Decision details

1                    To consider and approve the Budget in respect of the Mayoral Functions and the West of England Combined Authority for 2023/24.

2               The West of England Combined Authority is still relatively young having only existed since February 2017. It has had a successful year in terms of attracting additional funding to the region. Section 2.3 of the report shows a number of these significant successes and a 256% increase in Grant Funding between 2022/23 and 2023/24 compared to an increase of 36% in staffing posts, with staffing costs reflecting the higher-cost infrastructure posts, in particular, for 2023/24. Figure 8 shows the staffing costs against the total revenue budgets for 2022/23 and 2023/24 which remain consistent at 11% year on year, notwithstanding an increase in cost per post of these additional posts. The infrastructure portfolio alone has witnessed a four-fold increase in value compared to that for 2022/23. In addition, the Skills portfolio has more than tripled from c£20m to c£60m within the last 2 years. Resources are needed to deliver the increased programme noting the much lower increase in staffing resources required compared to programme budget increases. The resources are also essential when considered against potential reductions in funding for some public bodies and may provide employment opportunities in this respect.

3               It is essential to recognise that the West of England Combined Authority is changing and needs to adapt to ensure that it has the skills and capacity to deliver the significant programme of work ahead for the benefits of the economy, and ultimately the residents and businesses of the region and its constituent parts. The West of England Combined Authority is looking to increase its engagement and ‘step change’ positively its reputation with government, business, and residents. It will work to bring even more funding into the region and not just through public sources. It is essential that investors see the region as competent, ambitious, risk aware and effective in delivery. The amount of funding it targets will increase and we need to have a strong pipeline of investments ready for funding opportunities. The members of the Committee have already agreed through the governance report and action plan to undertake a meeting to look at the pipeline and opportunities, given the current economic conditions and the ‘cost-of-living’ crisis, making this is even more important.

4               There are various bodies that make up the public sector and it is important to recognise the differences between the West of England Combined Authority and the Unitary Councils that we are already on the journey to improve and change our working methods and relationships with. The Unitary Councils, like the West of England Combined Authority, are feeling the effects of inflation in a significant way. Whilst this year's Government funding may have been a little better than expected there has been over a decade of overall significant real terms reductions in funding for local government to deal with. Against this backdrop and some very high-profile Council financial failures it is surprising to note that England’s 444 Local Authorities hold £33 billion in non-ringfenced reserves having increased by £11.1bn (50%) in the last 2 years.

5               Spending money effectively is even more challenging than bidding and getting it in. It is essential to resource the delivery body of the region given the complexity and importance of this delivery. Whilst there are narrow financial treasury benefits from holding cash in investments the key measure will be in effectively deploying resources at a quicker rate. It is also important to recognise that Unitary Authorities in the area will have made difficult services decisions and will be making further tough decisions as part of their budget processes, but this is a different organisation with different needs to deliver its objectives, and it is important to value this.

6               The West of England Combined Authority has not asked the Unitary Authorities for any additional contributions to resourcing itself.  In effect the West of England Combined Authority is already delivering real cashable savings and significant cost increase avoidance to the Unitary Authorities by coming up with ways to be help with efficient service options in for example the area of supported bus services. This demonstrably underlines the benefits of a regional approach both to inward investment and solution finding. We are in the early stages of the journey to both gear up for delivery and become more efficient and effective, as there are inadequate resources to deliver a programme with such increases without the need for additional staffing resources within this budget. It is for that reason that the West of England Combined Authority will undertake further work to look at the organisational change requirements to become more effective and efficient. This must not hold back the agreement of the budget and in particular the recruitment of essential staffing resources as there is no time to waste given the economic conditions faced and delivery programme timescales ahead of us. We need to push on with delivery or risk our reputation and returning the monies to funders.

7               The West of England Combined Authority is looking to make a step change in delivery. The organisation needs these changes to be fit for purpose and there are examples where there are single points of potential failure and aspects of the business that need to improve and build on improvements. It is essential that there is a robust and collaboratively constructive process to ensure that value for money is achieved in the new organisational structure and we will work robustly, collaboratively and constructively with the Unitary Authority Chief Executives to periodically test the achievement of value for money in the structure providing this improves delivery and increases pace.

8               The West of England Combined Authority is shifting its focus to delivery of the programmes as well as gaining additional funding for the region. Delivery of programmes needs resources. It is essential that delivery is efficient and effective. The report sets out how core funding has changed in relative terms to programme funding underlining the efficiencies of the West of England Combined Authority that is a continual focus of management. Further work will be undertaken in respect of benchmarking of the authority that will be reported back to committee in addition to working with the Unitary Authority CEO’s.

9               Allocating funding to the priorities agreed by the Combined Committee on 1st July 2022 has been a priority with notable examples being Quantum Technology Innovation Centre, the Arena, Cycle paths, Walkways, Bristol Temple Quarter and Hydrogen Sustainable Transport Economy Accelerator. In relation to the Green Recovery Fund of £30m, helping us to tackle the Climate and Ecological Emergencies, notable projects include the Wind and Solar Community Energy projects, creation of the Great Avon Wood, creation of the Frome Valley River Nature Reserve and the creation of the West of England Retrofit Accelerator.  The Combined Authority's Investment Plan for the £13.7m UK Shared Prosperity Fund and Multiply programmes has now been agreed and, alongside £9m for Skills Boot Camps delivery, represents a significant package of support to create new jobs and training opportunities.  Whilst there is clearly work to do it should be noted that the Committee has made some significant and important decisions. These will help with our reputation as a region and group of authorities.  It is essential that we demonstrably show improvement changes so that our reputation with government, business and investors develops and does not fall behind other regions forging ways to bring investment to their areas.

10            The national fiscal and economic situation is an important consideration for the Combined Authority in setting and managing its budgets. Inflation and the  recession are issues that will require constant changes in working practices and programme / project reviews. The Committee will recall that an initial inflation review was undertaken on our own and Unitary Authority lead projects, but it is already apparent that there is some over-optimism in the returns estimating an ability to deal with the inflationary impact with no additional ask. Further work will be needed in this area on an ongoing basis for some time. Again, efficiencies are being looked for in projects and identifying these is high on the agenda at the Programme Review Board meetings. These meetings include the Unitary Authority Section 151 Officers and Infrastructure Directors. The Programme Review Board is there to drive forward many complex projects and was set up at the request of the Committee.

11            The West of England Combined Authority operates in a competitive market for resources. The Government will need to find a solution to public sector pay policy that helps to resolve the recruitment and retention problems faced today.  It is not always the right thing to have permanent staffing levels therefore a mix of flexible tenures is helpful from a skills and financial commitments perspective, given funding ebbs and flows. That said, whilst interim senior staff have been essential, we have too many interim appointments at a senior and middle level in the organisation. We are already in process and have longlisted to appoint a new permanent Director of Infrastructure. The Monitoring Officer and Director of Investment and Corporate Services positions will follow this appointment.  It is important to recognise the shortage of skilled resources and make the posts competitively attractive both in terms of the job itself, regional impact, and remuneration. Additionally, whilst there are clear pace of recruitment benefits using interims in some projects there will be a clear plan to replace these with permanent or fixed-term appointments as soon as it makes good business sense. It is a reason for some of the additional recruitment capacity that will more than pay for itself as interim appointments by their very nature can be more expensive in a skills supply shortage environment. There are benefits to bringing in experienced resources quickly and it is also about a clear plan to replace those temporary resources in directorates, with permanent resources, at the right time in a managed way. Public sector pay is growing but in real terms there are cuts to pay and private sector pay is growing much faster whilst unemployment remains low, so it is increasingly difficult to fill roles with permanent resources in some skills areas in particular.

12            The report sets out the budget for the West of England Combined Authority and incorporates the provisional Finance Settlement for 2023/24. If applicable a verbal update will be provided at the Committee following any final settlement announcement. Many aspects of the Combined Authority funding such as the Mayoral Capacity Funding have not been inflated again this year requiring the West of England Combined Authority to make more efficiency savings or draw on reserves.

The Committee RESOLVED:

1.     Approve the combined authority budget for 2023/24 as summarised in figure 6 and the relevant related supporting appendices, with the exception of the £8m staffing increase, of which 10% will be withheld to enable further work to be undertaken to assess the relevant need against pressures on services. The remaining funds will be released following the unanimous approval of the Combined Authority Chief Executive and Chief Executives of the Constituent Councils. Should a decision not receive unanimous approval the matter will be returned to the next Combined Authority Committee.

2.     That the acting Chief Executive works with UA Chief Executives on a programme of effectiveness and efficiency reviews to be agreed at the March 2023 committee, including the delivery timescales for such reviews, which will include appropriate value for money testing with external validation where appropriate, this will include the development of a risk-based reserve policy as referred in para 4.

3.     Approve the West of England Combined Authority budget for 2023/24 as summarised in figure 6 and relevant related supporting appendices.

4.     Review and comment on the West of England Combined Authority projected revenue forecast for 2022/23 as detailed in Appendix 2.

5.     Approve the Mayoral Budget for 2023/24 together with the funding contribution from the West of England Combined Authority, (Investment Fund), budget of £675k as set out in Appendix 7.