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Every silver lining has a cloud – devolution case even clearer after Brexit vote

Every silver lining has a cloud – devolution case even clearer after Brexit vote

🕔04.Jul 2016

Last week’s Forum for Growth event, staged by the new West Midlands Combined Authority at the Vox Conference Centre, Resorts World Birmingham took place under the shadow of the Brexit vote and continuing political and economic uncertainty. Mike Best, Executive Director of Turley, chaired one of the discussion panels and emerged still able to see the light. 

When I agreed to take part in the West Midlands Forum for Growth, a day conference organised by networking organisation Movers & Shakers, it seemed like an opportunity too good to miss. It was to be the official launch of the West Midlands Combined Authority (WMCA), supported by UKTI, with the prospect of a senior Government minister as keynote speaker. I agreed, not as a cheerleader for devolution but as someone who thinks the private sector should engage in the process, contribute to the thinking, and work with the public sector to help drive sustainable growth. It has been something the existing LEPs have encouraged for the past five years, but the Combined Authority adds another level and scale of ambition to the mix.  Understanding its scope and reach is important, as well as then holding it to account.

Coming only a few days after the EU Referendum result led to the conference being somewhat hijacked by Lord Heseltine’s impassioned speech about a “dark cloud” hanging over the country. He had described devolution as being the “culmination of his lifetime’s work” but could not see beyond the “unprecedented threat” that Brexit represented (as much directed at a TV audience beyond the conference room). It fell to Mark Rogers, Chief Executive of Birmingham City Council to improvise his follow-up speech with a call to arms (and I paraphrase): ‘We are where we are, devolution is happening and we need to re-calibrate but stick to our purpose and principles.’

Martin Reeves, the new Chief Executive of the WMCA had launched the event with a clear post-Brexit message: ‘there is still logic to devolution, the assets of the West Midlands are the same today as last week, and the vote suggests that people want decisions made at a more local level.’

As the discussion developed over four panel sessions chaired by Richard Parker of PwC, Simon Marks of Arcadis and Ian Stringer of Bilfinger GVA and me, I think three key themes emerged:

  • Combined Authority is a big step forward for a city region not known for co-operating (although still capable as the following day’s AGM shows of falling out over the details – in this case, the appointment of a non-constituent authorities’ representative). Devolved powers do represent a significant opportunity to drive further growth, although notable that half of the financial package is dependent on HS2. That day’s National Audit Office report that it could be delayed, and Liam Byrne’s dire warnings of it being abandoned, were quickly scotched by the Transport Minister’s reassurances that it was still on track and John Clancy’s statement that it was more important than ever.
  • Devolution could offer something of a solution to the present crisis in that, whilst Central Government will be focussed on Brexit negotiations for much of the next two years, local government and Combined Authorities in particular can get on with running the show, making decisions locally and managing budgets. It could be an invitation to push on with more devolution of power and money to the local level, although Lord Heseltine reminded the audience of the key role played by both Cameron and Osborne in making this happen. Will a future PM and Chancellor be as committed?
  • What has widely been referred to as the ‘democratic deficit’ with Combined Authorities needs to be addressed. With 400 property, business and local government people in the room for the ‘official launch’, it did feel like there was a whole audience that doesn’t “get it” or perhaps even want it. The West Midlands was the region with the highest percentage of Leave voters, with even Birmingham voting out. The disconnect between communities and those in authority (of whichever colour) appears greater than ever, so the success of the WMCA rests as much on how it balances being strategic with its outputs being recognised at the local level. There needs to be clarity around where WMCA’s responsibilities start and stop, how local authority sovereignty is retained (to keep everyone on board) and signposting for communities and businesses as to who to go to for what aspect of their governance. In less than a year, there will be Mayoral elections where people’s understanding of what it all means for them will be put to the test.

The event had speakers from industry, the investment world, developers, members and officers of local authorities and the new transport authority. All were in general agreement that the current uncertainty made it very difficult to predict outcomes, but the basic conditions for growth in the West Midlands were favourable all things being equal.

Ian Stringer, of Bilfinger GVA, who chaired the Investment panel, commented:

Whilst the jury will be out for quite some time in terms of Foreign Direct Investment, with potential for uncertainty with some major occupiers, the competitive position of the West Midlands when compared to London remains no different when it comes to being able to afford housing, reduced commuting times and school places, not to mention the additional benefits of HS2 when it gets closer to reality.

With no emergency budget and the Bank of England moving quickly to reassure markets, the view seemed to be that the economic fallout, whilst serious, would not be as bad as the most pessimistic predictions. Stock market drops and changes in exchange rates always create investment opportunity for some as relative prices shift. The key to confidence is whether the underlying value of assets remains strong and that is where Government and the WMCA locally may have to intervene to a greater extent than they may have wished.

Infrastructure investment will be critical here, which is where the transport authority’s remit is so important. Simon Marks, a non-executive director of GBSLEP, commented:

There is a large portion of the WMCA Investment Plan linked to HS2 and this connectivity will benefit over 2 million people. When you think about this activity and then add Midlands Connect, the Enterprise Zone (now extended to include the Curzon Regeneration Area) the plans for the NEC, the Airport, UK Central and a host of other regional schemes we have a huge amount to be positive about.

However, it is as vital that land use decisions are brought into the same arena, so that the sub-region capitalises on new infrastructure to support the physical growth that comes with an extra 49,000 jobs and 32,000 population as the Strategic Economic Plan proposes. This means taking a strategic view on the distribution of the additional housing and employment sites that will be needed.

Above all, the conference showed the need for leadership at a time when it is lacking elsewhere, hence the importance of WMCA getting the message out beyond the conference audience that it is clear about its purpose and principles.

Mike Best, Executive Director of Turley and Board Director of Colmore Business District, writes in a personal capacity. 

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