Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025.

My Lords, these regulations were laid before this House on 19 November 2024. The other place debated them on 8 January 2025. The regulations relate to the York and North Yorkshire Combined Authority, the East Midlands Combined County Authority and the North East Mayoral Combined Authority. Via Section 1 of the Local Government Act 2003, they will enable these authorities to borrow money for use against their relevant functions.

Presently, the York and North Yorkshire Combined Authority and the North East Mayoral Combined Authority are already able to borrow against their transport functions, and the York and North Yorkshire Combined Authority is able to borrow against its police and fire authority functions. The East Midlands, as a combined county authority, is unable to borrow against any of its functions.

The regulations before us will enable the York and North Yorkshire Combined Authority, the North East Mayoral Combined Authority and the East Midlands Combined County Authority to make use of borrowing powers for purposes relevant to their current and future functions. This will bring all three authorities in line with existing combined authorities and fulfil commitments made in their original devolution agreements.

On consent, I bring it to the Committee’s attention that all three authorities and their respective constituent councils have given consent to the conferral of borrowing powers. Similarly, the three authorities have agreed their respective debt caps with HM Treasury for 2024-25.

The regulations will also confer the East Midlands Combined County Authority’s constituent councils’ general power of competence for economic development and regeneration upon the combined county authority. The power will be held concurrently with the East Midlands constituent councils; the East Midlands Combined County Authority will be able to exercise the general power of competence only in relation to economic development and regeneration. The conferral of this power will fulfil the East Midlands’ original devolution agreement and enable the combined county authority to support local businesses and charities, as well as strengthening the area’s visitor economy.

As the conferral of the general power of competence for economic development and regeneration upon the East Midlands constitutes a new power, Section 48 of the Levelling-up and Regeneration Act 2023 applies. I can confirm that the requirements under Section 48 have been met, and that the East Midlands Combined County Authority and its constituent councils have consented to this conferral.

I come to the final part of these regulations, which will make amendments to the East Midlands Combined County Authority Regulations. Specifically, these are by: first, amending a typographical error so that the combined county authority is the local housing authority for housing needs, laundry facilities, shops, recreation grounds and housing purposes, and with respect to buildings acquired for housing purposes; secondly, enabling the mayor of the combined county authority to arrange for a committee of the combined county authority to exercise mayoral functions; thirdly, allowing non-constituent members of the combined county authority to have voting rights in an authority committee; and, finally, clarifying the voting arrangements for the combined county authority, including the requirement for a two-thirds majority to pass its mayoral budget. These amendments have been discussed with the East Midlands and its constituent members, with the councils and the combined county authority consenting to the amendments being made.

My Lords, these are important changes to the devolution in the three mayoral authorities referenced by the Minister. In general, I and my party support devolution, of course, but we remain concerned about the mayoral system being adopted across England because of the way in which it concentrates too much authority and decision-making in the hands of one person. So, it is a “yes” to devolution, but mayoral authority may need some adjustment to make it more democratic, particularly as it is happening in this statutory instrument, with more powers being extended to mayoral authorities—hence budgets becoming enlarged, sometimes substantially. It seems to me that, if there is more capital borrowing, there will be a requirement to fund that borrowing, and there will therefore be an increase in the mayoral precept. My first question for the Minister is this: will there be a cap on either capital borrowing or mayoral precepts so that we understand the extent of the borrowing and the cost to the taxpayer?

The second thing I would like to understand is what powers the mayoral authorities will be able to exercise in relation to housing, regeneration and planning. The Minister itemised the housing powers that will be exercised by the East Midlands Combined County Authority, but it is not clear to me what those powers will be in relation to the other mayoral authorities—the York and North Yorkshire Combined Authority and the North East Mayoral Combined Authority. What powers will they have? As we do not yet have the English devolution Bill, can we have more precise details of the Government’s thinking?

In general, I support the extension of powers, but I am concerned about the democratic deficit, as I see it. I support the extension of the functions, although I would like to see and hear more details on what those powers will be. I am concerned about the potential rise in the mayoral precept and about whether the Government are transferring the ability to fund functions and the costs of that from government to local taxpayers, as they have done with the social care precept, which I continue to be concerned about.

Lastly, throughout our discussions on the levelling-up Bill, an area of concern that was shared across the House—well, perhaps not entirely, but by me and the Minister in her previous role—was about the non-constituent members of a mayoral authority and how they would be selected or elected and what powers they would be able to operate. That is in paragraph 5.9 of the Explanatory Memorandum, in relation to the East Midlands Combined County Authority. Can the Minister throw a bit of light on that? How will this operate? In the levelling-up Bill those non-constituent authorities were going to be representative district councils, and we argued strongly for that, but if district councils are abolished in combined county authorities, as the Government are proposing, what then? I know this is perhaps impinging a bit on the English devolution Bill but, considering it is here, it would be helpful if the Minister could explain how it will operate.

I give this SI my general support, with a few caveats.

My Lords, this SI is a key step in advancing the devolution agenda, continuing the work set out in the Levelling-up and Regeneration Act 2023 under the previous Conservative Government. As we have heard, it extends the borrowing power to the York and North Yorkshire Combined Authority, the North East Mayoral Combined Authority and the East Midlands Combined County Authority, empowering them to invest in critical areas, such as housing, regeneration, transport, education and health. This is part of a broader effort to decentralise power from Westminster and empower local authorities to shape their own futures, which His Majesty’s Official Opposition support.

In terms of economic development and regeneration, the regulations grant the EMCCA the general power of competence to support local businesses, tourism and other sectors. This is a notable shift, allowing the EMCCA and its constituent councils to carry out more comprehensive projects, including potentially accessing grants from central government, but we must ensure that, while these powers enable growth and development, there is robust accountability in place to ensure that resources are used effectively and in the best interests of those local communities.

A public consultation was conducted regarding the proposed changes, particularly focusing on the economic development and regeneration powers of the EMCCA. While the feedback was largely positive, with no significant objections, it is important to note that support for these new powers was not overwhelming. The absence of major concerns from stakeholders, including the House of Lords Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments, suggests broad acceptance, although this should not be construed as unanimous approval.

I have a number of questions for the Minister. While the regulations aim to empower local authorities, several questions need to be answered to ensure these powers are used effectively and responsibly. On effective devolution, the work of the Levelling-up and Regeneration Act promoted decentralisation, but how much autonomy will local authorities truly have under these regulations and at what point will central government oversight become excessive? On oversight, without a statutory review clause noted, how will the Government ensure accountability for these new borrowing powers? Are there safeguards in place to ensure that borrowing is managed prudently? Finally, on regional equity, could the new powers create disparities in regional development, potentially leaving smaller regions behind? How will the Government ensure that these powers, to be granted to certain areas, do not exclude or disproportionately benefit specific regions at the expense of others?

My Lords, I thank both noble Baronesses for their participation and broad support for this SI. I will address some of the questions raised. The noble Baroness, Lady Pinnock, asked about the powers of mayors; I simply point to the success of existing mayoralties, delivering real things for their communities that have made a huge difference—in transport, skills and, in some places, health economies—in the areas where people live. Of course, you can only really do that if you are part of the community that you are representing, and the Government’s push for devolution is to help those local areas with skin in the game to have the powers and funding they need to drive their areas forward, particularly for growth but also for the conditions for the people in their areas.

We now have the Council of the Nations and Regions, which is a very important body for driving forward growth in our regions and nations. It is very important that every part of the UK has a seat around that table. That was the thinking behind the English devolution White Paper—it is still out for consultation, so we will see what comes back from that.

On capital borrowing, it will be the responsibility of mayors to drive growth in their areas, but I realise that borrowing will have to be paid back. Debt caps have been agreed with the Treasury. There has been an extensive process to agree them, and it has been done on the basis of what is affordable for those areas within their current envelopes.

The noble Baroness spoke about powers in relation to housing and planning. The English devolution White Paper set out strategic and investment powers, and possibly development corporations that mayors will have powers over. Planning powers on a day-to-day basis will stay with the constituent local authorities, which is right and proper because they are the people on the ground.

I asked how we would ensure regional equity.

I thank the noble Baroness and apologise for missing that. She will have seen that one of the adjustments we have made to the local government finance settlement that came out just before Christmas was to slightly reshape the spending to meet need. There will be more news on that and more discussion about it as we go into the spending review in the spring.

That is an important point because having a champion for a local area on its own will not be enough. We need to make sure that we are addressing the key disparities, and there are some enormous disparities that we heard much about during the passage of the levelling up Bill in health, employment, standards of living, housing, and so on. The devolution aspect of this project means that local areas have far more autonomy to make the changes that will make a difference to them. The spending review will take all that into account and, I hope, reshape the way that the distribution of finance is done so that we make it more equitable generally. If there are further contributions to the spending review as we go through it, I will be pleased to hear them.

These regulations deliver on the commitment made in the devolution deals agreed with York and North Yorkshire Combined Authority, the East Midlands Combined County Authority and the North East Mayoral Combined Authority to provide them with borrowing powers against their functions. The conferral of borrowing powers will provide all three authorities with the opportunity to further invest in their services and functions to the benefit of those who live and work across their geographies. In short, I believe the regulations and the powers that it confers will make a significant contribution to the future economic development and regeneration of York and North Yorkshire, the east Midlands and the north-east by providing those three authorities and all the people who look after them with the tools to shape their futures, driving growth and higher living standards across their geographies. I commend the draft regulations to the Committee.

Motion agreed.

Committee adjourned at 5.32 pm.