North East England’s new, expanded devolution deal is about to go out to statutory pubic consultation. And not before time.
The Local Government Association (LGA), which has a whole section on its website on ‘Engaging Citizens in Devolution’, advises that: “Engagement should begin early and enable the public to shape not only answers to problems, but the questions asked and the topics considered.”
This is what happened when NECA decided to seek a devolution deal in 2015. Public consultation was carried out in advance of proposals being put to the government, and the feedback was used in framing those proposals.
There was another consultation after the provisional deal had been signed, and in both cases, the public was supportive of devolution. That did not stop councillors rejecting the deal in the end, however.
In spite of the LGA advice and the 2015 precedent (or perhaps because of it), North East council leaders negotiating their new deal with the government have kept their discussions behind the closed doors of the region’s town halls, and details have only emerged now it is virtually a done deal.
For surely no one can seriously doubt that this time the deal will be ratified by the seven councils in Northumberland, Tyne & Wear and County Durham which it covers, with little more than perhaps some details to be tweaked as a result of the public consultation.
Surely the seven council leaders will not repeat the strategic error they made in 2016 when they voted 4-3 to reject the government offer then on the table. Gateshead, South Tyneside, Sunderland and County Durham voted against and remain in a rump North East Combined Authority (NECA) without a deal.
Meanwhile the other three – Newcastle, North Tyneside and Northumberland – voted in favour of the 2016 deal, formed their own North of Tyne Combined Authority (NTCA), signed their own deal and elected their own mayor, Jamie Driscoll.
That is where the North East remains today, but probably not for much longer. The new expanded deal, if ratified by the seven councils following the public consultation and successful completion of the parliamentary process, will reunite the region from Tweed to Tees in a new (or re-constituted old) NECA.
A menu with specials
Devolution in England is a process under which central government in Westminster and Whitehall hands powers, responsibilities and funds to (usually) combinations of local authorities or (sometimes e.g. Cornwall) single local authorities.
Devolution is not the same as levelling up but it is very closely linked. Devolution gives councils some additional tools and extra money to level up their region by investing in their economy. In return, they must (usually) accept a directly elected mayor to be accountable to both voters and the government.
There are those who believe that the whole process is inadequate to meet the challenge of England’s imbalanced economy, with wealth and prosperity over-concentrated in London. Be that as it may, the present devolution model is what we have until at least there is a new government.
So the only way to judge whether the new North East deal is a good one is in the context of other deals for places like Greater Manchester and Tees Valley. Most have been offered what a House of Commons Library research paper describes as “a menu with specials”.
On the menu are an investment fund for economic development, payable annually for 30 years; funding from the City Region Sustainable Transport Settlement (CRSTS); bus franchising; regional control of the existing adult education budget (AEB); power to impose a 2% supplement on business rates, subject to a vote of businesses affected; business support; power to impose a precept (extra charge) on council tax, subject to conditions on excessiveness; and planning and land use powers including compulsory purchase and the ability to establish mayoral development corporations. To that list can now be added control of the UK Shared Prosperity Fund (UKSPF).
The list of ‘specials’ includes fire and rescue service; mayor as Police and Crime Commissioner; integrated [criminal] rehabilitation service; Brownfield Housing Fund; and integrated health and social carel
The North East deal
The North East deal includes everything on the menu, with some of the funding at a comparatively generous level, plus two of the ‘specials’.
The region’s investment grant will by £48m a year, giving £1.44bn over 30 years. Measured by head of population, this is £731 per capita over that period, second only to the West of England, with less than half the population, which is receiving £953. By comparison, Tees Valley is getting £663.
The North East’s CRSTS grant is £563m by 2026-27, which at £286 per capita is the second lowest of all devolved combined authorities, above only the West of England; others range up to £458 per capita for Liverpool City Region.
However, the North East is also receiving £164m announced separately in April 2022 for its Bus Service Improvement Plan – the highest allocation in the country and, with a small revenue grant, bringing the region’s total devolved transport funding over the next five years to £732m or £372 per capita, slightly above the average of £366.
In addition, the deal will bring an extra £33m for essential maintenance work on the Metro, plus revenue support for Metro operations in 2023-24 and 2024-24, using the 2022-23 allocation of £27.8m. as the base figure for each year. It is hard to believe, though, that having just forked out £337m towards a new Metro train fleet, £94.7m for the Metro Flow project (dualling the track in South Tyneside) and £57.3m to support revenue during the pandemic, the government would not pay to help keep the Metro going now even without a devolution deal.
Another power on the menu which is coming the North East’s way is bus franchising. This is a big deal, even though it does not come with any specifically allocated funding, and one which the old NECA tried and failed to secure before splitting seven years ago. It will give the MCA the power to determine bus services, routes and fares. Many expect fares for single journeys across all modes of local public transport to be capped at £2.
Hand-in-hand with this will go power to establish key routes for bus lanes (like London red routes) and cycling infrastructure.
Devolution of the adult education budget will give the new NECA £60m a year to help raise people’s skills and fit them for better jobs.
The UKSPF, replacement for European Union funding, is worth £102m to the region by 2025. At £52 per head of population, this is the highest per capita figure in the country apart from Tees Valley (£63) and North of Tyne (£56) which it will replace in May 2024.
The North East will be eligible for £17.4m over the next two years from the Brownfield Housing Fund in addition to £32m already offered to North of Tyne to support the building of new homes, making a total of £49.4m or £25 per capita compared with an average of £30.
Statements of intent
In addition to the specifics outlined above, the deal lists a significant number of policy areas in which the government and the MCA state that they ‘commit’ to action. However, these are circumscribed with so many caveats that they are best described as ‘statements of intent’, not firm promises, still less with funding attached. They leave a lot of wriggle room.
There are at least 30 of these, ranging over such diverse topics as child poverty, special educational needs and disabilities, further education, employment programmes, green energy and net zero, social housing, more Metro extensions, digital connectivity, culture and sport, health and social care, protection of women and girls and rural issues.
When Levelling Up Secretary Michael Gove announced the deal before Christmas he was, unsurprisingly, pleased with it. It would, he said, “ensure local priorities in the North East are at the heart of decision-making” and “provide the financial certainty needed to level up the area right now and for years to come.”
The deal has been widely welcomed by political and business leaders in the region too, though some council leaders have been ambivalent. In a joint statement, the council leaders and mayors said:
“This is a significant step towards securing important decision-making powers and investment for our region. This would allow us to make decisions that reflect local needs and invest wisely into projects that will make a difference for all our residents, communities and local economy.”
North of Tyne Mayor Jamie Driscoll wrote in his column in The Journal:
“As devolution deals go it compares well against other regions”.
Among others who have spoken out in support have been leaders of the North East England Chamber of Commerce, regional CBI, regional Federation of Small Businesses, Newcastle Gateshead Initiative and North East Local Enterprise Partnership (NELEP).
However, two council leaders who helped negotiate the deal and put their names to the joint statement welcoming it have since expressed reservations. Councillor Martin Gannon, leader of Gateshead Council, posted on Twitter that the region was being ‘forced’ into the deal which he claimed was “not levelling up.” He wrote:
“It’s not a good deal and it’s definitely not ‘levelling up.’ The ‘deal’ is a fraction of the funding that local authorities have lost; however, without it, we’ll get nothing.”
He later told the Local Democracy Reporting Service (LDRS), as reported in ChronicleLive, that he was “absolutely 100% supportive” of the deal, but added:
“It is not levelling up, it is us getting what we are entitled to. And it is a fraction of what has been taken off us – it is not a generous deal.”
Councillor Nick Kemp, the Labour leader of Newcastle City Council, told the Local Government Chronicle (LGC) that while the deal “is significant” it “in no way replaces the hundreds of millions of pounds that was lost from local government budgets’ as a result of austerity.”
He said that whilst he will be pragmatic and will “welcome the money that is incoming for the benefit of the city and the city region’’ he will also “maintain the argument that the cuts that have been made are damaging to the city.”
The devolution deal on its own will not level up the North East. Nor will it make up for the funding lost by the region’s councils during the past 12 years of austerity as Councillors Gannon and Kemp rightly say. But they miss the point.
The investment fund and other new funding are not intended to make up for the austerity cuts. The latter affected revenue spending on day-to-day services; the former is for capital investment in the economy.
It is true that to complete levelling up, public services will have to be restored and many such services are provided by local authorities which will need extra revenue spending to do so. But that should not be confused with capital funding for economic development. That was a misunderstanding that led NECA to reject a deal in 2016, at great cost to the North East.
Of all the features of this deal, three stand out as likely to make a significant contribution to levelling up the region – the £48m annual investment grant, control of the £60m annual adult education budget and bus franchising. For the sake of these powers and funding streams alone, the seven councils should grasp the deal with both hands.