North East Devolution and Levelling Up

Don’t be distracted by dreams of a trillion; stay focused on the realistic

Suddenly the purported cost of levelling up the UK’s economically lagging regions has made a quantum leap from billions to trillions. The new estimate of £1.7 trillion over a period of decades is equivalent to the 2 trillion euros spent by Germany on its former eastern regions since reunification in 1990.

But beware: talk of trillions for levelling up is to enter the world of fantasy finance.

It may well be a realistic assessment of what is needed economically. It comes, after all, from a respected think tank, the Centre for Cities, which produces research cited quite often by this website. It has been shared on this occasion with The Guardian.

But a trillion pounds is such a huge amount that there isn’t even any universally agreed definition of what it is. If you are not quite sure how many millions make a trillion, or when to stop adding noughts if you are writing it down, don’t feel embarrassed. Neither did I till I looked it up.

According to Wikipedia, which I do not normally cite but which is interesting in this case because it demonstrates how far beyond not only our experience but even our imagination such a sum is, there are two distinct definitions.

One is that a trillion is one million million, or ten to the twelfth power, or 1,000,000,000,000. That is what is known as the short scale and is now, apparently, the generally accepted meaning in both British (since 1974) and American English. It is the one I will assume in this blog to be the case.

The other definition, known as the long scale, is a million times greater. It is ten to the eighteenth power, or 1,000,000,000,000,000,000, and is still used in many non-English-speaking countries.

To return from Wikipedia to the safer ground of the Office for National Statistics, the UK’s net worth in 2020 was estimated as £10.5 trillion, or £158,000 per person including all land, dwellings and other buildings, machinery, intellectual property, cultivated assets and financial assets. The national debt surpassed £2 trillion for the first time in 2020.

So it is politically that it is a fantasy to start thinking in terms of trillions of investment in levelling up. No one, surely, expects any government to commit to that amount of investment, not even over decades.

Indeed, the time required is part of the problem. Governments tend not to think or plan beyond the next election. There are even grave doubts at the moment whether the government will fulfil long-held expectations to go ahead with Northern Powerhouse Rail and HS2b linking the North East to the high-speed rail network.

To the North East’s local leaders, however, talk of trillions is only likely to spur them on to ever greater and less realistic ambitions. Their current ‘asks’ of the government, such as £2.8bn for Covid recovery, which has been lying on the table for almost a year, and the North East Transport Plan, for which they want £6.8bn by 2035, may start to look decidedly modest.

Nevertheless, it is on these plans, which at least have some chance of being realised, that they should keep their sights fixed, and not get carried away with wilder aspirations.

What the North East needs is investment in education and skills, including support in the community to create a learning culture; improved local transport, like the Northumberland rail line now under construction and including bus franchising, to get people in more isolated places to colleges and workplaces; and support for businesses, especially in the field of research and development.

The region must hope, and its politicians press for, opportunities for incremental but significant improvement in areas like these to be included in the White Paper on levelling up and devolution expected in the autumn. Dreaming of what could be done with trillions, even over decades and across the wider northern region, would be a distraction.

Meanwhile, there is one practical step that North East councillors could take to put themselves in the best possible position to exploit whatever opportunities there are. They should do a devolution deal as soon as possible covering the area’s seven councils to create a united voice and correct the error of 2016 when they rejected a government offer and split in two.