Financing the combined authority’s investment programme remains the biggest threat to the organisation, it has been revealed.
Due to be discussed at this week’s Investment Board meeting, papers note that confirmed income streams for the West Midlands Combined Authority (WMCA) “provide funding for investment spend of £766 million”.
The WMCA has already committed £634.2 million to various projects across the region, with the papers going on to say that “the available funding will be fully utilised during quarter two of 2019/20, and this generates a funding gap to March 2020 of £176 million.”
The WMCA was originally set up on the assumption of four ‘pillars of funding’ – these being the devolution grant, worth £36.5 million a year, the mayoral precept, generating £150 million, business rates growth money, and an assumption there would be a supplementary business rate approved.
However, of these four pillars, only one has so far been secured – the funding from the devolution deal – meaning that the ‘financial assumptions of the investment programme’ is now ranked as the biggest threat to the organisation on its strategic risk register.
The register has given the financial assumptions of the devolution deal a red score of 25 – meaning that both the likelihood of a shortfall in funding, and the impact this would have on the WMCA, are both given the highest possible risk rating of 5.
And, because of this, the paper have confirmed that alternative funding streams continue to be explored by the authority.
“Investment Programme Prioritisation Strategies are currently being progressed and the overall plan is the subject of regular discussion at the WMCA Finance Directors’ monthly meetings,” they say.
“A summary of the current funding position and potential strategies/options was discussed at the leaders away day on 8th March 2019.”
The WMCA’s strategic risk register states that a ‘cost review’ exercise is set to be reported to the board.
Further actions being undertaken to mitigate risk include:
- Close working with Government to understand the ongoing financial position and its effects on the region.
- Consulting with Government on Business Rates Growth solutions.
- Soft consultation on Business Rates Supplement to be undertaken in April 2019.
- Assessing opportunities to turn grants to loans and / or maximise 3rd party contributions and land value capture.
- Continuation of working with Government and constituent authorities
regarding the assumptions relating to business rates.
- Alternative funding and financing streams are being explored with HMT.
- Future (post 2020) precept options to be explored.”
The expected outcome of the cost review exercise is set to be provided this autumn.