East Midlands Combined County Authority Regulations 2024

Monday 19th February 2024 Grand Committee

Considered in Grand Committee

17:16

Moved by

[Baroness Scott of Bybrook]

That the Grand Committee do consider the East Midlands Combined County Authority Regulations 2024.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, these regulations provide for the implementation of the devolution deal agreed between the Government and four councils—Derby City Council, Derbyshire County Council, Nottingham City Council and Nottinghamshire County Council—on 30 August 2022. Since then, we have been working closely with the councils on the implementation of the deal, which is an important contribution to the Government’s levelling-up agenda increasing opportunity, investment and prosperity in the East Midlands. The four councils consented to the making of these regulations on 15 December 2023.

The regulations, if approved by Parliament and made, will establish the East Midlands Combined County Authority and the office of mayor for the area. This will be the first of a new type of local government institution, a mayoral combined county authority, made possible by the Levelling-up and Regeneration Act 2023. The essential feature of a combined county authority is that only upper-tier authorities, that is county councils and unitary authorities, can be constituent members of the combined authority, with a requirement that there must be at least two constituents. This does not mean that, where a constituent authority is a county council, the district councils in the area cannot be involved and have a voice within the combined county authority on matters which could affect them.

In the East Midlands it is envisaged, as set out in the devolution deal, that the constituent members will invite the district councils to be represented by four non-constituent members, two from Derbyshire districts and two from Nottinghamshire districts. It will be for the district councils to decide who their representatives will be. These non-constituent members can be given voting rights on certain matters, as decided by the constituent members. In addition, district councils will be invited by the combined county authority to nominate certain of their members to serve on the combined county authority’s overview and scrutiny committee and audit committee. These committees will have important roles for the accountability of the combined county authority and of the mayor to the people of the East Midlands.

The central feature of the East Midlands Combined County Authority that the regulations provide is that there will be a directly elected mayor for the area. The mayor will provide a single point of accountability essential for the powers and budgets being devolved.

The regulations provide for the first mayoral election to take place on 2 May 2024. The elected mayor will then take up office on 7 May, with a four-year term ending after the next mayoral election in May 2028. Thereafter, there will be elections every fourth year, to be held on the ordinary day of election for the year, which is the first Thursday in May. Following the enactment of the Elections Act 2022, these mayoral elections will be on a first past the post basis.

The regulations also make provision for the overall governance arrangements of the combined county authority. Each constituent council will appoint two of its members to the combined county authority. One of these members will act as the constituent council’s lead member. This means that the combined county authority will have a mayor and a total of eight constituent members.

The mayor will be the chair of the East Midlands Combined County Authority and will appoint a deputy mayor from one of the constituent members. The combined county authority may, in addition, arrange for there to be up to eight non-constituent or associate members. As I have mentioned, it is the intention of the East Midlands authorities that the district councils should nominate four non-constituent members.

The combined county authority will be established the day after the day on which the regulations are made. Until the elected mayor takes office, it will be for the constituent members to decide how they will conduct business, including arrangements for chairing any meetings.

In addition to certain generic functions that all mayoral combined county authorities have, the regulations also confer significant functions on the combined county authority, as agreed in the devolution deal. Many of these functions are currently functions of a public authority, such as Homes England or the Greater London Authority, or indeed functions of the Secretary of State. As required by the 2023 Act, alongside these regulations we have laid a Section 20(6) report, which provides details about the public authority functions being devolved to the combined county authority.

Certain of the functions conferred on the combined county authority are to be exercised only by the mayor. In addition, the mayor will have powers, as mayors of combined county authorities generally do, to issue a precept, if they so choose, to cover the costs of mayoral functions which are not being met by other resources available to the combined county authority. The functions conferred by the regulations include those on housing and regeneration, mayoral development corporations, transport, public health, and education and skills. I will address each in turn. The essential features of these functions are as follows.

To improve the supply and quality of housing and to facilitate the regeneration of the East Midlands, Homes England powers will be conferred on the combined county authority and will be held concurrently with Homes England. These powers will enable the combined county authority, working closely with Homes England, to promote housing and regeneration, and will include the compulsory purchase of land. This will be a mayoral function, and any decisions will also require certain local consents, including the consent of the district council if the proposed land for purchase falls within its area, and that of the Peak District National Park Authority should the land fall within its geographical boundary.

The regulations provide for the mayor to have power to designate mayoral development areas within the geography of the East Midlands Combined County Authority to support the development of strategic sites. This is the first step in establishing a mayoral development corporation; further regulations would be necessary to create such a body. Powers relating to such a corporation are to be exercised by the mayor. As with the compulsory purchase powers, local consents are also necessary. District council consent is required should the proposed development area sit within a district’s geographical boundaries. Similarly, the consent of the Peak District National Park Authority would be required if any part of the development area were within the national park.

The combined county authority is to become the East Midlands transport authority. The mayor is to have control over a consolidated and devolved transport budget, with the power to pay grants to the constituent councils in relation to the exercise of their highways functions to improve and maintain roads. The mayor may also pay grants to bus service operators for eligible bus services operating within the East Midlands area. Grants must be calculated in accordance with any regulations made by the Secretary of State.

Local authority public health functions are to be conferred on the combined county authority, enabling it to deliver public health initiatives throughout its area and in support of the local authorities in the East Midlands. The combined county authority is to be required to adhere to Section 2B(1) of the National Health Service Act 2006, which places a duty on a local authority to take steps as it considers appropriate to improve the health of the people in its area. This responsibility will be held concurrently with the combined county authority’s constituent councils. None of the constituent councils’ public health functions is transferred from the councils to the combined county authority.

Finally on functions, I mention that the devolution deal also provides for the devolution of certain education and skill functions, together with the adult education budget. As agreed with the area, further regulations for these functions will be brought forward later this year with the aim, subject to Parliament’s approval, of the combined county authority being responsible for these functions from the academic year 2025-26.

These regulations will be made, if Parliament approves, under the Levelling-up and Regeneration Act 2023. As provided for by that Act, Derby City Council, Derbyshire County Council, Nottingham City Council and Nottinghamshire County Council consulted on a proposal to establish the combined county authority based on the East Midlands devolution deal. They promoted the consultation by a number of means, including a dedicated website; two online events in which residents and stakeholders could make their views known; and a communications campaign. Responses could be made online or directly by email or paper. The councils also undertook stakeholder engagement with businesses, the voluntary sector and key institutions in the East Midlands.

The public consultation ran from 14 November 2022 to 9 January 2023. A total of more than 4,800 people responded to that consultation. As required by the 2023 Act, the councils preparing the proposal provided the Secretary of State with a summary to the responses to the consultation on 1 November 2023, after the enactment of the 2023 Act. The Act provides that a consultation carried out before it came into force can be considered as fulfilling the requirement in it to consult. The majority of respondents supported all aspects of the proposal with one exception. On the establishment of the mayor, 48% of those who took part in the consultation supported the proposal, with 52% opposing it.

The role of the mayor is integral to the proposal. Many aspects of the proposal supported by residents are available only to an institution that is led by a strong, accountable, directly elected leader such as a mayor. Those opposed to a mayor raised concerns about the cost of a mayor, the consolidation of power in an individual and adding an additional tier of governance to local government. In contrast, those supporting the approach of a directly elected mayor referred to the benefits that it could bring to the area in accountability, leadership and providing a voice for the region at national and international levels.

17:30

In laying these regulations before Parliament, the Secretary of State is satisfied that the statutory tests in the 2023 Act are met, namely that no further consultation is necessary and that the constituent councils have consented to the establishment of the combined county authority, which would: be likely to improve the economic, social and environmental well-being of some or all of the people who live or work in the area; be appropriate, having regard to the need to reflect the identities of local communities and to secure effective and convenient local government; and achieve the purposes specified in the constituent councils’ consultation.

Most importantly, the making of these regulations opens a way to providing very considerable funding for the area, as set out in the devolution deal. The combined county authority will have £38 million per year of investment funding for 30 years. That total of £1.14 billion is to be invested by the combined county authority to drive growth and take forward its priorities over the long term. The combined county authority will also have access to: £17 million-worth for the building of new homes on brownfield land, which will be available in 2024-25 subject to sufficient eligible projects for funding being identified; £18 million of capital funding to support the delivery of housing priorities and drive net-zero ambitions in the East Midlands area; and the East Midlands allocation of the UK shared prosperity fund.

At this point, I pay special tribute to local leaders and their councils for all that they have done, and continue to do, to address local priorities and support businesses, industry and communities across the East Midlands. These regulations, which are supported locally, are a significant step forward for the East Midlands, its businesses and its communities. They are key to the future economic growth and regeneration of the East Midlands and will enable local leaders to invest in and address local priorities effectively. I commend the draft regulations to the Committee.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to my noble friend for setting out the contents of the regulations before us, which follow the same sort of model that has been used for the York and North Yorkshire Combined Authority and its mayor, as well as the North East Combined Authority and its mayor. I have a couple of questions.

If the housing responsibilities are transferring from the combined authority to the mayor, what will happen in the instance of planning for a major housing scheme? For example, if people have concerns about the impact of flooding and the lack of sustainable drains or similar, which authority will consider that application? It concerns me that the planning process seems to be separated out from what has previously happened in a straightforward way. If all the county councils to which my noble friend the Minister referred are now being transferred to a higher authority, it may not have the facility or means to understand planning issues. It may focus on what it perceives to be the need for increased housing; for example, it may focus on a four or five-bedroomed housing scheme and not on a one or two-bedroomed scheme, which might be preferred or more required in a rural setting.

My noble friend referred to the power to issue a precept. How much of the funding that she set out to the Committee this afternoon is new funding and how much is simply replacing what is already available in the terms of schemes? I will draw a parallel with the area that I know best. For example, if we look at the Tees Valley Mayor, he has an awful lot of new funding at his disposal at virtually every turn. I understand that that will not be the case for new combined authorities and mayors, such as the subject of these regulations. What new funds are going to be available? Are the funds being transferred from the combined authority to the mayor? Is it going to be the case that there is no new money so, in fact, as set out in the regulations, the power to raise a precept will be relied upon in virtually every case, in which case the council tax will have to go up? Was that put in the consultation that was put to the public to which my noble friend referred?

Finally, on the consultation, as a democrat I find it incredibly difficult to accept that when 52% of those responding, if I understand the Minister correctly, rejected the model for a mayor in this instance, the Government and the Minister’s department are proceeding. Would it not be a good idea to pause, reconsider and go back on the proposals? Even though my noble friend says authoritatively that all the legal requirements of the consultation have been met, I urge her to consider the democratic implications of rejecting what 52% of the population said.

[Lord Shipley (LD)]

My Lords, the noble Baroness, Lady McIntosh of Pickering, has raised a number of pertinent points and I am looking forward to hearing the Minister’s response to them. She particularly raised the consultation and the responses. There has been a continuing problem with consultation on combined authorities because the number of people who respond is very low. In the case of the East Midlands, I think Ministers have taken the view that elected councillors would have to make the decision about the mayor. Nevertheless, there is a question about how the Government and combined authorities can engage with people to a much greater degree so that response rates to any question would be much higher than in this case. Having said that, I thank the Minister for her explanation of these regulations. It is very good to see the close working of the local authorities in the East Midlands Combined County Authority. I wish it every success in its work. We want it to succeed.

I have previously raised issues of scrutiny, audit and risk in relation to this combined county authority and other mayoral combined authorities. I noticed that the Secondary Legislation Scrutiny Committee commented on this public consultation. Paragraph 45 of the report cites the Department for Levelling Up, Housing and Communities explaining that

“the Secretary of State has noted respondents’ concerns about the EMCCA’s governance model and the position of a Mayor but is satisfied that these draft Regulations would ‘provide the necessary check and balances on the governance of the EMCCA and its Mayor’”.

I draw the Minister’s attention to the Tees Valley Review dated 23 January 2024. I will quote from it, because what it says is important to all combined authorities. The question I pose to the Minister relates to whether any of the deficiencies identified in that report, published a few weeks ago, could occur in the East Midlands Combined County Authority. I quote specifically from paragraph 1.7 of the report’s executive summary, which said that

“there are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds. The Panel have therefore concluded that the systems of governance and finance in place within”

the Tees Valley Combined Authority and the South Tees Development Corporation

“at present do not include the expected sufficiency of transparency and oversight across the system to evidence value for money”.

Recommendation 6 then went on to say that the Tees Valley Combined Authority cabinet should

“review its current delegations and directions to STDC to ensure it meets its statutory obligations, including appropriate oversight by Overview and Scrutiny Committees, to enable value for money to be delivered and evidenced through effective scrutiny of significant decisions”.

The Secretary of State has said that the draft regulations would

“provide the necessary check and balances on the governance of the EMCCA and its Mayor”.

Can the Minister, either now or perhaps later in writing, explain how these draft regulations actually provide the checks and balances necessary to ensure that a report such as that written on Tees Valley could not be written on the East Midlands?

The Minister is aware that I have raised issues of security, audit and risk repeatedly during the passage of the levelling-up Bill and on other occasions, and I find those words in the Tees Valley Review worrying. I hope that this cannot possibly happen elsewhere. I am surprised by what has been said on Tees Valley but, given that, what structure is in place—I cannot find it in these regulations—to prevent a repetition of what seems to have occurred in the Tees Valley from happening in the East Midlands or in any of the other mayoral combined or combined county authorities?

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the Minister for setting out the basis for this new type of mayoral combined county authority. The regulations establish the East Midlands combined authority and are required in advance of the first planned combined authority mayoral elections in May this year. We consider them to be very important for the economic and social development of the region and its population, so we will not be objecting to this important SI, but that does not mean that we do not have any questions about it. Indeed, we are very excited and hopeful that our candidate, Claire Ward, will be the first East Midlands mayor elected and, as mayors do up and down the country, will make a great difference to communities in the areas that the Minister set out—housing, transport, public health, and education and skills.

We also noted the degree of consultation that took place from 14 November last year to 9 January this year, but further note, as did the noble Baroness, Lady McIntosh, and the noble Lord, Lord Shipley, that the numbers are very low in these consultations. We need to think about how we engage the public more in these very important discussions about the future of their areas. We also noted that there is a distinctive emphasis in this devolution deal on the combined authority reflecting the local communities within the combined authority area. We can do more of that, and I think that might help to engage people even more.

17:45

I pay tribute, as did the noble Baroness, Lady Scott, to the local authorities within the combined authority area, especially the leaders who have worked together with the Government to bring us to the point where we have this instrument before us today. As I know from experience, achieving consensus across local government boundaries can be demanding and challenging. We should thank all concerned for putting the interests of their area first above their very parochial issues in their own areas.

However, it cannot be ignored that the financial pressures facing local government are profound, particularly in the East Midlands region. The combined authority will be only as successful as the component local authorities beneath it. The Government really must address the financial uncertainty in local government. It is a fact that devolution under this Government has, to date, been fragmented, piecemeal and has not gone far enough or fast enough. The powers and resources do not touch the sides of what is required for communities to have real control over their areas and futures. Like much else, what appear to be very large sums of money being allocated to areas—of course, you cannot blame local authorities for wanting to get deals in place that attract that funding—are not compensating areas for the considerable amounts of funding that they have lost since 2010. Therefore, will the Government please set out the extent of that funding lost in government grants since 2010 across all the authorities in the combined authority area so that residents can see whether this is a good deal for the East Midlands or whether it does not even replace the funding that they have already lost?

In relation to funding, all local authorities are having to place a heavy burden on council tax payers as funding reduces, demand continues to rise and inflation takes its toll. Of course, most council tax payers do not access the specialist services that are the high-spend areas for councils, and the services that they do use are increasingly being cut to meet the demands of those high-need areas. In other words, they pay more council tax and get less for it. I note that the mayor in this combined authority will be able to levy another precept on council tax payers, a point referred to by the noble Baroness, Lady McIntosh. Can the Minister say more about the limit of this precept and what it is intended to cover? What responsibility do the constituent councils have for funding support for the mayor’s office should the mayor decide not to levy a precept?

On a separate issue, will the independent remuneration panel be set up immediately on approval of this SI so that those seeking office can understand what their remuneration might be before they set out to seek office and the election takes place? Will the Minister clarify why mayors are not being given equal status to PCCs and MPs in relation to pension arrangements? I understand that the mayors of Greater Manchester and West Yorkshire have already written to the Secretary of State on this issue. The removal of access to the pension scheme for all councillors was a retrograde step. I always remember the noble Lord, Lord Pickles, saying that we should be treated like scout leaders. For many people with responsibility for huge budgets and the whole of their areas, that was a step too far. For mayors, who have responsibility for even bigger areas and powers over the functions that we have already discussed, it is incomprehensible.

I have a number of questions for the Minister relating to governance matters, but before I ask them, and without labouring the long discussions that we had during the passage of the Levelling-up and Regeneration Bill, I highlight again that district councils in this area are to be given the reductive role of non-constituent members of the combined authority, as the Minister set out. Again, I ask for it to be noted that, quite apart from sidelining their independent electoral mandate, in two-tier areas it is district councils that hold planning, economic development and housing powers, so shutting the door in their face when it comes to strategic decision-making about any local area seems at best unwise and, at worst, could lead to chaos in trying to implement the decisions of the strategic body.

I have a few questions on the governance. First, is it the intention that the post of political advisor to the mayor be politically restricted? Looking at the SI, that seems to be the case, but it seems a little unusual. Secondly, is it the case that the mayor will need to have the agreement of each constituent council, not just the combined county authority, to make changes to transport arrangements, even after transport powers have been completely transferred after the transition period? Thirdly, as responsibility for public health is conferred on the combined authority, is it the intention that any money will be allocated by government grant to enable the combined authority to meet that responsibility? As the mayor requires the consent of two-thirds of authority members to pass significant decisions, have the Government given any thought to what mediation might be carried out in the case of a deadlock which prevents the mayor moving on the strategic plan in a timely manner?

I refer to the points made by the noble Lord, Lord Shipley, about the Tees Valley issues. I will not go into the detail, because the noble Lord has already read out pieces from the report, but if there is to be a mayoral development corporation, significant lessons of audit and oversight need to be learned from what happened in Tees Valley. Clear requirements are needed for procurement transparency, and so on. Have the Government fed into this process the outcome of that report on Tees Valley, which was so clear in saying where the deficiencies were?

In conclusion, my party fully supports devolution. In fact, Labour would push power out of Westminster with a take back control Act that would give communities a direct say in their future, starting by giving all mayors the powers and flexibility to turbocharge growth in their areas on matters such as planning, housing, transport, net zero and adult education offering all places the right to negotiate with the Government for powers that have been devolved elsewhere. The principle will be no area left out or held back. Areas that can move faster will be supported to do so. We have seen that true devolution can be transformational but, too often, at local level it has felt like a further extension of the Government’s Hunger Games approach to funding, which has seen local partnerships and coalitions having ongoing battles to be allocated powers over the services that they believe can be transformed to the benefit of their area. We need a position of default devolution. Only by doing this can we give Britain its future back.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank noble Lords who have spoken in this debate, particularly for their support for the East Midlands. I know that will be well received. Once again, we all wish it well. I will respond to a number of questions— I will look at Hansard and write if I miss any—starting with my noble friend Lady McIntosh.

The response rate to the consultations the constituent councils did was very low. The noble Baroness, Lady Taylor of Stevenage, and the noble Lord, Lord Shipley, mentioned that 4,800 responses from 1.6 million people is not a lot, but you cannot force people. My experience is exactly the same. People will tell you, “We just want people to lead our council, keep us safe and economically viable and to spend our money wisely”. Sadly, that is what happens in all these cases, but that is how it is.

My noble friend Lady McIntosh of Pickering asked whether this funding is new. Yes, the funding to the East Midlands is new, as was the case in Tees Valley; that was new funding, too. My noble friend also mentioned planning powers. No planning powers or housing powers are being transferred from existing planning and housing authorities. We made that clear in passing the then Levelling-up and Regeneration Bill, which is now an Act. Therefore, those authorities will be responsible. That is part of the challenge; they must work together for the good of their area.

The East Midlands devolution deal is a level 3 deal, with strong devolution alongside the establishment of a mayor. There was concern that 52% of those who responded to the consultation did not want a mayor; the problem is that they also said they wanted a level 3 devolution deal, with the large amounts of money and power that come with it. It was for the Secretary of State to make the decision that the result of the East Midlands consultation should be a level 3 deal, which requires a mayor.

The noble Lord, Lord Shipley, the noble Baroness, Lady Taylor of Stevenage, and my noble friend Lady McIntosh brought up Tees Valley. As they will know, the report came through very recently. We are considering the two recommendations in it. The noble Lord, Lord Shipley, is absolutely right: risk, scrutiny and audit are very important here, as they are in all local government. The mayor from Teesside has been asked for his response by early March; once it comes through, I will write a further letter on the Government’s response. What I think will happen is that we—the Government—will learn from that report, as will the East Midlands. As with all local government, as I say, scrutiny, audit and risk are important.

[Lord Shipley (LD)]

Since we are on that specific issue, may I ask two questions? The Minister said that there were two recommendations but, actually, there are 28 altogether.

[Baroness Scott of Bybrook (Con)]

I was talking about the ones on scrutiny.

[Lord Shipley (LD)]

Right, but there are others which relate indirectly to the scrutiny, risk and audit function.

Secondly, this is not just about the East Midlands Combined County Authority. This issue relates to all mayoral combined authorities: those that currently exist and those that are about to come into existence. I hope that, when the Minister writes to us, there will have been an in-depth examination by the department of how the criticisms of Tees Valley’s arrangements could not occur in all of those other authorities. I hope that I am making myself clear: there needs to be an examination of the constitutional and working arrangements in all those combined authority areas.

[Baroness Scott of Bybrook (Con)]

I agree with the noble Lord. This is what we will do: we will look at the report in detail and respond accordingly on the things in the report that reflect, first, on the department itself and, secondly, on future combined authorities of whatever type because of the importance of that.

There are currently no limits on mayoral precepts; the power does exist to set limits. That would need the approval of the Commons, though, if it were to happen so we will watch that as it moves forward. I think it was the noble Baroness, Lady Taylor of Stevenage, who brought up the issue of a political adviser. The combined county authorities can have one political adviser; the post, like local authority political advisers, is not politically restricted in the way that other officers’ posts are, but they can have one.

18:00

There was quite a lot of discussion, as always, on the engagement with district councils and the role they play. They are not losing any of their powers—I think we have discussed this enough in other debates—but throughout this whole process, the district councils have been very much part of the discussions and will continue to be so. In fact, not long ago, Minister Young was in Lancashire with its county council, discussing their concerns about the establishment of combined county authorities in that area. I know that the Secretary of State met the District Councils’ Network quite recently, at the end of last year, to discuss this whole issue. We are listening to and talking to them throughout this process.

I will just check whether there is anything else; I think that covers most of the questions that were asked. If there is anything that I have missed I will write, as I have said, and put a copy in the Library.

I go back to saying that the important thing about these regulations is that they are widely welcomed by the people of the East Midlands. This is a huge and significant development for the whole of that area, which benefits from having two cities alongside large towns and rural areas, and being the home for industry such as Toyota UK, Rolls-Royce, Alstom and Boots, with expertise in the area in aerospace, rail, life sciences and transport. The establishment of the East Midlands Combined County Authority is an important step in contributing to the Government’s levelling-up agenda.

In short, the regulations and the devolution deal they implement will make a significant contribution to the future economic development and regeneration of the East Midlands. That will empower its local leaders to invest in local priorities. Once again, I wish it well and commend the draft regulations to the Committee.

Motion agreed.