Combined Authority: £28.2bn disaster for the Region

The following article has been written by Leslie Kaye, the chairman of Solihull and Meriden branch.

At their July Meeting, Solihull councillors voted in favour in principle of joining the West Midlands Combined Authority (WMCA). The Combined Authority might be formed as early as next April. Councillors talk openly about creating a London-style mayor. Chancellor George Osborne is driving the process forward in order to deepen political integration with Europe and to seize the opportunity to unload a good chunk of the national deficit onto the Combined Authority.

The Chancellor is concerned that the Combined Authority will be lead by a “mafia” of council leaders. Such people are elected in safe seats so that in practice the same people run the authority for decades. This fosters arrogance and corruption whilst denying youth and fresh ideas. Chancellor Osborne pressures new combined authorities with offers of greater powers to borrow from the EU if they will establish a London-style Metro Mayor. This is so that the mayor can keep an eye on the council leaders and maintain some semblance of democracy.

The cost of services such as the NHS and transport are to be devolved to the new Authority. For the seven metropolitan boroughs there will be a £8.2 billion deficit between the cost of the devolved services and the tax revenues available to pay for them. When the Combined Authority reaches its final size intended to include fourteen other councils from Greater Birmingham, Solihull, Coventry, Warwickshire and the Black Country then according to Mark Rogers, chief executive of Birmingham City Council, the annual deficit will be £28.2 billion which is about £7,750 for every man, woman and child in the region.

Increases to the Minimum Wage announced in the Budget are expected to increase these deficits substantially by 2020.

To close the deficit, the WMCA will undertake a fundamental review of public services. It is estimated that £0.5 billion will be saved from reducing criminal re-offending. £1 billion will be saved from in-patient treatment of the chronically sick. In addition the NHS will be asked to make savings equivalent to three hospitals. The Institute for Fiscal Studies has said that such a gap could not be bridged just through spending cuts.

Councillors are told that the gap can be closed by “economic growth” funded by a debt frenzy made up of borrowing from European institutions which is to be matched with loans from the Treasury and private business.

To understand how we have got to this situation please allow me to digress with a bit of history.

Following the signing of the Lisbon Treaty, the European Commission published its 10 year “Europe 2020” strategy designed, according to the President of the Committee for the Regions “to develop a culture of ‘multi-level’ and ‘multi-actor’ governance in Europe”. The strategy provides for the European Commission to work “in partnership” with regional authorities to achieve “Europe 2020 headline goals and EU socio-economic and territorial cohesion”, thereby bypassing the elected European Parliament and working to make national governments obsolete.

The Coalition Government embraced the strategy. The then Deputy Prime Minister Nick Clegg was put in charge of morphing the old Regional Development Areas into European style Local Enterprise Partnerships between councils, universities and strategic business. According to Clegg, this was done to “maximise value and take the opportunity to look again at key European funding for economic development”.

The Localisation Act 2011 was enacted to provide local government structures compliant with Europe 2020. It hands over power to the EU to set local authority policy by enabling the Commission to fine them for non-compliance with EU policy and directives.

Mindful of the 2004 referendum when regional government for the North East of England was rejected by 78% of voters, subsequent legislation removes the need for a referendum to be held over the combining of authorities or the inception of the position of mayor.

Deals are made by the Commission with all levels of local authority to carry out EU policy compliant projects. These are match funded by index linked loans from the strategic and cohesion funds emanating from the European Investment Bank. The Greater Manchester Combined Authority (GMCA) is used as an example for the information of our local Councillors.

Manchester is racking up debt in a style which would put a Greek politician to shame. Loans from the EIB already exceed £1 billion and rising. This is matched with a further billion borrowed from the Treasury and business. Loans are for periods of up to 30 years so that the problem of repayment does not fall upon the current generation of spendthrift councillors.

EIB loans to Manchester have come with conditions to implement EU “green” policies. A hugely expensive green energy plan seeks to make a 48% reduction in the City’s CO2 emissions by 2020. Unsightly solar power arrays and wind farms are to be constructed, driving up energy bills for residents and for business.

Attempts are being made to implement EU green policies of congestion charges and toll roads. Residents are locked into battles to try and stop these measures.

It should be understood that the Combined Authority spending deficit can only be closed by “good growth” arising from higher productivity with more tax being levied from higher wages. In the UK we have consumer-led “bad growth” arising from a housing bubble, borrowing and population increase. This merely serves to increase pressure on social housing and public services.

The Conservative Government has recently signed up to advertise British job vacancies across Europe on the EURES scheme. EURES will pay relocation costs for workers to come to the UK.

With EURES pushing EU free movement of labour policy, creating new jobs in the UK just means that we will suck in more job seekers from the poorer parts of Europe. It is fallacy to think that our local leaders can achieve the miracle of good growth against the headwinds of EU bureaucracy, open borders and wasteful social policies. There is a limited period of time to tell them so by engaging in the “Governance Review” HERE.

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