If new Prime Minister Andy Burnham takes a quick glance at the latest Public Expenditure Statistical Analyses (PESA) published by the Treasury this month he may get the impression that the North East receives more than its fair share of taxpayers’ money.
And so it does, and has done for years. In 2024-25 (latest available) public spending in this region (including Tees Valley) totalled £14,104 per head of population – almost £1,000 per person more than the England average. Only London did better out of the public purse, with £15,217.
But Burnham would do well to take a closer look. He will then see that there are some disturbing reasons for that apparent generosity of the Treasury to the North East. And some unexplained oddities in the figures.
Where the North East gets more
This region is not getting more than average to help it lift its economy out of the long-term decline that has beset it since the closures in the coal, shipbuilding, steel, garment and other industries in the 1970-80s. Rather, the money is going on the sickness, disability and deprivation resulting from those events.
This is not investment in economic success; it is the mitigation of failure. It represents the serial inadequacy of regional policy by governments of all parties for 50 years.
Take social protection, which includes pensions, social services and a range of in-and-out-of-work benefits. No English region gets more that the North East’s £6,111 per head. The average is £5,322.
Health is similar. North Easterners benefit from £3,694 each spent on health services, with only Londoners getting more – £4,220. The England average is £3,462.
Where the North East gets less
In contrast, there is one stand-out area where the region badly needs help but receives less than most others – economic affairs, for which it receives £984 compared with the average of £1,191. London gets almost twice as much as this region – £1,859. But East Midlands, Yorkshire & Humber and the South West get even less.
Transport is the big item under the economic affairs, and it will come as no surprise to anyone that London is way out in front with £1,195 per head, leaving all other regions trailing including the North East (£496), Yorkshire & Humber (£475) and East Midlands (£376). The North West comes closest to London, with £711, followed by the West Midlands with £656. The average, dragged up by London, is £669.
If the road (or railway) to London is paved with gold, it clearly runs from Manchester via Birmingham, not from Newcastle through Yorkshire and the East Midlands.
Education
If there is one area of public spending vital to economic growth where the North East seems to fare better than average it is education, though margins are quite narrow. North East spending overall is £1,766 per head, which is behind only London and West Midlands and above the national average of £1,722.
But there is a big caveat attached to these figures. £149 of the North East spending is on “subsidiary services to education”, which is considerably more than in most other regions and the national average of £104 and accounts for almost all the region’s above-average spend.
This heading covers services like school buses and school meals. Once again, an apparently generous provision is actually a mitigation of deprivation.
Unexpected oddities
More is spent in the North on general public services than any other region, including London. The regional figure is £188 compared with the national average of £154. This seems very odd when one considers that general public services cover executive, legislative, fiscal, external affairs, public administration, public debt transactions, and transfers not allocated to specific functions. It takes in (but not only) the Prime Minister’s Office, Cabinet Office and Parliament, some Treasury functions, diplomatic service, foreign economic aid and some research. Nearly all of these, one would have thought are in London and will be staying there, in spite of Burnham’s intention to set up a No. 10 North.
The North East spends £2 per head on civil defence, a sum matched only by London and twice that of any other region.
This region spends a lot more on prisons than any other – £208 per person compared with the England average of £107, pushing our total budget for public order and safety up to £756, second only to London’s £1,000 which includes £597 for policing – more than anywhere else.
We spend significantly more public money on cultural services than every other region, including London – £105 per head compared with the average £63. We also spend more on community development than anywhere else (£109); this includes items like regeneration of neighbourhoods, community facilities and centres, community capacity-building, local development programmes, support for community organisations and area-based initiatives to improve quality of life. The average is £60.
Transferring Manchesterism – comment
North East politicians looking for clues in these statistics to the much-vaunted success of Andy Burnham’s mayoralty on Greater Manchester and how to emulate it in this region will have to dig deep to get much further than the pretty obvious heading of transport where, as we have seen, the North West is the biggest spender outside London. The fact that the North West is much more than Manchester but includes Liverpool City Region and all of Lancashire and Cumbria too does not invalidate the comparison, which is on a per head basis.
Apart from the case of transport, Burnham’s home region does not spend significantly more public money proportionately than others except, for some reason, on waste management, which is hardly relevant.
So the lessons for North East politicians from these statistics are limited. They should focus on more local transport improvements like the Northumberland Line to get people to and from work and college, and on skills, which both the North East and Tees Valley are doing through their local skills improvement plans (LSIPs).
A final lesson from Manchesterism, not immediately obvious from the statistics, is the need to work closely with the private sector particularly on housing development, including social housing, and industrial investments like green energy at the Port of Tyne and Blyth.
If Kim McGuinness, the North East Mayor, can carry on as she is going she has a good chance of retaining and building on Burnham’s and the government’s trust and support. The Tees Valley Mayor, Lord Ben Houchen, and his cabinet need to persuade the Ministry of Housing, Communities and Local Government (MHCLG) to lift its Best Value Notice (BVN) from their backs first and convince ministers that they are a reliable partner. That will take time.
When it is done, we can hope that Burnham and the mayors together will be able to fulfil the pledge the new Prime Minister gave in his first speech in his new role on the steps of Downing Street: “We will take power out of here and carry it into every postcode in the land so that they can do more.”
Friends of Bylines Network
There has never been a greater need for grassroots journalism that investigates the stories that really matter, holds power to account and champions the voices of everyday citizens. We are proudly powered by volunteers but what we do isn’t free.
STAND WITH US for independent, citizen-led journalism that makes democracy stronger, and you will even get some exclusive benefits.
