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Tax-raising metro mayor at heart of WMCA devolution package

Tax-raising metro mayor at heart of WMCA devolution package

🕔28.Sep 2015

A West Midlands metro mayor would have extensive powers to levy additional council tax and business rates under plans drawn up by council leaders.

In an initial submission to the Treasury setting out a proposed devolution deal, the seven metropolitan councils go further than expected to map out a wide-ranging package of powers for the mayor and the combined authority.

With the councils having accepted privately that the West Midlands must have a metro mayor to get the best devolution deal from George Osborne, the document sets out in detail how the duties and responsibilities could be carved up between the mayor and council leaders.

It’s made clear that Government approval for the devolution package will be dependent on a new model of governance in the metropolitan area with an elected metro mayor “to bring greater accountability to growth, public service reform and efficiency”.

The mayor will chair WMCA and have powers to raise cash through council tax and supplementary business rates and would not be required to hold a referendum but would need an “electoral mandate” to impose any additional levies.

Any additional council tax precept levied by the mayor must be for specific “investment priorities”.

Under an example given in the submission document, a £10 annual council tax levy on Band D properties would raise £6 million a year and support £78 million of investment.

A two per cent supplementary business rate would raise £30 million a year and support investment of £400 million.

It’s also proposed the seven councils would sacrifice their individual rights to retain business rates uplift growth, with all of the money generated from new business moving into the area passing directly to the combined authority and the mayor.

Sources close to the shadow combined authority are stressing that the document is a copy of the first submission to the Treasury, dated September 4, which was leaked to the Coventry Telegraph.

The proposals have been described as “an opening gambit” and it is thought unlikely that all of WMCA’s requests will be approved by the Chancellor.

The document envisages WMCA and the mayor being handed an £8 billion investment fund.

Other proposed powers for the mayor include:

  • Control of a proportion of the Government Road Fund for local priorities such as tackling M6 congestion and making better use of the M6 Toll.
  • Control of a £1.3 billion ten-year transport investment fund. All transport investment funding for the West Midlands would be in the hands of the mayor who would have statutory traffic management duties.
  • Integration of bus and rail networks enabling the mayor to develop a bespoke model for bus franchising, the creation of a single commissioning body for transport infrastructure projects, and development of a rail and bus smart ticketing system.

Powers to be devolved to the West Midlands Combined Authority include control of £200 million land remediation fund to tackle the most “intractable sites” and bring them back in to use and control of a £500 million housing loan fund.

The council leaders are promising to deliver at least 30,000 more new homes across the West Midlands over the next ten years than had been planned – a pledge that is bound to raise questions about the future of green belt land, particularly in the Meriden Gap between Solihull and Coventry.

The document sets out a range of “asks” of the Government including cash to kick start the Birmingham HS2 growth strategy with funding to extend the Midland Metro tram from New Street to Birmingham International and to develop new metro routes in the Black Country

WMCA is also asking for permission to take control of Air Passenger Duty at Birmingham Airport.

The combined authority wants to take direct control of the adult skills budget and the national careers service budget and in return will set up a new employment service dedicated to “up-skilling” unemployed people and supporting them to find jobs and apprenticeships.

The council leaders are asking the Government to back the West Midlands to host the 2025 World Expo with £4 million funding from the public and private sector.

There’s also a proposal for a £50 million Government fund to establish the National Pathfinder for Innovation, an initiative described as a “game changing” attempt to promote the West Midlands as a centre for university-based research and innovation.

Proposals to cash in on the region’s reputation for culture and a thriving visitor economy are set out in what’s being called the Midland Magnet – Investing in the Quality of Life. The Government is being asked to devolve to WMCA powers to commission activities for culture, creative industries and the visitor economy.

The Government is asked to explore the possibility of allowing WMCA to retain a proportion of increases in VAT revenue generated by the visitor economy, as well as a plan to relocate the National Art Collection to HS2 stations.

Plans to make the M6 Toll free at the point of use are also mentioned, at an estimated cost of £15m per year. But councils predict this would generate £1.2bn for the local economy.

The document sets out what the council leaders say can be delivered as a result of the devolution deal:

  • 104,000 jobs created and safeguarded and £14 billion of additional economic output through the HS2 growth strategy.
  • De-risking of key industrial development sites and extensions to the Birmingham and Black Country enterprise zones.
  • A new employment service with an employer-led approach to meeting demands for skills.
  • Higher productivity and economic growth rates across the three WMCA LEPs.
  • A compelling bid for World Expo 2025, which is likely to attract 25 million visitors spending up to £6 billion in the local economy.

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