The Chamberlain News

Operation Clancy: everything you need to know about the new council leader and his policies

No one can accuse the new Birmingham city council leader of lacking policies. John Clancy has radical schemes coming out of his ears; indeed, it is doubtful whether any previous candidate for the top job has campaigned on such a wide-ranging and radical manifesto, writes Paul Dale.

There are populist proposals like offering free school meals and a pledge to scrap the £80-£100 million a year Capita-Service Birmingham ICT contract and hand the work to local firms.

Then there are the really big-idea showstoppers such as developing a Birmingham and regional sovereign wealth fund by utilising billions of pounds from the local government pension fund and the council’s property and land assets. Were this to come off, the new council leader could easily pay for his promise to build thousands of new houses a year, as well as setting an important fund-raising precedent for other councils.

At the very top of Cllr Clancy’s in-tray, however, is a problem of the utmost importance. He has to persuade the Birmingham Independent Improvement Panel that he is serious about delivering the culture change at the council demanded by the Kerslake Review.

If he cannot convince the panel that he is moving the reform agenda forward at pace, all of the fine policy pledges will come to nothing because the Government will eventually lose patience with Birmingham and send commissioners in to run the council.

Clancy’s gone out of his way in the past few days to present an image of change, making it clear he wants to work with opposition Conservative and Liberal Democrat groups for the greater good of Birmingham. He’s had a meeting with Communities Secretary Greg Clark, as well as Greater Birmingham and Solihull LEP chair Andy Street and Birmingham Chamber chief executive Paul Faulkner.

One of the first visits Clancy made after being elected Labour group leader on November 23 was to Cllr Bob Sleigh, the Tory leader of Solihull Council and chair of the shadow West Midlands Combined Authority.

In the past Clancy has made clear his suspicions of the business-led LEPs and questioned their democratic accountability. He also criticised the West Midlands combined authority’s £8 billion 30-year devolution deal with the Government as being “at the bottom end of expectations”.

Clancy assured Cllr Sleigh, and Greg Clark, that he would work with GBSLEP and WMCA to improve the devolution package, although he accepts the chances of any significance rest on Birmingham city council delivering the Kerslake reforms and playing a full role in the combined authority.

So assuming, for the moment, that the improvement panel breathes a sigh of relief and declares its work in Birmingham done by the end of March, what are the chances of the council leader delivering on his extensive policy promises?

The following are the pledges Cllr Clancy made during the council leadership campaign, with my analysis of how difficult or easy it might be to deliver each one.

1. Make Birmingham a Free School Meals City. After our zero-based budget review we will look to reset our budget to invest first in children, not IT. We will make Free Hot School Meals available to both infant and junior pupils at all of our LEA primary schools. We will then look to make Birmingham a Free School Meals City bringing in new forms of investments through social enterprise, social impact bonds and partnerships to achieve this.

A headline-grabbing promise from Cllr Clancy’s manifesto, and one of the most controversial. Several Labour councillors opposed the proposal because only children at council-run schools would benefit, with those at academies missing out. But Clancy sees this as a start towards turning Birmingham into a free school meals city for all children, which he says is an essential plank in the fight against poverty. Something on this scale could only be funded through a complete reappraisal of the council budget, but Clancy’s zero-budgeting exercise will not be in place until 2017-18.

2. Immediate Zero-Based Budget review to address severe cuts to revenue in particular over next two years, where nothing is ruled out and everything is on the table. We have to decide what we can afford. We haven’t done this at all properly yet. All contracts, all books will be given over to our, and the public’s, immediate scrutiny so we can balance the books together.

A tilt at Sir Albert Bore here, whose various promises to radically review council spending priorities never quite made it beyond the salami slicing stage. This promise was quickly refined to make it clear that the 2016-17 council budget, which is almost complete, would not have to be dismantled. The zero budget exercise won’t begin immediately, but when work does get under way the council leader has promised a radical examination of spending line by line to decide what is necessary, and what is not. This will be hugely controversial, which is why Sir Albert Bore shied away from it.

3. The Capita-Service Birmingham Contract will have to go: in its current form there is effectively a protected £80-100 million a year department. This is simply no longer the kind of spend we can contemplate when we will have to take tough decisions elsewhere. We will offer the contract out at a price we can afford at a fraction of the current cost. We should look to our own West Midlands firms to do our IT.

A populist pledge among backbench Labour councillors whose suspicion of “money-grabbing” Capita knows no bounds. The compensation that would have to be paid to Capita may prove a difficult stumbling block. Estimates put the figure at anything between £30 million and £80 million, and reaching agreement will be a legal minefield. Finding a sufficient number of West Midlands IT firms with the skills and capacity to deliver for the council could also be a challenge.

4. Challenge the £45 million extra top-up payments each year to the Local Government Pension Fund when it has now revealed it pays £90 million a year in Investment Management Expenses. We will decline to pay those unnecessary top-up payments to the fund of £45 million each year for the next few years and ask for a refund. Why ask the West Midlands councils for top ups of £100 million extra a year when they can find £90 million for investment expenses? Our huge pension contributions as employers of hundreds of million pounds for all employees will be met fully and with pride. Unnecessary top-ups will not.

Another popular proposal that sounds good on paper, but may result in a legal stand-off with the West Midlands Local Government Pension Fund and the six other West Midlands councils. However, if Clancy can pull this one off he could realise more than enough additional cash to fund his free school meals pledge, and again set the standard for other councils to follow.

5. The £20 million Library of Birmingham Financial Headache must be resolved immediately – our Library must become an asset, not a drain on our resources. We must look to radically reset the asset within an investment asset base and extend the involvement of partners, especially our great universities in its running.

A pretty straightforward proposal. The universities are cash-rich, so get them to bail out the loss-making library. Will they be prepared to play ball? This will be an early test of Clancy’s negotiating skills.

6. A City Region Sovereign Wealth Fund – this would use our £5-6 billion physical asset base to generate capital spend in building housing, and investing in business, Jobs and infrastructure across all wards of the city, to generate economic growth city-wide. We must use it to ensure thousands of affordable homes are built each year over the next decade in this city. Initial investments via Birmingham Municipal Bonds, a Birmingham Municipal Bank, Asset Backed Vehicles, Real Estate Investment Trusts (all immediately available under current legislation) would be the starting blocks to creating a much bigger Wealth Fund at regional level to generate revenue and add to and enhance the asset base and invest in skills.

Radical Clanynomics comes into its own here. Using the public sector property and land asset base to generate spending along with Brummie bonds, a municipal bank and real estate investment trusts. These are ideas that have been around for a long time, but the council has proved itself unable in the past to progress beyond the drawing board. A good idea in theory, but much work will be required to deliver something practical and the Government will have to be on board. As for a promise to build thousands of new homes a year, even if the money is available there will inevitably be issues over where exactly to build these homes.

7. We must work with the combined authority to enhance the current devolution offer with a regional wealth fund at its side. The city’s and the region’s vast assets would become part of a triangle of regional wealth which would bring in significant liquid financial investment from the West Midland Pension Fund (and others). It would draw similar sums of investment capital into the fund from throughout the world which would undoubtedly see the fund as a safe and attractive asset-based fund.

A West Midlands regional wealth fund backed up by the multi-billion pound local government pension fund makes perfect sense, but council pension funds have proved unwilling in the past to invest in things like house building and other public sector capital schemes. Chancellor George Osborne is known to be considering forcing the hands of the pension funds so it may be that Clancy’s moment has come. After all, investing in housing has to be a pretty safe bet for suitable financial returns over a very long period of time, even for cautious pension fund trustees.

8. The £2.7 billion Amey contract. We must look to renegotiate the entire contract, working with the Highways Agency, and the Department of Transport so that, instead of being seen as a city-wide contract, it actually becomes part of the devolution process. The contract must effectively be folded into and be part of our devolution plans for local areas, especially at ward level where councillors, in particular, have a real say in how these services are delivered and, as importantly, how they involve local people, businesses and other providers.

Another big challenge. It took the council several years to negotiate the highways PFI, eventually handing a lucrative 25-year contract to Amey to invest in and manage Birmingham’s roads and pavements. How quickly the contract can be unpicked and changed, and at what cost, remains to be seen.

9. An Open Data Council – We will move to a model of running and leading this city on the basis of transparency and co-operation with our own citizens, partners and businesses. Personal protected data aside, the books and contracts and deals the city makes, and has made, will become a matter of public record. This will better enable citizens, partners and businesses to help us and the city make the right choices. It will also enable others to identify how better to run and lead our city and make the best and most efficient use of our limited resources.

Of all the Clancy promises, this would appear to be one of the easiest to deliver, on paper at least. It will though require overturning decades of ingrained local government secrecy. The council’s lawyers are probably already shaking in their boots and telling the council leader “you can’t do this”.

10. Cabinet Member roles and titles that mean something – I believe very few council employees, councillors or citizens have a sense of who is responsible for what in the political leadership of this council. We will return to clear descriptions that make sense and show who is responsible for what.

Finally, the easiest pledge of all to deliver. Does anyone really have any idea what the commissioning, contracting and improvement and skills, learning and culture portfolios actually cover? Sir Albert Bore’s departmental cross-cutting cabinet names have not proved a great success. Expect early in the New Year a reshuffle and the reintroduction of “sensible” titles such as cabinet member for housing, transportation, finance etc.