AGENDA ITEM 7(c) COUNCIL – 21 JULY 2015 REPORT OF THE EXECUTIVE DIRECTOR DEVOLUTION AND COMBINED AUTHORITIES 1. INTRODUCTION 1.1. The concept of “Combined Authorities” emerged over the course of the previous Coalition Government but has been given real impetus since the General Election this year, with the recently published Cities and Local Government Devolution Bill aimed at assisting the process. 1.2. Locally generated proposals for a West Midlands Combined Authority are now moving rapidly forward. The purpose of this report is to summarise that emerging picture and to suggest how Rugby Borough Council can determine its role within it. 1.3. It may be helpful to state at this point what a Combined Authority is, or perhaps more importantly, what it isn’t. It isn’t anything to do with local government reorganisation, it isn’t anything to do with unitary authorities and it isn’t anything to do with being “ruled” from somewhere else. What it is about is Councils in a defined area formally working together in pursuit of certain agreed objectives relating to economic development and transport with the additional goal of taking control of central Government devolved budgets relating to health, social care etc. Neither does the Combined Authority replace Local Enterprise Partnerships. Member Councils in a Combined Authority retain their civic identity and the responsibility for delivering local services to their areas. 2. BACKGROUND (a) PRE GENERAL ELECTION (i) During the course of the last Government a “City Deal” based on Coventry and Warwickshire together with Hinckley and Bosworth was established. The overall aim was regeneration and the core of the deal was a contract between the constituent Councils and Government based around what resources would be made available. (ii) One of the requirements of the Government in agreeing a City Deal was the establishment of robust governance arrangements to deliver its outcomes. Initially a Joint Committee (of Leaders) was established to manage this delivery, this developed into an Economic Prosperity Board with the intention that this would ultimately change into a Combined Authority, giving further formalisation to joint working arrangements. (iii) The West Midland conurbation Councils were rightly seen as being off the pace when it came to Combined Authorities. The area that had moved furthest and fastest was Greater Manchester, but other urban areas in the UK were beginning to develop proposals of their own. (iv) Following the Scottish Independence Referendum and the Government’s announcement of further devolved powers (around health) to Greater Manchester the leaders of Birmingham and the Black Country Councils (Wolverhampton, Walsall, Dudley and Sandwell) stated in late 2014 their intention of establishing a Combined Authority and made it clear that other authorities in the West Midlands were welcome to join. (v) The issue of whether to join that emerging West Midlands Combined Authority has been current ever since amongst those neighbouring Councils, particularly those who are members of one of the relevant Local Enterprise Partnerships. This includes Councils in parts of Staffordshire and Worcestershire together with Solihull and, closer to home, Coventry, Warwickshire, Hinckley and Bosworth and Solihull. (vi) Membership of a Combined Authority should be determined not by administrative boundaries but by “functional economic geography” i.e. those areas that have high levels of containment within economic activity. In order to brief all Members on the functional economic geography relative to Rugby a presentation was given in the Council Chamber on 5th March 2015. (b) POST GENERAL ELECTION (I) The new Government has moved very quickly to deliver its manifesto policy of economic growth through devolution. It has already published the Cities and Local Government Devolution Bill and the Chancellor’s first speech after the election related to the “Northern Powerhouse” and Devolution. (II) The Government’s focus in this respect is to rebalance the national economy such that other conurbations begin to match London in terms of contribution towards GDP. This is based on the economic theory that this requires scale, there being compelling evidence that globally a disproportionally high percentage of productivity and creativity is delivered by the largest cities. In the UK only London is big enough to function in this way. The Government’s intention therefore is to achieve scale by removing barriers such that the larger conurbations function, in relation to economic development and transport, as single cities rather than a grouping of disparate local authorities. If those disparate local authorities formally create Combined Authorities in pursuit of agreed inward investment and transport objectives then the Chancellor has promised greater powers and autonomy via devolution. 3. WHERE WE ARE NOW 3.1. Given how fast this issue is now developing there is a danger of describing “where we are now” in a written report given that we’ll probably be somewhere else by the time that report is being considered. However, with that in mind, this is what things currently look like. 3.2. There are two distinct, but inter-twined, strands to the Combined Authorities agenda. The first is the creation of a Combined Authority and the second is the Devolution Deal that can be negotiated with Government once it exists. 3.3. In a recent joint visit to Birmingham the Chancellor, the Secretary of State and Lord Heseltine made is clear that there was an opportunity for the West Midlands to respond to the Government’s devolution agenda but this would require a speedy – and ambitious – response from the local authorities. They also urged engagement with the neighbouring areas, including District Councils. 3.4. On the 6th July the Leaders of the 7 Metropolitan Councils in the West Midlands (Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton) issued the “Launch Statement” for the Combined Authority. A copy is attached to this report. 3.5. In it they say that whilst they are all committed to a Combined Authority for their area they all agree that – “a Combined Authority covering a much wider and important area across the 3 Local Enterprise Partnerships is crucial. This could involve 13 more Councils joining the West Midlands Combined Authority. Currently District and County Councils are actively engaged in a dialogue around the creation of a West Midlands Combined Authority and are still working through the implications of joining”. 3.6. This wish to increase the geographic area of the Combined Authority is based on maximising its functional economic geography (see 2 (a) (vi)). There is a high level of self -containment in the economy of the 7 Metropolitan Councils, but this self-containment rises even higher if the area is expanded to cover the 3 LEPs. 3.7. Turning to the local area (the Coventry and Warwickshire LEP), Coventry City Council’s Cabinet has already agreed in principle to join the Combined Authority with a preference that the Councils of Warwickshire together with Hinckley and Bosworth join as well. However, it is more or less certain that should these other Councils not wish to participate that Coventry will join anyway. Consequently a “Coventry and Warwickshire Combined Authority” which some have suggested they would support is not a realistic proposition, setting aside that it is probably too small to provide the scale that a Combined Authority requires. Other groupings of Councils have been suggested but whilst these may have attractions from a political perspective it is unlikely that they will have either the scale or the functional economic geography required of a Combined Authority. 3.8. If the Councils in the 3 LEPs were to join in then the result would be biggest Combined Authority area in the country with a population of more than 4 million and extending from Bromsgrove to Burton on Trent via Birmingham. At the present time it would appear (and this needs clarification and it could change) that full membership is only open to the 7 Metropolitan Councils. The options open to the others include Non Constituent Membership with Voting Rights (giving involvement in such inward investment and strategic spatial planning activity as they signed up for, work on skills and public sector reform and benefitting from devolved powers) or Non-Constituent Non-Voting (based on a contractual relationship around defined activities, benefits and obligations). 4. CONCLUSIONS 4.1. The Combined Authorities agenda had a long gestation during the last Government but since the election it has grown at very considerable speed. The 7 Metropolitan Councils of the West Midlands have been working up their proposals for about 12 months but whilst Coventry City Council in particular has always sought to include Districts it is fair to say that we have only had sight of the specific proposal since they were contained within Launch Statement on 6th July. The Mets acknowledge that those other Councils need to “work through the implications of joining” (or not). Some time can be made available for that on-going work but it is suggested that if Councils want to be in at the beginning with an opportunity to shape the Combined Authority that a decision on joining needs to be made sooner rather than later – in Rugby Borough Council’s case the Council Meeting on 28th October 2015 would seem to be the opportune date. 4.2. Prior to 28th October more information and clarification needs to be gained in order to allow for an informed decision to be made. These would include at least some of the following – Can we actually join? This is pretty fundamental. There is lack of clarity from Government at the moment as to whether there has to be unanimity in 2-tier shire areas or whether different Councils in the same area can come to different decisions.