Shabana has written to the Secretary of State at the Department for Environment, Food and Rural Affairs regarding the administration of Birmingham’s Clean Air Zone.
The Government recently announced a £2 charge per transaction for local authorities using its central services systems to administer the new zone.
The new charge, introduced by Statutory Instrument, raises questions over the business case for Clean Air Zones across the country.
In her letter, Shabana asks the Secretary of State to be more transparent about how the decision on the £2 charge was reached, and outlines the damage it could do to the rollout of the CAZ in Birmingham.
The Clean Air Zone will be introduced in June 2021 and will put Birmingham on a journey to cleaner air.
You can read the letter in full below.
Letter to the Secretary of State
Dear Secretary of State
I am writing regarding Statutory Instrument 2020 No. 1444 relating to the central services fees charged to local authorities introducing a clean air zone (CAZ).
I understand that the original business case presented by Birmingham City Council to your Department regarding the CAZ included a detailed financial case for its operation. In the financial modelling provided there was an assumed cost recovery from Government for provision of central services, a figure set in the business case at 5 per cent of income generated.
At that time, the 5 per cent figure was not disputed by the Joint Air Quality Unit. However, once the procurement process for the provision of central services commenced, further discussions began between the Department and local authorities regarding cost recovery.
JAQU has since made clear its intention to recover costs through the adoption of a £2 cost per transaction. Birmingham’s original business case forecasted 5% of revenue generated from the CAZ equated to £9.117m. With this new approach Birmingham will be required to contribute 16% (£16.972m) of its revenue, which represents a 320% increase to the original model – all revenue that could have been directed to improvements in local transport infrastructure.
Several questions arise:
– What level of consultation took place with Birmingham and the other local authorities about the updated approach to cost recovery for the Clean Air Zone central services?
– How the £2 transactional fee was arrived at, and what data supports it?
– Whether or not the revenue recovered from Birmingham and the other local authorities introducing Clean Air Zones will cover the full costs of the Clean Air Zone central services?
Local authorities such as Birmingham are under intense scrutiny to demonstrate value for money and be transparent about their finances, yet have been left in the dark by the Department and asked to sign up to central services with no proper costings released.
The blunt force of using a statutory instrument to enforce this charge has dried up any remaining goodwill shared between the Department and local authorities. In the case of Birmingham, the LA communicated a clear business case to JAQU with a 5 per cent assumed cost recovery, only to have the goalposts moved only months before the introduction of the CAZ. Local authorities now have no space to negotiate on a significant cost for implementing a policy instructed by Ministerial Direction.
Please could you outline, with clear costings, how the determination was made to introduce a £2 charge for the use of central services. I would also be grateful if you could inform me what further discussions will take place with affected local authorities to ensure that cost recovery does not place them in a situation of negative revenue.
Shabana Mahmood MP