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Growing pains

Growing pains - LG November 2016

Birmingham City Council CE Mark Rogers says that, painful though they have been, nationwide reforms in the UK are opening up opportunities for a more adult-to-adult relationship between local and central government. And that has got to be good.

Over in the British west Midlands, Birmingham City is on a roller coaster ride of huge growth and challenging times. Back in 2010, the city’s population was 1.1 million. Fast forward to 2030 and Birmingham will probably be home to closer to 1.3 million – even 1.35 million – people. Already Birmingham has the youngest population of any city in Europe and, by 2030, half the population will be under 30 years of age. Its inhabitants speak some 186 languages. And by 2030, Birmingham is tipped to be the first majority Muslim city in the UK.

Despite such stellar growth, like other councils throughout the rest of the country, Birmingham City Council has been on the receiving end of an austerity programme driven both by the 2008 financial crash and a nationwide policy to shrink government.

Chief executive Mark Rogers says Birmingham City Council has had its standard grant from government culled by around 45 percent between 2010 and 2015. Government will gradually reduce that grant to zero by 2020.

“The upside – and there is an upside to this,” he says, “is the government’s got a plan to substitute that grant funding with business rates. We already get some money from business rates but the rate levied locally all goes back to [central] government first and then they give us 50 percent back. By 2020 the entirety of business rates will come back to council.”

For Mark, the silver lining in all of this is that it hands very strong incentives to local authorities to drive private sector growth in their own areas in their own ways.

The levers are now being pulled differently, says Mark. And with that comes an opportunity for local government to challenge its relationship with London.

“We’ve got to end the parent / child relationship between central and local government. We are two sets of adults and local government needs its independence.

“Local authorities do not need their every waking moment, their every move, to be either policy-driven or in other ways regulated by central government.”

He says he has “some envy” for the independence of local government in New Zealand “because it’s clearly stronger than what we have”.

“Last year, there was a strong move amongst English councils to persuade the government to set up a commission that would effectively provide a constitution for local government and strengthen its independence in a way that you’ve already got here,” he says.

Despite strong backing from many councils, that initiative foundered, due in part to the change in government.

“Now,” says Mark, “I think we’re moving on. The big drive to devolution is an alternative to a constitution.”

In Birmingham’s case, devolution means it has been able to enter a formal partnership with six of its neighbouring councils to create a combined authority. And this means government now recognises them collectively as a negotiating body to set up and control large-scale initiatives of their own.

“You couldn’t do it any other way,” says Mark. “That negotiating body gets a mayor. We’ll get ours next year but we’ve already been able to negotiate our first deal which is bringing HS2 – the high-speed rail system – to the Midlands in a way that means we don’t just bring the railway line and two stations but we also put in the infrastructure for private sector growth and more housing.”

Government is giving the combined authority £40 million a year for 30 years, off the back of which it can borrow £1 billion.

“We then add that to our local infrastructure resources so we’ve now got what used to be a programme of just under £6.5 billion going up to £7.5 to £8 billion for the next 10 years.

“We get the money for 30 years but the borrowing we can do off that we will spend in the first 10 years and that will bring HS2 much more quickly to the Midlands.”

In other words, by kicking the parent / child relationship into touch, local authorities get to make the investment decisions for infrastructure in their own region.

See also: ‘Masters of their own fiscal destiny? Lessons from local government in the UK’.

This article was first published in the November 2016 issue of NZ Local Government Magazine.

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