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Rebuilding the West Midlands - The WMCA Representation to the Comprehensive Spending Review 2020

Financial Sustainability

Long Term Sustainable Funding for the Region

The funding framework for local authorities is not sustainable over the medium to long term. There is an urgent need to set out a clearer future funding framework for the Combined Authority in order to ensure it delivers on the promises made when it was established through the Devolution Deal in 2016.

The first and most pressing ask of this proposal is that the Government recognises and rectifies the financial shortfalls across the region.

The WMCA’s financial position is reliant on contributions from its constituent authorities to fund its operational costs whilst its capital investment

programme is inherently unstable. More needs to be done to provide greater certainty to the core operational budgets of CAs in order to attract and retain the high-quality staff required to deliver sustainable growth and long-term change.

The three Local Enterprise Partnerships (LEPs) in the West Midlands have an important role to play in supporting the economic recovery of the region and its future growth. The amount of core funding currently provided by Government is not sufficient for the level of activity required and the annual allocations make business planning very difficult.

CSR Revenue:
Total (£m's)
Local Authority Sustainability
- £337.0m £329.0m £350.0m   £1,016.0m
WMCA Sustainability*
- £24.6m £24.9m £28.0m   £77.5m
LEP Sustainability Sustainability
- £5.5m £5.6m £5.8m   £16.9m





* includes West Midlands Growth Company Destination Management


Financial Flexibilities

This proposal seeks further discussion with government to explore a range of financial flexibilities for local authorities and the WMCA, outlined in our August 2020 regional submission to the Local Recovery and English Devolution White Paper.

This includes:

  • A sustainable, long term and fair financial settlement for local authorities and urgent and substantial additional funding to meet the costs of the coronavirus pandemic and enable recovery in communities and services

  • Sustainable core revenue funding for the Combined Authority (CA) and moving away from membership fees

  • Devolved, long-term and flexible investment to replace EU structural funding

  • Creation of a single pot investment fund aligned to regional economic strategies

  • A sustainable and long-term settlement on local business rates retention

  • Granting the power to raise a business rate supplement in the future

  • Greater borrowing powers

  • Mandate retention of uplift in rail franchise value as a result of capital investments

  • Devolve Bus Service Operator Grant and COVID-19 Bus Services Support Grant directly to Mayoral CAs

  • Local retention of revenue generated from transport enforcement
  • Revenue raising powers (e.g. exploring the benefits of a tourist tax and land value capture)
  • Local retention of share of existing taxes (targeted at investment to enhance regional growth e.g. Energy market levies, Air Passenger Duty, Vehicle Excise Duty, Energy Company Obligation, Stamp Duty, VAT)