Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Election of Mayor) Order 2016

Lord Beecham Excerpts

Monday 18th July 2016 Lords Chamber

We are committed to this devolution agenda because it gives a real opportunity for areas to assume powers and budgets, which will help those areas achieve their potential, take control of their growth and, importantly, have a positive impact on the lives of local citizens. These orders will provide both the Sheffield City Region and the West Midlands with a strong voice and an effective leader who can deliver for the local area and help rebalance the economy of the country as a whole. I therefore commend these draft orders to the House.

[Lord Beecham (Lab)]

My Lords, I extend a warm welcome to the Minister on his first appearance at the Dispatch Box in his new position. It troubles me that it was 10 years ago that I concluded a report on public services in Wales, which was named—though not by me—the Beecham report. At some point perhaps the Minister and I could have a session in which I can catch up on what, if anything, has happened since that report was published.

These two orders, providing for the election of mayors for the combined authorities of the West Midlands and South Yorkshire, constitute the launch, in effect, of two further vessels to join the devolution armada which the Government are intent on creating. Both areas contain authorities which voted by substantial majorities not to have elected mayors when they were compelled to have referendums on the issue. The Government pretend that it is open to the authorities in question to accept or reject the concept of an elected mayor for the combined authority and so, formally speaking, it is. However, given that the entire devolution deal depends upon the adoption of the mayoral model, the reality is that councils are faced with the political equivalent of Henry Ford’s offer to those who wished to purchase his cars: “You can have any colour as long as it’s black”. The millions of people who live in these areas can have devolution with any kind of local governance as long as it is headed by a mayor.

In the case of these areas and others which have entered into or plan to enter into agreements with the Government, there are concerns about the new system and the claims made for it by Ministers. Some of these relate to the alleged benefits to be derived from the additional funding to be provided to combined authorities and their mayors for investing in economic growth. The West Midlands will receive £36.5 million a year for 30 years, or, as the Minister said, £1.095 billion, which equates to £13 a year per head of population. South Yorkshire will receive £30 million a year, £900 million in aggregate, which is the equivalent of £22 per head of population per annum.

These figures compare with £915.6 million of local authority capital expenditure and £105.2 million of annual growth fund allocations to the local enterprise partnerships in 2014-15 in the West Midlands, and £367.4 million and £54.7 million respectively for South Yorkshire. Therefore the bonanza amounts to an additional 3.6% for the West Midlands and 7% for South Yorkshire. Meanwhile, Birmingham alone will by 2020 be suffering from cuts to its revenue expenditure of £817 million a year. By the end of this year, Sheffield will have sustained cuts of £350 million a year, with the likelihood of some £50 million or £60 million a year more by 2020. It is clear that the vaunted claims for devolution made by its erstwhile progenitor, the lately departed George Osborne, were, in financial terms, wildly overstated. But there are other issues of concern to these two areas which need to be considered.

As the Secondary Legislation Committee points out, and as I mentioned when we discussed the combined authority order for South Yorkshire, there is an issue concerning the wishes of two districts in Nottinghamshire and Derbyshire, Bassetlaw and Chesterfield. They will become part of the combined authority and thereby, for the purposes of the combined authority, will come under the authority of the elected mayor for South Yorkshire. They would, however, remain under their existing county councils for functions such as education, social care and libraries. But, given the relationship between, say, housing and public health, which are matters over which the combined authority may be expected to exert influence, how is this likely to work?

I warned that we seemed to be in danger of sliding into a back-door reorganisation of local government as the demand for a unitary model, based on an expanded South Yorkshire combined authority, inevitably grows. Alternatively, or additionally, will we see the creation of a North Midlands combined authority, presumably not a mayoral authority, of which, confusingly, Chesterfield and Bassetlaw would seek to be members, as the Select Committee observed? They would be based upon the two counties of Derbyshire and Nottinghamshire.

The National Audit Office explicitly warned, as the Secondary Legislation Scrutiny Committee reminds us, that devolution deals, such as that in the West Midlands,

“are increasingly being negotiated and agreed with more complex and untested geographies”.

Its report of 20 April refers explicitly to,

“risks around alignment with the administrative geographical areas for other linked policies”,

citing the NHS planning guidance which requires areas,

“to define their own local health economies and to consider devolution deals while doing so”.

As the National Audit Office points out, given that,

“geographical configurations … have yet to be resolved in many areas, it is not yet clear how these two processes will align”.

So can the Minister tell us what discussions have taken place between the DCLG and the Department of Health, and for that matter with NHS England, about the position in general, and specifically with regard to the two areas we are discussing today? This is particularly relevant to the complex situation in the West Midlands where, as I pointed out when we were discussing the combined authority order, we appear to be reverting to the era of the Anglo-Saxon Heptarchy, with its Kingdom of Mercia.

The West Midlands mayor will head a combined authority with seven member councils, three local enterprise partnerships and no fewer than five non-constituent member authorities: namely, Cannock Chase, Nuneaton and Bedworth, Redditch, Tamworth, and Telford and Wrekin, all of which are districts within a county council whose residents will not have a voice or a vote in the choice of mayor. How is this consistent with democratic local government? What will be the relationship with the relevant county councils?

The Secondary Legislation Scrutiny Committee referred in an earlier report to “combination creep” through the involvement in combined authorities of non-constituent councils or councils outside the geographical limits of existing combined authorities. Given that the report was published only last Thursday I do not expect the Minister to be able to respond today and to provide the greater clarity the committee seeks. But could he indicate when a reply will be provided, and whether it would not be sensible to pause before proceeding with this series of orders, which seem set to lead in some areas to highly complex changes whose benefits are at best highly unquantifiable?

The idea of devolution is welcome, but not every aspiring area is the same. Huge questions go unanswered about finance, accountability and structures to different degrees in different areas, and we do not know whether the new Prime Minister, her Chancellor and the Secretary of State share the apparent enthusiasm of their predecessors for this policy.

Some areas—Greater Manchester, Merseyside and the Tees Valley—are well down the road and are well defined, but more work is surely required to ensure that for the kind of areas we are discussing today, and with some still to come, the serious questions raised by the National Audit Office, the Secondary Legislation Scrutiny Committee and others can properly be addressed. I make it clear that we on these Benches—all of us—want to see this devolution work and be properly funded, but it is difficult to see how well it will work unless these critical questions are answered. We do not want to see the devolution armada scattered to the four winds like its Spanish naval counterpart.

[Lord Shipley (LD)]

My Lords, first, I congratulate the noble Lord, Lord Bourne of Aberystwyth, on his appointment, and we welcome him in assisting the drive for devolution. I agree with what the noble Lord, Lord Beecham, said about the importance of devolution—it is a shared agenda across your Lordships’ House. I hope very much that the new Minister will bring his expertise to bear on the detail of the move to greater devolution within England as the Cities and Local Government Devolution Act is implemented.

I should say at the outset that I am a vice-president of the Local Government Association. Right across local government, politicians have been very supportive of the move to greater devolution.

Last week, there was a debate on similar orders for Merseyside and the Tees Valley. I do not want to repeat comments that were made during that debate, except to say that I agree with much of what the noble Lord, Lord Beecham, said about the general approach being taken and about some of the problems being produced by changes in government, as well as the overall financial problems that local government has.

Last week it was confirmed—as it will be tonight—that there will be a mayoral election in May 2017, even if there is no agreement later this year on the powers and budgets that a combined authority will have. I understand the reasons for that, although if that were to happen it would clearly make things more complicated and more difficult to explain to the general public.

In our debate on Merseyside and the Tees Valley, I drew attention to a report on the devolution process published at the beginning of this month by the Public Accounts Committee of the House of Commons. There is a full record in Hansard of what we said, but the crucial sentence in the report that I want to draw to the Minister’s attention tonight is on page 3 of the summary:

“There has been insufficient consideration by central government of local scrutiny arrangements, of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

I subscribe to that. There was a request by the Public Accounts Committee that:

“Government should set out by November 2016 its plans for how it will ensure that local scrutiny of devolved functions and funding will be both robust and well supported”.

I think there is a commitment from the Government to come back with the detail of the powers, budgets and scrutiny at the same time so that we get both at once, because that really matters.

I am grateful to the Minister for the letter that we received today by email. It answers some of the issues that we raised during the debate on the Merseyside and Tees Valley orders concerning how a chair of an overview and scrutiny committee could be appointed. It is made clear in the letter that an independent chair will be appointed following “an open, competitive process”. I think that that implies the Nolan procedures, but I would be grateful if the Minister confirmed that it does. The letter states that,

“a candidate must submit an application to the combined authority in response to a public advertisement”,

and the appointment,

“must be approved by a majority of the members of the combined authority”.

The letter then says—this is a point I take issue with—that there will therefore be,

“a wholly transparent appointment process mirroring the approach which councils must use when appointing independent persons under the Localism Act 2011 for the purposes of the councillors conduct regime”.

Local councils are bound by statute to proportionality in the make-up of committees. The difficulty here is that a combined authority will be the leader of the local authorities. It is entirely possible—and certainly it would happen in the north-east of England, where I live—that there would be seven Labour chairs. I am concerned that proportionality simply cannot exist in such a constitutional structure. Indeed, an independent chair could be appointed by a majority vote of a one-party committee. I hope very much that when the Minister comes back later this year, the guidance—if it is guidance, as opposed to being statutory—makes it clear that this appointment cannot simply be in the hands of a handful of people, all from one party, who may decide to support an independent person who, in practice, may well not be entirely independent. I draw that to the Minister’s attention because it is important we ensure that public confidence in the powers of an elected mayor is protected.