North East Devolution and Levelling Up

Cause for cautious optimism at last

For the first time in 57 years of observing and writing about North East England as it struggles to lift itself off the bottom of the UK’s economic league tables, I feel a sense of cautious, but real, optimism.

This has very little, though not quite nothing, to do with the actions of politicians, national or local, Conservative or Labour. Indeed, their actions have sometimes had negative effects on the regional economy.

No. It has nearly everything to do with the private sector and how it is adapting to climate change and the green industrial revolution now getting under way.

Developments in recent days and weeks in this sector have brought home that the shift to a low-carbon economy and electric vehicles is not mere talk.   

In Sunderland and neighbouring South Tyneside, Nissan and its partner Envision are investing £1bn in the manufacture of electric vehicles and the batteries to power them, using a renewable electricity manufacturing ecosystem being developed by Sunderland City Council.

At Blyth, Britishvolt is planning a £2.6bn gigaplant (whatever that is) on the site of the town’s former coal-fired power station to produce cells for electric vehicle battery packs.

Meanwhile Tees Valley is placing itself at the forefront of the green energy revolution with a range of initiatives and developments focused on the use of hydrogen and renewables. Many are being developed at Teesworks, site of the former Redcar steel works.

These projects build on the North East’s existing strengths in offshore wind and other forms of low-carbon energy, stemming from the region’s legacy of shipbuilding, engineering and coal mining – survivors of the devastation of the region’s traditional industries in the 1980s.

Together they will provide many thousands of jobs from Northumberland to Redcar and promise to bring many more as clusters develop around sites like Teesworks, Britishvolt and the International Advanced Manufacturing Park (IAMP) in Sunderland/South Tyneside. This is the most hopeful moment for the North East economy since Nissan announced it was to build its UK factory in the region 1984.

There is a useful summary of recent developments by Guy Currey, director of Invest North East England, in Bdaily News here and a summary of developments in Tees Valley by Tees Valley Combined Authority and Mayor here

All these developments will take several years to deliver their benefits. We should not expect to see a sudden fall in the North East unemployment rate, for example. Meanwhile, however, there are actions that politicians can take to support the private sector businesses which are the driving force behind them.

Politicians have a decidedly mixed record when it comes to supporting and renewing the North East economy. They have tried economic plan after plan – the Hailsham Plan (1963), Challenge of the Changing North (Northern Economic Planning Council – Dan Smith’s plan – 1966), Strategic Plan for the Northern Region (North Regional Strategy Team – 1977), (Unlocking Our Potential (One North East – 2001), Leading the Way (One North East – 2006), Newcastle in the North East of England (Organisation for Economic Cooperation and Development – 2006), North East Independent Economic Review (the Adonic report – 2013), More and Better Jobs (the North East Local Economic Partnership – 2014), the Tees Valley Strategic Economic Plan (Tees Valley Unlimited – 2014) and Tees Valley: Opportunity Unlimited (the Heseltine Plan – 2016).

While it would be unfair to say none of them has made any difference at all, none has succeeded in lifting the North East from the bottom of the nation’s economic league tables. The trouble is, they have all been implemented half-heartedly. Governments have ‘dabbled’ in regional development, to use the Prime Minister’s word in his ‘levelling up’ speech on July 15.

The mistakes of politicians in relation to the North East have been multiple. Governments in the 1980s and 1990s closed steel works, coal mines and finally shipyards without providing adequate alternative employment; in 2010 they abolished the regional development agency and split the North East between Tees Valley and the rest; in 2016 North East local politicians rejected a devolution deal and split the region again along the line of the Tyne; Brexit is a self-inflicted wound, and the spur it has provided for Nissan to expand its local supply chain has been a piece of luck that surprised everyone.

On the positive side, the government and the whole region united to bring Nissan to Sunderland in 1984; the former Tyne & Wear County Council had the foresight and tenacity to build the Metro light railway in the 1970s; and the North East Combined Authority and business-led North East Local Enterprise Partnership has put £49m into the IAMP. A feature of all these successes was that they stemmed from unity.

Finally on the plus side, Tees Valley Mayor Ben Houchen is making the most of the opportunities offered by devolution. While Houchen is seen by some as a divisive figure with party political motives and personal ambition, he would not be able to do what he is for Tees Valley if the area’s five Labour leaders had not set aside their differences and done a devolution deal with the Tory government in 2016. So unity again laid the groundwork.

While the movers and shakers behind the region’s future development will in the main be in the private sector as it responds to the opportunities and challenges of the green industrial revolution, there are actions that politicians can take.

They should, first of all, focus on ensuring that both young people and older workers have the education and skills to fill the new jobs that are coming. Secondly, they should facilitate good local public transport so people can travel easily and economically to colleges and workplaces. Thirdly, they should provide financial support to companies, particularly small businesses, to engage in research and development.

These are the priorities, ahead of grandiose schemes like bringing high-speed rail to the North East, which will cost billions, take decades and probably never happen. Think Leamside Line, not HS2. As to Northern Powerhouse Rail across the Pennines, let Andy Burnham and Tracy Brabin, mayors of Greater Manchester and West Yorkshire respectively, worry about that.

Most importantly of all North East politicians should unite and agree a devolution deal with the government covering all seven councils in the region (Tees Valley excluded), correcting the error they made in 2016 when they rejected an offer by four votes to three and split along the line of the Tyne.

A devolution deal would give the area the united voice it needs and put it in the best possible position to act on the priorities outlined above, including an investment fund of probably about £30m a year for 30 years, control of the adult skills budget, and the powers offered by bus franchising. That way they can do their bit to make the most of this moment of opportunity.