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Can North East devolution hopes survive political turmoil?

There will be dismay, but hardly surprise, in the North East business community at news that progress towards a new, expanded North East devolution deal appears to have stalled as a result of government turmoil following the recent mini-budget.

The news emerged from a meeting of the North East Combined Authority (NECA) yesterday as reported by the Local Democracy Reporting Service (LDRS) in ChronicleLive.

And a further development affecting the prospects for devolution and levelling up in the region came today during Prime Minister Liz Truss’s speech to the Conservative Party conference, when she said levelling up would continue but ‘in a Conservative way.’

According to the LDRS in ChronicleLive, Sunderland Council’s deputy leader Claire Rowntree told the NECA leadership board that local authorities are waiting for news about what will happen to the deal under the Truss administration, with the details of a draft proposal having been finalised in the last days of Boris Johnson’s government.

She said councils would have to wait and see what the government does or doesn’t want to do next but could not put a timescale on talks due to ministers being occupied at the moment by the fallout from the mini-budget.

The deal, if it is ever agreed, will re-unite the North of Tyne Combined Authority (NTCA), consisting of Newcastle, North Tyneside and Northumberland, which already have their own deal, with the three Tyne & Wear South councils – Gateshead, South Tyneside and Sunderland – which rejected a deal in 2016.

It would reportedly bring the region £3bn over 30 years, including a £35m annual investment fund, £900m transport funding and the power to control local bus services and fares.

Whether County Durham, which remains in NECA for the time being but is considering doing a separate county deal, will also join in remains uncertain. Durham’s deputy leader, Councillor Richard Bell, told the LDRS that he had written twice to the new government asking them to engage constructively in devolution talks but had yet to receive a reply. He said that a mid-October deadline for Durham to decide whether to join a North East deal or go it alone set by former levelling secretary Greg Clark, was now perhaps no longer applicable.

A spokesperson for the Department for Levelling Up, Housing and Communities (DLUHC) told ChronicleLive: ‘We continue to work at pace with leaders in the North East to deliver a devolution deal.’ One can read almost whatever one likes into that formulaic response.

It may be that the details of a draft deal were finalised under the Johnson government, and it may be that the DLUHC is working at pace with North East leaders. But there is still no actual deal. Those in the North East who want an agreement only have to look as far south as Yorkshire and the East Midlands, where two new deals were signed during the summer, to be prompted to wonder what this region is doing wrong.

North East business leaders have long wanted a regional devolution deal covering the seven councils in Northumberland, Tyne & Wear and County Durham to match that done by Tees Valley in 2015-16. A North East deal then was scuppered when the government eventually took it off the table, frustrated by 11 months of prevarication by North East council leaders. Now it is the government which is apparently responsible for the delay.

But it takes two to deal, and there is no evidence of enthusiasm for devolution in this region on either side, nationally or regionally.

Nationally, on the government side, the deal may be seen as just one of the items of business to have fallen victim to the ‘distraction’ that Chancellor Kwasi Kwarteng complained of when u-turning on tax cuts for top earners. In that case, the victim could be revived once the turmoil subsides. A hopeful sign that the government is not planning to abandon the devolution-levelling up agenda came at the start of the Prime Minister’s speech to the party conference today. She opened with tributes to Tory metro mayors Andy Street (West Midlands) and Ben Houchen (Tees Valley) and called for the election of Conservative metro mayors elsewhere.

But there was a more ambiguous statement later when she added: ‘We must level up our country in a Conservative way, ensuring everyone everywhere can get on.’ What the phrase ‘in a Conservative way’ means in practice is as yet unknown. Whether the North East deal drafted during Johnson’s premiership will be Conservative enough for Truss’s Levelling Up Secretary, Simon Clarke, we don’t yet know. If not, and Clarke insists on changes, the councils may be be deterred from signing.

For six years the council leaders have taken absolutely no effective steps to heal their split of 2016 and do a new deal, in spite of the powers and funding a deal would have brought, including those mentioned above. Whether they will do so now must be open to doubt, particularly if they believe failure to get an agreement can be blamed on an ideological Tory government.

Yesterday’s comments at the NECA leadership board marked one of the few occasions when councillors have said anything in at all in public about a new deal. They have completely failed to engage the public in the devolution process and it was telling that the comments came at this moment, when failure to reach an agreement could be laid at the door of ministers.

The best that can be hoped for now is that a new deal for the North East faces nothing more than a delay while the government gets over its distraction. The Prime Minister’s speech encourages the hope that the government will be open to a deal in due course. But if the deal negotiated with the Johnson government fails to survive scrutiny by Simon Clarke and he demands changes to make it more ‘Conservative’ it may prove unacceptable to councillors. With the prospect of more spending cuts to come in a budget next month, regional leaders who have always been sceptical about devolution may reject a deal for the second time in six years.