Motion to Consider
My Lords, the draft regulations that we are considering today, if approved, would enable the combined authorities for Tees Valley and the West Midlands to collect appropriate levies from their constituent councils to meet the costs of carrying out their transport functions.
The five constituent councils of the Tees Valley Combined Authority—Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, and Stockton-on-Tees—and the seven constituent councils of the West Midlands Combined Authority—Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton—have led a local process to improve their governance arrangements, which culminated in this House and the other place agreeing orders that saw the establishment of the Tees Valley Combined Authority on 1 April 2016 and the West Midlands Combined Authority on 17 June 2016.
These orders gave effect to the desire of the local authorities in these areas to improve their joint working, including on transport matters. Orders have since been made to provide for mayors to be elected on 4 May for both the Tees Valley Combined Authority and the West Midlands Combined Authority, and once elected the mayor will be the chair of the combined authority. Combined authorities are designated as levying bodies under the Local Government Finance Act 1988. Under that Act, the Secretary of State is able to make regulations in relation to the expenses of combined authorities that are reasonably attributable to the exercise of its functions, including those relating to transport.
The draft regulations before the Committee today would amend the Transport Levying Bodies Regulations 1992 to take account of the creation of the two combined authorities in the Tees Valley and the West Midlands. They have been drafted to reflect the proposed approach of the local areas and have been agreed by the two combined authorities. The levy could fund any of the transport functions that sit with the combined authority in question. The functions of each combined authority are set out in its establishment order, and any subsequent order that confers functions and transport functions are clearly identified. Transport functions of the two combined authorities include developing a local transport plan, as well as a range of passenger transport related functions. It will be for the combined authority to decide how to fund these transport functions in accordance with the establishment order and any subsequent orders.
The constituent councils will need to consider how they fund any levy issued by the combined authority as part of their budget process, whether by council tax, government grants or other sources of revenue. They will need to take into account the impact of council tax levels in their area, including when determining whether any council tax increase is excessive.
In the case of the West Midlands, the regulations effectively constitute a name change. On the creation of the West Midlands Combined Authority, the West Midlands Integrated Transport Authority was dissolved and its functions were transferred to the combined authority. Like the ITA before it, the West Midlands Combined Authority will continue to levy its constituent authorities for transport purposes. It will also continue to apportion this levy by agreement, or on the basis of the population of the constituent councils.
The Tees Valley Combined Authority is different because there was no integrated transport authority in place in that area. Therefore, these draft regulations have to establish how any transport levy would be apportioned between the constituent councils if the combined authority could not reach agreement. In the event that they cannot agree, the combined authority will apportion the levy by taking into account previous levels of transport expenditure by the constituent councils.
These draft regulations help to facilitate the provision of transport arrangements as part of the wider governance changes across the two areas. I commend them to the Committee.
My Lords, I strongly congratulate the Government on their move towards combined authorities and the development of the mayoral model, which will lead to the election of mayors in two months’ time. That will bring to fruition the extension of the very successful mayoral model in London to the other major conurbations. Just as it has led to a positive revolution in transport for London, I hope that it will bring about the same for the other conurbations. I know that the Minister has played a significant part in encouraging these developments.
There is, however, one issue on which I would like to hear more from the Minister: the relationship of this order, and the ability of the combined authority and mayors to raise money themselves, with the designated grant that the Government are giving to enhance spending on transport connections in some of the areas he mentioned. Yesterday, the Chancellor announced almost £400 million of funding for the Midlands engine. When I read the release, I was struck by how detailed and prescriptive the list of specific projects was that the Chancellor was seeking to fund—right down to specific sums of money for the Pershore relief road, smart ticketing technology and so on. Given that when he is elected in two months’ time the new mayor will come in with a big mandate and, one hopes, a significant plan for improving transport in the West Midlands, I wonder how far it will be open to him to decide his priorities and what he intends to do, or whether he is in fact bound by yesterday’s announcement by the Chancellor and the department to be simply the clerk who processes the list of projects. If he is not in a position to give me a specific answer, I would be very happy for the Minister to write to me on that.
My Lords, I declare my usual interests as listed in the register: I am an elected councillor, although not in these areas, and a vice-president of the Local Government Association. We are happy to support the regulations before us today. I do not have a huge amount to say and so do not intend to detain the Grand Committee. I am very happy to talk when I have something to say, but there is no point in doing so when I have only one or two points to make.
By way of background, I am conscious of where these regulations originated. Back in 2012, the Greater Manchester Combined Authority was able to issue levies to meet the cost of carrying out its transport functions. In 2015, a number of other integrated transport authorities were established and, again, they were able to issue levies through the measures in regulations. Therefore, we support these regulations for the new combined authorities of Tees Valley and the West Midlands. As we have heard, they will be electing their mayors in a matter of weeks. It is certainly correct that the authorities can levy their constituent councils to raise funds so that they can go ahead with their proposals. I understand that all the councils have been consulted and are very happy with what is before us today.
I am interested in the question my noble friend raised in respect of yesterday’s Budget announcement of what are very prescriptive projects in the West Midlands. What powers will the elected mayor have to vary those or do something different? Again, if the Minister cannot answer that today, I am happy to receive a letter in due course. With that, I am content to support the order before us.
I thank the noble Lords, Lord Adonis and Lord Kennedy, for their support. In the general move towards devolution, I know that the model on transport, in particular, is close to the heart of the noble Lord, Lord Adonis.
We broadly agree that it is important for local areas to decide on priorities. To answer the noble Lord’s question generally, mayors come forward with their transport plans, and combined authority mayors will also be required to submit a draft budget to the combined authority for consideration. It is then for the combined authority to recommend any amendments to that budget. As he may be aware, specific criteria are set for each of the two authorities that I mentioned. In the West Midlands, for example, a majority of two-thirds is required, whereas three-fifths is required in Tees Valley. Combined authority mayors in both areas will also be able to set a precept to fund particular functions. The level of the precept is subject to the same combined authority challenge and amendment process as the mayor’s draft budget.
Turning to allocations, the noble Lord, Lord Adonis, mentioned the Midlands engine and the Chancellor’s announcement today. Those are identified, existing priorities on specific transport functions. I will review the detail of the announcement and write to the noble Lord, Lord Adonis, as he suggested, and advise other noble Lords, including the noble Lord, Lord Kennedy. I thank noble Lords again for their broad support.
Committee adjourned at 4.27 pm.