North East Devolution and Levelling Up

Budget disaster rooted in devolution folly

The North East’s Budget disaster yesterday, when it got nothing from Chancellor Rishi Sunak beyond what was available to all, can be directly traced back to 6 September 2016, when the leaders of the area’s seven councils short-sightedly voted 4-3 to reject a devolution deal offered by the government.

They thought the £30m a year for 30 years they were being offered was not enough; they didn’t want a mayor to upset the cosy cabal they had enjoyed for decades, yet at the same time they could not get over their local rivalries; they resented Newcastle’s position as regional capital; and they did not want to do a deal with a Tory government.

So they threw away the £30m a year for 30 years on offer and split the Tyneside economy in two. The North East’s economic governance now consists of one combined authority north of the Tyne, with a deal, an investment grant and a mayor, and another south of the river with none of these things. Meanwhile, a single Local Enterprise Partnership with an unelected business majority tries to hold this incoherent governance together.

Why would any government give this shambolic mess the billions it keeps asking for?

Meanwhile, Tees Valley’s Budget triumph can be traced through the same 2015-16 period, when it accepted a deal, and beyond that to 2010 when the coalition government split the area from the North East and gave it its own economic governance. 

In Tees Valley the Conservatives seized their opportunity, got a Tory mayor elected in 2017 and haven’t looked back.   

So it was no surprise when yesterday the North East got nothing from Chancellor Rishi Sunak while Tees Valley, is celebrating the award of a freeport, new port infrastructure to support offshore wind projects, a Treasury economic campus in Darlington and town deals for Middlesbrough and Thornaby.

The present devolution model may be far from perfect. It may be a political game, metaphorically, with Tees Valley Mayor Ben Houchen’s chances of being a winner in May’s elections enhanced by having Rishi Sunak on his team. 

But for now it is the only game in town. The seven North East councils better join in if they are not to be side-lined until at least 2024 while they wait and hope for a Labour government and something better. There’s probably just time for them to get together and do a devolution deal by the summer, with a mayoral election in May 2022. They should stop sulking in the dressing room, get on the pitch and start playing.