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20
Oct
Why does North Yorkshire's combined authority need extra borrowing powers?
When the Conservative government introduced borrowing powers for combined authorities in 2018, it was described as “a tool to help stimulate economic growth”.
Fast forward six years later and York and North Yorkshire Combined Authority is seeking to take advantage of those powers.
Both North Yorkshire Council and City of York Council, the constituent authorities which make up the organisation, have backed the move.
But what does it mean and why does the combined authority need such powers?
Borrow for growth
Currently, the North Yorkshire combined authority can only borrow for transport and police and crime functions, as agreed as part of its devolution deal.
However, other authorities are able to seek extra money for other responsibilities such as economic development.
This is because the government granted extended borrowing powers. Most of the combined authorities in the UK, such as Greater Manchester and Liverpool, were approved such powers in 2018.
A further three in West Yorkshire, South Yorkshire and North of Tyne were granted the ability to borrow for more functions two years ago.
As a result, North Yorkshire wants the same powers.
Both North Yorkshire Council and City of York Council have approved the proposal for the combined authority to be able to borrow more money.
During a debate on the matter in Northallerton on Tuesday, Cllr Gareth Dadd, executive councillor for finance at North Yorkshire Council, pointed out that it would make little sense to block such a move and leave the body with no additional borrowing power.
He said:
I’m happy to support this given that the York and North Yorkshire mayoral combined authority would be the only combined authority in the UK without the ability to borrow money for things like economic growth.
The Secretary of State will need to approve the additional borrowing powers by laying a statutory instrument before parliament, which council officials expect to happen later this month.
What can they borrow for?
The intention of the powers is to offer flexibility.
Under the proposals, combined authority’s can borrow for areas such as economic development and housing.
Some authorities, such as Greater Manchester, use the power to borrow for capital investment. However, others such as South Yorkshire Combined Authority budgeted for no borrowing requirements last year.
Officials at York and North Yorkshire Combined Authority will also be required to agree a limit with central government known as a "debt cap", which will be reviewed annually.
Each combined authority is required to agree a debt cap with the Treasury on long-term borrowing. For example, West Yorkshire Combined Authority's limit last year was £381.6 million.
The North Yorkshire combined authority will also be liable for paying back any money it borrows, meaning no liabilities will fall on North Yorkshire Council or City of York Council.
Why does the combined authority need these powers?
The Stray Ferret asked the combined authority which specific areas did it need the extended powers for and would it help with any projects in particular.
In response, James Farrar, chief executive of the York and North Yorkshire Combined Authority, said the organisation was not looking at any specific project to use borrowing for at this stage.
James Farrar, chief executive of York and North Yorkshire Combined Authority.
However, Mr Farrar added that the new powers would help to put the combined authority on "an equal footing" with other authorities across the UK.
He said:
The combined authority already has borrowing powers in relation to its policing, crime, fire and rescue and transport powers. The legislation that is due to be passed will allow the Mayor and the combined authority to consider borrowing in support of its other aims, including those around economic development. The legislation puts us on an equal footing with other cpmbined authorities and is a continuation of the devolution process, which has seen more powers and investment move from central Government to York and North Yorkshire. When our devolution deal went out to public consultation, borrowing powers were highlighted as a requirement, so this is delivering against that action.
The legislation process has been set by a parliamentary timetable. There are no specific projects that we are looking to use the new borrowing powers for at this stage, but we will be set up for this should we need to. Once consent for the legislation is given at a local level, it will be laid before parliament to formally grant the combined authority borrowing powers.
Mr Farrar added that a borrowing cap with HM Treasury is expected to be agreed and confirmed in November.
Analysis
The addition of extended borrowing powers will be a leap forward for the combined authority.
It could also be a catalyst for the announcement of bigger projects and raises the question over what the authority has up its sleeve.
While Mr Farrar says that the borrowing powers are not for anything specific, they will come as a useful tool for the functions at its disposal — such as transport, housing and economic development.
Last week, the Stray Ferret analysed the performance of David Skaith, Mayor of York and North Yorkshire, so far including a closer look at his projects.
One key difference between Mr Skaith and his counterparts in West Yorkshire and Tees Valley is the lack of a big ticket project.
Much of the Labour mayor’s announcements have seen him spread money around various different sectors, such as £10 million for a high street fund, £5 million for net zero projects and £2.5 million for skills.
We raised the question as to why no big, strategic project has been announced.
If part of that reason is money, this extended borrowing power would help to remedy that.
As we noted in our analysis, the mayor has the resources at his disposal to enact such a project — this would enhance that.
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