The Chamberlain News

United Manchester’s budget boost puts pressure on West Midlands to seal combined authority deal

George Osborne’s decision to allow the Greater Manchester region to retain one hundred per cent of business rates growth piles yet more pressure on political leaders in the West Midlands to close a deal on forming a combined authority.

If such a move were to be extended to Birmingham’s city centre enterprise zone, the amount of income raised from the rates paid by new businesses moving in would be doubled. At the moment the city council keeps only half of the rates uplift to spend on regeneration.

The Chancellor hinted when presenting the budget that he could extend the new measure to other local authorities and has set up pilot studies in East Cheshire and Cambridge.

But for the time being the Government’s focus on devolution is aimed squarely at rewarding combined authorities – Mr Osborne also announced a deal with Leeds and West Yorkshire, giving the region autonomy over skills, apprenticeships and transport.

However, Yorkshire failed to win the extensive powers and pooled NHS budgets granted to Greater Manchester because it did not agree to have an elected metro mayor.

In his budget speech Mr Osborne described Greater Manchester’s decision to have an elected mayor as “the most exciting development in civic leadership for a generation”.

Greater Birmingham Chambers of Commerce said Mr Osborne had given a firm hint that Birmingham must copy Greater Manchester by creating an authority that represents the real economy of the region. Chamber president Greg Lowson :

This is the biggest hint yet that Greater Birmingham and the surrounding region must get its act together and create an authority that can speak for the wider economy.

Only then can the West Midlands begin to enjoy that same sort of treatment the Government has given to Greater Manchester.

Centre for Cities said Mr Osborne’s business rates uplift decision for Greater Manchester was “another reward for the city-region that has proven itself most capable of making tough decisions and working in partnership across boundaries for the broader economic good”. But the think-tank warned:

This means that the gap between Greater Manchester and the powers available to other UK cities to decisively shape their economic future continues to grow.

What we need from the next Government is a fundamental commitment to shift power away from the centre and support cities across the country to fulfill their potential.

Solace, the Society of Local Authority Chief Executives, said:

The Chancellor’s announcements on enterprise zones are a step forward. The flexibilities will provide an important means by which local authorities can contribute to greater economic growth.

However, to create a step change and truly rebalance the economy, greater levels of devolution are needed, like those announced today for West Yorkshire. We must ensure that local authorities have all the necessary powers to create prosperity at a local level and support growth of the national economy.

Council leaders in Birmingham, the Black Country, Solihull and Coventry appear to be as far away as ever on agreeing to set up a combined authority, with the latest demands from Sandwell Council leader Darren Cooper focusing on naming rights – ‘we won’t be called Greater Birmingham’ – and a refusal to countenance having a metro mayor.

Conservative-controlled Solihull Council remains wary of teaming up with Birmingham and the Black Country, fearing that a combined authority would push for massive housing development in the Meriden Gap green belt.

The naming issue is a side show. Council leaders will probably settle for the West Midlands combined authority in an effort to move forward. Refusing to have an elected mayor may not matter if Labour wins the General Election and forms a Government since Ed Miliband has said he doesn’t regard the mayoral model as essential. Another Conservative-led Government with Mr Osborne as Chancellor will see things differently.

The Local Government Association described Mr Osborne’s decision to award Manchester one hundred per cent business rates growth a “significant step forward” but added that other local authorities should benefit from the same deal. LGA chair Cllr David Sparks said:

Councils have long been calling for reform of out-of-date business rates and for any growth in receipts from this tax to be retained by local government. The announcement of pilots in Greater Manchester, Cheshire East, Cambridgeshire and Peterborough keeping a greater share of this income is a significant step forward, but one which should not just be limited to a handful of areas.

All parts of the country should be able to reap the benefits of having a thriving local economy. This should be implemented as soon as possible in a way which ensures areas with fewer businesses do not lose out.

The greater say people in Greater Manchester and now West Yorkshire will have over their local transport, skills provision and welfare policy will save money and improve services.

Local areas having autonomy over their local services should no longer be dependent on incremental concessions from Westminster. The future of local services depends on this becoming the default.

Cllr Sparks pointed out that government grants to local councils will have fallen by about 40 per cent between 2010 and 2016. He added:

The next government must protect funding for local services, tackle the adult social care crisis and set out a new settlement for England which devolves decisions about infrastructure and skills as well as health and social care, down to local areas.

This Budget has acknowledged the need for changes to the way public services are funded and delivered and for more of the important decisions to be made closer to the people who use them. But it has not protected funding or delivered the bold approach to English devolution which will be essential to the survival of our libraries, children’s centres, parks and local buses in the next few years.

image: BBC Midlands Today graphic, 7 November 2014