 2016. The new members are included in the Mayoral ‘function’s Scheme – to note, the proposed Mayor’s functions will only be exercised across the ‘area’ of the Combined Authority, i.e. the Constituent Councils. The Scheme is considered separately on this agenda.

3.0 Warwickshire County Council

3.1 On 17th May 2016, Warwickshire County Council approved Non-Constituent membership of the West Midlands Combined Authority

3.2 The Board are asked to consider and approve the Non-Constituent membership status of Warwickshire County Council.

4.0 Financial implications

4.1 Each Non-Constituent will contribute £25,000 for their Membership, this is the figure for 2016/17.

5.0 Legal implications

5.1 There are no further legal implications arising from this report.

6.0 Equalities implications

6.1 Not applicable

7.0 Schedule of background papers

https://democratic.warwickshire.gov.uk/cmis5/CalendarofMeetings/tabid/128/ctl/ViewMeetin gPublic/mid/645/Meeting/3548/Committee/457/Default.aspx

Page 172 [PUBLIC] Agenda Item 3.1

Board Meeting

Date Friday 10 June 2016 Report title West Midlands Combined Authority Strategic Economic Plan Accountable Chief Martin Reeves, Chief Executive to the Combined Executive Authority Tel 024 7683 1383 Email [email protected]

Accountable Sarah Middleton Employee Email [email protected] Tel 01384 471102

Report to be/has been WMCA Shadow Board – 27 May considered by 2016

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve the inaugural West Midlands Combined Authority Strategic Economic Plan (SEP).

Page 173 [PUBLIC]

Agenda Item 3.1

1.0 Purpose

1.1 The report seeks approval of the West Midlands Combined Authority SEP. (The document will be available at the Annual General Meeting.)

2.0 Background

2.1 To guide the development of future economic priorities and Devolution Deals, the West Midlands Combined Authority SEP creates the framework of sectors and their role economically for Gross Value Add and jobs, relevant clusters, business competitiveness, employment and skills for the workforce and residents and the overall infrastructure requirements to underpin business growth.

3.0 West Midlands Combined Authority Strategic Economic Plan

3.1 The West Midlands Combined Authority SEP Board has developed an Economy Plus approach to the Strategic Economic Plan, including;

a. Adopting a Vision led approach (to 2030) for the economic period. b. Embracing the aspiration for a balance of benefit across the Combined Authority but reflective of flexible time horizons to the achievement of agreed ambitions across communities. c. Creating a family of SEPs with the West Midlands Combined Authority SEP creating a ‘wrapper’ for the existing 3 LEP SEPs reflective of the economic opportunities and challenges that are cross cutting across all three areas or matters which are individually significant leading to a West Midlands Combined Authority SEP treatment. d. An emphasis on the acceleration of improved productivity. e. An integrated Performance Management Framework to annually track progress and inform future priorities. f. An overall focus on communicating the unique place of the Combined Authority delivering for the UK economy. g. Strong recognition of the cross cutting impact of productivity improvements across all sectors including the relationship to the Public Service Reform ambitions and the WMCA 3 LEP geography. h. Stronger reference to supporting other key WMCA plans including the Transport Plan. i. Technical evidence base and other relevant reference materials being made available via the Combined Authority website. j. Development of a Dynamic Impact model to support the assessment and impact of future pipeline priorities. k. A commitment to review the SEP as its geography and membership change on a timely basis as guided by the Combined Authority.

Page 174 [PUBLIC]

Agenda Item 3.1

4.0 Financial implications

4.1 The production of the SEP has been incorporated into existing budgets. The implications of the programs and plans that may follow over the years will be assessed as they arise.

5.0 Legal implications

5.1 There are no legal implications flowing from the contents of this report.

6.0 Equalities implications

6.1 An initial equality screen has been conducted on the establishment of the Combined Authority. There is no indication that the SEP will have negative implications for protected groups. Going forward, work carried out under the SEP will be subject to Equality Analyses as required, to ensure they are complying with the Public Sector Equality Duty. The Combined Authority are working closely with the West Midlands Local Authority Equality Network to ensure equalities is embedded across the Combined Authority.

Note: The SEP will be made available at the Annual General Meeting and will also be placed onto the Combined Authority website.

Page 175 [PUBLIC]

Agenda Item 3.1

Page 176 [PUBLIC] Agenda Item 3.2

Board Meeting

Date Friday 10 June 2016 Report title Strategic Transport Plan Approval Accountable Chief Laura Shoaf, Managing Director - Transport for the Executive West Midlands (TfWM) Tel 0121 214 7444 Email [email protected]

Accountable Laura Shoaf, Managing Director - Transport for the Employee West Midlands (TfWM) Tel 0121 214 7444 Email [email protected]

Report to be/has been None considered by

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve the “Movement for Growth” Strategic Transport Plan documents (full and summary), to provide the framework for transport development in the West Midlands.

Page 177 Page 1 of 6 [PUBLIC] Agenda Item 3.2

1.0 Purpose

1.1 To seek approval of the “Movement for Growth” West Midlands Strategic Transport Plan documents. The Summary document is appended to this report and the full document is available on line at: http://www.wmita.org.uk/strategy-and-publications.aspx

2.0 Background

2.1 The Movement for Growth (MfG) Strategy has been previously considered following public consultation and adopted on 17 December 2015 by the West Midlands Integrated Transport Authority (WMITA).

2.2 The MfG sets out an ambitious plan to greatly improve the transport system in order to support economic growth and regeneration, underpin new development and housing and improve air quality, the environment and social inclusion. It is based on improvements, year in year out, over the long term to an integrated transport system made up of 4 tiers of provision:  National and Regional;  Metropolitan (Metropolitan Rail and Rapid Transit Network, Key Route Network, Strategic Cycle Network);  Local; and  Smart Mobility.

2.3 The MfG provides a robust position for transport over the West Midlands geography. This is also consistent with the overall transport needs of the Midlands, as captured with by Midlands Connect - an ambitious initiative to identify and then realise the transport connectivity improvements that the Midlands as a whole (east and west) need in order to maximise long-term regional economic growth.

2.4 Midlands Connect has taken an evidenced based approach through a number of technical studies which, in parallel to those of Network Rail and Highways England, will focus on building the strongest economic case possible for strategic transport investment across the region. Midlands Connect forms the transport ambitions of the Midlands Engine initiative, which is working across the same geography to develop strategies and measures which will drive forward significant additional economic growth and job creation.

2.5 The MfG strategy is also referenced and supported in the West Midlands Combined Authority Strategic Economic Plan, providing a framework to bring forward the connectivity that our economy and spatial growth (as set out in current and emerging Local Plans) needs.

2.6 In order to maintain continuity of overarching transport policies and strategy the West Midlands Combined Authority are requested to re-affirm the adoption of the “Movement for Growth” strategy and note the current work being undertaken to develop further specific policy and strategy initiatives.

2.7 Following its adoption, MfG has been recognised as international best practice in regards to Sustainable Urban Mobility Planning (SUMPs) and nominated for a European SUMP Awards in April 2016.

Page 178 [PUBLIC] Agenda Item 3.2

3.0 Current Work and Next Steps

3.1 Transport for West Midlands (TfWM) is now working on a 10 year transport delivery and implementation plan, which will set out priority projects for delivery and development. This work will include plans and measures to ensure the resilience and operational stability of the transport network during a period of previously unprecedented infrastructure investment, by the Combined Authority and partners, as well as by Network Rail, Highways England and HS2 Ltd.

3.2 TfWM is developing a series of more detailed policies and strategies, for example a draft freight strategy is being finalised and a Logistics Forum being established; as well as detailed development of a Mobility as a Service strategy. Both of these were recently considered by West Midlands ITA and further reports will be bought back to Combined Authority during 2016. A review of rail and highways strategy is also underway in order to inform what is being targeted for the Combined Authority area from the on-going Midlands Connect work. Other key areas for policy and strategy development include air quality and work to identify measures to support the young, socially excluded and troubled individuals. Other immediate and active priorities for TfWM include:

3.3 HS2 Growth Strategy Local Connectivity Package: - The Combined Authority Devolution Deal contains a £4.4bn HS2 Growth Strategy which aims to make the most of HS2 arriving in the West Midlands. As part of this Growth Strategy there is a local connectivity package of 20 transport schemes to effectively “plug-in” the 2 new HS2 stations to local transport networks. These schemes include the East-West Metro with Metro light rail extensions to Dudley - Brierley Hill and lines through East Birmingham to North Solihull and HS2 Interchange station.

3.4 Better Use of the M6Toll and Network Resilience: - “Movement for Growth” states that:

“Wider use of the M6Toll is very important for the West Midlands and possible means to deliver this need exploring, to ensure better use and integration with the wider highway network”.

Work is currently progressing with the Department for Transport, through the Devolution Deal to consider ways of achieving better use of M6Toll, particularly when incidents cause severe congestion on the network. Related to this is a significant piece of work to identify how the impact of major road works over the next 10 years due to HS2, Highways England, Network Rail and ‘local’ schemes can be minimised during in a period of extensive construction across the whole transport system.

3.5 Key Route Network: - This is a fresh look at what the West Midlands main road network is and what role it should have. A newly defined “Key Route Network” of main roads has been identified. The network serves the main strategic highway flows of people and freight across the metropolitan area and provides connections to the national strategic road network. The performance standards for this new network are currently being developed and will seek to use the latest technology solutions to monitor and manage it. The work will be supported by a dedicated team and the local Highway Authorities.

3.6 West Midlands Rail: - West Midlands Rail (WMR) Ltd is a new company governed by a board drawn from 14 councils and which has been set up to secure devolvement of a

Page 179 [PUBLIC] Agenda Item 3.2

greater level of local control of rail services in the West Midlands. This includes the 7 Combined Authority constituent authorities, who currently form a coordinated joint position on the WMR Ltd board. WMR Ltd is working with the Department for Transport to draw up the specification for a new rail franchise for the West Midlands (to replace the local elements of the current London Midland franchise). This will start in 2017 and will involve in greater influence and control of local rail services, potentially leading to a fully devolved contract in the future.

3.7 Bus Alliance: - TfWM is leading on an innovative strengthened partnership approach with bus operators to deliver practical improvements to the bus system over the next five years up to 2021. The commitments are:  To increase bus patronage by 5%.  Improvement in peak time journey speeds.  More intuitively understandable core turn-up-and-go routes.  Fare rises of no more the RPI +1% per annum.  Zero or ultra-low emissions with every other bus at least Euro 6.  Customer satisfaction levels remain over 85%.  Discounted young person’s travel for everyone under 19 years old.  Integrated ticketless travel in line with intelligent mobility policy.  Network Development Plans to support the economic objectives of the next decade.  Increased investment in highways infrastructure to aid journey times, reliability and road safety.  The financial benefits of increased patronage contribute towards infrastructure and buses.  Improvement on board through improved seating, next stop announcements and WiFi.

3.8 Metro Delivery: - A number of Metro schemes are now in development to follow the extension to New Street station:  Metro to HS2 Curzon Street and Eastside  Metro to Centenary Square  Metro to Wolverhampton Interchange/ rail station  Metro from Wednesbury – Brierley Hill and Eastside – East Birmingham/North Solihull – HS2 Interchange (“East-West Metro”) Projects beyond this are based on tram-train lines to link up the Black Country centres more effectively, in line with the Black Country’s overall development strategy

3.9 Mobility as a Service (MaaS) and Intelligent Mobility: - The West Midlands is well placed to be a world-leader in transport innovation and new technology. TfWM is co-ordinating the public sector’s role in how new technology is used. The work sits under the broad banner of ‘intelligent mobility’, which can be thought of as a technology enabled system of mobility solutions supporting full end-to-end journeys which enables the traveller to easily balance cost, comfort, speed, and convenience against need. An Intelligent Mobility Strategy has been produced and previously adopted by West Midlands ITA (July 2015) and a number of areas of detailed development work are now being carried out, including to improve payment systems (contactless payment); support ‘open data’; support connected and autonomous vehicles (with a first on road trial in early 2017); and making the transport infrastructure (signals etc.) better utilise the latest available technology in order to improve

Page 180 [PUBLIC] Agenda Item 3.2

performance. Following adoption by West Midlands ITA of a MaaS strategy in March 2016, a proposal for a MaaS pilot scheme is currently being developed, with a view to delivering this within 12 months.

3.10 Air Quality Strategy: - TfWM is currently working to help coordinate air quality strategy across the West Midlands. Transport is a main source of the pollution of Nitrogen Dioxide and particulates, which have been shown to have significant health impacts and are linked to premature deaths. In Birmingham, unless mitigation measures are implemented, air quality levels are predicted to exceed the levels set by a 2008 European Directive on ambient air quality (2008/50/EC).

3.11 This directive was made law in England through the Air Quality Standards Regulations 2010. There are also air quality concerns in other areas of the Combined Authority. The currently different approaches of the Black Country, Birmingham, Solihull and Coventry to assessing these are being reviewed with the relevant District teams, with a view to finding a more effective combined approach to assessment and mitigation. A key issue to tackle going forward will be linking the cost of implementing measures which beneficially impact air quality to the savings that can be realised from reduced premature deaths and a lower healthcare bill.

4.0 Financial implications

4.1 A 2016 / 2017 budget of £40,000 was made available to progress the plan and all activities to date have all been contained within this allocation. It is expected that the budget allocation will also cover the next phase of policy and strategy work, which features the production of a ten year delivery and implementation plan”.

5.0 Legal implications

5.1 There are no legal implications flowing directly from the contents of this report. Consultation has been previously undertaken by West Midlands ITA.

5.2 Any associated procurement activity will need to comply with applicable procurement legislation.

6.0 Equalities implications

6.1 The strategy highlights the importance of meeting the needs of people with disabilities, older age groups and socially excluded groups, with an emphasis on social inclusion and accessible transport provision improvements. Equality and accessibility considerations will need to form part of future policy development in relation to all individual tiers

7.0 Other implications

7.1 A strategic environmental assessment has informed the development of the final document.

8.0 Schedule of background papers

8.1 The West Midlands ITA considered the Movement for Growth Strategy on the following occasions:

Page 181 [PUBLIC] Agenda Item 3.2

 ITA 19 November 2014: “Outcomes of the ITA Workshop, 30th September, 2014”  ITA 19 November 2014: “Approach to adopt a new Strategic Transport Plan for the West Midlands”  ITA 28 January 2015  ITA 18 March 2015  ITA 29 April 2015  ITA 24 June 2015  ITA 16 July 2015  ITA 18 November 2015 and 17 December 2015 [Adoption of the MfG]

APPENDIX 1: Movement for Growth Summary Document (For full document see: http://www.wmita.org.uk/strategy-and-publications.aspx)

Page 182 MOVEMENT FOR GROWTH: The West Midlands Strategic Transport Plan Summary

Page 183 The West Midlands Combined Authority (WMCA) has been established with a purpose: to plan for, and deliver, a transport system across the West Midlands Metropolitan area that will boost our regional economy and improve the daily lives of our residents and workers.

This document, and the accompanying full document, sets out our vision and a strategy for how we will achieve it. The WMCA is made up of the seven Metropolitan Authorities (Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton), as well representatives from the three Local Enterprise Partnerships and five non-constituent Authorities are also part of the WMCA.

The recently announced devolution deal for the CA states that we will invest £5bn in our transport network over the next 10 years, including schemes in the High Speed Two (HS2) Growth Strategy to plug- in the two new High Speed stations to the wider West Midlands and so maximise jobs and growth from HS2. This document provides an overview of our plans for this West Midlands £5bn of funding.

Our Aspirations

Our aspirations are set out in the following vision statement:

"We will make great progress for a Midlands economic ‘Engine for Growth’; clean air; improved health and quality of life for the people of the West Midlands. We will do this by creating a transport system befitting a sustainable, attractive and economically vibrant conurbation in the world’s sixth largest economy."

In this document we will describe how investing in our transport system can contribute to the overall vision for the West Midlands and what we believe are the right things to invest in:

Invest in infrastructure

• Make better use of our existing road and rail capacity through schemes such as junction improvements

• Invest heavily in public transport, cycling and walking for much needed additional sustainable transport capacity

Invest in Behaviour Change

• The infrastructure provides choice, we then need people to have the information to make their best travel choice possible

Our investment will achieve three key aims:

1 Improved national and regional links to boost our economy

2 Improved links across the Metropolitan Area to provide better access to jobs, leisure and services

3 Improved links within local communities to reduce the reliance on cars for short distance trips

The need for an accessible transport system with accessible infrastructure, services, information and customer care is integral to our vision Page 184 To achieve these aims we will develop:

• Regional infrastructure to improve movement across the West and East Midlands and to maximise the opportunities provided to us from HS2

• A high quality metropolitan public transport network –so people can easily get across the conurbation in a space efficient, environmentally friendly way

• A metropolitan main road network (“Key Route Network”) to provide for the main flows of people and freight using public and private transport

• A metropolitan cycle network – to provide a “flagship” for cycling through a network of high quality cycle routes to serve main cyclist flows

• A ‘smart’ mobility platform to make better use of transport capacity, giving people a wider set of travel options and better information on those options

By investing in transport we can help achieve our aims and tackle our current and future challenges:

• Support economic and population growth by linking ‘jobs and people’ and ‘products and markets’

• Meet the challenges greater demand for movement brings (capacity and congestion)

• Reduce the environmental impacts from transport ( Carbon, air quality)

• Improve people’s heath through the encouragement of more active lifestyles

• Raise the standard of living by improving access to leisure and essential services THE FACTS Export growth up 9%of UK population in the region

12% between 2008 of all the goods & services exported and 2014 from the UKPage 185

Why We Should Invest In Transport , Investing in transport will have a number of positive impacts on our region:,

Supporting Jobs and Population Growth We will develop a We can support our planned growth in jobs and population by providing faster and more reliable connections between ‘people programmed 10 year and jobs’. Whether that be wholly within our borders or enabling people who live within the ‘journey to work’ area to access jobs in delivery plan which the West Midlands. will demonstrate how We also recognise that our transport system must also the overall vision for connect ‘goods with markets’. We must also therefore invest in infrastructure allowing fast and reliable movement of goods each of these will within and to/from our region. progress. Improving Reliability and Reducing Congestion ,,

Our infrastructure is under pressure from the increasing demands The West Midlands placed on it; we have congestion and delays on our roads, we have Metropolitan Area £53.2bn capacity issues on our rail services and with the plans for more has seen a 3.2% jobs and a larger population these challenges will continue and annual growth in GVA output, at potentially worsen. Our goal is to reduce the problems and issues we face today and to off-set future problems before they happen.

This equates to £19,244 per head of the The Figures population in West Midlands (compared to UK £23,168 per head)

CO2 emissions per passenger km National tourism entering the West Car CO2 Population is set to 205 grams grow by as many as Midlands Region increased by 29% &

Bus CO2 expenditure by 45% 110 grams 444,000

Metro CO2 73 grams

Train CO2 56 grams

Transport accounts for people by 2035 around 25% of all man made CO2 emissions.

Transport represents the largest portion of 36% of all morning peak trips weekly household to main centres are by public 16.3p transport. In Birmingham city Unleaded spending at centre alone 58% of morning Amount fuel prices have peak trips are made by public 16.3p decreased from April 2014 transport Diesel to April 2015 14%Page 186 Improving our Environment Raising our Standard of Living

Although there are many causes of impacts to our environment it is Transport isn’t just about well known that transport contributes to poor local air quality, noise getting people to/from jobs pollution and carbon emissions. We will have a strong focus on or goods to/from markets; it reducing transport’s impacts and improving our local environment. is part of our everyday lives. As soon as we step out of the front door to go anywhere Improving the Health of our Citizens we are using the transport system. At the WMCA our goal There is currently an emphasis nationally on the links between is to improve the lives of West inactivity and poor health. This issue is being described as one Midlands’ residents by raising of the biggest challenges of our generation. We can contribute to the quality of our transport the overall solution by enabling people to make a choice to walk system but also ensuring that or ride a bike for particular journeys. To do so we must invest in transport isn’t a barrier to infrastructure which make this a safe and attractive choice, but accessing essential services; we must also invest in marketing and promotion to encourage such as health, education and changes in behaviour when making travel choices. leisure.

Patronage per head of Percentage of 17 - 20 year olds population: West Midlands holding a driving licence: 48% in 1994 9.9 million 29% in 2014 Percentage of 21 - 29 year olds Bus holding a driving licence: 1.8 million 75% in 1994 63% in 2014 Rail 0.2 million

Metro Currently 77% of households in the region own cars. This is projected to rise to 81% by 2035

Jobs Careers

of surveyed 82% buses being punctual- an increase *** from 77% in 2013/14. Wanted 10% of buses are Recruitment subsidised in the West Midlands

The West Midlands Area uses approximately million tons of fuel a year. International trips to the West Percentage representation: Midlands Region 0.95 shows an increase of 6% with 2 million MILLION trips made in 2014 Page 187TONS 63% 31% 6%

Our Strategy To achieve our vision and ensure that our transport system contributes to helping the West Midlands move forward we must make key investments. Two main areas of investment will be targeted:

A Infrastructure

To improve the level of service we provide to our customers (residents, workers, firms) we must invest in new infrastructure. Our strategy is very much based on new public transport, cycling and walking infrastructure alongside junction improvements and some limited new highway capacity to serve economic development sites.

Our investments will be targeting three key ‘tiers’ of movement:

National and Regional Tier A study is currently on-going which is looking at how to improve long distance connectivity within and to/from the West and East Midlands. ‘Midlands Connect’ is seeking to understand how the economy of the whole Midlands region can be boosted if connections to employment and key markets are improved. It is anticipated that a programme of significant new and upgraded infrastructure will come from this study; some of which will then become priorities for the West Midlands to deliver.

Metropolitan Tier We will invest in infrastructure which provides faster and more reliable journeys across the West Midlands Metropolitan area. This will provide better and more sustainable access to jobs, education, health facilities and leisure for all residents and visitors.

Local Tier We will not forget that most daily trip making for our residents occurs very locally to where they live. We know that today 41% of journeys under 2 miles in the West Midlands are by car. We will therefore need to invest in local communities to ensure that very short distance trip making can be safely made by walking/cycling and public transport.

Page 188 Specifically our investment will be centred on the following networks: Metropolitan Rail and Rapid Transit Network The vision for this network is based on suburban rail, metro - light rail, tram-train, very light rail and SPRINT Bus Rapid Transit lines running on suitable routes of one single network. This will be integrated with local bus services and underpinned by park and ride, passenger information, promotion and ticketing. This system will be easy to understand and use and be provided with high

standards of customer care.

Northampton

Rugby Parkway Rugby

Hinckley

Rugby Coventry East Coventry

Trent Coventry

Bermuda Park Coventry Arena Coventry Nuneaton - Burton-upon

Galley Common Galley Coventry South Alrewas/NMA Tamworth Coleshill Parkway Kenilworth

Kingsbury

Interchange

Leamington Spa Leamington

Warwick

Lichfield Orton Water

Roughley Airport/NEC Birmingham Solihull

Castle Bromwich Walmley Hill Hook Streetly Blythe Valley Blythe Park Business Fort Sutton Coldfield Sutton Parkway

Brownhills

Stratford-upon-Avon Kingstanding Aldridge

Pelsall Moseley Druids Heath Birmingham Walsall Kings Heath

Hazelwell

Hamstead

Cannock

West Bromwich West Darlaston

Redditch

Rugeley Willenhall

Longbridge

Halesowen

Galton Bridge Galton Smethwick Smethwick Wednesbury

Quinton Stafford Bromsgrove Bartley Green Bartley

Dudley Port Dudley i54 / Brinsford / i54 Dudley Penn Frankley Stourbridge Wolverhampton Brierley Hill Brierley

Worcestershire Parkway

Telford

ail

Shrewsbury Parkway Shrewsbury Shrewsbury o et r igh Speed R ail H Main Centre Interchange R M SPRINT Tram Train/Rail New Station (Proposed/in Construction) Hereford Worcester Droitwich Spa Droitwich Great Malvern Great Kidderminster Fernhill Heath Fernhill

Page 189 Metropolitan Main Road Network (“Key Route Network”) The Metropolitan Main Road Network is being developed as a “Key Route Network” and will serve the main strategic demand flows of people and freight across the metropolitan area, and provide connections to the national strategic road network. Leicester Rugby/M1 Northampton/M1 Rugby/M1 Hinckley

Coventry Warwick & Warwick Spa Leamington Banbury Burton Upon − Trent Nuneaton Bedworth Tamworth Kenilworth Tamworth Tamworth Interchange − Upon Avon Stratford Upon − Trent Solihull − Upon Avon Stratford Birmingham Airport/NEC Lichfield/Burton Sutton Coldfield Lichfield Alcester Birmingham Walsall Redditch

Cannock

Bromwich West Lon gbridge Cannock Bromsgrove Dudley Dudley Port Stafford

Worcester Wolverhampton Dudley Stafford Brierley Hill Brierley Kidderminster Bridgnorth Albrighton Stourbridge Kidderminster Shrewsbury/Telford otorway M Draft metropolitan main road network Road outside the metropolitan area

Page 190 Metropolitan Cycle Network The Metropolitan Cycle Network will provide high-quality, capacity and fast cycle infrastructure in key corridors. Its aim will be to raise the profile of cycling in the West Midlands and ensure that it is viewed as a viable option for most daily trip making. This network will be comprised of high quality core cycle routes supplemented by quietways using green corridors/well maintained canal towpaths and low traffic flow/speed streets; it will also be integrated with local cycle networks across the West Midlands. Rugby Leamington Spa Leamington JLR Gaydon Coventry Kenilworth Bedworth Nuneaton Tamworth UKC Sutton Coldfield Sutton BHX Warwick Solihull Dorridge Blythe Valley Park Valley Blythe Shirley Aldridge Lichfield Perry Barr Perry Brownhills Birmingham

West Bromwich Walsall Redditch

Oldbury Bloxwich Longbridge Willenhall Rubery Halesowen

Dudley Wednesbury Wednesfield Brierley Hill Brierley Pensnett Stourbridge Sedgley Wordsley Featherstone Wolverhampton Kidderminster Telford Strategic Cycle Route (illustrative) Perton Tettenhall Page 191 B New Transport Technology and Innovation: Smart Mobility

In addition to physical infrastructure that we will see on the ground, our strategy also recognises the importance of investing strongly in technology and behaviour change.

Our ‘Smart Mobility’ strategy will look at aspects such as technology and marketing/promotion to ensure that everyone has access to information. It is important to the success of the overall strategy that people can make informed choices as to what is the optimal way to make a particular journey; rather than defaulting to the car for even the shortest trips.

In addition we will look to take advantage of our region’s strength and history in the automotive industry. We want to use this to help ensure the region becomes a world leader in innovative technologies around future vehicle manufacturing and engineering; leading to cleaner, greener and safer vehicles.

We will invest in technology to help deliver aspects such as:

• Simpler and more flexible payment mechanisms for public transport

• Innovations in vehicle manufacturing and engineering , • Increased access to and more varied travel choice information , • Reduced dependency on car ownership Our ‘Smart Mobility’ • More efficient traffic management strategy will look at aspects such as technology and • Reducing the need to travel marketing/promotion • ‘Last Mile’ logistics to ensure that everyone has • Road safety access to information,,

Page 192 INFLUENCES ON MOVEMENT FOR GROWTH

INFLUENCING DOCUMENTS: INFLUENCING DOCUMENTS: Birmingham Connected Midlands Engine Solihull Connected Highways England Route Coventry Connected Investment Strategies Black Country Network Rail Route Transport Strategy Utilisation Strategies LOCAL NATIONAL ITA Bus Alliance Local Plans Metropolitan HM Treasury Authorities Cabinet Office BIS DfT HS2 Ltd DCLG Network Rail Highways England MOVEMENT FOR GROWTH

REGIONAL

Midlands Connect Partnership WM Rail LEPs INFLUENCING DOCUMENTS: Midlands Connect Partnership Midlands HS2 Growth Strategy WM Freight Strategy WM Rail

MOVEMENT FOR GROWTH WILL INFLUENCE Strategic Transport Plan Delivery Plans ITA Bus Alliance West Midlands Rail Local Authorities Detailed Transport Strategies and Plans Midlands Connect Highways England Route Investment Strategies Network Rail Route Utilisation Strategies West Midlands Freight Strategy Land Use Plans

Delivering Our Plan

Work is progressing on developing a 10 year delivery plan (10YDP) in conjunction with West Midlands Local Authorities, WMCA and the Local Enterprise Partnerships and this will continue to evolve alongside the formation of the West Midlands Combined Authority. The 10YDP will be finalised in 2016 and will form a key part of the West Midlands Combined Authority’s transport workplan.

The proposed Combined Authority devolution agreement sets out how we intend to fund our ten year delivery plan. The proposed agreement covers a new £36.5 m per year revenue stream for 30 years from the Government, which the West Midlands can borrow against for up-front investment. This is part of a new overall investment plan for the Combined Authority which will also include existing committed capital investment, devolved funding streams, including those for local transport, private sector investment and locally generated funds. These locally generated funds will include, for example, business rate retention, expanded and new enterprise zones and prudential borrowing. It also includes £97m of Government funding of the metro extension in central Birmingham to Adderley Street Time to Start Delivering

We have consulted with the public and key stakeholders on the draft strategy, which was published in July 2015 and have had very positive feedback. There is strong support for the plan but the message to us is clear that people keenly want to see schemes delivered on the ground. That will be our focus from here on in, with the prospects of a new Combined Authority commencing next year providing a very solid basis for a prolonged period of delivery in line with this plan. Page 193 www.westmidlandscombinedauthority.org.uk [email protected]

0121 214 7251 Page 194 [PUBLIC] Agenda Item 3.3

Board Meeting

Date Friday 10 June 2016 Report title West Midlands Combined Authority Assurance Framework Accountable Chief Martin Reeves, Chief Executive to the Combined Executive Authority Tel 024 7683 1383 Email [email protected]

Accountable Sarah Middleton Employee Email [email protected] Tel 01384 471102

Report to be/has been WMCA Shadow Board – 27 May considered by 2016

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve the West Midlands Combined Authority Assurance Framework delegating to the West Midlands Combined Authority Chief Executive any final amendments in response to finalised government feedback.

Page 195 [PUBLIC] Agenda Item 3.3

1.0 Purpose

1. Approve the West Midlands Combined Authority Assurance Framework delegating to the West Midlands Combined Authority Chief Executive any final amendments in response to finalised government feedback.

2.0 Background

2.1 An Assurance Framework explains how an organisation will appraise projects, monitor and evaluate schemes and assess investment decisions. A well-designed framework helps ensure that selected investments are those that deliver maximum impact and best value for money, giving confidence they have been subject to suitable scrutiny and challenge.

2.2 HM Government are asking places in receipt of Single Pot (devolution funds) funding to write a local Single Pot Assurance Framework which DCLG will sign off before 2016-17 funding allocations of investment funds, and 2017-18 onward allocations of other funding streams, are paid. DCLG have published National Guidance on developing this ‘Single Pot Assurance Framework’ which has provided a guide for the development of the West Midlands Combined Authority Assurance Framework.

2.3 Despite being a requirement from HM Government, it is also good practice locally to set up a local Assurance Framework to ensure that local public money is spent in a robust, evidence-based and transparent way.

2.4 The West Midlands Combined Authority Assurance Framework has been developed in a collaborative and iterative way, aided by the West Midlands Combined Authroity Assurance Framework Working Group supported by advice from PwC.

2.5 The Assurance Framework (and supporting documentation as outlined below) are currently in draft final version, and have been reviewed by DCLG and DfT who have been very positive about our progress.

3.0 West Midlands Combined Authority Assurance Framework

3.1 There are several key features of the West Midlands Assurance Framework: o Governance and decision making arrangements o Accountable and transparency o Project lifecycle appraisal process o Business case templates for Strategic Outline Case (SOC), Outline Business Case (OBC), and Full Business Case (FBC) o Appraisal template for assessing business cases

3.2 The West Midlands Combined Authority Chief Executive requires authority to approve the final working draft prior to submission to Government to ensure government timescale and lead in times are manageable.

3.3 During the development of the Assurance Framework, various issues have been exposed which have been discussed and largely resolved through the Working Group. These discussions have led to several assumptions being made that underpin the Assurance Framework. These are important to note to the Combined Authority Board. Page 196 [PUBLIC] Agenda Item 3.3

o Existing programmes that underpin the formation of the Combined Authority will need to be taken through the project lifecycle process, unless they have already established business cases. o A Risk Management Strategy will need to be developed for the Combined Authority, outlining its appetite to risk, its approach to funding innovative and transformative projects, and outlining appropriate levels of scrutiny. o Public Service Reform (PSR) outcomes will be important to consider within the Assurance Framework– the documents are currently being revised to take account of this. o The Assurance Framework as it stands is not tried and tested and will therefore be subject to dummy runs –both a typical investment project but also for a PSR project. This will be done within the Combined Authority team, i.e. the people who will use the framework. o Prioritisation and sequencing decisions need to be made – the assumption is that this will be done at the level of the Super SEP Board with the technical support of the West Midlands Combined Authority Investment Board. o The governance arrangements need to reflect fully the role of LEPs in investment decision making and the relevant transport business case systems such as WebTag. o An ambition to achieve standardisation over a period of time, integrate transport assurance requirements within the Combined Authority process and to minimise the number of Assurance Frameworks in operation across the CA geography. o The scope of the Assurance Framework is ambitious and includes the full £8 billion funding.

4.0 Financial implications

4.1 The Framework itself has no direct financial implications but setting up an appropriate and robust assurance framework will help identify and control project and program expenditure thus ensuring risks and financial consequences are highlighted and manged as soon as they are identified.

5.0 Legal implications

5.1 There are no legal implications flowing from the contents of this report.

6.0 Equalities implications

6.1 An initial equality screen has been conducted on the establishment of the Combined Authority. There is no indication that the assurance framework will have negative implications for protected groups. Going forward, work carried out under the framework will be subject to Equality Analyses as required, to ensure they are complying with the Public Sector Equality Duty. The Combined Authority are working closely with the West Midlands Local Authority Equality Network to ensure equalities is embedded across the Combined Authority.

Page 197 [PUBLIC] Agenda Item 3.3

Page 198 Agenda Item 3.3

West Midlands Combined Authority Assurance Framework

1st June 2016

DRAFT

Version 9 – updated on 1 June 2016

Page 199 Agenda Item 3.3

Contents 1 Introduction ...... 5 1.1 What is an Assurance Framework? ...... 5 1.2 Why does the WMCA need an Assurance Framework? ...... 5 1.3 Who is the Assurance Framework for? ...... 6 1.4 What is covered in this document? ...... 6 2 Governance and Decision Making...... 7 2.1 Name ...... 7 2.2 Geography ...... 7 2.3 West Midlands Combined Authority Governance Structure ...... 8 2.3.1 Governance Overview ...... 8 2.3.2 The Mayor ...... 9 2.3.3 The WMCA Board ...... 10 2.3.4 The WMCA SEP Board ...... 10 2.3.5 The Public Service Reform Board ...... 10 2.3.6 The WMCA Audit Committee ...... 10 2.3.7 The WMCA Scrutiny Committee ...... 10 2.3.8 The WMCA Investment Committee ...... 11 2.3.9 Governance Protocols ...... 11 2.3.10 Theme Advisory Groups and WMCA Board Sub-Groups ...... 11 2.3.11 Review of Governance ...... 11 2.4 Cross-Combined Authority Working and Engagement ...... 12 2.4.1 Cross-Combined Authority Working ...... 12 2.4.2 Engagement ...... 12 2.4.3 Mechanisms for Dispute Resolution ...... 13 2.5 Interacting with “Existing” Assurance Frameworks ...... 13 2.6 Dealing with Pre-Existing Projects ...... 13 2.7 Treatment of Risk at the WMCA level ...... 14 3 Accountable and Transparent Decision Making ...... 15 3.1 Stakeholder Engagement and Transparency ...... 15 3.2 Availability of Information Online ...... 15 3.2.1 Publication of financial information ...... 16

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3.2.2 Transparency of Pay for Senior Employees ...... 16 3.3 Status and Role of Accountable Body ...... 16 3.4 Audit and Scrutiny ...... 16 3.5 Checks and balances ...... 17 3.6 Strategic Objective and Purpose ...... 18 3.7 Equality and Diversity ...... 19 3.8 Whistleblowing ...... 19 3.9 Registration and Declaration of Interests ...... 19 3.9.1 Conflict of Interests Policy ...... 19 3.10 Gifts and Hospitality ...... 20 3.11 Complaints Procedure ...... 20 4 Project Lifecycle and Ensuring Value for Money ...... 21 4.1 Project Lifecycle principles and objectives ...... 21 4.2 Method of calculating Value for Money ...... 21 4.2.1 Projects vs Programmes...... 22 4.2.2 Proportionality ...... 22 4.2.3 Treatment of risk at the Project Level ...... 23 4.2.4 The Five Case Model...... 28 4.2.5 Due Diligence ...... 29 4.3 The Project Lifecycle Process ...... 29 4.3.1 Project Lifecycle Stakeholders ...... 38 4.3.2 Project Lifecycle Documents ...... 39 4.3.3 Process flow and timeline ...... 39 4.4 Prioritisation and sequencing ...... 41 4.5 Statutory requirements and funding decisions ...... 41 4.5.1 Treatment of the £36.5 million per annum Gain Share Funding ...... 41 4.5.2 Integrating the West Midlands Combined Authority’s Land Remediation Fund and Collective Investment Fund ...... 41 4.5.3 State Aid ...... 42 4.6 Monitoring and evaluating ...... 42 4.7 Five Year Gateway Review ...... 44 4.8 Quality Assurance and Annual Review of WMCA Assurance Framework . 44

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A.1. Bibliography ...... 46 A.2. Glossary ...... 48 A.3. Accompanying Documentation ...... 52

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1 Introduction

Source: Material in this section is drawn from HM Treasury Assurance Framework Guidance, and specific Combined Authority-related “Single Pot Assurance Framework” guidance.

1.1 What is an Assurance Framework?

An Assurance Framework is a set of systems, processes and protocols designed to provide an evidence-based and independent assessment of the governance, risk management, and control processes of an organisation. The independence inherent to the Assurance Framework is derived from the separation between the sponsorship of projects/programmes and their appraisal and evaluation. The Assurance Framework enables organisations to monitor, measure and scrutinise how well objectives are being met and risks managed. It also implements processes to ensure an adequate response if risks or performance are perceived to be unacceptable. HM Treasury define Assurance Frameworks as “an objective examination of evidence for the purpose of providing an independent assessment on governance, risk management, and control processes for the organisation.”

1.2 Why does the WMCA need an Assurance Framework?

The Assurance Framework will help WMCA to allocate public resources in accordance with the law and proper standards, and in an efficient and effective way that delivers both desired outcomes and value for money. It is important to note that the WMCA Assurance Framework applies to all WMCA funding (i.e. not just the funding agreed through the West Midlands Devolution Agreement). It is also important to note that the WMCA Assurance Framework has been designed to align with the Single Pot Assurance Framework Guidance developed by the Department for Communities and Local Government (DCLG) and the Cities and Local Growth Unit [add weblink once available]. It is also designed to align with existing Assurance Frameworks and additional guidance used by the West Midlands’ LEPs, although there remains a clear distinction between the LEP Assurance Frameworks and the WMCA Assurance Framework. Section 2.5 below outlines the WMCA’s approach to dealing with overlapping Assurance Frameworks.

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1.3 Who is the Assurance Framework for?

The Assurance Framework provides assurance to the Departmental Accounting Officer and to Parliament for how funding that is granted or devolved to the WMCA is allocated, and that there are robust local systems in place which ensure resources are spent with regularity, propriety, and value for money. The Assurance Framework also is also designed to provide assurance about the Combined Authority’s activities and spending to the Constituent and Non-Constituent Authorities and to the taxpayer. It sets out a set of clear and transparent arrangements for all stakeholders in the Combined Authority area including local authorities, citizens and businesses about how WMCA will conduct itself. The accountable decision making authority (i.e. the WMCA) and its associated Local Enterprise Partnership(s) must agree the final local Assurance Framework, and submit it to the Department for Communities and Local Government for sign-off. Due to the anticipated lifetime, value and significance of certain elements within devolution deal agreements, local assurance frameworks will need to be formally signed off by the Investment Sub-Committee at DCLG and reviewed regularly. DCLG will have a role in periodically reviewing how the local assurance frameworks are operating in practice. The feedback element of the business case templates that have been built in to the process will be valuable for this exercise. Where potential changes result in significant divergence from approved local assurance frameworks, adjustments must be agreed by the Accounting Officer for DCLG, in consultation with relevant Accounting Officers across Government. This document was signed-off by DCLG on [xx month year] and the WMCA Board on [XX month year].

1.4 What is covered in this document?

This document is split into three further sections. The first section covers the governance and decision-making systems that underpin the WMCA’s Assurance Framework. The second section outlines the apparatus and safeguards in place to ensure that the WMCA’s decision making is transparent and that decision makers are held accountable. The third section outlines the processes that will be followed in order to ensure a rigorous and robust appraisal of projects and programmes. This Assurance Framework document should be read alongside the WMCA Constitution and is accompanied by a suite of further documents that are included in the appendices.

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2 Governance and Decision Making

2.1 Name

West Midlands Combined Authority.

2.2 Geography

Source: Adapted from the Draft Constitution The West Midlands Combined Authority (WMCA) is geographically defined by the area consisting of the combined areas of the “Constituent Authorities” of:

 Birmingham City Council;

 Coventry City Council;

 Dudley Metropolitan Borough Council;

 Sandwell Metropolitan Borough Council;

 Solihull Metropolitan Borough Council;

 Walsall Metropolitan Borough Council; and,

 Wolverhampton City Council. The WMCA also covers the geography encompassing some parts or all of the areas of eight “Non-Constituent Members ”, which are:

 Black Country Local Enterprise Partnership;

 Cannock Chase District Council;

 Coventry and Warwickshire Local Enterprise Partnership;

 Greater Birmingham and Solihull Local Enterprise Partnership;

 Nuneaton and Bedworth Borough Council;

 Redditch Borough Council;

 Tamworth Borough Council;

 Telford and Wrekin Council. The list of Non-Constituent Members is to be amended to include additional members, such members will join the WMCA formally towards the end of 2016.

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2.3 West Midlands Combined Authority Governance Structure

2.3.1 Governance Overview

Figure 1: WMCA Governance Map – [DRAFT]

The diagram above depicts the WMCA’s governance structure. This governance structure will be the framework under which all WMCA decisions are made, and is designed to maximise transparency and democratic accountability. The terms of reference for each element of the WMCA’s governance structure are detailed elsewhere [to be confirmed]. This document provides specific reference to the role of the different elements of the governance structure within the investment and funding allocation process. A summary table is provided in 4.2.1.

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2.3.2 The Mayor and Cabinet

The directly elected Mayor for the West Midlands will be a Member and Chair of the Mayoral WMCA and will be subject to the Mayoral WMCA constitution. Until such time as the Mayor is elected, a Chair and up to 2 Vice Chairs will be appointed from the Constituent Members by majority. Once elected, the Mayor will appoint a Deputy from one of the Constituent Members.

The Leaders of Constituent Councils, who are Members of the Mayoral WMCA, will hold the office of portfolio leads for aspects of the WMCA’s responsibilities, on the basis to be set out in its Constitution and in consultation with the Mayor and will be collectively known as the Cabinet operating with collective responsibility. Portfolio leads will be decided by unanimous vote of the Constituent Members. The Cabinet will examine the Mayor’s draft annual budget and the plans, policies and strategies, as determined by the Mayoral WMCA, and will be able to reject them if two-thirds of the Mayoral WMCA Cabinet agree to do so. In the event that the Mayoral WMCA reject the proposed budget then the Mayoral WMCA shall propose an alternative budget for acceptance by the Cabinet, subject to a two-thirds majority of those present and voting. The Mayor shall not be entitled to vote on the alternative Mayoral WMCA proposed budget.

If the Mayoral WMCA agrees, the Mayor may be paid an allowance subject to an independent review of the appropriateness and amount of such an allowance, subject to any statutory provision.

The Mayor is able to appoint one person as the Mayor’s political adviser and to provide for the terms and conditions of such appointment in accordance with Section 9 of the Local Government and Housing Act 1989.

The functions which are to be Mayoral functions pursuant to the devolution agreement and the conditions under which they can be exercised by the Mayor are detailed in the draft Mayoral WMCA ‘functions’ Scheme and in summary are:

 HCA CPO powers (with the consent of the appropriate authority(ies)

 Grants to Bus Service Operators (Secretary of State to consult the Mayor)

 Devolved, consolidated transport budget

 Reporting on the Key Route Network (in consultation with the authorities)

 Mayoral precept

 Raising of a business rate supplement (in agreement with the relevant LEP Board(s) and the Mayoral WMCA)

 Functional power of competence

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The Mayor votes as a member of the WMCA, unless otherwise specified in the Mayoral WMCA Constitution. Regarding the £36.5 million the gainshare arising from the CA Devolution Deal 1, t the Mayor as part of the CA and its Chair will be fully involved in any investment decisions and if it did come to a vote the Mayor would be part of that vote.

2.3.3 The WMCA Board

[TOR for the WMCA Board are TBC]

2.3.3.1 WMCA Board Membership

Source: Draft Constitution p. 3 (11/03/2016) Please refer to the WMCA Constitution for information on WMCA Board Membership. 2.3.4 The WMCA SEP Board

[TOR for the WMCA SEP Board are TBC]

2.3.5 The Public Service Reform Board

[TOR for the WMCA Public Service Reform Board are TBC]

2.3.6 The WMCA Audit Committee

Source: Draft Constitution p. 26-27 (11/03/2016) The WMCA has an Audit Committee, which is responsible for approving the Statement of Accounts, and reviewing the Authority’s Risk Register and Annual Governance Statement. The WMCA Constitution details who will sit on the Audit Committee, as well the process for selecting an Audit Committee Chair. The WMCA Constitution also outlines the key Audit Committee procedures and functions.

2.3.7 The WMCA Scrutiny Committee

Source: Draft Constitution p. 19-26 (11/03/2016)

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The Scrutiny Committee provides the focus for scrutiny and challenge to the WMCA, as well as to any of its sub-committees and related entities. The Scrutiny Committee is charged with investigating matters of strategic importance to residents of the West Midlands. The Scrutiny Committee is an independent body, and will adopt a range of independence safeguards and implement regular independence checks. The WMCA Constitution outlines the role, functions and procedures of the Scrutiny Committee.

2.3.8 The WMCA Investment Committee

[TOR for the WMCA Investment Committee are TBC]

2.3.9 Governance Protocols

Source: WMCA Constitution pages 3-5 and 29-30. The Governance protocols for the WMCA are outlined in the draft constitution, including detail around the proceedings of the Annual Meeting, the nature and content of Ordinary Meetings, and the circumstances in which Extraordinary Meetings are required or can be called. The Constitution also provides information on the place of meetings, the meeting notification process, and detail on public access (in particular, see pages 3-5 of the Constitution). Of particular relevance to the Assurance Framework, the Constitution outlines the protocols under which the governance of the Combined Authority can evolve and change through the creation of Committees, Sub-Committees and Working Groups of the Combined Authority.

2.3.10 Theme Advisory Groups and WMCA Board Sub-Groups

Source: WMCA Constitution pages 29-30. The WMCA Board will establish a number of Theme Advisory Groups and Sub- Groups to advise, make recommendations and co-ordinate activity and engagement on fulfilling the SEP and Public Service Reform (PSR) objectives.

2.3.11 Review of Governance

Source: New drafting The WMCA will publish an Annual Governance Statement (AGS) on an annual basis alongside its Annual Accounts. This Statement is prepared following an internal review of the Authority’s governance arrangements, and it provides details of key areas where improvements can be made. The AGS will be discussed and approved

Page 209 Agenda Item 3.3 by the Audit Committee, and will also be examined by the WMCA’s External Auditors. The Audit Committee and Scrutiny Committee will share responsibility with the WMCA for monitoring and reviewing governance arrangements and attending to issues raised through this process. These committees will also have a role in considering how the local assurance frameworks are operating in practice.

2.4 Cross-Combined Authority Working and Engagement

2.4.1 Cross-Combined Authority Working

Cross-Combined Authority working arrangements (i.e. between members of the WMCA) will be drawn up post-vesting, following a review and examination of the strategic aims arising out of the thematic approach set out above. On vesting day, all non-operational decisions rest with the WMCA Board, but, over time, the WMCA Board will need to set its standing Scheme of delegations as well decided upon item/project specific delegations.

2.4.2 Engagement

Source: Summary of consultation analysis on proposals for a West Midlands Combined Authority (February 2016). Engagement with and feedback from neighbouring authorities, key stakeholders and the public is key to shaping and defining the Combined Authority’s activities on an ongoing basis. This has particularly been the case during the creation and development of the Combined Authority through engagement with neighbouring authorities and the three Local Enterprise Partnerships that cover the area: The Black Country, Greater Birmingham and Solihull and Coventry and Warwickshire. Early in the development of proposals for a Combined Authority, Leaders of the seven Metropolitan Authorities set out their ambition to collaborate across the three LEP area. This engagement and collaboration shaped the Combined Authority proposals and has culminated in five districts, at least one from each County comprising the three LEP area (Staffordshire, Worcestershire, Warwickshire), and the three LEPs, joining the West Midlands Combined Authority as Non-Constituent members. The WMCA will continue to take this approach to engaging with neighbouring authorities, key stakeholders and the public following its inception in June 2016. Channels for engagement include the formal consultation process, as well as the communication and dissemination of information as set out in 3.1.

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2.4.3 Mechanisms for Dispute Resolution

[Insert WMCA mechanisms for resolution of disputes between Constituent/Non- Constituent WMCA members]

2.5 Interacting with “Existing” Assurance Frameworks

A number of the bodies and organisations that make up the WMCA may have their own Assurance Frameworks. This raises a question of how the WMCA Assurance Framework will interact with these other Assurance Frameworks. There are two cases where overlap may occur: 1. Local Growth Funding (LGF): LGF is currently administered through the LEPs. The government has said that the LGF allocation for 2016/17 will not be part of the WMCA Single Pot. Therefore, for this period, the respective LEP assurance frameworks will continue to apply to this funding. However, LGF may be included in the WMCA’s Single Pot in future. If this is the case, the Single Pot Assurance Framework (i.e. this document) would supersede existing LEP assurance frameworks. 2. A project being funded by two or more organisations: It may be the case that the WMCA provides funding to a project which requires funding from a number of other organisations that have their own Assurance Frameworks. HS2 projects provide a good example of this. Where this is the case, the WMCA’s portion of the investment should be treated in the same way as a standalone project and tested through using the WMCA Project Lifecycle. This is because the WMCA’s objective is to provide assurance to itself that its portion of investment in the project is appropriate and will provide deliver Value for Money.

2.6 Dealing with Pre-Existing Projects

As per the logic outlined in 2.5, pre-existing projects and programmes that require WMCA funding will also be subject to the full Project Lifecycle process. This is to ensure that the funding contributed by the WMCA is appropriate and that it delivers Value for Money. The specific method of evaluation will be determined by the cost of the project, which is in line with the Combined Authority’s approach to proportionality outlined in 4.2.2. Where pre-existing projects and programmes are important in the context of the West Midlands, but do not require specific funding from the WMCA, there is no requirement for them to be tested against the Assurance Framework through the Project Lifecycle.

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2.7 Treatment of Risk at the WMCA level

A key role of the Assurance Framework is to ensure that risk is identified, monitored and managed appropriately, both at a corporate level (that is, the risks facing the WMCA as an organisation), and at a project and programme level (that is, the risks involved in any one specific investment, or group of investments). Treatment of project-specific risks are discussed in more detail in 4.2.3. To identify, monitor, manage and mitigate risks at the corporate level, the WMCA is developing a Corporate Risk Register. The risk register is aligned to the corporate objectives of the Combined Authority. The key principle of the Corporate Risk Register is to account for risks that face the WMCA as a whole, to determine where and by whom such risks are borne, to establish controls to prevent the identified risk (such as funding shortfall) from materialising (such controls could also include ways to reduce the impact such as use of reserves or insuring against the shortfall). The Register is not limited to financial risks, and will also consider issues such as a major divergence of interests between two or more Constituent Authorities. Further updates to this section will be provided on completion of the Corporate Risk Register, which will be accompanied by an “Assurance Map” that will act as the dashboard for risk assessment, monitoring and reporting. This responsibility for this sits with the Combined Authority’s Section 151 Officer and the WMCA Management Board, and will be overseen by the Audit Committee and the Scrutiny Committee. In addition to the Corporate Risk Register, the WMCA will also develop risks management procedures that will apply to activities at all levels of the organisation. These procedures will be developed as part of a broader Risk Management Framework which is separate to this document. The Risk Management Framework will also consider how risks in the constituent bodies could impact on the CA and develop a clear set of escalation procedures.

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3 Accountable and Transparent Decision Making

3.1 Stakeholder Engagement and Transparency

Source: New drafting Bi-monthly newsletters will be distributed to stakeholders throughout the West Midlands informing them of current and planned Combined Authority activity and how to get involved. Regular social media updates concerning relevant activity will be provided via the WMCA Twitter handle @[WMCA]. A calendar of events will be developed and made available on the WMCA website www.westmidlandscombinedauthority.org.uk. An on-going PR campaign will inform stakeholders of WMCA activity. Stakeholders will be able to contact the WMCA via the WMCA website’s contact form https://westmidlandscombinedauthority.org.uk/contact or through social media @[WMCA]. Meeting papers and minutes, scheme business cases and evaluation reports, funding decision letters with funding levels and conditions indicated and regular programme updates on delivery and spend against budget will be published on the WMCA website [https://westmidlandscombinedauthority.org.uk/] in accordance with Access to Information Rules. The public and stakeholders will be able to provide input via the contact form on the WMCA website [https://westmidlandscombinedauthority.org.uk/]. Stakeholders will be made aware of how to provide input by being informed via the WMCA newsletter which is available online. The WMCA will adhere to the Local Government Transparency Code. A statement detailing the process by which the WMCA will make decisions on major investments, as well as the rationale, will be published online alongside other documentation. Details can be found at [insert address]. FOI and EIR requests will be dealt with in the first instance by the Combined Authority’s Freedom of Information Officer.

3.2 Availability of Information Online

Links to the WMCA website are available on local authority and LEP websites.

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3.2.1 Publication of financial information

The WMCA will publish financial information on its website, including Annual Statement of Accounts. The WMCA will ensure that this information is complete and up-to-date.

3.2.2 Transparency of Pay for Senior Employees

As part of its Annual Statement of Accounts, the WMCA will publish information on the pay and benefits of senior employees.

3.3 Status and Role of Accountable Body

The West Midland Combined Authority is the Accountable Body for all the devolved funding streams set out in the Devolution Deal and which as a consequence will be paid to the Authority. The Combined Authority will therefore be responsible for:-

 Prioritising projects against the available resources

 Ensuring value for money

 The evaluation of outcomes

 Risk management In performing this role the Combined Authority will ensure that it acts in a manner that is transparent, evidence based, consistent and proportionate. The detailed processes are set out in Section 4. The responsibility for the administration of the Authority’s financial affairs rests with the Section 151 officer. This framework will be reviewed annually to ensure it remains relevant to the operations of the Authority.

3.4 Audit and Scrutiny

The Devolution Act, 2016 replaces the statutory requirement upon the WMCA to establish both a Scrutiny Committee, and an Audit Committee (full details are available at http://www.legislation.gov.uk/ukpga/2016/1/contents/enacted).

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The Scrutiny Committee has power to (full detail of powers and responsibilities available at http://www.legislation.gov.uk/ukpga/2016/1/schedule/3/enacted):

 Review or scrutinise decisions made, or other action taken, in connection with the discharge by the mayor of any general functions;

 Make reports or recommendations to the mayor with respect to the discharge of any general functions;

 Make reports or recommendations to the mayor on matters that affect the authority’s area or the inhabitants of the area;

 Direct that a decision is not implemented while under its review; and,

 Recommend that a decision be reconsidered. The Scrutiny Committee will publish details of how it proposes to exercise its powers in relation to the review and scrutiny of decisions made but not yet implemented and its arrangements in connection with the exercise of those powers. The functions of the Audit Committee are:

 Reviewing and scrutinising the authority’s financial affairs;

 Reviewing and assessing the authority’s risk management, internal control and corporate governance arrangements;

 Reviewing and assessing the economy, efficiency and effectiveness with which resources have been used in discharging the authority’s functions; and,

 Making reports and recommendations to the combined authority in relation to the above points.

3.5 Checks and balances

The WMCA is subject to the same accountability and transparency legislative provisions for decision making as Local Government, including public notice of meetings and the business to be conducted at those meetings, in addition to the general public Access to Information Rules as set out below in paragraph 3.7. The WMCA is the subject of the Freedom of Information Act 2000 which grants a right of access to information held by public authorities. It promotes openness and accountability amongst the public sector and entitled members of the pubic to make request for information, which is disclosable subject to the statutory exemptions. Further the WMCA will maintain a publication Scheme setting out what information is available publically, and how it can be accessed. The use of resources by the WMCA are subject to standard local authority checks and balances. In particular, this includes the financial duties and rules which require

Page 215 Agenda Item 3.3 councils to act prudently in spending, and to ensure transparency that annual accounts are published. The development of these checks and balances will be overseen and managed by the WMCA’s Section 151 Officer. In addition, the WMCA will follow best practice by ensuring that all investment decisions will be made with reference to statutory requirements, conditions of the funding, local transport objectives and the WMCA’s Strategic Economic Plan. These issues are explored in more detail in Section 4 below.

3.6 Strategic Objective and Purpose

Source: WMCA SEP 04/03/2016 The WMCA SEP has identified three key issues on which action at a CA level could add real value. They are:

 Skills and employment, in relation to which there are important opportunities through the devolution agreement and major challenges across the CA area in relation to sector-specific skill gaps and the imperative to increase the proportion of people with degree level skills and reduce the number with low skills;

 Housing, where the area faces a major challenge in accommodating the level of economic growth envisaged in our vision;

 HS2, which is critically important in relation to connectivity across the area and the potential for major supply chain and employment opportunities. In relation to these key issues, the WMCA SEP has identified eight strategic priorities. These are:

 New manufacturing excellence;

 Creating a dynamic economy, particularly in the digital and creative sectors

 Environmental Technologies;

 HS2 Growth;

 Housing;

 Skills for the Future and Employment for All;

 Medical and Life Sciences;

 Exploiting the 3-LEP geography.

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3.7 Equality and Diversity

A key requirement is for the WMCA is to ensure that ‘equality duty’ is taken into account. During the application for WMCA funds, project sponsors will be required to provide evidence to this end. This will be assessed through an evaluation of the business case templates submitted by applicants.

3.8 Whistleblowing

Source: WMCA Constitution 04/03/2016 The WMCA Constitution sets out the WMCA Complaints and Whistleblowing Policy, including full details of how concerns can be raised in confidence and how those concerns will be dealt with, which can be found on pages 65-70 of the WMCA constitution.

3.9 Registration and Declaration of Interests

Source: New drafting Members of the WMCA Board must register their interests. Elected members will have already undergone this procedure and their own local authority’s register of interests will be sufficient except they will be asked if they need to make any additional declarations to reflect the application of the code across the WMCA geography. A collated register of interests of all members of the WMCA will be maintained and will be available on the WMCA website www.westmidlandscombinedauthority.org.uk. The registration of interests procedure will follow the Code of Conduct for Members, which is set out in the WMCA Constitution. Members must act in the interest of the whole WMCA area and not solely in the interest of their geographical area. Completed registration of interest forms will be available on the WMCA website.

3.9.1 Conflict of Interests Policy

[Insert information on the procedures for when a conflict of interest becomes apparent]

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3.10 Gifts and Hospitality

Source: New drafting The Code of Conduct for Members outlines the specific terms for the declaration of gifts and hospitably received as a member including the notification process to the WMCA Monitoring Officer by which members must abide. 3.11 Complaints Procedure

Source: New drafting Complaints from stakeholders and members of the public will be dealt with and resolved in accordance with the WMCA’s Customer Care Charter and Complaints Procedure. Whistleblowing allegations will be referred immediately to and investigated by the Internal Audit officers. The whistleblowing procedure is included at [insert reference].

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4 Project Lifecycle and Ensuring Value for Money

4.1 Project Lifecycle principles and objectives

The purpose of the Project Lifecycle is to provide a framework for the WMCA to make rigorous assessments about the Value for Money (VfM) of its investments. Specifically, the Project Lifecycle assesses projects against a range of strategic, economic, financial, commercial and management objectives. This assessment is primarily undertaken using HMT’s Five Case Business Case appraisal process that has been specifically tailored to the WMCA’s objectives and requirements. The Assurance Framework is not intended as a mechanism for prioritising and sequencing investments, and the WMCA has other tools which it can use for this purpose, such as the Dynamic Economic Impact Model (DEIM), which uses inputs take from the business case templates, and Public Service Reform (PSR) Filter. Sample business case templates for the Initial Proposal Stage, Outline Business Case Stage and Full Business Case Stage of the Project Lifecycle are included as appendices to this document. These have been developed through discussions with the WMCA Assurance Framework Working Group, and have been designed to cover a very broad range of projects and types of projects. At present, the business case documentation has not been tested using a live project, and, as such, the Project Lifecycle could require updating as and when the Assurance Framework is implemented in practice. The Working Group envisaged that the Assurance Framework and the Project Lifecycle more specifically could be trialled over a 6-12 month period. Similarly, there is reference to monitoring and evaluation within the Full Business Case Template, but the Project Lifecycle is not intended to reflect the suite of monitoring and evaluation documents and processes that will be required by the WMCA.

4.2 Method of calculating Value for Money

A key objective of the Assurance Framework, and of the Project Lifecycle more specifically, is to support the WMCA to make judgements about the Value for Money (VfM) of potential investments and to accept or reject investments accordingly. An assessment of VfM is derived through a process under which an organisation's procurement, projects and processes are systematically evaluated and assessed to provide confidence about suitability, effectiveness, prudence, quality, value and

Page 219 Agenda Item 3.3 avoidance of error and other waste, judged for the Exchequer as a whole. (HMT, Managing Public Money, August 2015 Revised Version). Value for Money can be assessed using three criteria: Economy (i.e. minimisation of resource usage, or "spending less"); Efficiency (i.e. the relative level of outputs and the resources used to produce them, or "spending well"); and, Effectiveness (i.e. the relationship between the intended and actual results of public spending, or "spending wisely"). A number of questions have been included in the Economic and Financial case of the business case documents that test projects against a number of VfM metrics.

4.2.1 Projects vs Programmes

The Assurance Framework Project Lifecycle has been designed to assess and prioritise WMCA interventions at a Project level. The Assurance Framework recognises that the SEP objectives can only be met through the delivery of effective Programmes that account for and take advantage of the interdependencies between individual projects. However, the role of the Assurance Framework is to provide the framework through which the WMCA can make a judgement about whether each individual project is robust and has been rigorously assessed against a specific set of criteria to ensure that it achieves VfM. The Project Lifecycle assesses projects, while programme creation and the prioritisation of investments is conducted elsewhere. That said, the products of the Project Lifecycle, such as the completed business case documentation, will be important inputs to the debates around prioritisation and, more specifically, the tools that the WMCA will use to prioritise investments (e.g. DEIM and PSR Filter). In addition, groups that perform key functions within the Project Lifecycle, such as the Investment Advisory Group, will be well placed to contribute to programme creation and investment prioritisation. Ideally, the prioritisation and sequencing exercise will take place at the inception of the WMCA, but will also be continually updated as new projects are proposed or new calls for projects are issued. This approach to will be reviewed regularly during the Annual Review process.

4.2.2 Proportionality

The Assurance Framework is designed to ensure that the appraisal and evaluation of projects is done in a way that is proportional to the relative size of the investment required. This is crucial so that project sponsors are not put off by an overly burdensome and costly application process when applying for a small amount of investment for a low value project. Similarly, it is crucial so that large investments are scrutinised and tested appropriately.

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The WMCA’s approach to proportionality is to build some flexibility into its funding application process by setting thresholds to determine the timescales involved in the Project Lifecycle process and the information required. These thresholds and their associated criteria are yet to be confirmed. At present the working assumption for thresholds is:

 Small: <£5 million;

 Medium: £5 million – 20 £million; and.

 Large: >£20 million. The timescales associated with these thresholds are illustrated in the Process Flow below. 4.2.3 Value for Money – Transport Schemes

Transport Scheme sponsors will also be required to conduct appraisals and value for money assessments based on WebTAG guidance. The Combined Authority DoT will ensure that scheme traffic/public transport modelling and appraisal is robust and meets this guidance at the time a business case is submitted for each stage of approval (programme entry; conditional approval – if required; full approval). The assessment of the scheme traffic/public transport modelling and appraisal will require expert resources which are independent of each scheme sponsor. The most appropriate resource will be commissioned from transport consultants with suitable experience of major scheme business case development and independent of the scheme sponsor in question i.e. a transport consultant could not sit on a panel assessing scheme traffic/public transport modelling if it has been commissioned (in whole or part) to develop the traffic model in question. The scope of the scrutiny will be dependent on the type and scale of the scheme. All schemes will be assessed against a set of core requirements by an independent panel and as such will be subject to independent scrutiny. These are detailed in the table below. Table - Core Scrutiny Requirements

Topic Requirement Modelling Has the scheme promoter applied the modelling approach methodology that was discussed and agreed with the CADoT/DfT at the start of business case development? Model validation Has the traffic or public transport model been validated and calibration and calibrated in line with WebTAG guidance? Central case Is the central case assessment based on forecasts which assessment are consistent with the definitive version of the National

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Topic Requirement Trip End Model? Modelling reports Have the following reports been provided and do the reports articulate a robust case for investment: -  Data Collection Report;  Local Model Validation Report;  Demand Model Report; and  Forecasting Report? Business Case Have all five components of the business case been completed in line with Combined Authority guidance to scheme promoters: -  Strategic case;  Economic case;  Commercial case;  Financial case; and  Management case? Appraisal Has a completed AST been provided? Summary Table (AST) Delivery Has an existing delivery framework been identified? Risk Has a QRA being undertaken using @Risk software to model the Monte Carlo simulation and obtain the P50 value? Value for Money Does the scheme have a value for money assessment of ‘high’ or ‘very high’ based on the information provided by the scheme promoter? Evaluation Has a monitoring and evaluation approach been agreed with the Combined Authority?

For schemes that have total costs in excess of £20 million; have a benefit cost ratio (BCR) of less than 2:1 but an adjusted value for money assessment of ‘high’; or have notable local opposition to implementation, the scope of the scrutiny will be extended. This will require the external scrutiny to analyse the data presented by the scheme promoter in more detail by auditing all components of the business case and confirming (or otherwise) WebTAG compliance. For these schemes, the Combined Authority Director of Transport will develop a scrutiny brief that is specific to the scheme in question. An independent panel will be appointed to undertake this work in line with an agreed timetable. The output of standard or extended scrutiny will be presented to the Combined Authority Director of Transport, who will inform the scheme promoter of the findings

Page 222 Agenda Item 3.3 and make a recommendation regarding further action. The recommendations are likely to be focused on the following responses: - • Acceptance of the scrutiny findings and agreement that no further work required; • Further dialogue with the scheme promoter (this is likely to involve posing questions and then assessing the responses to these); • Commissioning a ‘second opinion’ from a suitably qualified person or persons; or • Additional work is specified for the scheme promoter to conduct and an appraisal of this work is undertaken on completion. Any additional technical work generated by this process will be commissioned and monitored by the Combined Authority Director of Transport. Scrutiny findings will be reported to the Combined Authority. The Combined Authority will be asked to approve the scrutiny findings based on a recommendation from the Director of Transport, once all the required work has been completed. No full approval decision will be made until acceptance and approval of the scrutiny findings has been agreed by the Combined Authority DoT. In order to minimise the financial impact on the Combined Authority, LEPs and local transport authorities, the DoT will explore the utilisation of intra-LEP/LTB technical support and joint procurement to resource the expert inputs required for scheme appraisal. Central case assessments will be based on forecasts that are consistent with the definitive version of the Department for Transport’s National Trip End Model (NTEM) and accessed using TEMPRO software. The forecasts include population, employment, households by car ownership, trip ends and simple traffic growth factors based on data from the National Transport Model (NTM). This approach will be supplemented with locally-specific land use change figures set out in the Combined Authority Strategic Economic Plan, Individual Core Strategies and supporting Local Development Frameworks. These will include housing and employment growth forecasts. It is essential that all large, complex and long-running projects are managed effectively. Scheme sponsors will be required to manage projects using PRINCE2 principles and techniques, with a clearly defined project structure. All schemes will be subject to a formal review process at the end of each major stage of the project lifecycle. This is in addition to the regular reviews of progress which are undertaken throughout the life of the project. The key stages at which reviews will take place include: -

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• Combined Authority DoT appraisal of business case (programme entry approval) • Detailed design • Statutory orders and acquiring land/property • Procurement • Combined Authority DoT appraisal of business case (full approval) • Construction Reviews will include consideration of the project management process and quality plan (risk management) procedures. The work supporting the review process will be undertaken by the scheme sponsor and be submitted to the Combined Authority Director of Transport, who will appraise submissions on behalf of the Combined Authority. This may necessitate using external resource if reviews cannot be appraised from within the Authority The review findings will be reported to the scheme sponsor and the Combined Authority DoT. Scheme sponsors will be required to seek early technical advice (i.e. at the start of business case development) from officers working on behalf of the Combined Authority DoT regarding modelling approach and assessing the social and distributional impacts (SDI) of schemes. These work streams can have significant lead times and the intention is that the overall approach is approved at an early stage in order to prevent any abortive work (with significant cost implications) being undertaken. The Scheme Promoter will produce a Value for Money (VfM) statement for each scheme put forward for approval summarising the overall assessment of the economic case for the scheme. This statement will be in line with WebTAG guidance. The VfM statement will include: - • Value for money category of the scheme (and explanation for this); • Present Value of Benefits (PVB), Present Value of Costs (PVC), and Benefit Cost Ratio (BCR); • Summary of the benefits and costs that have been assessed, including any assumptions that influence results; • Assessment of non-monetised benefits; and • Identification of any key risks, sensitivities and uncertainties. The initial value-for-money appraisal, which is based on an assessment of the scheme’s monetised impacts in line with WebTAG (e.g. journey time savings and

Page 224 Agenda Item 3.3 accident reductions), will result in each scheme being placed in one of five categories: - • Very High – where benefits are greater than 4 times costs; • High – where benefits are between 2 and 4 times costs; • Medium – where benefits are between 1.5 and 2 times costs; • Low – where benefits are between 1 and 1.5 times costs; and • Poor – where benefits are less than costs. Whilst the benefit/cost ratio (BCR) (or initial VfM assessment) is not the only consideration impacting on scheme approval (scheme affordability being another key determinant, for example), the Combined Authority DoT policy will be to consider funding: - • Schemes with very high VfM; and • Schemes with high VfM. Schemes with medium, low or poor VfM will not be eligible for investment. This will apply even if the scheme in question has previously been prioritised by the JC for the 2015-19 programme (the VfM assessment will change as business case progression results in more sophisticated analysis and may involve the business case development of some schemes being halted at appropriate junctures). In order to articulate a comprehensive set of reasons for making an investment, the VfM assessment will ultimately need to take into account the non-monetised costs and benefits of each scheme. This will involve consideration of both quantitative and qualitative assessment of scheme impacts and a judgement as to how they affect the overall VfM appraisal of the scheme. Consequently, the Combined Authority DoT will take account of other compelling reasons for investing in a scheme (e.g. significant numbers of jobs created or investment unlocked) within the context of a wider VfM appraisal. This may mean, for example, that a scheme may have an initial ‘medium’ VfM assessment but the non-monetised benefits generated by the intervention elevate this scheme to a final ‘high’ VfM assessment; equally a scheme with an initial ‘high’ VfM assessment could have that assessment reduced when non-monetised costs are considered e.g. adverse environmental impacts. 4.2.4 Treatment of risk at the Project Level

As part of the Project Lifecycle and business case evaluation process, applicants are required to develop a Project Risk and Issues Log. This will detail all of the project specific risks that have been identified during the development phase of the project. Within the business case templates that are submitted to the WMCA, the applicant will also be required, for key risks, to estimate the impact of the risk materialising and

Page 225 Agenda Item 3.3 probability of the risk occurring, attribute the risk with a Red, Amber, Green (“RAG”) rating, identify the risk owner, and provide a strategy for risk mitigation. This complies with the Single Pot Assurance Framework Guidance requirement that “deliverability and risks have been appropriately considered” and that an evaluation made as to whether “there are likely to be clear mitigations for those [risks]”. Project risk will be aggregated and reviewed at the level of the WMCA. A template for the project-based Risk and Issues Log can be found in the Appendices.

4.2.5 The Five Case Model

HM Treasury and Department for Transport best practice guidance for the development of a public Business Case is based on their Five Case Model. The WMCA business case templates build on this best practice supplementary guidance to the Green Book, including WebTAG where applicable, as well as on the HMT’s “supporting public service transformation” guidance. Policies, strategies, programmes and projects will only achieve their spending objectives and deliver benefits if they have been scoped robustly and planned realistically from the outset and the associated risks taken into account. All transport schemes (over £5m) seeking funding will be assessed using the methods and assumptions set out in WebTAG ensuring that the economic case prepared by promoters should reflect the WebTag requirements. Central case assessments for transport schemes will be based on forecasts that are consistent with the definitive version of the Department for Transport’s National Trip End Model (NTEM) and accessed using TEMPRO software. The results of appraisals will be reported to the appropriate group or decision maker in accordance with the project lifecycle process. The business case, both as a product and a process, provides decision makers, stakeholders and the public with a management tool for evidence based and transparent decision making and a framework for the delivery, management and performance monitoring of the resultant scheme. The business case in support of a new policy, new strategy, new programme or new project must evidence: a) That the intervention is supported by a compelling case for change that provides holistic fit with other parts of the organisation and public sector– the “strategic case”; b) That the intervention represent best public value – the “economic case”; c) That the proposed Deal is attractive to the market place, can be procured and is commercially viable – the “commercial case”; d) That the proposed spend is affordable – the “financial case”; and,

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e) That what is required from all parties is achievable – the “management case”.

4.2.6 Due Diligence

The Combined Authority is committed to undertaking due diligence activities that support effective decision-making and project appraisal. The specific nature and timing of the due diligence will depend on the nature of the project, its cost and the potential impact of the project on the WMCA itself. The description of the Project Lifecycle process below, highlights key stages at which due diligence might occur, and what sort of due diligence this would be. The Investment Advisory Group (IAG) will be responsible for determining the timing and nature of due diligence activities. Although routine due diligence activities will be done “in house”, the IAG may wish to commission external due diligence providers in some instances.

4.3 The Project Lifecycle Process

This section outlines the method for how projects and programmes will be evaluated and prioritised throughout the Project Lifecycle. It explains the assessment and evaluation process at each of the Lifecycle’s stages, the role of different stakeholders at each stage, and how the Project Lifecycle model interfaces with specific prioritisation tools (e.g. DEIM), other investment frameworks (e.g. Land Remediation Fund and Collective Investment Fund), and other Assurance Frameworks. The flowchart below illustrates the Project Lifecycle process.

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The flowchart shows how the Project Lifecycle is split into six stages, including: 1. The Initial Proposal/Strategic Outline Business Case Stage 2. The Outline Business Case Stage 3. The Full Business Case Stage 4. Contract Ready and Award Stage 5. Delivery and Regular Evaluation/Monitoring Stage 6. Contract Completion Stage Each stage is described in more detail below.

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Pre-Lifecycle Requirements and Processes Before a project can be put through the Project Lifecycle, there are some key processes that need to take place and requirements that need to be met. As the Project Lifecycle flowchart demonstrates, it is crucial that the WMCA Board sets and signs off the WMCA’s strategic priorities. This process is currently taking place through the development of the Strategic Economic Plan (SEP), and the SEP will need to be finalised before any projects can enter the Project Lifecycle. This is in order that the WMCA can begin allocating funding on the basis of project ‘fit’ with SEP objectives. In the Pre-Lifecycle Stage, a decision will also be made about how to initiate projects into the Project Lifecycle. The WMCA is yet to make a firm decision on this, but we understand that it is a combination of:

 Project sponsor proposals: Project sponsors can submit a proposal – at any stage, or within agreed windows – to the WMCA; and,

 Call for projects: WMCA Board issues a call for projects at regular intervals based on the requirements and priorities of the SEP and evidence of progress so far against SEP Objectives. This approach will be preceded by a separate prioritisation and sequencing exercise. It is a working assumption that there are no restrictions on the type of organisation that can bid for WMCA funding. However, as part of the project lifecycle, the WMCA will consider the project sponsor’s capability of delivering the project.

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1. The Initial Proposal/Strategic Outline Business Case Stage The key purpose of the Initial Proposal Stage is to:

 Establish the strategic context for the spending proposal;  Evidence the case for change; and,  Establish the preferred way forward.

To proceed to the Outline Business Case Stage, the project will need to demonstrate that it:

 fits with the strategic objectives of the Combined Authority as stated in the Super SEP;  will achieve balanced outcomes;  achieves value for money;  has a financial case; and  is deliverable. The initial proposal stage assesses whether projects that are taken forward into the latter stages of the Lifecycle meet a minimum set of criteria and are appropriate for further development. The Initial Proposal Stage requires project sponsors to submit a completed initial proposal template (also referred to as the Strategic Outline Case or “SOC”) (see list of documents below), which will be submitted to the Appraisal and Evaluation Panel for review and evaluation. The Initial Proposal Stage business case template primarily consists of the Strategic Case, although some preliminary questions are also posed regarding the Economic Case, the Financial Case and the Management Case (the Commercial Case comes in at OBC stage). This is to ensure that there is an adequate strategic fit with projects that are taken forward to the OBC stage. The Management Case primarily focuses on setting out the management plan for the rest of the project development phase. The Appraisal and Evaluation Panel will use the Initial Proposal Evaluation Criteria and Scoring Guidance document to assess the projects. Projects will be assessed against a number of criteria under the following headings (further detail can be found in the attached Initial Proposal Template and Guidance documents):

 Overview and Rationale;  Alignment with Strategic Economic Plan;  Alignment with Public Service Reform (PSR) objectives;  Relevant Programme of Investment and Other Options;  Costs and Funding;  Risks and Issues; and,  Project Development Plan.

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Before projects are either progressed to the Outline Business Case (OBC) Stage or returned to project sponsors for re-working, the Appraisal and Evaluation Panel will review projects and provide input into the evaluation process. They will liaise with the Investment Advisory Group who will be focused at the more strategic programme level and will provide confidence that the projects that are progressed to the OBC stage are aligned to an acceptable extent with the WMCA’s SEP objectives and, moreover, that they fit within a wide programme or sequence of investments. In essence, the IAG serves to reinforce the Pre-Lifecycle prioritisation process (mentioned above). Where appropriate, the WMCA Management Board and WMCA Board will provide oversight and input into the evaluation process at this stage. [Role of Management Board to be raised at Working Group and expanded upon].

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2. Outline Business Case Stage The key purpose of the OBC is to:

 Revisit the assumptions and main findings reported at the Initial Proposal Stage;  Establish the preferred option; and,  Set out the structure of the ‘deal’ and any arrangements for procurement if appropriate.

The OBC aims to ensure that only projects that meet the needs of the West Midlands – as defined in the WMCA SEP - are taken through to the Full Business Case stage. The core of the OBC is the options analysis, which should demonstrate that the preferred option is optimally designed to meet the WMCA’s investment criteria. At this stage, project sponsors are expected to have:

 Established the preferred scheme option;  Utilised at least the basic expectations for different types of specific project appraisal (as listed in the appendix); and,  Set out the structure of the ‘deal’ and any arrangements for procurement if appropriate. The OBC Stage requires project sponsors to submit a completed OBC template (see list of documents below), which will be submitted to the Appraisal and Evaluation Panel for review and evaluation. Information included in the OBC templates will be inputted into the DEIM model to provide an assessment of the schemes GVA contribution. The DEIM model will provide final checks and balances that the project at hand is suitably aligned with a wider investment programme/sequence. In addition, at this stage, project sponsors are required to complete an additional template with supplementary information about their organisation and about their proposed project, which will be reviewed as part of a due diligence exercise by the Appraisal and Evaluation panel. Due Diligence would take the form of both Commercial Due Diligence (i.e. Is there demand for the project? Is an optimal deal structure in place? Is the project commercially viable? etc.) which would feed into the Economic Case, and Financial Due Diligence (i.e. is the project affordable? Is there a funding gap?), which would feed into the Financial Case and overall evaluation of the proposals. The Appraisal and Evaluation Panel will use the OBC Evaluation Criteria and Scoring Guidance document to assess the projects. The OBC Templates are structured to provide a separate section for each one of the Five Case Business Case elements (Strategic, Economic, Commercial, Financial and Management), although project sponsors are encouraged to only resubmit information regarding the

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Strategic Case if there have been substantive changes since the Initial Proposal Stage. The Appraisal Panel will undertake initial due diligence work based on the information provided by the project sponsor. However, in some instances, it may be determined by the Appraisal Panel that further due diligence work is required, in which case it may commission external due diligence work to be undertaken. Before projects are either progressed to the FBC Stage or returned to project sponsors for re-working, the Investment Advisory Group (IAG) will review projects and provide input into the evaluation process. The IAG’s input at this stage will be more analytical than at the Initial Proposal Stage, and will include tasks such as:

 Critically appraising assumptions  Reviewing outputs of the DEIM model  Assessing the robustness of the cost estimates and funding plan  Value for Money assessments. Where appropriate, the WMCA Management Board and WMCA Board will also provide oversight and input into the evaluation process at this stage.

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3. Full Business Case Stage

The key purpose of the FBC is to:

 Revisit the OBC and new assumptions (e.g. resulting from the procurement);  Confirm that the recommended solution continues to optimise VfM; and,  Establish that the management arrangements for successful delivery are in place.

The aim of the Full Business Case (FBC) Stage is to provide a mechanism for appraising projects against a comprehensive set of criteria for each of the Five Cases. The FBC Stage will revisit the assumptions and main findings from the OBC which may have changed for example due to procurement arrangements, but will also bring forward new evidence on issues such as procurement and management strategy. The FBC Stage requires project sponsors to submit a completed FBC template (see list of documents below), which will be submitted to the Appraisal and Evaluation Panel for review and evaluation. Project sponsors are encouraged to only resubmit information previously provided at the Initial Proposal and OBC stages if there have been substantive changes since the previous submissions. The Appraisal and Evaluation Panel will use the FBC Evaluation Criteria and Scoring Guidance document to assess the project. Where appropriate, the Appraisal and Evaluation Panel may commission further confirmatory due diligence work at this stage. This would be especially relevant for larger or more complex projects and programmes, and would serve a range of purposes, such as testing the due diligence undertaken at the OBC stage, reviewing the wider impact that the project or programme would have on the WMCA (e.g. if the WMCA acquires a new asset worth £40million, what does this mean for its operating costs, staffing requirements and funding requirements going forward?). It might also be pertinent at this stage to undertake Legal Due Diligence (i.e. reviewing contractual documentation). By the FBC stage, it is expected that there is already a clear alignment between the project and a wider investment programme/sequence. As a result, the focus of the FBC evaluation will be to scrutinise each component of the Five Business Cases to ensure that the project stacks up in isolation and that it will deliver Value for Money for the Combined Authority and the taxpayer. The IAG will support the Appraisal and Evaluation Panel in the evaluation. The IAG will then make a recommendation to the WMCA Management Board and WMCA Board. The WMCA Management Board and WMCA Board will review the recommendation and provide project sign-off, return the project for re-submission, or reject the project outright with evidenced reasons.

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4. Contract Ready and Award Stage The primary focus of the Contract Ready and Award Stage is the completion and evaluation of any due diligence undertaken at the OBC and FBC stages to ensure that the Project Sponsor meets the WMCA’s required standards and criteria. Where the project sponsor is deemed fit for undertaking the project, the project will progress to contract award and funding will be provided to the project before project delivery commences. Detailed contract/grant conditions will be drawn up by the WMCA for each successful bid as part of this Contract Award stage.

5. Delivery and Regular Evaluation/Monitoring Stage Project sponsors will have been required to outline their project monitoring and evaluation plan during the business case submission process at Full Business Case Stage. Individual project sponsors will be required to implement their monitoring and evaluation plan, which, in turn will feed into the Performance Monitoring Framework and WMCA Dashboard (see below for more detail). The WMCA will monitor and map the outputs of projects and programmes through the Economic Intelligence Unit. This analysis will be used to inform the evaluation of the quality and impact of the WMCA’s investment decisions, and in turn will create the evidence base for the Five Year Gateway Review. Government guidance recognises the fact that local and national economic impact of the Investment Fund might not be observable after five years. As a result, the national evaluation panel will use appropriate metrics at the first gateway, such as whether investments are being delivered to time and to budget.

6. Contract Completion Stage On completion of the agreed scope of work the project must be formally closed. Lessons learned will be captured as part of the Closure Report completed by the project team. The Appraisal and Evaluation Panel will assess the lessons learned and share these will other projects and stakeholders as deemed useful, provided these are not commercially confidential. The WMCA is committed to using evidence-based analysis to improve its investment decision making. As such, information collected at the Monitoring and Evaluation Stage will be used to inform the future prioritisation of investments and the ongoing refinement of the Strategic Economic Plan.

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Where appropriate, individual projects and their underlying funding decisions, will be subject to review by the WMCA Scrutiny Committee and the WMCA Audit Committee.

4.3.1 Project Lifecycle Stakeholders

There are a number of stakeholders (e.g. Committees, Boards, Panels and Groups) that are involved in the Project Lifecycle. These stakeholders are part of the WMCA’s overarching system of governance (detailed above), but have distinct and clearly defined roles within the Project Lifecycle. These stakeholders are outlined in the table below:

Stakeholder Personnel Role Mayor • The Mayor

Appraisal & • Executive • Focus on project appraisal Evaluation officer group • Review and assess business cases - project scoring Panel • Technical and evaluation of business case documentation expertise • Appraisal Panel considers 'total impact' and not just • Project PSR or just economic considerations emphasis • Provide recommendations to IAG • Also responsible for project monitoring/evaluation on an annual basis • Panel members must be independent of project sponsor Investment • Executive • Focus on programme appraisal but involved at every Advisory officer group stage for continuity (strategic, outline, full) Group • Strategic view • Review projects in relation to the Strategic Economic • Programme Plan (SEP) emphasis • Consideration of PSR proposals including cost-benefit analysis and ‘filter’ assessment. • Use DEIM as a tool for assessing strategic fit of programmes against WMCA priorities • Make recommendations to the WMCA Management Board • Monitor and review Appraisal Panel performance and decision-making • Direct line of communication to WMCA Board and WMCA Management Board • Group members must be independent of project sponsor WMCA • Local Authority • Responsible for signing off business cases in alignment Management Chief with SEP Board Executives • Responsible for meeting WMCA objectives and delivery • Local Authority of the SEP Section 151 • Responsible for coordinating effective risk management Officers procedures • Make recommendations to the WMCA Board

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WMCA Board • Local Authority • Provide ultimate sign-off and responsibility on Leaders investment decisions • Elected Mayor • Provide political accountability and transparency

4.3.2 Project Lifecycle Documents

A number of standard documents are required to support projects through the six lifecycle stages. These include:

Initial Outline Full Business Contract Delivery & Contract Proposals Business Case (FBC) ready and Regular Completion Stage Case (OBC) Stage award stage Evaluation/ Stage Monitoring  Initial  OBC template  FBC template  Contractual  Monitoring  Evaluation proposal with with embedded documentati documentatio and template embedded guidance on n approved by monitoring with guidance Appraisal report  FBC appraisal embedded  OBC Panel and led  Lessons guidance appraisal scoring criteria by Investment learnt  Initial scoring  Management Advisory report for proposal criteria Board report Function Appraisal appraisal  Investment and Panel scoring Advisory recommendatio criteria Group report ns  DEIM inputs sheet

4.3.3 Process flow and timeline

The Project Lifecycle follows a strict process and set of requirements that need to be met by each project sponsor within given time periods. It is logical, however, that there is some flex in these requirements depending on the cost and complexity of the project at hand. The Process Flow chart (below) breaks the Project Lifecycle into a series of steps and provides timescales for each Stage. At present, the timelines are indicative and subject to change. The distinction between small, medium and large projects aligns with the threshold levels described above. The Process Flow also clearly delineates the roles of different parts of the WMCA governance apparatus. Importantly, the funding decision for schemes will be made following Management Board sign-off of the Full Business Case document prior to the WMCA Board’s final approval and “programme entry”.

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4.4 Prioritisation and sequencing

The Project Lifecycle, described above, is specifically designed to support the WMCA to appraise and evaluate the suitability and value for money of individual projects or programmes. It will enable the WMCA to provide assurance to government that its investment decisions have been made in a robust, consistent and transparent manner. The prioritisation and sequencing of investments (i.e. choosing how, where, and when to invest WMCA resources) is not directly included within the Project Lifecycle and must be considered as a separate exercise.

4.5 Statutory requirements and funding decisions

4.5.1 Treatment of the £36.5 million per annum Gain Share Funding

Through the West Midlands Devolution Agreement, the Government committed to providing the WMCA with up to £36.5 million per annum as part of a Gain Share agreement. The full allocation of the funding is subject to the WMCA’s successful completion of the Five Year Gateway Review, which will evaluate the impact of the WMCA’s investment of the Gain Share funding in the five year period up to the Gateway Review. The WMCA’s intention is to use the £36.5 million per annum of funding as a revenue stream to support borrowing that will be invested into a wide range of projects across the West Midlands. This approach will enable the impact of the £36.5 million funding to be accelerated.

4.5.2 Integrating the West Midlands Combined Authority’s Land Remediation Fund and Collective Investment Fund

There are a number of key interfaces between the Assurance Framework and the WMCA’s Land Remediation Fund (LRF) and Collective Investment Fund (CIF):

 Due the fact that the LRF/CIF are part of the WMCA’s investment toolkit, the funds should be cognisant of the Assurance Framework and Project Lifecycle, and certain elements of the Project Lifecycle should be built into the LRF/CIF evaluation criteria (e.g. compliance with SEP Objectives).

 Where the LRF/CIF are providing grant funding, it is anticipated that the project would be subject to the full Assurance Framework and Project Lifecycle processes and assessment criteria.

 There is also an expectation that the LRF/CIF would feed into the wider WMCA investment prioritisation process, for example by feeding back information that is required to run the project through the DEIM model. This is crucial, as it will 41

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ensure that projects that are funded/financed through the LRF/CIF are captured, that future investment priorities adjusted accordingly, and that duplicate investments are avoided.

4.5.3 State Aid

The Assurance Framework has been designed to support the WMCA make an assessment about whether its investments are State Aid compliant. The business case templates that form the core of the Project Lifecycle, require Project Sponsors to confirm that their project complies with State aid Regulations and does not contravening the State Aid Legislation. The templates also require Project Sponsors to outline what advice (e.g. legal advice) they have had in relation to State Aid, and to confirm their acceptance of the following: “All applicants need to take steps to satisfy themselves that any WMCA funding approved does not amount to unlawful State Aid. A declaration of compliance with EU State Aid regulations will be required prior to any WMCA funding being provided. If your project is awarded funds from the WMCA it will be subject to a condition requiring the repayment of any WMCA funding in the event that the European Commission determines that the funding constitutes unlawful State Aid.” Where required, the WMCA will also conduct legal due diligence to obtain further confidence that State Aid requirements have been met.

4.6 Monitoring and evaluating

The monitoring and evaluation of the investment of public monies in a proportionate way is essential for:

 Providing a focus so that projects are delivered as planned;

 Delivering an understanding of whether a project has achieved Value for Money;

 Maintaining scrutiny and accountability;

 Informing future investment prioritisation and resource allocation; and,

 Informing and encouraging best practice. Monitoring and evaluation for the WMCA as a whole will operate at two interconnected levels. One at the level of individual projects, as defined at the FBC stage through the Assurance Framework, and one at the level of the WMCA as a whole through the WMCA Performance Management Framework (PMF). For certain projects, and for projects funded through particular sources (e.g. the £36.5 million Gain Share funding), the WMCA may wish to consider procuring evaluation to be conducted independently.

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It is essential that all monitoring and evaluation exercises align in readiness for the 5 year Gateway Review, and in order that the WMCA Dashboard can be built on the same framework. The M&E Stage will also include detailed impact pathway analysis at Programme Level led by the Investment Advisory group. The focus of M&E for the WMCA Assurance Framework is more on ‘Impact Evaluation’ and ‘Economic Evaluation’ than on ‘Process Evaluation’. The difference between is highlighted below:

 Process Evaluation refers to how a project or policy was delivered

 Economic Evaluation refers to whether the benefits of intervention justify the costs

 Impact Evaluation refers to whether the policy made a difference The PMF is composed of a selection of strategic headline indicators, which measure the impact of the various programmes areas of the WMSEP. These indicators cover a range of theme areas including economic, fiscal, social and environmental impacts. The PMF will provide a framework against which WMCA success can be measured, both across strategic programmes and in individual projects. The ambitions are based on an agreed vision led economic future for the area underpinned by extensive modelling work undertaken using the Oxford Economic model. It is essential that all projects (however small or large) have an effective Monitoring & Evaluation (M&E) plan in place to assess the effectiveness of public spending over time, and so that lessons can be learnt from. It is important to note that the WMCA will monitor projects/programmes against the outcomes described in the economic case. We will annually monitor our progress in relation to the targets in the PMF so that we can clear on the impact of our delivery plan in achieving our ambitions. Responsibility for monitoring at a strategic level will lie with the Economic Intelligence Unit, whereas at the project level it will lie with project sponsors. Over time, prioritisation and sequencing will also involve a feedback loop through which the outcomes of the WMCA’s monitoring and evaluation work will be used to shape future investment priorities. In relation to transport schemes. the Combined Authority Director of Transport will ensure transport schemes are evaluated (assessed for effectiveness and efficiency during and after implementation) in line with the DfT guidance. A consistent monitoring approach (collection of data to check progress against planned targets and benefits) across all LGF supported schemes will help inform programme level analysis, enabling dissemination of good practice and lessons learnt. Proportionate and targeted evaluation will be required by the Combined Authority DoT in line with DfT guidance. All transport scheme promoters will be required to monitor the following standard measures: -

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• Scheme build; • Delivered scheme; • Costs; • Scheme objectives; • Travel demand; • Travel times and reliability of travel times; • Impacts on the economy; • Carbon impacts; and These measures will be reported in both a ‘one year after’ and a ‘final evaluation report’.

4.7 Five Year Gateway Review

The Single Pot Assurance Framework National Guidance from DCLG and the Cities and Local Growth Unit states that for Combined Authorities in receipt of devolution and other investment funds from Central Government, five-yearly Gateway Reviews will be used to assess investments’ impact. Presently, the guidance suggests that economic growth will be the primary metric against which impact is assessed, although it is anticipated that Combined Authorities will have the ability to shape the assessment criteria in their own Five Year Gateway Review so that it aligns with the objectives that they have set out in their respective Strategic Economic Plans. The Five Year Gateway Review process is intended to provide an incentive to encourage appropriate project appraisal, assurance and Value for Money processes. Government has suggested that the Five Year Gateway Review process will focus on evaluating the performance of the WMCA’s £36.5 million per annum of Gain Share funding, although the WMCA may choose to use this to exhibit the impacts of its wider £8 billion programme of investment.

4.8 Quality Assurance and Annual Review of WMCA Assurance Framework

This is a ‘live’ document and will be subject to an annual review to ensure that material is kept up to date and to provide quality assurance on the Assurance Framework itself. The Single Pot Assurance Framework Guidance and Policy set by Government may also evolve over time: for example, further funding or powers may be incorporated.

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The annual review will also refer to any periodic updates of the documents referenced in the appendices to the Assurance Framework, including the business case templates and evaluation criteria, monitoring and evaluation procedures and the risk log. It is anticipated that the Assurance Framework will continue to evolve and develop, especially during the first year of the Combined Authority’s formation, during which time it will be used in practice for the first time. It will be sensible to invite feedback from project sponsors who fill out the templates on a continual basis so that they can be constantly evolving to be fit-for-purpose.

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A.1. Bibliography

Doc. no. Name of Document Author

1 HMT Green Book Guidance and Supplementary HM Treasury Guidance

DCLG Appraisal Guide DCLG

2 Equality Impact Assessment HMT

3 Employment Densities Guide Homes and Communities Agency

4 The Aqua Book HM Treasury

5 Local Government Transparency Code DCLG

6 Further Education Schemes Cost Models: New Build, Association of Colleges, AECOM and Small Works and Refurbishment Construction Skills Funding Agency

7 Value Benefits of Regeneration DCLG

8 Cost Benefit Analysis - HCA Summary Guide for Homes and Communities Agency Housing and Regeneration Projects

9 Impact of RDA spending – National report – Volume Department for Business, Enterprise & 1 – Main Report Regulatory Reform

10 Additionality Guide Homes and Communities Agency

11 Budget Asks and Devo 2 WMCA Programme Board

12 Greater Birmingham and Solihul Growth Deal GBS LEP Accountability Framework

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13 Greater Birmingham & Solihull Local Transport Greater Birmingham & Solihull Local Board Assurance Framework Transport Board

14 Assurance Framework Black Country LEP

15 LEP Assurance Framework BIS

16 Assurance Frameworks HM Treasury

17 Single Pot Assurance Framework, National Guidance DCLG

18 HMT Magenta Book: Guidance for Evaluation HM Treasury

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A.2. Glossary Additionality The extent to which something happens as a result of an intervention that would not have occurred in the absence of the intervention. Affordability Affordability refers to both the absolute availability of funding to defray the costs of a project (i.e. is there a funding gap?) and the relative cost of the project in relation to other interventions that could otherwise be funded instead. A project can represent Value for Money, but not be affordable, and vice versa. Alternative Option A scenario which reflects a different way in which similar objectives could be met. This may include an option with lower costs but fewer benefits, or higher costs with more benefits. Balance Objectives A series of objectives designed to ensure that the whole of the region (in terms of geography and people) benefits from growth. Capital Expenditure Expenditure on the acquisition or creation of a tangible fixed asset or expenditure which adds to and not merely maintains the value of an existing tangible fixed asset. Capital Funding Funding that is hypothecated or ring-fenced for capital expenditure. Cashability Refers to the extent to which a change in an outcome or output (e.g. fewer children in care) will result in a reduction in fiscal expenditure such that the expenditure released from that change can be reallocated elsewhere. Cashable Cashable fiscal benefits will result in a reduction in fiscal expenditure such that the expenditure released from that change can be reallocated elsewhere. They should be counted in the financial case as reducing the overall budget impact of a project and in the economic case as a benefit to the public (as this resource can be reallocated to productive purposes elsewhere) Contingency A special monetary provision in the project budget to cover uncertainties or unforeseeable elements of time/cost in the estimate associated with the normal execution of a project, for example, labour rates and design development. Demand A consumer's (or taxpayer) willingness to pay a price for a good or service. Demand can be used to infer the 'need' for a project. Displacement The number or proportion of intervention outputs (occurring under the reference case and the intervention options) accounted for by reduced outputs elsewhere in the target area. Dynamic Economic A model commissioned by the WMCA to provide a forecast of the net Impact Model (DEIM) additional Gross Value Added (GVA) that an intervention might create. Financing The set of financial arrangements put in place to provide committed capital to meet the costs of a project as they are incurred Funding The sources of income to be used to meet the capital and operating costs of a project over time.

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Funding Gap The amount of the funding requirement that has no identifiable funding sources (measured in Pounds Sterling or as a percentage of total funding requirement). Governance The systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of the WMCA Interest Payable Amount of interest repaid in a given period. Leakage The number or proportion of outputs (occurring under the reference case and the intervention options) that benefit those outside of the intervention’s target area or group should be deducted from the gross direct effects. Lifecycle / Whole Life Sum of all recurring and one-time (non-recurring) costs over the full Costs life span or a specified period of a project. Loan Drawdown Amount of funds drawn from a loan facility in a given period. Multiplier Effect Further economic activity (jobs, expenditure or income) associated with additional local income, local supplier purchases and longer term development effects Net Cash Position Sum of the total cashflows for a given period. Non-Cashable Non-cashable fiscal benefits should be quantified as these represent a benefit to the public from freeing up resource for other productive purposes (even if public expenditure is not reduced). In this case, the fiscal benefit is assumed to be equal to the ‘opportunity cost’ of resources under business as usual which are expected to change as a result of the proposed project, i.e. the value of the forgone alternative use of resource under business as usual. For example, staff time in treating avoidable A&E attendances which is freed up for other purposes (i.e. other more serious A&E cases) as a result of a project could be counted as a non-cashable fiscal benefit. These non-cashable fiscal benefits are counted in the economic case in addition to any cashable benefits. OJEU Official Journal of the European Union. Public sector procurements above a certain value must be published in this Journal. Optimism Bias There is a demonstrated, systematic, tendency for project appraisers to be overly optimistic. To redress this tendency project appraisers should make explicit, empirically based adjustments to the estimates of a project's costs, benefits, and duration. Opportunity Cost ‘Opportunity cost’ is a concept used in economics to describe the trade-off between different choices, or the cost associated with making one choice over another. Outcome The benefits and other impacts resulting from specific outputs (e.g. reduced journey times, jobs created, homes built, reduction in pollution, access to employment, reduced offending etc.). Some outcomes are tangible and measurable, but some may be more intangible. Outcomes can be used to measure the WMCA's success in delivering its strategic objectives.

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Output Specific and clearly measurable products resulting from an investment (e.g. metres of train track, square metres of remediated land, number of educational places created, etc.). In isolation outputs do not necessarily enable the WMCA to meet its strategic objectives. Programme Group of related projects managed in a coordinated way to obtain outcomes not available from managing projects individually Project A distinct scheme that is required to provide a specific service(s) or deliver a specific output(s). Proportionality The allocation of resources to the production of evidence should be clearly related (i.e. proportional) to the scale of the resources associated with the activity in question. Proposed Option Details of the assumptions and forecasts made under the investment case. Public Service Reform Interventions that change the extent and nature of public sector (PSR) administration, organisation and governance with the aim of improving social outcomes, and more cost-effective service delivery. Reference Case The 'but for' or baseline scenario: The reference case requires a set of assumptions and forecasts about a future in which the intervention is not made. It is used to determine the net benefits of a project or investment. Repayment of Principle Amount of principle repaid in a given period. Revenue Expenditure The operating costs incurred by the authority during the financial year in providing its day to day services. Distinct from capital expenditure on projects which benefit the authority over a period of more than one financial year. Revenue Funding Funding that is hypothecated or ring-fenced for revenue expenditure. Risks A probability or threat of liability, loss or other negative occurrence that may affect the funding and deliverability of a project, with knock on implications for the project sponsor and/or the WMCA. Stakeholders The range of public and private organisations and individuals who have a definitive interest or role in a project/programme or who will be impacted by it. Strategic Economic Plan A document that sets out the actions that need to be taken in order to (SEP) deliver the WMCA vision. Substitution Arises where a firm substitutes one activity for a similar one (such as recruiting a jobless person while another employee loses a job) to take advantage of public sector assistance. Total Debt Service Sum of interest and principle repaid in a given period. TUPE Transfer of Undertakings (Protection of Employment) Regulations 1981

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Value for Money Value for Money can be assessed using three criteria: Economy (i.e. minimisation of resource usage, or "spending less"); Efficiency (i.e. the relative level of outputs and the resources used to produce them, or "spending well"); and, Effectiveness (i.e. the relationship between the intended and actual results of public spending, or "spending wisely").

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A.3. Accompanying Documentation There are a number of documents which will accompany the Assurance Framework, and which will form part of the process of ensuring VfM, but which are still being developed. These are:  Change request processes and documentation  Exceptions report templates  Project status report templates  Project closure report templates  Accountable Body arrangements and claims and reporting processes  Audit and scrutiny arrangements  Risk and issues template log  Outputs and outcomes profile

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This document has been prepared only for Wolverhampton City Council and the other Constituent Councils of the proposed West Midlands Combined Authority and solely for the purpose and on the terms agreed with Wolverhampton City Council. We accept no liability (including for negligence) to anyone else in connection with this document, and it may not be provided to anyone else. If you receive a request under freedom of information legislation to disclose any information we provided to you, you will consult with us promptly before any disclosure. © 2016 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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Page 252 Agenda Item 5.1

WMCA Board Meeting

Date 10 June 2016 Report title 2016-2017 Combined Authority Budget

Accountable Chief Jan Britton, Chief Operating Officer of West Midlands Combined Executive Authority Responsible Officer James Aspinall S151 Officer of West Midlands [email protected] Combined Authority 0121 214 7013 Originating Council West Midlands Combined Authority

Report to be/has been West Midlands Finance Directors 26 May 16 considered by WMCA Management Board 26 May 16

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

1. Approve the balanced summary 2016/17 Consolidated Revenue Budget for West Midlands Combined Authority.

2. Approve the 2016/17 West Midlands Combined Authority Governance Budget.

3. Approve the 2016/17 Investment Programme.

4. Note and Endorse the 2016/17 Transport Delivery Revenue and Capital Budget

5. Note the Financial Monitoring & Reporting Arrangements

6. Note current Tax and Audit Status

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1.0 Purpose

1.1 To approve the Revenue Budget and Investment Programme for the continuation and progression of expenditure on behalf of the Combined Authority for the 2016/17 Financial year

2.0 2016/17 Summary West Midlands Combined Authority Revenue Budget

2.1 The 2016/17 Combined Authority Revenue Budget summary is presented below for approval. The Consolidated Revenue Budget consists of:

 The 2016/17 Governance Budget as detailed in Section 3 of this report for approval.  The 2016/17 Revenue impact of the 2016/17 Combined Authority Investment Programme as detailed in Section 4 of this report for approval.  The approved 2016/17 Transport Delivery Revenue Budget as detailed in Section 5 of this report.

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3.0 2016/17 Combine Authority Governance Budget

3.1 The following Table summarises the Combined Authority Governance Budget presented by key priorities as outlined in the Statement of Intent:

WMCA Governance Revenue Budget 2016/17 2015/16 2016/17

Outcome £000 £000 £000 New B/Fwd Total

Public Sector Reform 500 500 Productivity & Skills Commission 0 150 150 Mental Health Commission 0 150 150 Land Commission 250 75 325 Collective Investment Fund 350 350 Transport 241 241 Skills 101 101 Programme, Policy & Governance 580 580 Set Up Costs 243 243 Communications 199 199

Total Budget 2,463 375 2,838

2016/17 Membership Fees: Constituent Members 1,750 1,750 Non-Constituent Members 250 250 Associate Members / Official Observers 50 50

2015/16 B/Fwd Contributions 375 375

Fee Income 2,050 375 2,425

Shortfall (413) (413) Constituent Member Further Contribution 413 413 2016/17 Balanced Budget 0 0 0

3.2 This budget includes some broad estimates which will continue to be refined and assumes that resource capacity will be leveraged in a number of areas from WM Districts.

3.3 Transport Costs cover the work on the M6 Toll and Key Route Network and the CIF cost relates to fees.

3.4 Membership fees of £250,000 per Constituent Member and £25,000 per Non-Constituent Member, plus Associate Members and Official Observers have been included above. This leaves an additional funding requirement of £413,000 which it has been assumed will come from the Consituent Members only; being £59,000 per Member.

3.5 In addition Funds of £0.375m will be bought forward from 2015/16 where Commission expenditure is still to be progressed. These funds are bought forward from the contributions made by the Metropolitan Councils in 2015/16.

3.6 Expenditure will be controlled, monitored and reported throughout the year to the Combined Authority Board in terms of actual and forecast spend.

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4.0 Combined Authority Investment Programme

4.1 Summarised below is the projected 2016/17 Combined Authority Investment Programme which makes allowance for a potential programme of £147.7m. This is an ambitous programme and this first year reflects an early estimate of the profiled aspirations. It is unlikely that all individual business cases for a programme of this size will be progressed during 2016/17 but allowance has been made in the capital budget and revenue financing costs for investment up to this level.

WEST MIDLANDS COMBINED AUTHORITY: INVESTMENT PROGRAMME Financial Year Ending March 2017 Funded By (£000) Current Local WMCA Investment Programme estimate WMCA CIF Fund European 3rd Party/ Enterprise High Growth £000 Devolution (Birmingham) Union Other Zone Speed 2 Fund

HS2 UKC Interchange 900 900 UKC Infrastructure Package 2,400 1,600 700 100 HS2 Curzon Street Masterplan 500 500 HS2 Wider Connectivity Package 910 800 110 HS2 Curzon (Bull St to Curzon / Adderley) 2,200 2,200 HS2 Metro Birmingham Interchange 1,500 1,500 Brierley Hill Metro 1,200 1,200 HS2 Programme Governance 600 600 High Speed Supply Chain 36,200 36,200 National College - Development Team 70 70

HS2 Growth Strategy 46,480 3,970 - 700 36,410 500 2,200 2,700

Coventry UK Central Plus 440 440 Coventry City Centre Regeneration 780 780 WM Revolving Housing Fund - Collective Investment Fund 35,000 35,000 Land Reclamation Fund 40,000 40,000 Business Innovation 25,000 25,000 EZ Expansion (excluding Curzon Street) -

Combined Authority Total 147,700 70,190 35,000 700 36,410 500 2,200 2,700

4.2 Much of the above programme represents initial development costs of the £8bn Investment Programme based on the Devolution deal with Government. Spend incurred is at risk of the Authorities concerned until the Devolution agreement is signed.

4.3 The 2016/17 spend will be financed from the annual £36.5m Devolution agreement via prudential borrowing, along with other sources of finance shown above. Separately it has been approved that Birmingham City Council will be the accountable body for the CIF Fund and hence will undertake all the required borrowing. The CIF borrowing costs will be met by projected investments from the fund with a gurarantee of underwrite from the Districts should the Fund be in deficit.

4.4 The projected borrowing requirement for the Investment Programme in year is therefore £70.19m, however the Combined Authority is expected only to have borrowing powers for transport during 2016/17. The split of the borrowing requirement between Transport and non- Transport Spend is shown below:

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WMCA Financing Budget 2016/17 £000 £000 £000 Borrowing Transport Non Transport

HS2 UKC Interchange 900 - 900 UKC Infrastructure Package 1,600 1,600 - HS2 Curzon Street Masterplan - - - HS2 Wider Connectivity Package 800 800 - HS2 Curzon (Bull St to Curzon / Adderley) - - - HS2 Metro Birmingham Interchange - - - Brierley Hill Metro - - - HS2 Programme Governance 600 - 600 High Speed Supply Chain - - - National College - Development Team 70 - 70

HS2 Growth Strategy 3,970 2,400 1,570

Coventry UK Central Plus 440 440 - Coventry City Centre Regeneration 780 - 780 WM Revolving Housing Fund - - - Collective Investment Fund - - - Land Reclamation Fund 40,000 - 40,000 Business Innovation 25,000 - 25,000 EZ Expansion (excluding Curzon Street) - - -

Combined Authority Total 70,190 2,840 67,350

4.5 The Combined Authority will therefore borrow a projected £2.84m in 2016/17 to finance the Transport Element of this programme and this position is reflected in the 2016/17 Combined Authority Treasury Management Strategy Report also reported to this Board for approval.

4.6 Excluding the Land Reclamation and Business Innovation programmes, a balance of £2.35m non-transport borrowing would be required in year and this is small enough to be funded from the Devolution Grant itself in year without borrowing. This eliminates the need for complex inte-authority borrowing arrangements during the interim period when the CA does not have Non-transport borrowing powers in relation to these smaller projected expenditure areas.

4.7 In relation to the Land Reclamation and Business Innovation Funds, until Non-Transport Borrowing Powers are granted to the Combined Authroity, it is proposed that the lead Authority for each workstream undertakes the borrowing and the CA reimburse the Authority in full via an interim agreement from the £36.5m Devolution Grant as direct financing costs and the borrowing cost is included below.

4.8 The Revenue Impact of the 2016/17 Investment Programme is summarised below and included within the Consolidated Revenue Budget in Section 1 of this report:

WMCA Investment Programme Financing Revenue Account:2016/17 Income: £000 Government devo deal grant (part year) (27,375.0) Business Rates growth (1,500.0) Expenditure: Interest payable 1,000.0 Revenue costs of project & programme delivery 2,000.0 MRP 0.0 Revenue Financing of non Transport Capital Exp 2,500.0 MRP 23,375.0

Net revenue (income)/ expenditure 0.0

4.9 Work is ongoing to refine the funding flows between lead Authorities, the financial Administration requirements for the CA as accountable body and the definition of Financial Risk and Responsibility for all the schemes and Funds associated within this Investment Programme.

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4.10 The programme reflects initial work and development costs towards an assumed Investment Programme of around £8bn based on the Devolution Deal with Government. The Combined Authority together with the Mayor will need to make decisions about the scale of the investment programme and the revenue resources proposed to support the funding of the Programme. At this stage, the revenue implications of the 2016/17 capital budget above can be met wholly from the £36.5m Devolution deal revenue grant, without assuming income in later years from any other sources.

4.11 The MRP budget above is a prudent assumption which assumes a tailored profile of debt repayment charges, including a relatively high charge to revenue account in the early years, consistent with the financing of the assumed longer term £8bn Investment Programme. The amount of MRP required in 2016/17 is likely to be revised in the course of the year as the Combined Authority’s capital investment plans are developed.

4.12 The Combined Authority’s Governance and Assurance processes will review and agree the business cases for the individual capital investment proposals included in its capital budget, to ensure that they are affordable within planned resources, taking account of commitments into later years.

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5.0 2016/17 Transport Delivery Revenue Budget

5.1 This represents the inherited ITA/Centro Transport levy and budget which was approved by the January and March 2016 meetings. Under the Government legislation the previous ITA approvals carry forward into the Combined Authority, however for completeness these are presented in this report for endorsement.

5.2 The 2016/17 Transport Delivery Revenue Budget (net of operational income) is funded by the annual levy and is summarised beow:

2016/17 Transport Delivery Revenue Budget £'000

Income Levy 124,830

Total 124,830

Concessions National Bus Concession 53,633 Metro / Rail 4,213 Child Concession 11,425 Passes and Permits 172 69,443

Bus Services Bus Stations / Infrastructure 3,113 Subsidised Network 7,558 Tendering / Monitoring 996 Accessible Transport 7,568 19,235

Rail Services Metro 849 Rail Enhancements Car Park and Ride 1,049 West Midlands Rail 580 Bromsgrove Rail Station 144 2,623

Integration Safety and Security 1,074 Passenger Information 5,147 Sustainable Travel (60) 6,160

Transport Support Costs Transport Support Costs 3,251 3,251

Policy and Strategy and Elected Member Services 1,897

Finance Charges Finance Costs 16,287 Deregulation pension costs 6,873 23,160

Total Expenditure 125,769

Total Return funded by Reserves (939) Net Income / Expenditure 0

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5.2 The Table below sets how the 2016/17 levy of £124.830m is allocated by Authority:

Resident 2016/17 District Population % split Levy £000 mid-2014 Birmingham 1,101,360 48,955 39.22% Coventry 337,428 14,999 12.02% Dudley 315,799 14,037 11.24% Sandwell 316,719 14,078 11.28% Solihull 209,890 9,330 7.47% Walsall 274,173 12,187 9.76% Wolverhampton 252,987 11,245 9.01% West Midlands 2,808,356 124,830 100.00%

5.3 The Transport Delivery Revenue Budget funds the following:

Concessions

National Bus Concessions £53.6m Reimbursement for ENCTS is regulated by the Secretary of State with guidance provided by the DfT. Bus operators have announced their prices for 2016/17 and these, along with the latest patronage figures, have been taken into account in forecasting the ENCTS requirement. The current scheme extends entitlement from 9.30am to the last bus which will continue for 2016/17.

Rail and Metro Concessions £4.2m In the West Midlands the free national bus scheme has been extended to residents to include local rail and Metro services within the region, enabling cardholders to travel after 9.30am up to midnight on weekdays and all day at weekends and bank holidays.

Child Concessions £11.4m The provision of approximately half fare travel concession is offered to children aged five to 15 and young adults aged 16-18 in full-time education and resident in the West Midlands. This concession is only available on weekdays before 9.30am and between 15.30 and 18.00. Passenger numbers continue to rise and are currently 25 million trips per annum.

Bus Services £19.2m

Bus stations and Infrastructure £3.1m These costs cover the operation of bus stations and all management and maintenance associated with bus stations, stops and shelters.

Tendered Services £8.6m Where standards for access to the network are not met commercially, services are categorised into an order of priority giving a focus on journeys to work and access to shopping and health facilities. In residential areas, the maximum desirable walking distance to bus services in continuously built- up areas is 400 metres during the hours of 07.00 to 19.00 onMonday to Saturday and 700 metres at other times. The current access standards state that where passenger boarding exceeds eight and the cost per head is less than £1.60, then a service will be provided.

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the current service levels for Monday to Saturday. Current fares are £1 each way. In addition to the Ring and Ride service, a Walsall and Birmingham shoppers service is provided for older people who are primarily based in sheltered housing and a prison visitors service provides assistance for families, especially mothers with young children, to visit family members in prison. Rail Services £2.6m Metro £0.8m The Metro costs relate to annual commitments made under the concession deed pertaining to insurance and maintenance.

Park and Ride £1m Rail and Metro car parks are provided free of charge within the Metropolitan area. This policy provides in excess of 9,000 parking spaces. Car parking enforcement was successfully introduced in September 2014, with considerable public and mediasupport.

West Midland Rail £0.6m This cost relates to the invitation to tender and subsequent analysis of bids for the new West Midlands Rail Franchise.

Bromsgrove Rail Station £0.1m This expenditure is the net cost of financing and operating Bromsgrove Rail station after income receipts from access charges. Worcestershire County Council also make a contribution.

Integration

Safety and Security £1.1m Safety and security expenditure relates to the Safer Travel Police Team and the CCTV centre based in Centro House which includes additional requirements as part of the drive to utilise this facility across the districts.

Passenger Information £5.2m Passenger information expenditure relates to providing real time information across the network; customer information at bus stops, bus stations, on line, and includes the customer services teams and telephone support. This is provided in conjunction with the operators as part of the network commitments, which also includes a number of promotional campaigns throughout the year.

Transport Support £3.2m This covers Head office Costs of Summer Lane and the provision of ICT, Legal, Procurement, Health and Safety, Equalities, Programme Management, Finance, Human Resources, Business Management and general business infrastructure and support.

Finance Charges £23.1m Finance costs relate to pension, leasing and scheme development costs along with historic borrowing and capital financing costs. The deregulated pension costs relate to the pension commitments arising from deregulation in 1986, when a significant number of employees transferred from the Transport Authority to Travel West Midlands, but their pension rights accrued to that date remained an obligation of the Passenger Transport Executive.

Policy and Strategy and Elected Members £1.9m Cost relating to the Policy and Strategy team and Elected members.

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6.0 2016/17 Transport Delivery Capital Investment Programme

6.1 The previously approved 2016/17 Transport Delivery Capital Investment Programme is summarised below: 2016/17 Transport Delivery Capital Budget 2016 / 2017 BUDGET £000

MAJOR SCHEMES A45 Sprint 276 Hagley Road Sprint 432 Longbridge Connectivity Package 250 Managing Short Trips 2,967 Metro Birmingham Eastside Extension 2,976 Metro Catenary Free 158 Metro Centenary Square Extension 6,561 Metro East Birmingham to Solihull Extension 1,500 Metro Edgbaston Extension 8,087 Metro Wolverhampton City Centre Extension 3,846 STRATEGIC ECONOMIC PLAN SCHEMES TOTAL 27,053 Metro Wednesbury to Brierley Hill Extension 1,500 Birmingham City Centre Metro Extension 4,493 BBAF Highway Works 283 MAJOR TOTAL 6,276

MAJOR SCHEMES SUB TOTAL 33,329 MINOR SCHEMES Coventry and Walsall Bus Station Safety Measures 210 Metro Line One CCTV Replacement 38 Network Wide Bus Station Refurbishment Phase 1 168 Network Wide CCTV Refresh and Installation (inc APNR) 640 Network Wide P and R Resurfacing Programme 571 Network Wide Park and Ride Upgrades (Cycle Facilities Height Restrictors) 55 Network Wide Rail RTI- Life Expired Replacements 27 North Walsall Cutting 431 North Walsall Cutting and Stourbridge Junction Structural Improvements 101 Sale of Land at Colliery and Earlsmead Road 8 Shelter Infrastructure (Replacement of Time Expired Stock) 148 ASSET MANAGEMENT TOTAL 2,397 Dorridge and Solihull CCTV Feeds 9 CCTV TOTAL 9 Interconnect development 100 INFORMATION & MAPPING TOTAL 100 Metro Line One Upgrade 250 Tram Wifi Ground Infrastructure Improvements 100 METRO TOTAL 350 Bradley Lane P and R Extension 739 Bus Priority and Shelters Pre Sprint 40 DfT Clean Bus Technology 486 Dudley Bus Station Development 200 Network Wide Park and Ride Expansion Developments -Phase 2 140 Park and Ride Expansion Developments 20 Sale of Land at Colliery and Earlsmead Road 8 Solihull Station Upgrade and Connectivity Improvements 12 Walsall Town Centre Interchange Feasibility Study 11 PROJECT DEVELOPMENT TOTAL 1,656 Centro Asset Management System 148 ICT- Infrastructure Storage Upgrade 35 ICT Replacement Meru Wifi System 25 ICT- Resource Booking System 30 ICT Rolling Programme 20 ICT Service Desk 20 SYSTEMS ARCHITECTURE TOTAL 278 Network Wide Swift Procurement 152 Network Wide Swift Vending 50 TBT Birmingham City Centre Shelter Design Optimisation 215 TBT Highway Scheme Development (Bus reliability and punctuality) 65 TBT Lode Lane Bus Lane Contribution 450 TBT Network Wide RTI Programme 42 TBT North Birmingham Reliability Measures 13 TBT Platinum Route RTI Equipment Upgrades 184 TBT Wolverhampton City Centre Shelters 42 TBT TOTAL 1,213 Bescot Stadium P and R Improvements 30 Network Wide Cycling Programme Phase 1 14 Network Wide P and R Lighting Enhancement 170 Network Wide Rail Smart Ticketing 41 Network Wide TRT Integration Improvements Masterplan 30 TRT TOTAL 285

MINOR SCHEMES SUB TOTAL 6,288 TOTAL TRANSPORT DELIVERY CAPITAL PROGRAMME 39,617

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6.2 The approved overall programme is fully funded from direct grants, devolved transport funds and approved Transport borrowing as follows:

Transport Delivery Capital Programme Funding 2016/17 £m

Government Devolved Transport 9,567 Enterprise Zone 4,161 Local Growth Fund 16,135 Prudential Borrowing 7,197 Other 2,557 Total 39,617

6.3 The Transport Delivery Capital Investment programme includes majors (over £5 million) where the delivery of initiatives such as Wolverhampton Interchange, Metro Extensions for Edgbaston, Birmingham Eastside Extension, East Birmingham to Solihull and Wednesbury to Brierley Hill and Sprint will continue. Also shown is the minor works programme which is funded through the Integrated Transport Block to ensure the existing public transport asset base remains accessible and available, whilst unlocking private sector funding and investing in new facilities including park and ride.

7.0 Financial Monitoring and Reporting

7.1 Financial monitoring information will be available monthly and will reported for all Combined Authority Budgets to relevant Combined Authority Boards.

8.0 Combined Authority Tax Status and Audit

8.1 For information HMRC Confirmation has been secured as follows in relation to the Combined Authority:

 West Midlands Combined Authority has been approved as an exempt body for Corporation Tax, Income Tax and Capital Gains Tax  The Transfer of any assets from the PTE and ITA will be deemed to be for a consideration such that no gain or loss will accrue to the PTE  The transfer of all obligations and assets will be treated as outside scope for VAT  The existing VAT reference can simply transfer to the new body  Existing VAT Options to Tax will be replicated  The agreement to the interim VAT Recovery position of West Midlands Combined Authority from its effective date to the date of the Treasury Order (S33) inclusion in Statute book

8.2 No formal response has yet been received from the Stamp Duty Land Tax Office although verbal assurance has been given that we qualify for the relief. Contact with HMRC in relation to Stamp Duty was however for assurance only rather than a legal requirement. SDLT is a self assessment basis and the relief is deemed to be applicable as the re-organisation must be under statutory provision and all parties must be public bodies.

8.3 In terms of Audit, Combined authorities are listed as bodies subject to audit under schedule 2 of the Local Audit and Accountability Act 2014. Under provisions in this Act, the Secretary Page 263 Page 11 of 12 [NOT PROTECTIVELY MARKED]

of State for Communities and Local Government has delegated certain functions previously delivered by the Audit Commission, including appointing auditors, to Public Sector Audit Appointments (PSAA) for the length of the current audit contracts. PSAA will therefore appoint the auditor for 2016/17 and 2017/18 for the CA once the Order establishing the new authority has been made. This will be done in consulation with the CA and the PSAA Board must approve the appointment following consultation. The nearest Board meeting following formal establishment of the combined authority would be the one in early September.

9.0 Financial implications

9.1 These are included in the body of the report

10.0 Legal implications

10.1 This reports presents a fully funded and balanced Revenue Budget and Programmes as required under local Authority regulations.

11.0 Equalities implications

11.1 There are no Equalities Implications

Page 264 Page 12 of 12 (PUBLIC) Agenda Item 5.2

Board Meeting

Date Friday 10 June 2016 Report title 2016-2017 Combined Authority Treasury Management Strategy Accountable Chief Jan Britton, Chief Operating Officer to the Combined Authority Executive Tel 0121 569 3501 Email [email protected]

Accountable James Aspinall, Section 151 Officer to the Combined Authority Employee Email [email protected] Tel 0121 214 7690

Report to be/has been West Midlands Finance Directors 26 May 16 considered by WMCA Management Board 26 May 16

Recommendation(s) for action or decision:

The Combined Authority Board is recommended to:

Approve:

1. The Minimum Revenue Provision (MRP) Statement set out in Section 10.

2. Delegate authority to the West Midlands Combined Authority Section 151 Officer to undertake borrowing in accordance with this Strategy.

Note and Endorse:

3. The West Midlands Combined Authority Treasury Management and Investment Strategy for 2016-2017 as previously approved by the ITA now updated for the actual outturn as at 31 March 16 and the planned West Midlands Combined Authority Investment Programme.

4. The prudential and treasury management indicators and limits described in section 12 and as detailed in Appendix 2.

Page 265 (PUBLIC) Agenda Item 5.2

1.0 Purpose

1.1 The report outlines the West Midlands Combined Authority’s Treasury Management and Investment Strategy for 2016-2017.

1.2 It sets out the approved prudential and treasury management indicators for the period to 31 March 2019 and sets out the expected treasury operations for this period.

2.0 Impact on delivery of the Strategic Transport Plan

The Treasury Management Strategy details the expected activities of the treasury function in the forthcoming year 2016-2017. The publication of the strategy is a statutory requirement.

3.0 Main Principles of Treasury Management

3.1 The overall aim of the Treasury Management Policy is to manage the Authority’s cash resources so that sufficient money is available to deliver its services whilst at the same time minimising the costs of debt and maximising investment returns taking into account an acceptable level of risk.

3.2 No treasury management activity is without risk. The successful identification, monitoring and control of risk are integral elements to treasury management activities and include credit and counterparty risk, liquidity / market or interest rate risk, refinancing risk, and legal & regulatory risk. In addition future stability and predictability are also important considerations to be assessed.

In summary the Combined Authority’s Policy objectives are:-

3.2.1 Borrowing:

 To maintain adequate liquidity

 To manage revenue costs at an appropriate level of risk.

 To undertake funding in any year at the best rates available, taking into account existing commitments and future needs

 To manage the total debt maturity profile to ensure a fairly even spread of future repayments

 To review actively, opportunities to redeem (i.e. repay early) and reschedule debt (i.e. replace one debt with another) as interest rates change, to reduce revenue costs

Page 266 (PUBLIC) Agenda Item 5.2

3.2.2 Investment:

The fundamental principles governing the Combined Authority’s investment criteria are the security of its investments, taking into account investment return. The Combined Authority will ensure:

 Maintenance of capital security,

 Maintenance of adequate liquidity

 Maximum revenue benefit subject to appropriate risk

3.3 As in all Local Authorities the Authority is required to abide by the Prudential Code and The Chartered Institute of Public Finance and Accountancy’s Code of Practice for Treasury Management (The CIPFA TM Code of Practice (revised 2012)). The guidance arising from these codes has been incorporated within this report

3.4 All treasury activity will comply with relevant statute, guidance and accounting standards.

4.0 Treasury Management

4.1 The guidance to the CIPFA TM Code of Practice (2012) and the Prudential Code (revised November 2011) highlighted the need to reinforce organisational reporting, clarity and segregation of responsibilities as well as counterparty credit ratings.

4.2 The key implications were as follows;

Minimum Reporting Requirements

The Combined Authority will receive a minimum of three reports throughout the year as follows;

 An annual report on the strategy and plan to be pursued in the coming year

 A mid-year review

 An annual report on the performance of the treasury management activities

In addition to the above, the Prudential Indicators are currently included within the regular Financial Monitoring Reports to Committee and these will continue to be included and reported during the year.

Scrutiny and Approval

The Combined Authority will approve any changes required to the Treasury Management Strategy due to changes resulting from regulatory, economic, market or other factors affecting its treasury management activities, following

Page 267 (PUBLIC) Agenda Item 5.2 the approval by a responsible member body. This is currently the Section 151 Officer to Combined Authority in conjunction with the Combined Authority Head of Finance and other West Midlands Combined Authority officers responsible for Treasury Management activities (referred to as Treasury Management Group).

Officer and Member Training

The Section 151 Officer to Combined Authority must ensure that appropriate training is available so that those responsible for treasury management can effectively discharge their duties. This includes those responsible for governance to ensure that they have the necessary skills to complete their role effectively.

5. 0 Treasury Management Strategy

5.1 The Authority’s treasury activities are regulated by statutory requirements. The CIPFA Code of Practice for Treasury Management in Public Services (the TM Code of Practice), and the Prudential Code require local authorities to determine the Treasury Management Strategy Statement (TMSS) and the Prudential Indicators (PI’s) on an annual basis. The TMSS also includes the Annual Investment Strategy (AIS) that is a requirement of the Department for Communities Local Government (CLG’s) Investment Guidance.

5.3 The Combined Authority are supported by professional advisors Arlingclose limited in order to ensure that up to date market advice and information on the most appropriate investment / borrowing options is obtained. This arrangement is jointly funded between the Combined Authority and Coventry City Council who also use Arlingclose.

6.0 External Climate

6.1 The UK economy slowed in 2015 with GDP growth falling to 2.3% from a robust 3.0% the year before.

6.2 CPI inflation hovered around 0.0% through 2015 with deflationary spells in April, September and October. The prolonged spell of low inflation was attributed to the continued collapse in the price of oil, the appreciation of sterling since 2013 and weaker than anticipated wage growth resulting in subdued unit labour costs. CPI picked up to 0.3% year on year in February, but this was still well below the Bank of England’s 2% inflation target.

6.3 The labour market continued to improve through 2015 and in quarter 1 2016, the latest figures show the employment rate at 74.1% (the highest rate since comparable records began in 1971) and the unemployment rate at a 12 year low of 5.1%. Wage growth has however remained modest at around 2.2% excluding bonuses.

6.4 The slowdown in the Chinese economy became the largest threat to the South East Asian region, particularly on economies with a large trade dependency on China and also to prospects for global growth as a whole.

Page 268 (PUBLIC) Agenda Item 5.2

6.5 As the global economy entered 2016 there was high uncertainty about growth, the outcome of the US presidential election and the consequences of June’s referendum on whether the UK is to remain in the EU.

6.6 The Bank of England’s made no change to policy, maintaining the Bank Rate at 0.5% and Quantitative Easing at £375bn. In its Inflation Reports and monthly monetary policy meeting minutes, the Bank was at pains to stress and reiterate that when interest rates do begin to rise they were expected to do so more gradually and to a lower level than in recent cycles.

7.0 Internal Climate

7.1 As at 31st March 2016, the Integrated Transport Authority had £163m of borrowing (excluding inherited debt administered by Dudley MBC) and £28.15m of investments which relate to the WMITA legacy financing.

7.2 The underlying need to borrow for capital purposes is measured by the Capital Financing Requirement (CFR), while usable reserves and working capital are the underlying resources available for investment. The Combined Authority’s strategy will be to maintain borrowing below the underlying levels by minimising cash investments at the level needed to provide sufficient liquidity; known as internal borrowing.

7.3 The Authority is able to borrow funds in excess of the current level of its CFR up to the projected level. The Authority is likely to only borrow in advance of need if it is felt that the benefits of borrowing at interest rates now compared to where they are expected to be in the future, outweighs the current cost and risks associated with investing the proceeds until the borrowing was actually required.

7.4 The forecasted movement in the CFR is one of the Prudential Indicators (PI’s) and is covered in Appendix 2 paragraph 4.5.

8.0 Interest Rates

8.1 At the start of 2016 the Base Rate stood at 0.50%, and no change has been made to the base rate since 2009. The Authority’s treasury management advisor Arlingclose forecasts the first rise in official interest rates in the latter half of 2016 and a gradual pace of increases thereafter. Arlingclose forecasts show the level of the Bank Rate post-crisis to range between 0.5% and 2.0% by March 2019.

8.2 Longer term borrowing rates, such as those obtainable from the PWLB are currently relatively low but are expected to increase marginally during 2016- 2017. The interest rates offered by PWLB on 31st March 2016 are shown in table 1 below, along with the economic and interest rate forecast.

Page 269 (PUBLIC) Agenda Item 5.2 Table 1 - PWLB Rates as at 31st March 2016

Annual Interest Rate % Maturity Annuity Loan Loan 1 Year 1.32 N/A 1 - 2 Years 1.36 - 1.40 1.34 2 - 5 Years 1.46 - 1.81 1.36 - 1.49 5 - 10 Years 1.88 - 2.47 1.52 - 1.85 10- 20 Years 2.53 - 3.22 1.89 - 2.56 20 - 30 Years 3.24 - 3.31 2.59 - 3.06 30 - 40 Years 3.31 - 3.17 3.08 - 3.30 40 - 50 Years 3.17 - 3.13 3.31 - 3.31 In excess of 50 Years 3.13 3.31

8.3 Based on current estimated levels of Capital Expenditure it is likely that borrowing of up to £29.7m (see table, paragraph 8.7) of project related borrowing may be required between 2016-2017 and 2018-2019 to fund the Transport Delivery Programme and year 1 of the Investment Programme. Due to the uncertainty around borrowing powers, years 2 and 3 will be reflected in the future strategy.

8.4 The current debt position inherited from WMITA as at 31 May 2016, (excluding debt administered by Dudley MBC) is £163.01m. This is made up of a number of loans, details of which are shown in Table 2, with the maturity profile highlighted in the corresponding graph. Table 2 - Borrowing as at 31 January 2016

Loan Maturity Interest Rate Annual Interest Institution Loan Type Loan Value (£) Loan Start Date Date (%) Charge (£) PWLB Maturity 5,000,000 21 Dec 1995 21 Dec 2016 7.875 393,750 PWLB Maturity 5,000,000 21 Dec 1995 21 Dec 2017 7.875 393,750 PWLB Maturity 1,067,916 20 Sep 1993 30 Apr 2018 7.875 84,098 PWLB Maturity 21,934,712 11 Jul 1996 11 Jul 2018 8.375 1,837,032 PWLB Maturity 5,000,000 21 Dec 1995 21 Dec 2019 7.875 393,750 PWLB Maturity 5,000,000 21 Dec 1995 21 Dec 2020 7.875 393,750 PWLB Maturity 10,000,000 15 Jul 2029 15 Jul 2029 3.910 391,000 PWLB Maturity 13,000,000 16 Jun 2004 21 Jun 2034 4.950 643,500 PWLB Maturity 5,000,000 23 Dec 2009 23 Jun 2039 4.340 217,000 PWLB Annuity 9,631,768 15 Jul 2014 15 Jul 2039 3.870 379,966 PWLB Maturity 1,067,916 21 Sep 1993 30 Apr 2043 7.875 84,098 PWLB Maturity 9,000,000 02 May 2006 06 Sep 2045 4.450 400,500 PWLB Maturity 7,000,000 02 Oct 2006 06 Mar 2052 4.100 287,000 PWLB Maturity 4,000,000 06 Nov 2006 30 Apr 2052 4.050 162,000 PWLB Maturity 6,000,000 23 May 2007 22 Nov 2052 4.600 276,000 PWLB Maturity 4,800,000 06 Nov 2006 30 Apr 2053 4.050 194,400 PWLB Maturity 4,583,380 23 May 2007 22 May 2053 4.600 210,835 PWLB Maturity 7,000,000 22 May 1997 22 May 2057 7.375 516,250 PWLB Maturity 4,300,000 06 Mar 1998 06 Mar 2058 6.000 258,000 PWLB Maturity 4,300,000 06 Mar 1998 06 Mar 2058 6.125 263,375 PWLB Maturity 16,000,000 30 Apr 1998 30 Apr 2058 5.625 900,000 PWLB Annuity 4,325,034 23 Dec 2009 23 Dec 2059 4.340 188,764 Barclays LOBO 10,000,000 23 Jun 2005 23 Jun 2055 4.030 401,896 Totals 163,010,726 9,270,714

The average rate of interest is 5.69% reflecting the prevailing fixed interest at the time the borrowing was taken out.

Page 270 (PUBLIC) Agenda Item 5.2

8.5 The Authority will review the portfolio for potential early repayment / debt rescheduling benefits; however the penalty costs for early redemption are likely to make this too expensive to undertake.

8.6 The main borrowing sources likely to be used by the Combined Authority are:

 The Public Works Loans Board (PWLB) and its successor body which is in effect, the government. Although loans may be obtained at variable rates of interest they are normally at fixed rates.

 Money Market - these are loans obtained from financial institutions, such as banks. These have generally been less competitive than PWLB loans. The Authority holds a £10m LOBO loan where the lender has the option to propose an increase in the interest rate at set dates, following which the Authority has the option to either accept the new rate or to repay the loan at no additional cost. The full £10m has options during 2016-2017 and although the Authority understands that lenders are unlikely to exercise their options in the current low interest rate environment, there remains an element of refinancing risk. The Authority will take the option to repay LOBO loans at no cost if it has the opportunity to do so.

 Other Local Authorities – these are an important source of short term borrowing.

 European Investment Bank (EIB) – discussions with EIB are taking place regarding a major loan facility for the Combined Authority. This is likely to be significantly cheaper than PWLB.

 In conjunction with advice from our treasury advisors, Arlingclose Ltd, the Authority will keep under review additional borrowing sources.

- Commercial banks

- Capital markets (stock issues, commercial paper and bills)

Page 271 (PUBLIC) Agenda Item 5.2 - Structured finance

- Leasing

Capital Expenditure Estimates

8.7 The forecast Capital expenditure funding requirement to 2018-2019 is summarised in table 3 below. This represents the forecast borrowing requirement and therefore for prudent reasons this has been used throughout this report.

2015-16 2016-17 2017-18 2018-19 Actual Forecast Forecast Forecast

BASE PROGRAMME £50,222,450 £173,442,401 £42,515,641 £34,971,930

FUNDING

Local Growth Fund £14,178,885 £15,214,281 £786,970 £0

Enterprise Zone £2,271,063 £4,446,054 £5,130,884 £157,585

DFT - Integrated Transport Block and Other Grants £12,214,962 £27,191,247 £15,948,187 £23,219,401

3rd Party £842,328 £2,530,000 £4,759,279 £516,945

Productivity Fund £0 £36,200,000 £0 £0

Revenue £204,097 £2,452,203 £0 £0

Local Authority Borrowing (Non Transport) £0 £65,000,000 £0 £0

HS2 £0 £2,700,000 £0 £0

European Union £11,613 £680,000 £0 £0

TOTAL FUNDING AVAILABLE £29,722,948 £156,413,785 £26,625,320 £23,893,931

BALANCE TO BE FUNDED BY WMCA £20,499,502 £17,028,616 £15,890,321 £11,078,000

WMCA FUNDING

BORROWING £13,343,502 £12,363,977 £11,225,682 £6,263,361

USE OF MRP £7,156,000 £4,664,639 £4,664,639 £4,814,639

TOTAL WMCA FUNDING £20,499,502 £17,028,616 £15,890,321 £11,078,000

8.8 The table illustrates that using internal funds and the cash investments, no actual borrowing was undertaken in 2015-2016 (compared to a theoretical requirement of £13.3m). It is expected there will be a need to borrow an additional £12.4m in 2016-2017. The borrowing term will depend upon the predicted capital and investment programmes thereafter, but capital repayments of £5m are due in 2016-2017 and 2017-2018, with £23m due in 2018-2019 which will have to be rescheduled.

8.9 Borrowing in advance of need: The Combined Authority has some flexibility to borrow funds in year for use in future years. The Section 151 Officer to the West Midlands Combined Authority may do this under delegated power where, for instance, a sharp rise in interest rates is expected, and so borrowing early at fixed rates will be economically beneficial to meet budgetary constraints. Whilst the Section 151 Officer to West Midlands Combined Authority will adopt a cautious approach to any such borrowing, where there is a clear business case for doing so borrowing may be undertaken to fund the approved capital programme or to fund future debt maturities. Timing and actual borrowing levels undertaken in year will depend on cash flows and working capital requirements.

Page 272 (PUBLIC) Agenda Item 5.2 8.10 Risks associated with any advance borrowing activity will be subject to appraisals in advance and subsequent reporting through the mid-year or annual reporting.

8.11 In 2016-2017, it is proposed that the Combined Authority would be likely to borrow at least some of its emerging borrowing needs on a short term or variable rate basis to take advantage of current low short term rates. This strategy and its implementation will remain flexible to adapt to changing risks and circumstances. The strategy will be kept under review by the Section 151 Officer to the West Midlands Combined Authority and reported through regular monitoring reports.

9.0 Investments

9.1 Base rates have remained at 0.50% since 2009 and therefore, returns on existing investments have been low.

9.2 In relation to the WMITA inherited position Investment returns to March 2016 were very low with rates ranging from 0.3% to 0.8%, depending upon the individual institutions need for cash. There has been very little movement on investments ranging from 3 months to 12 months hence during 2015-2016 all surplus cash was required to be invested in in short-term unsecured bank deposits.

9.3 Given the increasing risk and continued low returns from short-term unsecured bank investments, the Authority aims to diversify into more secure and / or higher yielding asset classes during 2016-2017 where prudently able to do so.

10.0 Minimum Revenue Provision

10.1 The Combined Authority is required to provide for the repayment of long term capital programme borrowing through a revenue charge (the Minimum Revenue Provision or MRP). Capital Finance Regulations require the approval of an MRP Statement setting out the authority's approach. The proposed MRP statement is:

 “For capital expenditure incurred before 1st April 2009 or which in future will be financed by supported borrowing, the Combined Authority will follow previous practice, with MRP broadly based as being 2% of the underlying Capital Financing Requirement.

 From 1st April 2009 for all capital expenditure met from unsupported or prudential borrowing, MRP will be based on the estimated life of the asset or a depreciation calculation.”

 For the existing Transport Delivery Programme MRP will continue to commence in the year after the scheme becomes operational.

 In relation to the Combined Authority wider Devolution Investment Programme MRP will be charged over the 30 years to 2046-2047 in order to repay all the Investment Plan borrowing.

Page 273 (PUBLIC) Agenda Item 5.2

11.0 Use of Reserves

11.1 The Authority has minimal reserves set aside for funding the capital programme, however the timing of the application of these reserves will depend on the overall requirements of the capital programme and borrowing decisions

12.0 Prudential Code

12.1 The Local Government Act 2003 and associated CIPFA Prudential Code for Capital Finance in Local Authorities has set the framework for the new local government capital finance system. From the 2004-2005 financial year, Authorities can borrow whatever sums they see fit to support their capital programmes, subject to them being able to afford the revenue costs. This is a fundamental feature of the current system and requires that the Authority sets and monitors a number of Prudential Indicators (PIs) relating to capital, affordability, external debt and treasury management.

12.2 These indicators will be used by the Treasury Management Group to monitor against the CIPFA requirements and can be split into the following categories:

 Affordability

 Prudence

 Capital expenditure, external debt and treasury management.

12.3 Appendix 2 details the Prudential and Treasury Management Indicators for the period.

13.0 West Midlands Combined Authority – Wider Devolution Investment Programme

13.1 The West Midlands Combined Authority will be responsible for consolidating and reporting the progress of the Devolution Deal from central government in addition to undertaking the necessary borrowing to facilitate scheme delivery.

13.2 The Devolution deal enables the Combined Authority to create an investment fund of over £1 billion through a 30 year revenue stream and locally raised finance. Delivery of the devolution deal will commence from 2016-2017. Following this, an incoming Mayor would have the option, on the basis of support from business, to raise up a business rate supplement to fund the programme of works.

13.3 The West Midlands Combined Authority will be the recipient of the 30 year revenue grant, £36.5m pa, upon which, the borrowing required to fund the investment is secured. During 2016-2017, however, the CA is only expected to have borrowing powers related to Transport.

Page 274 (PUBLIC) Agenda Item 5.2 13.4 A detailed financial model has been assembled which shows that the investment from Government, together with supplementary funding both generated by the Combined Authority and secured at a local level by project sponsors (in most cases, Local Authorities) is sufficient to fund the overall programme of works over a 30 year period.

13.5 As detailed within this strategy, any borrowing undertaken by the West Midlands Combined Authority will be based on the availability of cash resources available to the Authority at the time so as to avoid un-necessary interest charges.

13.6 The 2016-2017 current estimated programme spend is shown below along with the assumed funding:

WEST MIDLANDS COMBINED AUTHORITY: INVESTMENT PROGRAMME

Financial Year Ending March 2017 Funded By (£000) Current Local Infrastructure Programme Spend estimate WMCA European 3rd Party/ Enterprise High Speed CIF Fund Growth £000 Devolution Union Other Zone 2 Fund

HS2 UKC Interchange 900 900 UKC Infrastructure Package 2,400 1,600 700 100 HS2 Curzon Street Masterplan 500 500 HS2 Wider Connectivity Package 910 800 110 HS2 Curzon (Bull St to Curzon / Adderley) 2,200 2,200 HS2 Metro Birmingham Interchange 1,500 1,500 Brierley Hill Metro 1,200 1,200 HS2 Programme Governance 600 600 High Speed Supply Chain 36,200 36,200 National College - Development Team 70 70

HS2 Growth Strategy 46,480 3,970 - 700 36,410 500 2,200 2,700

Coventry UK Central Plus 440 440 Coventry City Centre Regeneration 780 780 Collective Investment Fund 35,000 35,000 Land Reclamation Fund 40,000 40,000 Business Innovation 25,000 25,000

Combined Authority Total 147,700 70,190 35,000 700 36,410 500 2,200 2,700

13.7 As set out in the 2016-2017 Budget report, also to this meeting, the projected borrowing requirement for the programme in year is £70.19m, however, as the CA is expected only to have borrowing powers for transport during 2016-2017, the split of the Transport and Non-Transport requirement is shown below.

Page 275 (PUBLIC) Agenda Item 5.2 Borrowing Transport Non Transport WMCA Financing Budget 2016/17 £000 £000 £000

HS2 UKC Interchange 900 - 900 UKC Infrastructure Package 1,600 1,600 - HS2 Curzon Street Masterplan - - - HS2 Wider Connectivity Package 800 800 - HS2 Curzon (Bull St to Curzon / Adderley) - - - HS2 Metro Birmingham Interchange - - - Brierley Hill Metro - - - HS2 Programme Governance 600 - 600 High Speed Supply Chain - - - National College - Development Team 70 - 70

HS2 Growth Strategy 3,970 2,400 1,570

Coventry UK Central Plus 440 440 - Coventry City Centre Regeneration 780 - 780 WM Revolving Housing Fund - - - Collective Investment Fund - - - Land Reclamation Fund 40,000 - 40,000 Business Innovation 25,000 - 25,000 EZ Expansion (excluding Curzon Street) - - -

Combined Authority Total 70,190 2,840 67,350

13.8 The Combined Authority is therefore expected to borrow a projected £2.84m in 2016-2017 to finance the Transport element of this programme.

13.9 Excluding the Land Reclamation and Business Innovation Programmes, a balance of £2.35m non-transport borrowing is also required in year and this is small enough to be funded direct from the Devolution Grant itself in year without borrowing. This approach eliminates the need for complex inte- authority borrowing arrangements for this smaller requirement during the interim period when the CA does not have the necessary non-transport borrowing powers.

13.10 In relation to the Land Reclamation and Business Innovation Funds, until non- transport powers are granted to the Combined Authority, it is proposed that the lead Authority for each undertakes the borrowing and the Combined Authority reimburse in full via an interim agreement from the £36.5m Devolution Grant as financing costs. This would result in the same financial impact for the Combined Authority.

13.11 All 2016-2017 spend will however be incurred at risk until finalisation of the Devolution Agreement.

14.0 Monitoring

14.1 Officers will monitor the Performance Indicators on a monthly basis, in particular the Authorised Limit, before any new borrowing is carried out. The monitoring of the Performance Indicators will be reported in the Authority's mid-year Treasury Management Monitoring Report, Financial Monitoring reports and also the out-turn report for the year.

15.0 Financial Implications

15.1 These are included in the body of this report

Page 276 (PUBLIC) Agenda Item 5.2

16.0 Legal Implications

16.1 Legal requirements are referred to in the body of this report.

17.0 Equalities Implications

17.1 There are no Equalities Implications

Page 277 [NOT PROTECTIVELY MARKED]

APPENDIX 1

WEST MIDLANDS COMBINED AUTHORITY INVESTMENT STRATEGY AND POLICY

Investment Strategy

1.1 The Authority holds invested funds representing income received in advance of expenditure plus balances and reserves held. Due to planned capital investment in 2016- 2017 against the ITA legacy Programme, a reduction in investment balances will occur but this will be off-set by additional grant received as part of the West Midlands Combined Authority Investment Programme / Devolution Deal.

1.2 Objectives: Both the CIPFA Code and the CLG Guidance require the Authority to invest its funds prudently, and to have regard to the security and liquidity of its investments before seeking the highest rate of return, or yield. The Authority’s objective when investing money is to strike an appropriate balance between risk and return, minimising the risk of incurring losses from defaults and the risk receiving unsuitably low investment income.

1.3 Strategy: Given the increasing risk and continued low returns from short-term unsecured bank investments, the Authority aims to diversify into more secure and/or higher yielding asset classes during 2016-2017. The Authorities surplus cash is currently invested in short-term unsecured bank deposits. This diversification will therefore represent a substantial change in strategy over the coming year.

1.4 The proposed Investment Policy is:

1.5 Approved Counterparties: The Authority may invest its surplus funds with any of the counterparty types in table 2 below, subject to the cash limits (per counterparty) and the time limits shown.

Table 1: Approved Investment Counterparties and Limits

Table 1 : Approved Investment Counterparties and Limits

Banks and Building Societies Credit Rating of Institution or Product Government Corporates Unsecured Secured

£ Unlimited UK Govt N/A N/A N/A 50 Yrs Max

AAA £50m (5 Yrs) Max £10m (2 Yrs) Max

AA+ £5m (1 Yr) Max AA £10m (3 Yrs) Max £4m (12 Months AA- Max) £20m (3 Yrs Max) A+

A £1m (1 Yr) Max

A- £5m (2yrs) Max

BBB+ £4m (100 Days) £5m (2 Yrs Max)

BBB OR BBB- £1m (Call) N/A N/A

Pooled Funds & Money Market £10m Per Fund

Page 278 [NOT PROTECTIVELY MARKED]

This table must be read in conjunction with the notes below:

1.6 Credit Rating: Investment decisions are made by reference to the lowest published long- term credit rating from any two from, Fitch, Moody’s or Standard & Poor’s. Where available, the credit rating relevant to the specific investment or class of investment is used, otherwise the counterparty credit rating is used.

1.7 Banks Unsecured: Accounts, deposits, certificates of deposit and senior unsecured bonds with banks and building societies, other than multilateral development banks. These investments are subject to the risk of credit loss via a bail-in should the regulator determine that the bank is failing or likely to fail. Unsecured investment with banks rated BBB or BBB- are restricted to overnight deposits at the Authority’s current account bank (HSBC) should the rating be reduced.

1.8 Banks Secured: Covered bonds, reverse repurchase agreements and other collateralised arrangements with banks and building societies. These investments are secured on the bank’s assets, which limits the potential losses in the unlikely event of insolvency, and means that they are exempt from bail-in. Where there is no investment specific credit rating, but the collateral upon which the investment is secured has a credit rating, the highest of the collateral credit rating and the counterparty credit rating will be used to determine cash and time limits. The combined secured and unsecured investments in any one bank will not exceed the cash limit for secured investments.

1.9 Government: Loans, bonds and bills issued or guaranteed by national governments, regional and local authorities and multilateral development banks. These investments are not subject to bail-in, and there is an insignificant risk of insolvency. Investments with the UK Central Government may be made in unlimited amounts for up to 50 years.

1.10 Corporates: Loans, bonds and commercial paper issued by companies other than banks and registered providers. These investments are not subject to bail-in, but are exposed to the risk of the company going insolvent. Loans to unrated companies will only be made as part of a diversified pool in order to spread the risk widely.

1.11 Pooled Funds: Shares in diversified investment vehicles consisting of any of the above investment types, plus equity shares and property. These funds have the advantage of providing wide diversification of investment risks, coupled with the services of a professional fund manager in return for a fee. Money Market Funds that offer same-day liquidity and aim for a constant net asset value will be used as an alternative to instant access bank accounts, while pooled funds whose value changes with market prices and/or have a notice period will be used for longer investment periods.

1.12 Bond, equity and property funds offer enhanced returns over the longer term, but are more volatile in the short term. These allow the Authority to diversify into asset classes other than cash without the need to own and manage the underlying investments. Because these funds have no defined maturity date, but are available for withdrawal after a notice period, their performance and continued suitability in meeting the Authority’s investment objectives will be monitored regularly.

1.13 Risk Assessment and Credit Ratings: Credit ratings are obtained and monitored by the Authority’s treasury advisers, who will notify changes in ratings as they occur. Where an Page 279 [NOT PROTECTIVELY MARKED]

entity has its credit rating downgraded so that it fails to meet the approved investment criteria then:

• no new investments will be made,

• any existing investments that can be recalled or sold at no cost will be, and

• full consideration will be given to the recall or sale of all other existing investments with the affected counterparty.

1.14 Where a credit rating agency announces that a credit rating is on review for possible downgrade (also known as “rating watch negative” or “credit watch negative”) so that it may fall below the approved rating criteria, then only investments that can be withdrawn [on the next working day] will be made with that organisation until the outcome of the review is announced. This policy will not apply to negative outlooks, which indicate a long-term direction of travel rather than an imminent change of rating.

1.15 Other Information on the Security of Investments: The Authority understands that credit ratings are good, but not perfect, predictors of investment default. Full regard will therefore be given to other available information on the credit quality of the organisations, in which it invests, including credit default swap prices, financial statements, information on potential government support and reports in the quality financial press. No investments will be made with an organisation if there are substantive doubts about its credit quality, even though it may meet the credit rating criteria.

1.16 When deteriorating financial market conditions affect the creditworthiness of all organisations, as happened in 2008 and 2011, this is not generally reflected in credit ratings, but can be seen in other market measures. In these circumstances, the Authority will restrict its investments to those organisations of higher credit quality and reduce the maximum duration of its investments to maintain the required level of security. The extent of these restrictions will be in line with prevailing financial market conditions. If these restrictions mean that insufficient commercial organisations of high credit quality are available to invest the Authority’s cash balances, then the surplus will be deposited with the UK Government, via the Debt Management Office or invested in government treasury bills for example, or with other local authorities. This will cause a reduction in the level of investment income earned, but will protect the principal sum invested.

1.17 Specified Investments: The CLG Guidance defines specified investments as those:

 Denominated in pound sterling,  Due to be repaid within 12 months of arrangement,  Not defined as capital expenditure by legislation, and  Invested with one of: - The UK Government - A UK local authority, parish council or community council, or - A body or investment scheme of “high credit quality”.

1.18 The Authority defines “high credit quality” organisations and securities as those having a credit rating of BBB+ or higher that are domiciled in the UK or a foreign country with a Page 280 [NOT PROTECTIVELY MARKED]

sovereign rating of AA+ or higher. For money market funds and other pooled funds “high credit quality” is defined as those having a credit rating of A- or higher.

1.19 Non-specified Investments: Any investment not meeting the definition of a specified investment is classed as non-specified. The Authority does not intend to make any investments denominated in foreign currencies, nor any that are defined as capital expenditure by legislation, such as company shares. Non-specified investments will therefore be limited to long-term investments, i.e. those that are due to mature 12 months or longer from the date of arrangement, and investments with bodies and schemes not meeting the definition on high credit quality. Limits on non-specified investments are shown in table 2 below.

Table 2: Non-Specified Investment Limits

Cash Limit

Total Long Term Investments £8m Total Investments without credit rating or rated below BBB+ £4m Total non-specified investments £12m

Investment Limits:

1.20 To ensure that the Authorities reserves are not exposed in the case of a single default, deposits will be placed in secured investments where possible. All investments will be managed within the parameters detailed below in Table 3 and Table 2 above.

Table 3: Investment Limits

Cash Limit

Any single organisation, except the UK Central Government £10m each

UK Central Government Unlimited

Any group of organisations under the same ownership £10m per group

Any group of pooled funds under the same management £10m per manager

Negotiable instruments held in a broker's nominee account £20m per broker

Unsecured investments with Banks / Building Societies £40m in total

Money Market Funds £40m in total

APPENDIX 2

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WEST MIDLANDS COMBINED AUTHORITY PRUDENTIAL & TREASURY MANAGEMENT INDICATORS

1. Prudential Code

1.1 The Local Government Act 2003 and associated CIPFA Prudential Code for Capital Finance in Local Authorities have set the framework for the new local government capital finance system. From the 2004-2005 financial year, Authorities can borrow whatever sums they see fit to support their capital programmes, subject to them being able to afford the revenue costs. This is a fundamental feature of the new system and requires that the Authority sets and monitors a number of Prudential Indicators (PIs) relating to capital, affordability, external debt and treasury management.

1.2 The prudential indicators to be reported are split into the following categories:

 Affordability

 Prudence

 Capital expenditure, external debt and Treasury Management.

1.3 The following indicators take account of the ITA’s approved prudential indicators together with the effect of the Combined Authority’s new plans and finances for 2016- 2017. Years 2 and 3 of the indicators should be regarded as indicative only and are likely to be substantially reviewed in the Combined Authority’s future budgets to take account of its developing investment plans. The prudential limit in paragraph 4.12 and the operational boundary in 4.9 include significant allowance for additional prudential borrowing in the event that the Combined Authority requires this.

2. Affordability

2.1 The fundamental objective in the consideration of the affordability of the Authority’s capital plans is to ensure that the level of investment in capital assets proposed means that the total capital investment of the Authority remains within sustainable limits, and in particular to consider its impact on the levy. Affordability is ultimately determined by an acceptable levy increase.

2.2 Indicators should be provided for the forthcoming year and the following 2 years and should take into account all of the resources currently available and estimated for the future together with the totality of the Authority’s capital plans, revenue income and revenue expenditure forecasts.

2.3 The Authority is to estimate for the forthcoming financial year and the following 2 financial years the ratio of financing costs to net revenue stream.

2.4 Table 4 summarises the impact on the net financing ratio on net revenue Streams, which shows a range 9.72% to 8.96% over the strategy period.

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Table 4 - Ratio of Financing Costs to Net Revenue Stream

Actual Forecast Forecast Forecast

2015/16 2016/17 2017/18 2018/19

£000 £000 £000 £000

PWLB Interest Charges - Base 8,625 8,756 8,363 6,766

LOBO Interest Charges 403 403 403 403

Interest on new Project Related Borrowing 0 588 898 1,160 borrowing Debt Rescheduling 0 41 191 695

Inherited Debt Interest Charges 607 586 569 528

Total Interest Charges 9,635 10,374 10,424 9,552

Investment Income (142) (225) (225) (200)

MRP 7,156 4,665 4,665 4,815

Net Financing Costs 16,649 14,814 14,863 14,166

Transport Services Levy 131,400 124,830 123,042 121,619

Devoloution Grant 0 27,500 36,500 36,500

Ratio of net financing costs to net revenue streams 12.67% 9.72% 9.32% 8.96%

2.5 As detailed in Table 4, the annual interest cost is predicted to increase over the first 3 years due to borrowing to fund new infrastructure projects; after-which, between 2017- 2018 and 2018-2019, the annual interest charge is forecast to decrease by £0.083m following the replacement of historic debt (obtained at 8.375%, maturing in 2018/19) with debt obtained at a cheaper rate, subject to year 2 and 3 investment programme financing and funding strategy.

2.6 The overall net financing cost is further reduced from April 2016 following the revisions to the MRP charge approved by WMITA on 15th September 2015.

2.7 In terms of the ratio of financing costs against net revenue streams over the period however, this remains relatively constant at around 10.0% as these savings are being countered by assumptions regarding a declining Transport Levy.

2.8 Table 5 below shows the impact of the changing finance cost as a proportion of the annual income, with values ranging from favourable 0.10% to adverse 1.2% over the period. The main contributors influencing the change resulting from the revised MRP charge, the rescheduling of debt detailed above and borrowing for new projects.

Table 5 - Incremental impact of capital investment decisions

2015/16 2016/17 2017/18 2018/19 Actual Forecast Forecast Forecast £000 £000 £000 £000

Transport Levy 131,400 124,830 123,042 121,619

Devoloution Grant 0 27,500 36,500 36,500

Movement in financing cost 126 (1,835) 50 (697)

Levy and Transport Grant plus effect of capital investment decisions 131,526 150,495 159,592 157,422

Change in financing as a Percentage of Income 0.10% (1.20%) 0.03% (0.44%)

3. Prudence Page 283 [NOT PROTECTIVELY MARKED]

3.1 The prudential indicator in respect of external debt must be set and revised taking into account affordability. It is through this means that the objective of ensuring that external debt is kept within sustainable, prudent limits is addressed year on year.

3.2 Indicator Requirement – Gross Debt and the Capital Financing Requirement: In order to ensure that over the medium term debt will only be for a capital purpose, the Authority should ensure that gross debt does not, except in the short term, exceed the total of capital financing requirement in the preceding year plus the estimates of any additional capital financing requirement for the current and next two financial years.

3.3 The Combined Authority Plan – Based on the planned capital programme the gross borrowing requirement for the Authority over the next 3 years is calculated as follows:

Table 6 - Net Borrowing Requirement

2015/16 2016/17 2017/18 2018/19

Borrowing Position Actual Forecast Forecast Forecast

£000 £000 £000 £000

Borrowing at start 163,289 163,009 175,081 186,004

Loan Repayment (280) (5,291) (5,303) (23,317)

Project Related Borrowing* - 12,364 11,226 6,263 Forecast New Borrowing Debt Rescheduling - 5,000 5,000 23,003

Gross Borrowing 163,009 175,081 186,004 191,953

* 2015/16 Forecast borrowing funded from effective use of cash balances.

3.4 As detailed above, there is a requirement in the Code to ensure that the estimate for the CFR at the end of 2018-2019 is not exceeded by the gross debt estimate at the end of 2016-2017. This requirement seeks to ensure that over the medium term, debt will only be for a capital purpose.

3.5 The gross borrowing at the end of 2016-2017 totals £175m as shown above and is less than the CFR comparator detailed within the code of £213m Table 8).

4. Capital Expenditure, External Debt and Treasury Management.

4.1 The Authority is required to set and monitor against specified prudential indicators for capital expenditure, external debt and Treasury Management.

4.2 Indicator Requirement - The Authority make reasonable estimates of the total of capital expenditure that it plans to incur during the forthcoming financial year and at least the following 2 years.

4.3 West Midland Combined Authority Plan - The Capital and Investment Programmes and funding assumptions can be summarised as follows:

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Table 7 - Estimates of Capital Expenditure

2015-16 2016-17 2017-18 2018-19 Actual Forecast Forecast Forecast

CAPITAL PROGRAMME £50,222 £173,442 £42,516 £34,972 FUNDING Local Growth Fund £14,179 £15,214 £787 £0 Enterprise Zone £2,271 £4,446 £5,131 £158 DFT - Integrated Transport Block and Other Grants £12,215 £27,191 £15,948 £23,219 3rd Party £842 £2,530 £4,759 £517 National Stations Improvement Programme £0 £0 £0 £0 Revenue £204 £2,452 £0 £0 European Union £12 £680 £0 £0 Prudential Borrowing £13,344 £12,364 £11,226 £6,263 Productivity Fund £0 £36,200 £0 £0 Local Authority Borrowing (Non Transport) £0 £65,000 £0 £0 HS2 £0 £2,700 £0 £0 Available Resources £7,156 £4,665 £4,665 £4,815 TOTAL FUNDING £50,222 £173,442 £42,516 £34,972

4.4 Indicator Requirement - The Authority has to make reasonable estimates of the total capital financing requirement at the end of the forthcoming financial year and the following 2 years.

4.5 The Combined Authority Plan – Based upon the Transport Delivery Capital Programme set out in table 8 the capital financing requirement is calculated as follows:

Table 8 - Capital Financing Requirement

2015/16 2016/17 2017/18 2018/19 Actual Forecast Forecast Forecast £000 £000 £000 £000 Capital Financing Requirement B/F 171,646 184,789 196,937 207,934 Less MRP (7,077) (4,590) (4,590) (4,740) Annuity Debt Principal Repayment (280) (291) (303) (316) Government and Other Grants (29,723) (156,414) (26,625) (23,894) Capital expenditure 50,222 173,442 42,516 34,972 Closing CFR 184,789 196,937 207,934 213,957

4.6 The estimate of capital financing requirement at the end of each year relates to all capital expenditure including previous years. The capital financing requirement reflects the Authority’s underlying need to borrow. The code requires that the gross borrowing position as at 31st March 2017 (£175m as per table 6) should not be greater than the CFR on 31st March 2019 (£214m as shown above).

4.7 Due to the uncertainty over borrowing powers the investment programme for years 2 and 3 have not been included in this current strategy and this will be revisited for next years budget. However as assurance, CA Cashflows are considered such that borrowings will not exceed the CFR over the 3 year period.

4.8 Indicator Requirement - The Authority is to set for the forthcoming financial year and the following two years an operational boundary for its external debt.

4.9 The Combined Authority Plan – Based on the agreed Capital Programme only this is calculated as follows: Page 285 [NOT PROTECTIVELY MARKED]

Table 9 - Operational Boundary 2015/16 2016/17 2017/18 2018/19 Actual Forecast Forecast Forecast £000 £000 £000 £000 Long term debt as start of year 163,289 163,009 175,081 186,004

New borrowing Project Borrowing - 12,364 11,226 6,263 requirement Debt Rescheduling - 5,000 5,000 23,003

Loan maturities (280) (5,291) (5,303) (23,317)

Headroom 13,000 78,000 78,000 78,000

Operational boundary 176,009 253,081 264,004 269,953

4.10 The operational boundary should be based on the Authority’s estimate of most likely, i.e. prudent, but not worst case scenario. Risk analysis and risk management strategies should be taken into account. The operational boundary should equate to the maximum level of external debt projected by this estimate. The operational boundary links directly to the Authority’s plans for capital expenditure, capital financing estimate and the estimate of cash flow requirement for the year for all purposes.

4.11 Indicator Requirement - The Authority is to set for the forthcoming financial year and the following 2 years an authorised limit for its total external debt, gross of investment, separately identifying borrowing from other long term liabilities. The authorised limit provides headroom over and above the operational boundary sufficient for example for unusual cash movements.

4.12 The Combined Authority plan – Using the proposed Capital Programme and headroom of £83m to allow for short term borrowing and possible loan rescheduling the authorised limit is proposed to be set as follows:

Table 10 - Authorised Limit 2015/16 2016/17 2017/18 2018/19 Actual Forecast Forecast Forecast £000 £000 £000 £000

Long term debt as start of year 163,289 163,009 175,081 186,004

New borrowing Project Borrowing - 12,364 11,226 6,263 requirement Debt Rescheduling - 5,000 5,000 23,003

Loan maturities (280) (5,291) (5,303) (23,317)

Headroom 18,000 83,000 83,000 83,000

Authorised Limit 181,009 258,081 269,004 274,953

4.13 Both the authorised limit and the operational boundary need to be consistent with the Authority’s plans for capital expenditure and financing and with its Treasury Management Policy Statement and practices.

4.14 Both the operational boundary and authorised limit are based on the Authority’s plans and the Authorised limit includes significant and sufficient headroom in the statutory limit to allow for the possibility that the Combined Authority could be given full borrowing powers from Government at some point. Page 286 [NOT PROTECTIVELY MARKED]

4.15 Other Indicator Requirements - The Authority has to set for the forthcoming financial year and the following two financial year’s upper limits to its exposures to the effects of changes in interest rates. These prudential indicators relate to both fixed interest rates and variable interest rates.

4.16 The Combined Authority Plan - The indicators are set to ensure that the Authority has clarity over interest rate exposure rather than risk.

Table 11 - Interest Rate Exposure

Forecast Forecast Forecast Maximum Exposure Permitted 2016/17 2017/18 2018/19

Fixed Rate exposure 100% 100% 100%

Variable Rate exposure 30% 30% 30%

4.17 The Authority has adopted the CIPFA Code of Practice for Treasury Management in the Public Services. The purpose of the code to ensure the Authority satisfies eight main purposes:

i. To assist public service organisations in the development and maintenance of firm foundations and clear objectives for their treasury management activities and thereby to add to their credibility in the public eye.

ii. To emphasise the overriding importance of effective risk management as the foundation for treasury management in all public service bodies.

iii. To encourage the pursuit of best value in treasury management, and to promote the reasoned use, development and appreciation of appropriate and practical measures of performance.

iv. To enable CIPFA members to fulfil their professional and contractual responsibilities to the organisations they serve and, in accordance with the members’ charter, “to maintain and develop the professional competence of both themselves and those they supervise.

v. To help facilitate a standardisation and codification of treasury management policies and practices in the public services.

vi. To assist those involved in the regulation and review of treasury management in the public services, particularly those charged with the audit of the same.

vii. To foster a continuing debate on the relevance and currency of the statutory and regulatory regimes under which treasury management in the various parts of the public services operates.

viii. To further the understanding and confidence of, and to act as a reference work for, financial and other institutions whose businesses bring them into contact with the treasury management activities of public service organisations.

4.18 The Authority has to set for the forthcoming financial year both upper and lower limits with respect to the maturity structure of its borrowing. Page 287 [NOT PROTECTIVELY MARKED]

Where the periods in question are:

 Under 12 months  12 months and within 24 months  24 months and within 5 years  5 years and within 10 years  10 years and above

Table 12 - Maturity structure of Loans

Current Lower Limit Upper Limit Level % % %

Under 12 Months 0% 20% 3.07% 12 months and within 24 months 0% 30% 3.07% 24 months & within 5 years 0% 40% 20.25% 5 years & within 10 years 0% 60% 0.00% 10 years & within 20 years 0% 100% 14.11% 20 years & within 30 years 0% 100% 15.15% 30 years & within 40 years 0% 100% 22.32% 40 years & within 50 years 0% 100% 22.04% TOTAL 100.00%

4.19 Where the Authority invests, or plans to invest, for periods longer than 364 days an upper limit for each forward financial year period for the maturing of such investments is set.

4.20 The Combined Authority plan - With the current market conditions it is not envisaged that any investments will be placed for over 364 days. However, to give the Fund Managers flexibility a limit of £10m has been set.

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APPENDIX 2 - Summary Prudential Indicators

2016/17 2017/18 2018/19 Measure Forecast Forecast Forecast £000's £000's £000's

Affordability Ratio of financing costs to net revenue stream: (a) financing costs 14,814 14,863 14,166 (b) net revenue stream 152,330 159,542 158,119 Percentage 9.72% 9.32% 8.96% Estimates of Capital Investment on Income (%) (1.20%) 0.03% (0.44%)

Prudence Gross borrowing and the capital financing requirement:

Gross Borrowing (excludes inhereted debt) 175,081 186,004 191,953

Capital Financing Requirement 196,937 207,934 213,957 (Gross borrowing in year 2016/17 must not exceed year CFR in 2018/19)

Capital Expenditure, External Debt and Treasury Management Capital Expenditure 173,442 42,516 34,972 Operational boundary for external debt Operational boundary for borrowing 253,081 264,004 269,953 Authorised limit for external debt Authorised limit for borrowing 258,081 269,004 274,953 Interest rate exposures Upper limit on fixed rate exposures 100% 100% 100% Upper limit on variable rate exposures 30% 30% 30% Investments longer than 364 days Upper limit 8,000 8,000 8,000

CIPFA Treasury Management Code? Yes Has the authority adopted the TM Code?

Maturity structure of borrowing - limits Upper Limit '% Current Level '%

Under 12 Months 20% 3% 12 months and within 24 months 30% 3% 24 months & within 5 years 40% 20% 5 years & within 10 years 60% 0% 10 years & within 20 years 100% 14% 20 years & within 30 years 100% 15% 30 years & within 40 years 100% 22% 40 years & within 50 years 100% 22%

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These Indicators will be updated for approval during the year should the onward refinement of the West Midlands Combined Authority Wider Devolution Investment Programme spend estimates require it.

Appendix 3: Current Lending list

Long term Rating Limit Term Limit Institution Country Fitch Moody's S & P £m £m

Debt Management Office UK unlimited 12 Months Local Authorities (a) UK £10m 12 Months Local Authorities (b) UK £10m 12 Months HSBC Bank plc UK AA- Aa2 AA- £10m 13 Months Lloyds Bank Plc UK A+ A1 A £10m 13 Months Santander UK Plc UK A Aa3 A £10m 6 Months Barclays Bank Plc UK A A2 A- £10m 100 days Nationwide Building Society UK A A2 A £10m 6 Months Royal Bank of Scotland UK BBB+ A3 BBB+ £10m 35 days

Page 290 [PROTECT] Agenda Item 5.3

Board Meeting

Date Friday 10 June 2016 Report title Establishment of a West Midlands Combined Authority Investment Board Accountable Chief Jan Britton, Chief Operating Officer to the Combined Authority Executive Tel 0121 569 3501 Email [email protected]

Accountable Jan Britton, Chief Operating Officer to the Combined Authority Employee Tel 0121 569 3501 Email [email protected]

Report to be/has been None considered by

Recommendations for decision:

The Combined Authority Board is recommended to approve:

1. The establishment of a West Midlands Combined Authority Investment Board to oversee and approve investments made via the Collective Investment Fund (CIF) and the Land Remediation Fund (LRF), noting that this will be the Combined Authority’s investment board, rather than Finance Birmingham’s, which will recommend investment decisions for these funds and any other funds that the Combined Authority appoints Finance Birmingham to Fund Manage in the future

2. That the membership of the Combined Authority Investment Board is comprised of three Combined Authority Constituent Members (Officers or Councillors, with one reserved for the accountable body/funding Council), one LEP Member, Finance Birmingham (non-voting) and an independent Chair, further details on the options regarding membership are provided at Appendix A.

3. That the Combined Authority Board will consider the recommendations of the Investment Board at its next available meeting after the Investment Board has met. Page 291 Page 1 of 15 [NOT PROTECTIVELY MARKED]

Collective Investment Fund

4. That the CIF will be a fund of investments made by the Combined Authority itself, and will be funded from Combined Authority prudential borrowing capped at £70 million, as soon as the Combined Authority has the necessary powers.

5. That until such time as the Combined Authority is formally established and the Combined Authority has the power to borrow:

a) Birmingham City Council act as Accountable Body for the CIF.

b) Birmingham City Council undertake any borrowing relating to the CIF.

c) Each of the six Metropolitan Districts enter into a formal written agreement with Birmingham City Council to confirm that they will share the risks associated with the CIF and therefore any losses in equal proportions, i.e. one seventh each. Noting that this will only be triggered in the event that the Combined Authority is unable to fund any losses from its own financial resources.

6. That when the Combined Authority is formally established and the Combined Authority has the power to borrow, any borrowing undertaken by Birmingham City Council relating to the CIF will be ‘purchased’ by the Combined Authority, with any related net balances, either surplus or deficit, e.g. surplus interest after any costs incurred by Birmingham, also transferring to the Combined Authority.

7. That the CIF will be targeted at bringing forward commercial land and property investment opportunities, including housing where this is part of a mixed scheme, noting that the investment strategy and parameters will be set by the Combined Authority and not Finance Birmingham and that Finance Birmingham will work closely with member Councils and LEPs on the pipeline of investment opportunities.

8. That consistent with the principles of balance and fairness the CIF to be focussed on securing a broader economic return across the West Midlands region, rather than purely maximising the financial return for the Combined Authority.

9. That a set of target outcomes will be developed, that align to the Strategic Economic Plan, in order that the success and value for money of the CIF can be closely monitored.

10.That the CIF will be available to support projects within the geographical areas of those constituent and non-constituent members of the Combined Authority named in the current Parliamentary Order.

11.That the CIF will operate as a revolving fund, for an initial 10-year period, with the aim of the initial capital being repaid to the Combined Authority in full at the time the CIF is wound up.

12.That Finance Birmingham are appointed as the Fund Manager for the CIF, noting that ownership of the funds will remain with the Combined Authority, or Accountable Body, and that funds are only released when loans are fully approved and all necessary paperwork has been completed. Page 292 [NOT PROTECTIVELY MARKED]

13.That Finance Birmingham’s management fee for operating the CIF will be 0.5% of the committed fund (i.e. £70 million) per annum, noting that this is an extremely competitive rate and also that this cost will ultimately be funded from the interest received on loans, in addition arrangement and monitoring fees will be paid to Finance Birmingham by applicants.

14.That the Information Memorandum for the CIF, provided at Appendix B, is approved, with delegation to Jan Britton as lead Chief Executive and Chief Operating Officer for the Combined Authority to agree minor amendments if required to bring the scheme into operation.

15.That an Investment Management Agreement (IMA) for the operation of the CIF is entered into by Birmingham City Council and Finance Birmingham and that this will be novated to the Combined Authority following its establishment.

16.That final approval of CIF related documentation be delegated to Jan Britton as lead Chief Executive and Chief Operating Officer for the Combined Authority for this workstream.

17.That in the event that the CIF is not self-financing during 2016/17, the Combined Authority funds the net cost of the CIF in 2016/17 (i.e. management fee less surplus from loans) from the budget allocation that has already been agreed by the constituent and non-constituent councils to support the Combined Authority in its first year of operation.

18.That in the event that the CIF is not established, Finance Birmingham are reimbursed for any costs that they have incurred on CIF related activity, this will be provided for within the IMA.

19.That Finance Birmingham are authorised to formally and proactively promote the CIF as soon as the IMA is in place, noting that promotional activity will be undertaken in partnership with member Councils and LEPs where appropriate.

20.That the outline plan set out within this report is approved in order to ensure that the CIF can be launched as soon as possible.

Land Remediation Fund

21.That the devolution deal provides for a LRF of £200 million. It is recommended that the following be agreed, subject to ratification of the devolution deal by the constituent councils and for implementation only after this ratification process is completed and the devolution deal agreed with Government:

a) That Finance Birmingham are appointed as Fund Manager.

b) That the LRF will be a fund of investments made by the Combined Authority itself, with a total value of £200 million.

c) Consistent with the principles of balance and fairness the LRF will be focussed on securing a broader economic return across the West Midlands region.

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d) That the fund is operated in a flexible manner, primarily providing grant and gap funding, however, equity instruments may be used where developer super profit is anticipated, noting that the investment strategy and parameters will be set by the Combined Authority and not Finance Birmingham and that Finance Birmingham will work closely with member Councils and LEPs on the pipeline of investment opportunities.

e) That the Combined Authority funds the net cost of operating the LRF.

f) A set of target outcomes will be developed, that align to the Strategic Economic Plan, in order that the success and value for money of the LRF can be closely monitored.

g) That an Information Memorandum for the LRF is developed and presented to the Combined Authority Board for approval in the near future, an early draft is contained at Appendix C.

h) That the LRF will be available to support projects within the geographical areas of those constituent and non-constituent members of the Combined Authority named in the current Parliamentary Order. Noting that the special circumstances of the Black Country, in relation to derelict and contaminated, will be recognised and prioritised within the Dynamic Economic Investment Model, along with the principles of balance and fairness.

The Combined Authority Board is recommended to note:

1. The progress that Finance Birmingham have already made in identifying a potential pipeline of projects for the CIF, where a number of developers have expressed a serious interest in borrowing £20 million to get four significant projects off the ground.

2. That further reports will be presented to the Combined Authority on the branding of the CIF.

3. That consideration is currently being given as to future contractual relationships and any necessary group structural changes in respect of Finance Birmingham and Marketing Birmingham and their Combined Authority roles.

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1 Purpose

1.1 To seek agreement from the Combined Authority Board to the establishment of a West Midlands Combined Authority Investment Board, a Collective Investment Fund and a Land Remediation Fund.

2.0 Background

2.1 In order to secure some quick wins for the Combined Authority and to get some of the planned funds working to its advantage as soon as possible, it is recommended that the Combined Authority Board approve the immediate establishment of a Collective Investment Fund (CIF) as well as a Land Remediation Fund (LRF), albeit subject to ratification of the devolution deal by the constituent councils and for implementation only after this ratification process is completed and the devolution deal agreed with Government.

2.2 As will be seen later on within this report work undertaken to date indicates that there is a strong demand for the CIF in particular. Meeting this demand by providing the required investment early on, presents the Combined Authority with a great opportunity to clearly demonstrate the benefit of the region working together collectively in this way.

2.3 Approval is therefore being sought to the establishment of a Combined Authority Investment Board to oversee investments made via the CIF and the LRF. In addition, the Combined Authority Board is asked to approve that the membership of the Combined Authority Investment Board is comprised of largely Combined Authority Constituent Members (Officers or Councillors) and LEPs, with an independent Chair and/or members.

2.4 The composition of the Board is a very important consideration in order to ensure that all investment proposals are robustly discussed and challenged. As a whole the Board will therefore need to contain the appropriate mix of skills and experience, including investment, commercial, regeneration/development, financial, local knowledge, public and private sector. Appendix A provides further details on the options regarding membership.

2.5 For the avoidance of doubt, it is important to note that this will be the Combined Authority’s investment board, rather than Finance Birmingham’s, which will recommend investment decisions for these funds and any other funds that the Combined Authority appoints Finance Birmingham to Fund Manage in the future.

Collective Investment Fund

2.6 A Collective Investment Vehicle or Fund has been an identified priority and aspiration for the Combined Authority since the very beginning of the process to establish the Combined Authority. The aim of the fund is to provide investment for commercial land and property developments, including housing where this is part of a mixed scheme, where those developments are viable but are unable to secure all of the required investment to get the development over the line without any unnecessary delay. It is important to note that the investment strategy and parameters for the CIF will be set by the Combined Authority and not Finance Birmingham and also that Finance Birmingham will work closely with member Councils and LEPs on the pipeline of investment opportunities

2.7 The CIF (previously referred to as the Collective Investment Vehicle or CIV) is to be focussed on securing economic return across the West Midlands region, in line with the principles of balance and fairness, whilst ultimately operating at nil net cost to the Combined Page 295 [NOT PROTECTIVELY MARKED]

Authority at worst. In addition, the CIF should operate as a revolving fund, for at least a 10- year period, with the initial capital being repaid in full at the time the CIF is wound up. The CIF will be marketed as the West Midlands Combined Authority CIF.

2.8 A set of target outcomes will be developed, that align to the Strategic Economic Plan, e.g. number of jobs created, number of houses developed, commercial building space developed etc. in order that the success and value for money of the CIF can be closely monitored.

2.9 Consideration has been given to the geography of the CIF and it is recommended that the CIF is seen as one of a number of key benefits that membership of the Combined Authority brings. Therefore, it is recommended that the CIF is available to support projects within the geographical areas of those constituent and non-constituent members of the Combined Authority named in the current Parliamentary Order.

2.10 In order to be able to set up and operate a CIF it will be necessary to appoint a Fund Manager, and it has always been the intention to utilise Finance Birmingham. Finance Birmingham recently appointed a commercial property expert, who has already made progress on a pipeline of projects for the CIF. Legal advisers have been appointed to ensure that the CIF and the appointment of Finance Birmingham are compliant with all relevant legislation, in particular procurement and state aid related.

2.11 It should be noted that ownership of the funds will remain with the Combined Authority or accountable body as applicable and that funds will only be released when loans have been fully approved and all necessary paperwork has been completed.

2.12 Approval is being sought to enter into an Investment Management Agreement (IMA) for the operation of the CIF, this will be between Birmingham City Council and Finance Birmingham and will be novated to the Combined Authority following its establishment. The approval of the IMA will be a matter for Birmingham City Council, although as this will be novated to the Combined Authority it will be necessary to consult with Jan Britton, as lead Chief Executive and Chief Operating Officer for the Combined Authority for this workstream, as part of this approval process.

2.13 The IMA will confirm Finance Birmingham’s management fee for operating the CIF at 0.5% of the committed fund (i.e. £70 million) per annum, payable quarterly in advance. It is understood that this represents a very competitive rate compared to fees that are being charged to other similar investment funds. In addition, arrangement and monitoring fees will be paid to Finance Birmingham by the applicants. In the event that the CIF is not established, Finance Birmingham will be reimbursed for any costs that they have incurred on CIF related activity, this will be provided for within the IMA. Finance Birmingham will need to recruit additional resource to source, negotiate, transact and monitor CIF projects.

2.14 The £350,000 management fee payable to Finance Birmingham, will ultimately be funded from the surplus generated from the interest charged on the loans made from the CIF. Until loans have been made and surpluses have been generated it is recommended that the Combined Authority funds the net cost of the CIF (i.e. management fee less surplus from loans) from within the total of £3.5 million that has been set aside by the seven Metropolitan District Councils to support the Combined Authority in its first year of operation.

2.15 Despite Finance Birmingham not yet having been formally appointed to fund manage the CIF, they have, at their own cost and therefore at risk, appointed a commercial property Page 296 [NOT PROTECTIVELY MARKED]

expert to develop the pipeline. Confidential, and discrete, discussions have already taken place with developers and strong interest has been expressed in the CIF for four well developed projects that span the region (one in Walsall, one in Wolverhampton and two in Birmingham), the total value of the four loans would be in the order of £20 million. This clearly demonstrates Finance Birmingham’s commitment and enthusiasm for the CIF and should help to provide comfort that the need to fund the net cost of the management fee to the Combined Authority will be short term.

2.16 Part of the work already undertaken by Finance Birmingham, in conjunction with Finance Directors, is the development of an Information Memorandum for the CIF, this is provided at Appendix B and sets out the proposed:

a) Investment strategy.

b) Objectives and eligibility criteria.

c) Governance and reporting arrangements.

d) Risk appraisal and project management arrangements.

e) The structure and composition of the West Midlands Combined Authority Investment Board, the composition of which is subject to approval by the Combined Authority Board.

Approval of this Information Memorandum is sought, with delegation to Jan Britton as lead Chief Executive and Chief Operating Officer for the Combined Authority, to agree minor amendments if required to bring the scheme into operation.

2.17 Finance Birmingham will be authorised to formally and proactively promote the CIF as soon as the IMA is in place, it should also be noted that promotional activity will be undertaken in partnership with member Councils and LEPs where appropriate.

2.18 Until such time as the Combined Authority is formally established and the Combined Authority has the power to borrow:

a) Birmingham City Council will act as Accountable Body for the CIF.

b) Birmingham City Council will undertake any borrowing relating to the CIF.

c) Each of the six Metropolitan Districts will enter into a formal written agreement with Birmingham City Council to confirm that they will share the risks associated with the CIF and therefore any losses in equal proportions, i.e. one seventh each. It should also be noted that that this will only be triggered in the event that the Combined Authority is unable to fund any losses from its own financial resources.

2.19 When the Combined Authority is formally established and the Combined Authority has the power to borrow, any borrowing undertaken by Birmingham City Council relating to the CIF will be ‘purchased’ by the Combined Authority, with any related net balances, either surplus or deficit, e.g. surplus interest after any costs incurred by Birmingham, also transferring to the Combined Authority.

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2.20 Further reports will be presented to the Combined Authority on the branding of the West Midlands Combined Authority CIF.

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Land Remediation Fund

2.21 It has also been an identified priority and aspiration for the Combined Authority to establish a LRF to support bringing brownfield and contaminated land sites back into productive use for employment and housing provision. Work to develop this fund is currently underway and further reports will be presented to the Combined Authority Board over the coming months.

2.22 In addition to being asked to approve the establishment of the LRF, subject to ratification of the devolution deal by the constituent councils and for implementation only after this ratification process is completed and the devolution deal agreed with Government, in principle agreement to the following is also being sought from the Combined Authority Board:

a) That Finance Birmingham is appointed as Fund Manager, noting that a proposed fee structure for this fund is being developed. This will provide greater flexibility for the Combined Authority to maximise the impact of the utilisation of its funds, by giving Finance Birmingham the option of blending those funds to deliver a creative investment solution.

b) That the LRF will be a fund of investments made by the Combined Authority itself, with a total value of £200 million, noting that there may be a need for one of the Metropolitan Districts to be Accountable Body and to undertake borrowing on behalf of the Combined Authority as an interim measure.

c) Consistent with the principles of balance and fairness the LRF will be focussed on securing a broader economic return across the West Midlands region, rather than securing a financial return for the Combined Authority.

d) That the fund is operated in a flexible manner, typically funding will be provided via grant or gap funding however equity instruments may be used where developer super profit is anticipated. The fund priority being to accelerate economic redevelopment of sites and projects identified as a priority for the Combined Authority and the SEP and that are not financially viable in their own right, subject to any state aid provisions. Noting that the investment strategy and parameters for the LRF will be set by the Combined Authority and not Finance Birmingham and that Finance Birmingham will work closely with member Councils and LEPs on the pipeline of investment opportunities

e) That the Combined Authority funds the net cost of operating the LRF.

f) That an Information Memorandum for the LRF is developed and presented to the Combined Authority Board for approval in the near future, an early draft is provided at Appendix C for information.

2.23 As with the CIF a set of target outcomes will be developed for the LRF, that align to the Strategic Economic Plan, e.g. number of houses developed etc. in order that the success and value for money of the LRF can be closely monitored. The economic impact of each funding request will be assessed at the outset and also on completion of each project. This will be undertaken by the Fund Manager, Finance Birmingham. Page 299 [NOT PROTECTIVELY MARKED]

2.24 Again as with the CIF it is recommended that the LRF is seen as one of a number of key benefits that membership of the Combined Authority brings. Therefore, it is recommended that the LRF is available to support projects within the geographical areas of those constituent and non-constituent members of the Combined Authority named in the current Parliamentary Order.

2.25 It is also important to note that the special circumstances of the Black Country, in relation to derelict and contaminated, will be recognised and prioritised within the Dynamic Economic Investment Model, along with the principles of balance and fairness. Therefore, whilst the fund is not being ring fenced exclusively for the Black Country, it is anticipated that the majority of the fund will be allocated to the Black Country.

3.0 Next Steps – CIF

3.1 In order to ensure that the CIF is capable of being launched as soon as possible the following key points and strategy has been developed:

 The Chief Executive of Finance Birmingham (Sue Summers), supported by the newly appointed commercial property expert (Nick Oakley), will project manage the process to launch the CIF.

 A project team, comprising Sue, Nick, Mark Taylor (Wolverhampton) and Alison Jarrett (Birmingham and Director of Finance Birmingham) has been established to review progress and agree criteria and commercials.

 A high level activity plan is being developed, in addition to the Information Memorandum appended to this report, as a minimum this will include:

o The IMA between Birmingham City Council and Finance Birmingham detailing fund management best practice, governance, conflicts policy, fees etc.

o CIF documentation, including application, appraisal, investment papers and facilities/loan agreements

o Combined Authority Investment Board terms of reference.

o Promotional and communications protocols and arrangements.

o Management reporting arrangements.

o The development of a pipeline to include viable investment opportunities in time for the launch.

o Identification of options and opportunities to leverage private investment.

4.0 Financial Structure and Implications – CIF

4.1 The Finance Directors propose that the most efficient financial structure is not to create a separate investment vehicle (which would require capitalisation by contributions from the constituent member authorities), but for the investments to be a revolving fund of the Combined Authority itself as follows:

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a) Investments will be funded by Combined Authority prudential borrowing, capped at maximum of £70 million at any point in time, which is in line with the assumptions in the Combined Authority bid.

b) In order to neutralise the impact on the revenue budget of the Combined Authority debt repayments (under the Combined Authority’s minimum revenue provision (MRP) policy) would be funded from the repayment or sale of the investments. This also creates borrowing headroom for new investments to be funded from new prudential borrowing, within the agreed £70 million revolving fund limit.

c) Interest on investments would be set at a commercial rate which takes into account the nature and associated risks of the individual investments, this will be above the cost of borrowing to the Combined Authority, with the surplus being used to fund the cost of operating the CIF (the management fee) as well as creating a reserve that will be available to fund any bad debts or losses.

d) Finance Birmingham will charge a management fee of 0.5% of the committed fund (i.e. £70 million) per annum, so £350,000 in total. In addition, arrangement and monitoring fees will be paid to Finance Birmingham by the applicants.

e) The Combined Authority will fund any net cost of the CIF in 2016/17 (i.e. management fee less surplus from loans) from within the total of £3.5 million that has been set aside by the seven Metropolitan District Councils to support the Combined Authority in its first year of operation. The aim is that the CIF will ultimately become self-financing, by utilising the surplus interest receipts generated on the loans granted from the CIF.

f) If an investment is not repaid in full or a loss is made on sale, a revenue charge would be required to repay the associated prudential borrowing (an MRP charge). This could be funded in the first instance from the bad debt reserve. In the event that losses are in excess of the reserve this Combined Authority would be required to fund these losses from other revenue resources, it is considered that the Combined Authority will be sufficiently financially robust to be able to manage this risk.

4.2 Until such time as the Combined Authority is formally established and the Combined Authority has the power to borrow:

a) Birmingham City Council will act as Accountable Body for the CIF.

b) Birmingham City Council will undertake any borrowing relating to the CIF.

c) Each of the six Metropolitan Districts will enter into a formal written agreement with Birmingham City Council to confirm that they will share the risks associated with the CIF and therefore any losses in equal proportions, i.e. one seventh each. It should also be noted that that this will only be triggered in the event that the Combined Authority is unable to fund any losses from its own financial resources.

4.3 When the Combined Authority is formally established and the Combined Authority has the power to borrow, any borrowing undertaken by Birmingham City Council relating to the CIF will be ‘purchased’ by the Combined Authority, with any related net balances, either surplus

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or deficit, e.g. surplus interest after any costs incurred by Birmingham, also transferring to the Combined Authority.

4.4 It is also important to note that by appointing Finance Birmingham as Fund Managers, the set up costs will be minimal other than the cost of the external legal support and advice that is required to establish the CIF. These costs will be fed into the Combined Authority budget monitoring projections as they become clear. This compares very favourably to the set up costs of other similar funds, which it is understood have run into seven figures.

4.4 Finally it should also be noted that in the event that the CIF is not established, Finance Birmingham are likely to have incurred costs that would be recoverable from the Combined Authority, this will be provided for within the IMA.

Page 302 [PROTECT] Appendix A WMCA Investment Board

The West Midlands Combined Authority Investment Board is being established to approve sponsored applications to be awarded funding.

It is being recommended that the Combined Authority Investment Board is facilitated by Finance Birmingham and that an Investment Director from Finance Birmingham presents investment opportunities to the Combined Authority Investment Board once they have assessed the viability and the risks associated with those opportunities.

In order for the Combined Authority Investment Board to be able to fully consider and challenge the investment opportunity, the Combined Authority Investment Board will need to contain the appropriate mix of skills and experience, including investment, commercial, regeneration/development, financial, local knowledge, public and private sector.

Combined Authority Investment Board Membership

An Investment Board would typically include a Chair plus four or five further board members and the composition of that membership could include:

 Independent member(s) from outside of the Combined Authority constituent and non- constituent councils and LEPs.

 Leader(s) or their nominees.

 LEP Chair(s) or their nominees.

 Officer(s) from Combined Authority constituent and non-constituent councils and LEPs.

It is however recommended that a representative from the accountable body/funding organisation is included on the Combined Authority Investment Board, initially this would therefore be Birmingham City Council, with the membership transferring to the Combined Authority once the has the power to borrow.

Board members can also be voting or non-voting, although typically the Chair would have the casting vote in the event of any disagreement between Board Members. In addition, the accountable body/funding organisation would typically have the power of veto.

It is recommended that Finance Birmingham are a member of the Combined Authority Investment Board, albeit on a non-voting basis.

It is also recommended that Combined Authority Investment Board is flexible enough to allow representatives from any third party investors to be party to decisions.

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In deciding the composition of membership of the Combined Authority Investment Board it is important to note that:

 All investment opportunities come with a level of risk of default. Although this risk will be robustly assessed by Finance Birmingham, in order to minimise the risk, and any approved investments will be closely monitored and managed by Finance Birmingham, that risk will be ever present.

 Combined Authority Investment Board members will use their skills and experience to help the Board to make appropriate decisions and will share responsibility for and uphold all decisions made by the Board.

 Combined Authority Investment Board members will always act in the best interests of the fund and will therefore act as an individual and independently and not as a representative of their own, or any other, organisation.

The Combined Authority Board is asked to confirm the number of members of the Combined Authority Investment Board and the composition of that membership taking account of the above.

5.0 Legal implications

5.1 The legal implications that relate to the Combined Authority and the seven Constituent Member District Councils, are set out in the body of this report.

Finance Birmingham are to be appointed as CIF Fund Manager and the report indicates that they have taken independent legal advice to satisfy themselves as to the legal arrangements required for setting up the Collective Investment Fund (CIF) and to act as Fund Manager for and on behalf of Birmingham City Council who will be the Responsible Authority on behalf of the District Councils. The Constituent Districts Council’s will be required to enter into a binding agreement with BCC to agree risk sharing relating to the CIF.

The Investment Management Agreement (IMA) setting out the operation of the CIF shall be entered into between Birmingham City Council and Finance Birmingham and such agreement will be novated upon terms to be agreed by the CA at a point at which the CA has appropriate borrowing powers.

The CA will need to work closely with Finance Birmingham and BCC at the relevant time that it takes over responsibility for this arrangement to ensure that all legal issues are appropriately concluded.

6.0 Equalities implications

6.1 An initial equality screen has been conducted on the establishment of the Combined Authority. There is no indication that the investment board will have negative implications for protected groups. Going forward, work carried out under the investment board will be subject to Equality Analyses as required, to ensure they are complying with the Public Sector Equality Duty. The Combined Authority are working closely with the West Midlands Local Authority Equality Network to ensure equalities is embedded across the Combined Authority.

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7.0 Other implications

7.1 None

8.0 Schedule of background papers

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