Agenda item

The CCRCD Director reminded Members that a report had been submitted to Regional Cabinet on the 20 September 2021 which set out the lift and shift proposed delivery model to deliver the CJC. That report flagged up some risks and issues, namely around the regulations and VAT and corporation tax needed to be added in. There were also some issues around financial status. It was thought at the time that working with Welsh Government (WG) would help to resolve those issues ahead of the go-live date, which is when the CJC had to set its first statutory budget.

The CCRCD Director therefore provided an update to the report of the 20 September 2020, which set out an alternative approach. She confirmed that the Cardiff Capital Region City Deal would continue to run, through the accountable body contractor model with Cardiff Council and the Regional Cabinet and on the other side the same 10 Members with the Brecon Beacons National Park forming the new statutory corporate joint committee. The CJC in the first instance would be on a bare minimum basis e.g., set up the CJC, do all the basic statutory undertakings but won't enact its budget in full or enact its business plan in full until such time those major issues can be resolved through the regulations. WG had undertaken some consultation to push back the date of those immediate commencement duties around the regional transport plan and the SDP to the 30 June 2022.

Members would receive a report, either through their Cabinet or Councils, to set out what it meant because the duty to set up the CJC didn't fall on the Cardiff Capital Region it fell on the 10 local authorities who make up and comprise the CJC, so it was right and proper that all got an individual report coming through their frameworks internally. In the meantime, an ordinary regional Cabinet meeting would be held on the 31 January with a standard agenda e.g., investment proposals, the annual business plan, quarterly updates on performance and budgets. Straight after that meeting an inaugural meeting of the CJC will be held, with the agenda for that meeting a very basic one e.g., appointing a Chair and Vice Chairs, making sure all the relevant insurances and indemnities are in place, setting out the new standing orders, which will cover schemes of delegation, the policy environment, setting up the Audit & Risk committee, setting up a Standards committee etc. It will then be straight into the annual business plan and the budget, which would be the bare minimum to avoid any detriment and then Audit Wales will come in and set their audit fee.

This was procedural, it was not going to be value adding at this stage but trying to prepare for the point that it would be value adding to be able to have a greater range, greater influence and be able to act directly and tackle some of the issues that the current CCRCD model didn't afford the benefit of.

A Member sought clarification on the reports going to all Council’s.

The CCRCD Director confirmed that reports would go to all Council’s, although she explained the reports were not CCR reports, because the statutory duty to undertake the CJC fell individually on the 10 Council’s e.g., own legal and financial advice. All the S151 Officers and Economic Development leads had been engaged and all the Members of Regional Cabinet have been involved. This gave consistency across the 10, and the opportunity to reaffirm the principles and to be clear about what it is Members wanted to get out of the CJC and the impact it can have.

A Member observed that it seemed at this stage that with regard to the whole CJC notion, the legislation had been poorly thought through.

The Member registered his concern that when the idea was proposed, he was very surprised and disappointed that these crucial issues were not thought through at the time. The Member registered his sympathy towards the CCRCD Director and the team in what they were now having to do.

The CCRCD Director had sympathy with this view, whilst learning as we go through the process, so yes, some lessons learned. What the CCRCD Director was trying to stay focussed on was the utility of the CJC and helping to overcome some of the current limitations. There was a need to ensure the CJC had the relevant status to be able to access all of the opportunities for the region, and Wales and would continue to push to do the best but absolutely understood the frustration.

A Member noted that the CJC was going to be a slightly different mix with the Brecon Beacons Park becoming a Member and asked if it was going to be difficult to run two meetings with different authorities. The Member also felt that voting rights would be an issue with CJC’s. 

The CCRCD Director confirmed the regulations stated that the Brecon Beacons National Park had to be the 11^th member of the CJC, but they only voted in relation to their jurisdiction, which was as a national park planning authority, so they only got a vote in relation to the strategic development plan. Whilst this was straight forward there would be a component of the budget that related to the strategic development plan, they would get a vote on, but not the rest of the budget. The SDP, would be reflected in the standing orders and in other parts of the governance, so it is difficult, to think about how that role would be isolated. There had been some really good positive meetings with Brecon Beacons, who were very pragmatic about this and fully understood their jurisdiction around the SDP.  This would bring a different dynamic.

The CCRCD Director confirmed that it was one member, one vote for CJC’s. The budget being brought forward on the 31 January 2022 did have to be unanimously agreed and there were also conversations about the SDP and governance around that. The CCRCD Director had until 30 June 2022 before that duty commenced and hopefully some work could be done in the meantime to resolve some of those governance issues alluded to.

A Member stated that he had similar concerns to the previous Member. He felt that all of this seemed to have been rushed through by WG where it had not been established correctly e.g., Tax, VAT, which should have been thought through. The Member stated that his personal view was that as Scrutiny the job was as a critical friend to the Cabinet, and they needed to be able to express concerns that this was set-up in a bit of a rush, and he did not think it should just be for the local authorities to try and muddle through as at the end of the day WG had a responsibility. The Member felt that training budgets, had always been poor, and it was left for local authorities to sort it out and try and find the funds, and some local authorities maybe struggling. WG had a duty of care if they were going to take this committee seriously. He felt that the Committee at some point, should be expressing that very clearly to WG, especially after the election, because maybe that was a time, they needed to put some more funding in.

The CCRCD Director agreed that the Member raised a good point on budgets. She noted that to date WG had given every region in Wales, £250k to set up the CJC’s. In the recent budget settlement it states that local authorities have some further continuation costs for CJC’s, but it is hypothecated, it can’t be identified what it is and where it has gone, but it was clearly a conversation needed because this wasn’t going to be done for free and there was going to be a cost associated with this. The CCRCD Director noted that since highlighting the issue around VAT, etc., WG had submitted a comprehensive business case to HMRC. WG were also working with National Government around things such as the pension status. They were also looking at other forms of taxation e.g., stamp duty land tax. She felt that WG were on the case, in doing the best that they could but it was unfortunate that these issues couldn’t have been sorted out sooner, to allow the integrated model envisaged from the start and lessons were being learnt.

The Member acknowledged the response from the CCRCD Director and noted that everyone could learn lessons, but this was basic stuff which should have been done and the Member felt the need to be critical on this occasion, and scrutiny should be strengthened.

The CCRCD Director acknowledged that the points the Member made in relation to scrutiny and strengthening that going forward, were well made.

A Member also raised the issue of why the taxation issues weren’t ironed out much earlier and asked the CCRCD Director, with the date of June now looming, whether WG anticipated that being sorted out by then.

The CCRCD Director explained that it was not known at the moment with conservative estimates that the turn around time for HMRC was about six months. WG had put forward a really solid case and as soon as she had that answer she would share it with Members.

The Member thanked the CCRCD Director, but felt it seemed such a basic requirement for it to have been missed until now and for the CCRCD Director to be in the position she was in, which seemed regrettable.

The CCRCD Director stated that she blamed herself for some of that because the regulations read that the CCRCD would have the same status as local authorities and it was only in September when everything was looked at line by line that the VAT issue was identified.

She was hopeful HMRC would give us a response and as soon as that update was received, she could plan for lift and shift. She hoped to come back to the committee with a more positive story soon.