The Chamberlain News

Councils put hands in pockets to set up £70 million WMCA investment fund

The seven West Midlands metropolitan councils will each pay £10 million to set up a £70 million fund to enable the new combined authority to kick-start commercial land and property developments including house building.

Plans for a collective investment fund are set out in a report to the Birmingham city council cabinet.

Details of a second fund, for land reclamation, to support bringing brownfield sites back into use for housing and employment will follow at a later date.

It is proposed Birmingham council should act through Finance Birmingham as the accountable body for the West Midlands Combined Authority, effectively the organisation’s banker, “until such time as the WMCA is able to borrow funds for non-transportation purposes in its own right”.

The cabinet will agree to pay £10 million into the fund. The other WMCA members – Solihull, Coventry, Dudley, Walsall, Wolverhampton and Sandwell – will also each contribute £10 million.

The seven councils will be re-paid their investment in full after ten years.

Birmingham city council will also contribute £50,000 towards the additional management costs faced by Finance Birmingham for recruiting staff to “source, negotiate, transact and monitor the collective investment fund projects” including a fund manager.

The WMCA is expected to be up and running on June 1 and will bring together the seven council leaders and Warwickshire, Worcestershire and Staffordshire shire district councils to run economic development, transportation and skills.

In May 2017, voters in the West Midlands metropolitan council areas are to elect a metro mayor who will chair the combined authority and oversee an £8 billion devolution deal, based on a £1.2 billion a year Government contribution over 30 years.

The Birmingham cabinet report says the investment fund is designed to enable WMCA to “secure some quick wins and get some of the planned funds working to its advantage as soon as possible”.

The report continues:

The WMCA Programme Board approved the immediate establishment of a collective investment and a land remediation fund. Work undertaken to date indicates that there is a strong demand for the collective investment fund in particular.

Meeting this demand by providing the required investment early on presents the WMCA with a great opportunity to clearly demonstrate the benefit of the region working together collectively in this way.

The collective investment fund has been an identified priority and aspiration for the WMCA since the beginning of the process to establish the WMCA. 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.

The collective investment fund is to be focused on securing economic return across the West Midlands region, whilst ultimately operating at nil net cost to the WMCA at worst.