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West Midlands Combined Authority Order 2016

Volume 773: debated on Monday 6 June 2016

Motion to Approve

Moved by

That the draft Order laid before the House on 28 April be approved.

Relevant document: 35th Report, Session 2015–16, from the Secondary Legislation Scrutiny Committee

My Lords, the draft order that we are considering this afternoon, if approved, will create a combined authority for the West Midlands. It will also dissolve the West Midlands Integrated Transport Authority and Passenger Transport Executive, and transfer their functions to the newly established combined authority. This order is made pursuant to the provisions of the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016.

The seven constituent councils of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton have led a truly local, bottom-up process to produce a proposal for the establishment of this combined authority. They believe that this governance model is the most appropriate way for the West Midlands to achieve stronger, more efficient and more effective delivery of economic development, regeneration and transport responsibilities. If this order receives parliamentary approval, the West Midlands Combined Authority will be the second combined authority established since the amendments to the 2009 Act by the 2016 Act, and the seventh established in the last five years.

It is important to note that, while establishing this combined authority in no sense commits the councils concerned, or indeed the Government, to creating a mayor for the area or devolving powers to the area, the councils and the Government intend to use this combined authority as the foundation for implementing the devolution deal that we have agreed with the West Midlands.

My Lords, the Minister said that the councils in the West Midlands have signed up to the issue of having an elected mayor. I remind her that, when we had a referendum in the West Midlands, we decisively voted against having mayors. There is no sign-up at all to having a mayor—it is just that her department has forced the West Midlands authorities to accept it because they would not get the powers unless they were given a mayor.

These matters are truly local matters, and if the local authorities approach government with their wishes, the Government will consider them. We went through that during the passage of the Cities and Local Government Devolution Act; no authority will be made to do anything that it does not wish to do.

Is the Minister saying that the powers that will be given to the West Midlands Combined Authority as set out in this order, and more in the future, will be available if the local authorities intimated that they would not have a combined mayor?

My Lords, the order we are dealing with today has no bearing on whether those local authorities will have a mayor. This order is about creating a combined authority. I want to make that absolutely clear to all noble Lords. This is about creating a combined authority; it is not about creating a mayoral combined authority.

In its report, the Secondary Legislation Scrutiny Committee questioned the relationship between the combined authority we are considering today and future developments, such as establishing a mayor for the area. I shall say a little more about this later, but now I would like to address in more detail the draft order before the House this afternoon, which is the order to create a combined authority.

This order provides for the combined authority to assume responsibility for economic development, regeneration and transport across the West Midlands. As I have said, the West Midlands Integrated Transport Authority and the West Midlands Passenger Transport Executive will be dissolved and their transport functions transferred to the West Midlands Combined Authority. This order will enable the seven councils and their partners—including the three local enterprise partnerships in the area: Black Country LEP, Coventry and Warwickshire LEP and Greater Birmingham & Solihull LEP; and the five non-constituent members: Cannock Chase, Nuneaton and Bedworth, Redditch, Tamworth, and Telford and Wrekin—to work together more effectively and efficiently to promote economic growth, secure investment and create jobs.

In laying the draft of this order we have followed the statutory process specified in the 2009 Act as amended by the 2016 Act. A key feature of this is that there is a triple lock. Establishing a combined authority can happen only if the councils concerned consent, the Government agree and this House and the other place approve the necessary secondary legislation. That is absolutely the case here. The seven constituent councils have consented to this order, the Government have agreed the draft of the order, and we are seeking Parliament’s approval before making the order which will establish the combined authority on 10 June.

We have considered the particular circumstances of this proposal for a combined authority, as the law requires. We have concluded that the statutory conditions are met. First, we are satisfied that the making of this order is likely to improve the exercise of statutory functions in the area to which it relates. We also consider it would be appropriate to establish this combined authority, having regard, as the 2009 Act requires, to the need to reflect the identities and interests of local communities and to secure effective and convenient local government. Finally, we have considered the public consultation carried out by the constituent councils of the West Midlands on the proposals to form this combined authority and consider that no further consultation is needed.

I recognise that in its report the Secondary Legislation Scrutiny Committee raised certain issues about consultation. I have to tell the House that we do not share the committee’s view that there are inadequacies in the consultation. We have reached this conclusion having had regard to the government Consultation Principles published on 14 January this year, which the Secondary Legislation Scrutiny Committee referred to in its report, and which have recently been amended in light of comments made by the said committee. In short, the consultation’s use of digital measures is wholly consistent with these principles and, as the principles make clear, consultation needs to be considered as,

“part of a process of engagement”.

The engagement in this case has been very substantial and included: writing to a representative sample of 465 stakeholders, comprising key private sector employers, public sector bodies and third sector organisations; the establishment of an online survey which attracted 305 respondents and for which the results were analysed and published; the attendance of the three local enterprise partnerships, and the authorities within them, at shadow combined authority meetings; seeking feedback from the public via a query box on the shadow combined authority’s website; a parliamentary event; and a number of formal and informal briefings with the business and third sector communities. In short, I can confirm to the House that we believe the conditions have unambiguously been met, and that we are therefore seeking the approval of this House today to the order that the other place has already approved.

On the point that the Minister has just made about the other House approving this order, how long did it spend on it?

Virtually no time at all, I understand. It shows the merit of your Lordships’ House that so many noble Lords are here today and are actually interested in this subject. I thank noble Lords for their presence here today and I am sure that I will be well and truly grilled.

I shall say a few words on devolution deals. The Government committed in our 2015 manifesto to,

“devolve powers and budgets to boost local growth in England”,

and we see combined authorities as a mechanism for doing so. On 17 November 2015 we agreed and concluded a devolution agreement with the seven councils that are constituent councils of this combined authority. This is a major step in our devolution agenda. The footprint created by the three local enterprise partnerships of the West Midlands makes up a major economy with an annual GVA of some £80 billion. The area is also England’s manufacturing heart, home to important manufacturing businesses and leading centres of advanced engineering research.

The region’s leaders are committed to delivering growth, prosperity and well-being for their residents, and they see the devolution agreement that they have concluded with the Government as central to achieving that. The agreement will devolve major powers and budgets, including £36.5 million a year of devolved funding, over the next 30 years; responsibility for a devolved transport budget; control of the 19-plus adult skills funding by 2018-19; strategic planning powers; and a devolved approach to business support. It will also enable the combined authority to create an investment fund of over £1 billion through the 30-year revenue stream and locally raised finance.

In return, the area has agreed appropriate governance for the new powers and budgets, centred on a combined authority and a directly elected mayor, providing the vital, sharp, single point of accountability that is essential if such wide-ranging powers and budgets are to be handed to the area. The combined authority that we are discussing today will be the foundation of that new governance, and we will be bringing forward to Parliament the necessary orders that, with the consent of the councils concerned, will establish the new governance arrangements if Parliament approves them. Today, however, we are considering simply the order that—if this House approves, as the other place already has—will establish a combined authority with transport and economic development functions, and which, as I have said, if those concerned wish this, can be the foundation of the governance needed for us to implement the devolution deal. I commend the order to the House.

My Lords, the order is to approve a combined authority for the West Midlands in the area comprising Birmingham, Coventry, Dudley, Sandwell, Walsall and Wolverhampton, as the Minister said. It is an area that I know well as I lived in Coventry for many years in the 1990s.

This is one of a number of such arrangements that are in various stages of being approved, the most advanced of which is the combined authority for Greater Manchester. I should say at the outset that I am generally in favour of the devolution of power, but there are potential problems with the proposed arrangement that we in this House need to explore before we approve the order. The National Audit Office has questioned the proposals, saying that they are “untested” and may not work. In fact it said that the arrangements were experimental, and that does not seem like a good way to proceed. Perhaps the Minister can respond directly to that point. The NAO went on to say that,

“the government's approach to English devolution still has an air of charting undiscovered territory”.

It is fair to say that the West Midlands deal is complex. There are the constituent councils at the core of the deal. There are the non-constituent councils such as Nuneaton and Bedworth, Tamworth, Cannock Chase, Telford and Wrekin and, I believe, Redditch. There is the prospect of other non-constituent councils such as Stratford-on-Avon, and all the other authorities which are not involved at all, such as North Warwickshire, Bromsgrove, Rugby, Warwick, and others, which all surround the West Midlands conurbation, and the various LEPs, which the Minister referred to.

It is fair to say that it could be seen as a bit disjointed and confused and not at all like the deals we have seen in Greater Manchester. Could the noble Baroness, Lady Williams of Trafford, comment on that and on the position regarding devolution deals in the counties of Warwickshire, Staffordshire, Shropshire and Worcestershire? If they are going to seek any sort of devolution deal, how will that be effected when some of the authorities are part of this deal? Maybe the Minister will say that as a non-constituent member it is not a problem and they can become a constituent member of a deal in their respective county. Again, however, that leaves a confusing picture, which I am grateful to the National Audit Office for highlighting. Can the noble Baroness also tell us something further about the proposed accountability arrangements for this devolution deal?

The other body that looked at the West Midlands Combined Authority, and in particular the way it is being established, is the Secondary Legislation Scrutiny Committee of your Lordships’ House in its 35th report, which questions the use of secondary legislation to bring about major policy change such as this. In particular it questions the consultation process, and on reading the report the committee has a point. A three-week online consultation does not seem adequate when you consider the power that this authority will have, and in particular the elected mayor. It is proposed that the election for that post will take place next May, although I accept that that is not part of this order. The committee suggested a minimum of six weeks for a consultation exercise of this nature, and I agree. In addition, having the consultation available only online disadvantages those sections of the community that are not e-enabled. I have some sympathy for the notion that for a consultation of such magnitude leaflets should also have been delivered to every home in the constituent council area.

There is also the issue of support in the local community for these arrangements; certainly Coventry—an area I know very well—appeared to be in this limited consultation the coolest when it came to the whole proposal. Can the noble Baroness, Lady Williams of Trafford, comment on the relative inadequacies of the consultation in respect of this proposed combined authority? Like the National Audit Office, the Secondary Legislation Scrutiny Committee comments that the proposed inclusion of non-constituent councils will add to the complexity and highlights even further the changes to local government structures that are being taken forward through secondary legislation. The committee used the term “combination creep” to describe what it saw in the proposed West Midlands deal.

Although the order does not bring forward the election of a mayor for the combined authority—I agree heartily with the comments of my noble friend Lord Hunt of Kings Heath in that respect—when that order comes to this House, which I am sure will happen in the next few weeks, will the Minister confirm who will vote for this mayor? Will it just be the electors in the constituent council areas or are the non-constituent council areas involved as well? I assume not, but it would be useful to have the Government’s thinking on this as well.

Although I have raised a number of points, I am supportive of devolution generally, and where it can be made to work it is great. But I feel that this is a bit like trying to run before you can walk. We have not even had a mayoral election in Greater Manchester, the concept has not been allowed to bed down, and we are already seeking to create even more complex structures with no evidence of how this will work in the future. That is the thrust of the points raised by the National Audit Office and the Secondary Legislation Select Committee, and I very much concur with those sentiments. I will be grateful if the Minister can respond to my points at the end of the debate but if she cannot, a letter will be absolutely fine.

My Lords, I am grateful for the opportunity to welcome this order today, notwithstanding and quite accepting the comments made by the noble Lord who is the spokesperson for Labour.

The order brings together the West Midlands. It lets local government think beyond its normal boundaries, and strategically, for our region. We need to look at our competitiveness—digital, manufacturing and in other areas. We need a strategy for our skills, we need proper broadband, and transport links are very overcrowded and need to be much better. We are a manufacturing region: 38% of our GVA is in manufacturing—that includes the supply chain—and we have problems.

I am very concerned about the difference in the relative wealth of the various local authorities. Birmingham is, for want of a better expression, broke. Fortunately, other local authorities are not in such a bad position. However, I want to ask about the LEPs. There is no formal mechanism for them to consult the business community. I am always thinking about local authorities but a key player in this will definitely be business, which will have a pivotal role.

The CBI has no regional representation in the West Midlands and the chambers are fragmented. We need a West Midlands chamber of commerce. We are criticised for our lack of productivity, which the West Midlands Combined Authority shadow board says is low. It is if you take GVA over the total population, at £20,137 per head, but if you take GVA over those in work it goes up to £45,000, so we do not want to be criticised purely because we have an unemployment issue in the area. We could be a lot more productive if we had better broadband, better transport and a better skills base.

I have a few questions for the Minister. I am glad that I am not the only one who is confused about what the voting rights will be for non-constituency members and what role those members will play. On scrutiny, what part will minor parties play? Will they have a voice as well? There are a lot of smaller parties in the West Midlands. Today I have learned that the Secretary of State, the right honourable Sajid Javid, is the official sponsor of the Midlands engine. Perhaps the Minister will comment on whether she has seen any evidence of the Midlands engine in the Midlands.

Finally, Sajid Javid is apparently responsible for bringing together a politically neutral coalition of West Midlands MPs. How is he getting on?

My Lords, I thank the Minister for her careful introduction to this order and I very much welcome the work that has been done by the local authorities concerned to get to this stage.

It has not been at all easy. The noble Baroness will know that there is a history of difficult relationships between local authorities in the West Midlands. First, we should acknowledge the work that has been done by the major constituent local authorities to come together and reach an agreement. That is a very positive start. Secondly, I agree with the noble Baroness and my noble friend Lord Kennedy about the huge potential of the West Midlands. It has had its problems but there is no doubt that there are some very promising signs with manufacturing development and the role played by universities.

We are also starting to see a return of media to the West Midlands, which, grievously, we had lost over a 20-year period. I do not know what discussions the Minister has with her colleagues in the DCMS but any nudge that she can give towards ensuring that Channel 4 does indeed move to Birmingham will be very much appreciated. I hope that she will ignore a typical metro article in the Independent today arguing that it would be quite impossible for Channel 4 to operate outside the centre of London. I am sure that the noble Baroness agrees with me on that.

I want to raise one or two issues. First, my noble friend mentioned the National Audit Office report, which made a very important critique of some of the issues surrounding the development of these combined authorities. I assume that the Government will respond in due course but I would be very interested in the Minister’s views on what the NAO said. Without quoting extensively from the report, the NAO thinks that there is quite a lot of confusion about what the core purpose is of these devolution deals, who is going to be held responsible and how that accountability is to be discharged.

The Minister will recall the debates we had about health and social care in Greater Manchester. At the time, it appeared that the Department of Health was unsighted on the agreement, and certainly on the implications of the so-called devolution deal. It has become clear since then that it is not devolution, it is delegation. The comments of NHS England about the control that it is keeping in relation to health and social care seem to me to be very much a step back from the premise that was given to your Lordships when we debated the original Bill that allowed us to develop these combined authorities. It is right for the NAO to ask whether some of these agreements are indeed devolution or delegation. There is clearly a very important difference between them. I want to come back to health and social care in a moment, but I am not convinced that NHS England is really part of this in a wholehearted way. I am interested in the Minister’s view on that.

The Minister will also have seen the report of your Lordships’ Constitution Committee, which comments on the issues around combined authorities. Again, the report is asking for greater clarity about where we are going on all these deals. We can see what is happening in Scotland, Wales and Northern Ireland, and we are seeing different agreements in different parts of the country. I understand the point about letting a thousand flowers bloom, and obviously the logic of what is happening here is to respond to the proposals that are being put forward locally—I get that. But at some point there will have to be some kind of coherent framework so that it will be possible for parliamentarians and the public to understand who is ultimately accountable in this new picture. This is very important.

I want to pick up on the issue of consultation. I know that the Minister and her department are quite satisfied with the consultation. However, I have to say that, after a very difficult, tortuous process, on which I congratulate the local authorities, to have an online consultation of three weeks is not sufficient. There should have been greater opportunity for members of the public to have their say. I hope that this is not going to be taken as a precedent for the future. The Minister talked about a review of the consultation procedures as a result of the scrutiny committee’s report, and I wonder whether she could say a little more about that.

Then we come to the issue of the mayor. I understand what the Minister is saying: that this order is about the combined authority and not about the mayor—I was almost going to say “super-mayor”, but, given the proposed salary of £45,000, I do not think that that is quite the right description. The scrutiny committee itself commented on the ambiguity in the consultative documents about this order and about what is going to happen with the mayorship. I think a draft order is now in play which will come to your Lordships’ House to set up the mayor structure. I have to say that I am deeply sceptical. I have been waiting for some rational explanation as to why it is that this Government—and my own Government—seem to have fixated on this. Why is it considered important to have these so-called super-mayors? Personally, I do not get it. I do not understand why the Government think that this is the answer. In relation to the mayors that we have had so far, I do not think the record shows that that is the right way to go.

If we really believed in local government, we would let local authorities decide their own governance framework. But I am afraid that Governments of both colours have messed around with local government. Take, for instance, the insistence at one point that local authorities have either a cabinet or a mayor and not a committee—they were not even allowed to decide their own committee structure. This does not strike me as being the mark of a Government—of any colour—with a true belief in local government. The plea I make to the Minister is: if she really believes in real devolution, she should let the local authorities decide for themselves what their governance structure should be.

I do not think that many people in the West Midlands want a mayor; we simply do not want a mayor. It is clear that local authorities have been told that they have to have a mayor—I wish that the Minister’s department would be honest about this. Local authorities have not signed up to this voluntarily; they have been forced to do so. We had a referendum in Birmingham on whether we should have a mayor for the city, and 57.8% voted no. That was clear cut, but a back-room deal now dictates that we are going to have a mayor and we have no say. As far as I can see, there is no proposal that the people of the West Midlands should have a vote. We are deciding on our membership of the EU with a referendum vote, but, apparently, we in the West Midlands cannot decide whether to have an elected mayor. That is a great pity.

The Minister will know that the local authorities are determined to circumvent the power of the mayor, as is quite clear from the documents and from what is being said. I do not know whether the £40,000 salary is an urban myth or reality. The very fact that the information has come out would suggest that the combined authorities are determined that the mayor should have no power. If that is the case, is it not better to accept that and let them get on with governing themselves in the way they want to, rather than forcing them to have what I am afraid is likely to be a second-rate or third-rate person elected as mayor because the job simply will not be worth doing?

Finally, on health and social care, the Minister will know that the chief executive of Birmingham City Council is leading the work on the sustainability and transformation plan for Birmingham—and is, I think, making very good progress. I hope that there will be a proposal in the months ahead for health and social care to be part of the combined authority functions. Would her department be sympathetic to a proposal coming forward? I am sure that, like Greater Manchester, the West Midlands would benefit hugely from local authority involvement in and overall supervision of health and social care. I hope that we can make some progress on that in the next few months.

My Lords, I was very pleased by the Minister’s response to my question about the other place. I thought that I had seen it on the news that the Delegated Powers Committee had met for a total of 15 minutes, but I do not know what business it had. I thought, “Well, they haven’t spent long on the West Midlands, that’s for sure”. For those who seek your Lordships’ House’s abolition, this is another good example of us performing our function of scrutinising and raising issues. The one thing I am sad about is that all the speeches appear to have been from this side of the House, when there is a lot of West Midlands experience among noble Lords on the other side.

I agree with the comments of my noble friend Lord Hunt and shall not repeat them, but some central points have to be explored. No one can deny that the seven metropolitan councils are coterminous—that was how it was all designed back in the 1980s. There is a plan now for combination creep. You cannot have proper accountability arrangements where there is no clear coterminosity—the National Audit Office has said that, and I shall give more examples. We have the seven authorities which will have two members on the council and the five non-constituent councils—Cannock Chase, Nuneaton and Bedworth, Redditch, Tamworth, and Telford and Wrekin. Added to which are planned: Shropshire Council—which is in the old language a unitary county council; I shall come to that in a moment—and Stratford-on-Avon. I have also read as I have searched through the documents on this that Warwickshire County Council might want to join—it costs non-constituent councils only £25,000 to join, by the way. If so, this would push Rugby, Warwick and North Warwick District Councils into joining them. This would take the combined authority numbers up to 29 if one includes the mayor. It would get quite large—I am not criticising that—but this is not a coterminous combined authority.

The devolution deal with the Government set out in November—of which I have a copy here—clearly requires an elected mayor. It is a condition of the devolution deal with the Treasury. There is no argument: if you do the deal to get the powers you must have an elected mayor. The West Midlands Combined Authority (Election of Mayor) Order 2016 has already been published and I have a copy here. Obviously we are not discussing that order today but we could have taken both orders together because they are all part of the same issue.

Paragraph 7.2 of the Explanatory Memorandum to this order refers to the Government doing “bespoke devolution deals” with local authorities. That means they are making it up as they go along. There is no plan for Parliament to scrutinise and no plan for the National Audit Office to test their programmes for economy, efficiency and effectiveness. There is no plan and so you cannot test it, report back on it or consult on it. There may have been some consultation but the order is growing like Topsy as it progresses and other authorities jump on the bandwagon. There has been no proper consultation within the normal meaning of the process.

The Wikipedia entry for the West Midlands Combined Authority says that it is,

“commonly referred to as Greater Birmingham Combined Authority, or simply Greater Birmingham”.

This is very unfair on the better-run authorities of Sandwell, Dudley and Wolverhampton. I make that quite clear. On the other hand, it is more accurate to refer to Shropshire Council as the Greater Shrewsbury and Oswestry Council given the blatant unfair treatment of south Shropshire, thought to be because south Shropshire is wholly represented by Lib Dems and the Tory cabinet are all in the north of the county.

Leaving aside the names, there are some serious governance issues with which the Government are playing fast and loose. Unlike my noble friend, I am not opposed to elected executive mayors who are genuinely accountable. That was my position when I was a Member of the other place and it remains my position now. However, once the mayoral order, which we are not debating—its shadow is sitting here—is agreed, the mayor will not be executive and will be mayor of only part of the combined authority; that is, the seven constituent founder councils, which will have two votes each as opposed to the others having one vote each.

It was reported in the Birmingham Post on 26 May that this system is known as the “smothered mayor model”. It makes the mayor just another member of the cabinet with the seven leaders. You smother the mayor—end of the issue. No wonder the respected West Midlands police and crime commissioner, David Jamieson, has expressed misgivings about the nature of the role. He is looking for a colossus for the role and there is not one in the Midlands at the present time. We have not got the Dennis Howells or the Adrian Cadburys any more. We need them, it is true, but we do not have them.

There is no doubt that, within the proposed combined authority area, the place with the land for major industrial investment is Shropshire, where I live in Ludlow. I was informed at a recent public meeting by the council leader that no new factories were welcome—yet this is the area of the country that gave birth to the Industrial Revolution at Coalbrookdale.

However, when the Minister was speaking, I was not certain whether we would get an update on all those who are seeking to join the combined authority. I have searched on the web because that is all you can do these days. The minutes of the Shropshire Council cabinet for 6 April on membership of the West Midlands Combined Authority is a full document from the chief executive about joining and signing up. The point is made about the fee and everything else. The document also states at paragraph 3.1.1 that it wants to support business,

“including expansion of high level manufacturing”.

I firmly believe that there should be more industry investment in the West Midlands to capitalise on our reputation for making things and being the centre of the Industrial Revolution. We have too many industrial museums, with the Black Country Living Museum and Ironbridge, but not enough factories. However, we must have proper governance, and that is my concern. If there is no proper governance, companies from outside the West Midlands that are thinking of investing cannot conduct due diligence on investment locations. It cannot be done because there is no plan. I do not believe that the approach that is being planned for—I shall put some meat on this—whereby chums and mates pick up the phone to carve up the opportunities, is the proper way to do things. The informal system that is envisaged is not accountable and is not the right way to conduct public administration.

My final point is this. The cabinet paper for the Shropshire decision to join the West Midlands authority contains, in paragraph 3.1.4, a very telling sentence. I will not read the whole paragraph. This was said by the chief executive to persuade Shropshire to join the authority, which it did:

“Deal making is seen by Tom Walker, the head of the CLG/BIS Cities and Local Growth Team in Whitehall, as being about a place based conversation, and therefore there will be more emphasis on what may be described as informal governance, where political leadership relies less on bureaucracy and more on networks and relationships”.

That is an incredibly dangerous sentence. It just about describes the Sir Philip Green approach to business governance that we have seen at British Home Stores. The system is informal. You ring up your chums and mates and you do not bother with the bureaucracy. This is really saying, “There won’t be too many civil servants watching what we do. We can get on and do it our own way”. That is not good enough. We are talking about large amounts of public money. We are talking about trying to encourage international, well-governed and well-managed corporations to invest in the West Midlands. They will not do it on this basis. It is slipshod beyond belief and I am really worried about this approach, which I have been looking at over the past couple of weeks, since my noble friend pointed out today’s debate. It is something I am concerned about. I cannot believe that the advisers to those large corporations thinking of investing will be immune to this, so something has to be done better to stitch it up.

I fully agree that the coterminosity or the non-coterminosity is not a deal killer, so there must be a way it can work; they are all in the West Midlands. For the mayor to be the mayor of a bit of it cannot work. The voting structure is mythical. By the way, I looked at Coventry’s papers, which more or less say the same thing. As my noble friend said, those cabinet papers show that it was clearly not happy about the process anyway.

What is being planned is dangerous and I do not want to stand here in two or three years’ time saying, “We told you so”. There must be something that can be done in central government to make this a tighter and better governed arrangement, which is really my plea to the Minister.

My Lords, I record my local government interests and very much endorse some of the remarks made by my noble friends. Given the extension of the area now to parts not actually connected to the major authorities in what was the county of the West Midlands metropolitan area, we are apparently seeing a revival of what was the Anglo-Saxon kingdom of Mercia, part of the heptarchy about which I recall reading in my copy of the Anglo-Saxon Chronicle some considerable time ago. There is an interesting expression of view about this. The NAO report identifies this, with the local geography, and states in terms:

“The devolution deals agreed so far involve increasingly complex and administrative and governance configurations, and there are risks around alignment with the administrative geographical areas for other linked policies”.

That is certainly reflected in the view of the Secondary Legislation Scrutiny Committee, which states:

“We would also comment that the apparent ‘combination creep’ of the West Midlands arrangements to involve non-constituent councils must add to the complexity, and highlights even further the far-reaching impact of the changes to local government structures which are being taken forward through secondary legislation”.

An example of that is contained very graphically in the order which we are dealing with tonight—the precursor to the devolution deal, which is presumably the object of the Government and perhaps those who are signing up to it. The order says that:

“A decision on a question relating to any of the matters specified in sub-paragraph (6) requires both … a unanimous vote in favour by all members appointed by the constituent councils, or substitute members … present and voting on that question … and … where members appointed by the non-constituent councils or appointed from the Local Enterprise Partnerships have been given voting rights by resolution … a simple majority of all members of the combined authority who are entitled to vote on the question to be decided (including substitute members, acting in place of those members) present and voting on that question at a meeting of the Combined Authority”.

That is a wonderfully crystal-clear administrative process which everybody no doubt is expected to understand and implement. It illustrates the complexity of some of these proposals.

I want to refer to the financial issue because we have heard little about that thus far. The Government have already made clear their intention to make additional investment funding available. That sounds rather good. We are told that in the north-east there will be, over 30 years, some £30 million a year added—that is £900 million to the North East Combined Authority. Gateshead at the moment has decided not to participate in a joint authority so there will potentially be a hole in the middle of our new doughnut. That aside, even if it is not part of this deal, it is only £30 million a year of capital investment between six councils. That is £5 million a year per council. It is peanuts. It is nothing in comparison to the vast amount of money that has been lost to local government in the region.

The same goes elsewhere. The NAO report has a table of the amount of additional investment involved in the devolution deals. It expresses that both in gross and per capita terms. It is quite interesting to look at how much the per capita annual amounts run to. In the West Midlands it will be £13 per head. That is towards the bottom end of the range. The region that will get the most is the West of England with £27 per head. My own region will get £15 a head. The smallest, rather surprisingly one might have thought given the fanfare of publicity about it, will be Greater Manchester, which will get only £11 a head.

The total, which is the more interesting point in many ways, for the 15.5 million people who will be included in the areas being considered will be £246 million a year. That is not a great deal of money given the size of the population but it pales into insignificance from the existing funding which comes from the annual growth fund, which is £461 million. The total capital spending of constituent local authorities is £4.4 billion. This is a tiny fraction added to what is currently being spent. The notion that somehow there will be a great revolution in terms of investment in these areas is complete nonsense. It is a very modest addition to what is currently being spent.

There is another question, of course: how are these combined authorities and their services to be financed—in revenue, not capital, terms—since local government will essentially now have to depend on business rates? How will that system work? What elements of redistribution will ensure that those areas with a smaller business rate base will not be disadvantaged in what they will be able to gather from their local businesses compared with better-off authorities? What redistribution methods are the Government examining and when will we have an indication of how they will play out in practice?

I am certainly sympathetic to the notion of devolution, but I am concerned, to use a phrase that I have perhaps overworked in this place, that we may see an example of the Government passing the buck but not the bucks. On the face of it, from the figures in the NAO report, that is certainly likely. We have to recognise that authorities are being put in an invidious position. As my noble friends have pointed out, it is all very well to say that they do not have to have a mayor, but if they do not have a mayor they do not get the deals. That is the reality. Pretty crude blackmail is being applied. It is unfortunate, because we ought to be able to move to a more devolved system of government, entrusting locally elected, responsible people with decision-making in their area, in partnership with the Government.

I make another plea, as I have often made in this House and elsewhere, that the Government think again about their relationships with these areas and revive what a Conservative Government introduced more than 40 years ago—one of its leading Secretaries of State is in his place—when we had government regional offices, where all departments in government eventually came to be represented in an area and a constructive, constant dialogue was made between the local authorities and the various branches of government. If we are to have any kind of devolved system, we need to look again at reinstating that provision.

I hope we can make progress. I entirely endorse what my noble friends Lord Hunt and Lord Kennedy said about the undesirability of imposing a mayoral system on these areas—particularly given what was said about a police and crime commissioner elsewhere—when the mayoral role will now absorb that of the police and crime commissioner, and presumably, if the Home Secretary has her way, of the fire service as well. An enormous amount of power will be concentrated in that single pair of hands. That is a matter of concern as well. I hope that we will see some progress here.

I raised my final concern in connection with another order some time ago affecting the Sheffield region, where district councils from the counties of Nottinghamshire and Derbyshire were keen to be involved because they are in Sheffield’s economic area. Therefore, for some purposes, as with the district councils in this order, they can have a connection, in this case with what we can crudely call the West Midlands, for economic and transport purposes, but will still have their connection with their own county councils—it might be a unitary council in the case of Shropshire—for other services. Yet, health and social care may well come on the agenda. They could find themselves in a position where they are between two counties. My suspicion—I may be too suspicious about this—is that this will create a backdoor reorganisation of local government and we will have new kinds of unitary authorities not corresponding to the present pattern. That is a concern to many Conservatives in local government, as well as some of the rest of us. It would be interesting if the Minister were able to comment on how the Government will approach such suggestions—it is fairly clear from the Sheffield experience that they are likely to endorse them—that would lead ultimately to a reconfiguration of local government on a scale that we have not seen in the last 25 years or so. That is creeping up on us and has not been adequately explored or debated.

My noble friend just reminded me that I should have declared my own local government interests. I do so now before the end of the debate: I am a local councillor in the London Borough of Lewisham.

My Lords, I congratulate your Lordships’ House on spending a substantial amount of time discussing this order. I certainly have quite a few questions to respond to but I start with the comments of the noble Lord, Lord Hunt, who commended all the constituent councils in the West Midlands for the way they have worked together. I acknowledge that, certainly in Greater Manchester, relationships have been built up over some 30 years and it has been an easier process there. As the noble Lords, Lord Hunt and Lord Rooker, said, the councils in the West Midlands are of a quite different type and variety. I sincerely congratulate them on the work they have done in getting to this place.

On the point of the noble Lord, Lord Hunt, about Channel 4, clearly, that is not my department but the BBC managed to uproot itself and place its home in Salford. People thought that that would never happen but it did. MediaCity provides an excellent working environment for both the BBC and ITV. I will not give my view on Channel 4, but it is possible and I hope sense will prevail.

We have strayed into mayoral combined authorities and devolution deals, and we almost cannot help that because they are so interrelated. However, this order is focused purely on the setting up of a combined authority for the West Midlands. I will start with what the noble Lord, Lord Kennedy, said about the NAO commentary on the devolution deal. He asked several questions about the devolution deal, including on the NAO report. As I understand it, the NAO simply commented that the devolution deal in the West Midlands sets up more complex and untested arrangements than those for Greater Manchester. At face value, they appear more complex. Of course, as I said to the noble Lord, Lord Hunt, the authorities of Greater Manchester have worked together for many years, but we are confident that the agreed deal can be effective. It would be great if it could be. We are not afraid of innovation in the governance arrangements that will be put in place. The mayor in particular will provide the necessary accountability. Accountability is very important here.

The noble Lord, Lord Hunt, talked about letting local authorities decide for themselves. However, the noble Lord, Lord Rooker, firmly made the point that we should not have informality; there must be some accountability and, I think he said, tightening. Of course, none of this is about the order today but I think we have agreed that. The order implements a proposal for a combined authority made by the councils in October 2015, one month before the deal in front of us was agreed.

The noble Lord, Lord Kennedy, also talked about whether non-constituent members, as well as constituent members, could be part of future deals. Deals are about areas. The area of a combined authority is that of the constituent councils but in the West Midlands the intention is for the combined authority to support the growth of the area across the three local enterprise areas, which includes the area of the non-constituent councils. But the electorate of the non-constituent council areas do not vote for the mayor, nor does the mayor exercise functions in that area.

The noble Lord also commented on the consultation, as did a number of other noble Lords. We hold the view that there are no inadequacies in the consultation, having had regard to the government consultation principles, which were, as I said, published on 14 January this year, and to which the Secondary Legislation Scrutiny Committee referred in its report and which have recently been amended in the light of comments made by the said committee. In short, the consultation’s use of digital measures are wholly consistent with these principles, and as the principles make clear, consultation needs to be considered as,

“part of a process of engagement”.

The engagement in this case has been very substantial and included: writing to a representative sample of 465 stakeholders, comprising key private sector employers, public sector bodies and third sector organisations; the establishment of an online survey which attracted 305 respondents, the results of which were analysed and published; the attendance of the local enterprise partnerships, and the authorities within them, at combined authority meetings; seeking feedback from the public via a “query box”, as I have mentioned; a parliamentary event; and a number of formal and informal briefings with the business and third sector communities. On account of these points, we think that there has been extensive engagement and local input from communities, stakeholders and local people.

A couple of noble Lords commented on combination creep in relation to the West Midlands combined authority. However, the simple fact is that the geography of this combined authority is absolutely clear. The area of the combined authority is the area of the seven metropolitan areas of the West Midlands, which are Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. The draft order before noble Lords provides that certain named councils outside the area can sit at the table of the combined authority. It is absolutely right and sensible that these neighbouring areas can influence decisions taken in the combined authority area. That is a sensible and progressive way to ensure appropriate governance and decision-making in this area.

The noble Baroness, Lady Burt, made some excellent points about strategic thought around skills, transport and manufacturing. She was not present for the debates on the Cities and Local Government Devolution Bill, but precisely that recurring theme arose throughout the passage of that Bill. That is precisely how local authorities should be thinking, as some are doing very well. She asked about the voting rights for non-constituent members. Any non-constituent council or LEP member of the combined authority shall be non-voting but may be given voting rights by resolution of the constituent members of the combined authority, possibly where there is an issue very relevant to that non-constituent authority. The noble Baroness also asked what part minor parties would play. I do not know whether she has heard this from her colleagues, but that issue was again much discussed during the passage of the Cities and Local Government Devolution Bill, particularly by members of her party. Combined authorities must have one or more overview and scrutiny committees, the majority of members of such a committee must be members of the constituent councils, and the committee must reflect the political balance of the constituent councils of the combined authority.

The noble Baroness also asked who votes for the mayor. Obviously, the political parties will choose their own candidates but the people who vote for the mayor will be the electorate within the constituent councils of the combined authority, so that will be Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. Obviously, the electorate of the non-constituent councils will not have a vote for the mayor.

The noble Lord, Lord Hunt, talked about an issue which we debated long and hard during the progress of the Cities and Local Government Devolution Bill: health and social care and whether DCLG would be sympathetic to a proposal coming forward. We welcome proposals from local areas. The Government are absolutely clear that devolution is an ongoing process and not limited to one deal: that is the beauty of devolution. It is for local areas to come forward with their proposals for further devolution deals, including health proposals, as Greater Manchester has already done.

The noble Lord, Lord Rooker, talked about the mayoral order already being published. The constituent councils of the West Midlands are in the process of considering a draft mayoral order which will establish the post of mayor from 2017 at full council meetings. Following the establishment of the basic combined authority, subject to approval by this House, the constituent councils and the combined authority will be asked to consent to the making of a mayoral order which will give effect to the devolution deal agreed between the Government and the West Midlands. The noble Lord also asked about the mayor being mayor for only part of the combined authority area. The area of the combined authority is the area of the constituent councils, that is, the area of the seven metropolitan—

My Lords, I will help the Minister by giving her time to decipher what she has got. When I said “part”, I was naturally referring to the old West Midlands metropolitan council area: in other words, the seven constituent members who will have the 14 votes in the combined authority. I fully accept that that is where the mayor will be, but the combined authority—if it gets going—will be discussed with all the others, including Stratford and Shropshire, as the West Midlands combined authority. Confusion may arise when people talk about the mayor of the West Midlands, but it only refers to the metropolitan district council areas.

It does indeed; it is only in relation to those areas. Regarding non-constituent councils, the point is simply that certain councils outside the area of the combined authority can be at the table of the combined authority, reflecting the fact that what the combined authority and mayor might do could affect the surrounding areas. However, the non-constituent councils do not have the right to vote on decisions except, as I explained to the noble Baroness, Lady Burt, in certain circumstances where the combined authority agrees.

Finally, the noble Lord, Lord Beecham, made a point about business rates. We are working with the LGA and local councils for a planned summer consultation—which I am sure the noble Lord will be involved in—before introducing the local growth and jobs Bill later in the Session to make the necessary provisions. However, I look forward to early engagement on that, particularly with the noble Lords, Lord Beecham and Lord Kennedy, whom I am sure will be involved.

I think I have addressed most of the points, and I hope noble Lords will be content for me to write to them on those I have not. I beg to move.

Motion agreed.