North East Devolution and Levelling Up

Leamside Line: time for new thinking

We have become used, especially in the decade and more of austerity, to seeing North East council leaders, when they want a capital project or service improvement for the region, going cap-in-hand to the government. Then, when they don’t get what they want, listening to them complain how unfair it is.

Often they are justified. In this centralised country almost all purse strings are held by the Treasury, and the North East can certainly make a case that it has been under-invested by the government for decades.

A recent and still current example has been the Leamside rail line. The North East’s Labour MPs reacted with kneejerk anger in October when the government turned down pleas to reopen the line, which would link the Tyne and Wear Metro at Pelaw with the County Durham town of Ferryhill. According to the Northern Echo there could be intermediate stations at Follingsby, the International Advanced Manufacturing Park, Washington, Penshaw, Fencehouses, West Rainton/Leamside, Belmont, and Shincliffe & Bowburn, and a spur to South Hylton creating a south-of-Tyne Metro loop.

Separately there is a possibility, supported by Durham County Council and the Conservative MP for Sedgefield, Paul Howell, of reopening the existing Stillington freight line between Ferryhill South and Stockton to passengers. This would provide a new, faster route between Teesside and Tyneside and, like the Leamside Line, increase capacity on the East Coast Mail Line (ECML).

These are excellent schemes which this website supports, but funding them requires more than shouting in frustration at the government when hand-outs fail to materialise.

Fortunately in recent days the case has been made in a manner more reasoned and less shrill, probably because a cross-party group of politicians has been joined by officials, business leaders and a think tank. There is now an apparent willingness to work with the government and a recognition among some at least that the secret to unlocking the necessary funds is to do a new North East devolution deal.

The MP for Washington and Sunderland West, Sharon Hodgson, has secured a Commons debate on the issue tomorrow (February 8). We’ll see how that goes.

The Leamside Line is included in the North East Transport Plan, drawn up by the region’s Joint Transport Committee (JTC) and costed at £6.8bn between 2021 and 2035. ‘We believe this to be a fair share of national transport funding which should be allocated to our region from central government in the period 2021-2035’, says the JTC hopefully.

Securing that level of funding looks like a long shot. It would require £485m a year over 14 years compared with, for example, the total £270m Local Growth Fund spread over the six years that constituted the main funding for the North East Local Enterprise Partnership between 2015 and 2021.

Since the North East Plan was drawn up the Leamside Line has already been rejected once, when it was left out of the government’s Integrated Rail Plan in autumn 2021 as ministers consider the cost of around £600m to be ‘prohibitive’.

But there are possible sources of funding for the Leamside Line, as Baroness Vere, Parliamentary Under-Secretary of State at the Department of Transport, made clear in a House of Lords debate on December 16. She said: ‘On the Leamside line, the north-east is eligible for a multiyear city region sustainable transport settlement (CRSTS). Unfortunately, we need the governance structures to be in place for it to have the CRSTS. We are working very closely to encourage the local area to form a combined authority, and then we will be able to think about providing funding, which may or not subsequently be used for the Leamside line’.

The CRSTS will total up to £6.8bn for the five years 2022-27, and seven city regions have already been awarded shares totalling £4.96bn, including £310m to Tees Valley. The North East will be eligible for a share that local politicians have referred to variously as sums up to £650m – but only if it does a devolution deal, which is what Baroness Vere meant when referring to ‘governance structures’.

This sum will be increased – will have to be increased – by other funds raised locally. The government has told mayors: ‘[C]ity regions will be expected to raise at least 15% to 20% local contributions for capital enhancements, fully additional to the money granted by government. Higher proposed contributions will be scored positively in bids.

‘This is less than the National Infrastructure Commission’s recommendation that a local contribution of 25% should be applied to major projects funding and is significantly less than the contribution London is making towards the Elizabeth Line’.

This is not the only possible source of funding for the Leamside Line. Devolution will bring with it an investment grant, probably of £30m a year for 30 years which is the same as has gone to Greater Manchester, Liverpool City Region, Sheffield City Region and the West of England. It is also the amount that was rejected by the North East Combined Authority (NECA) in 2016.

NECA councillors at the time derided this sum as paltry compared with the austerity cuts they had suffered over the previous six years. But they were not comparing like with like. The cuts affected their day-to-day spending on services while the investment grant was intended to enable them to create a capital fund for investment in the economy.

Just how substantial such a fund could be when effectively underwritten by the government was made clear in a report presented to NECA by its officials on March 24, 2016, just as councillors were embarking on the wrangling that was to lead to their rejection of the offer six months later.

There was the potential, they were told, to invest between £1.0bn and £1.4bn in the first 15 years, rising to between £1.6bn and more than £1.8bn over the whole 30 year period. ‘The ability to borrow would enable the frontloading of expenditure on infrastructure and investment to help grow the economy across the NECA area’.

Not all this has been lost, as the North of Tyne councils which broke away and did their own deal have been receiving £20m a year since 2019. But one-third has, and of that which remains none is available south of the river which is where it would be needed if it were to fund the Leamside Line.

A new devolution deal, now expected to cover the six councils in Tyne & Wear and Northumberland, would give greater flexibility though it would not now cover the southern section of the Leamside Line in County Durham, which is expected to sign its own county deal.

The North East and Durham devolved authorities would thus have to agree to share the cost. They might even persuade Tees Valley Combined Authority (TVCA) to make a contribution if the reopening of the Stillington Line can somehow be integrated in the scheme, as Tees Valley residents would also benefit from improved rail links to Wearside and Tyneside.

And that is not all. The new NECA with a devolution deal could ask its six constituent councils to make contributions through their own capital budgets, even those north of the Tyne which will not directly benefit from the reopening of the Leamside Line. They, after all, are already getting the Northumberland Line linking Ashington, Bedlington and Blyth to the Metro at Northumberland Park.

Besides, those with only moderately long memories will remember that Sunderland helped pay for the construction of the Metro even though it was not extended to Wearside for more than 20 years after the opening of its first sections.

Regional collaboration, solidarity and mutual support is what devolution requires and is all about.

Finally, there is the possibility of leveraging in private sector investment, possibly from bus or rail operators. Exactly how this would work for investment in a public transport system that currently requires subsidising is not clear to this author, but should no be arbitrarily ruled out. The government recognises that revenue support as well as new sources of capital may be necessary. It has told mayors: ‘Proposals for new locally raised revenue streams will be welcomed. If schemes or services are likely to require ongoing revenue support, proposals should also outline how this will be provided’.

The ideas discussed above may not necessarily work in the form in which they are outlined, but it is innovative thinking on these lines that is needed rather than simply asking the government for money and complaining when it is not given. There is a reason why devolution is referred to as a deal: it involves give and take. The government hands over powers and resources and councillors accept directly elected mayors as a way of increasing accountability. That has been understood since George Osborne, then Chancellor, made his devolution speech in Manchester in 2015.

Devolution for the North East’s six councils and for Durham separately now looks likely, but it cannot be taken for granted that our councillors will not repeat the strategic mistake they made in 2016. The leader of Gateshead Council, Councillor Martin Gannon, who ousted his predecessor and led the fight to reject devolution then is still in his post now and still the most influential politician in the south of Tyne area.

He has given a guarded welcome to the devolution proposals in last week’s Levelling Up White Paper but coupled it wih a warning that it should be a ‘fair, reasonable, equitable settlement from government’ that would ‘deal with the generations of unfairness and inequality that we have experienced in the North East’. Of course, but that should not be made an excuse for rejecting a deal again. A lot rests on Councillor Gannon’s shoulders.

There are opportunities available for those with the imagination and willingness to do what is necessary to take advantage of them. What is needed is a ‘can do’ attitude and a willingness on the part of councils to collaborate with each other and the government rather than the unsuccessful and demeaning Oliver Twist approach we have seen too often of: ‘Please sir, I want some more’.