Devolution: What's The North East's Problem?

Updated on 18 April 2022

To be specific, why wouldn’t four councils south of the Tyne – Gateshead, South Tyneside, Sunderland and County Durham – do a deal with the government when others in the region were willing to sign up?

And why, six years later, have those four (together forming the North East Combined Authority – NECA) still not done a deal in spite of the obvious damage being done?

Damage like that suffered most obviously on 3 March 2021 when Chancellor Rishi Sunak awarded freeport status and a Treasury northern campus to devolved Tees Valley but gave virtually nothing to the un-devolved NECA; damage like the relatively poor share received  from the £4.8bn Levelling Up Fund; and most notably damage like the failure to secure a potential £600m from the City Region Sustainable Transport Settlement.

‘It’s clear that mayoral combined authorities, with that single, accountable, electable individual, are drawing more money and more power down from government than other areas’

Jake Berry, Northern Powerhouse Minister (2018)

https://www.chroniclelive.co.uk/news/north-east-news/northern-powerhouse-minister-there-big-15517114

That is still the case in 2022 and looks like remaining so.

Devolution in its present form may not be ideal, but for now it is the only form available and those councils which refuse to take advantage of it are missing out.

When NECA rejected a deal in 2016 it had seven members – the south of Tyne four plus Newcastle, North Tyneside and Northumberland. The latter three wanted the deal, which would have given NECA enhanced powers over employment and skills, transport, housing, planning, business support and investment, as well as £30m a year for 30 years. But were outvoted. So they broke away, formed the North of Tyne Combined Authority (NTCA), did their own deal and elected their own mayor, Jamie Driscoll.

To discover why the south of Tyne four acted as they did in 2016, and why they are still without a deal six years later, it is not enough to examine the four councils themselves. A deal implies two parties, and if the local authorities were to accept an offer it first had to be made by the government. And there is a third party to be taken into account as well: the public. 

Errors

To discuss the councils first: it’s not as if party politics on its own was an insuperable barrier. True, the devolution offer came from a Conservative government, and therefore might have been suspect to the four dissenting councils, which were all controlled by Labour at the time.

But so were the north of Tyne councils, and the five Tees Valley councils. But they all accepted similar deals. England’s devolution pioneer, Greater Manchester, is a predominantly Labour area too, with 18 Labour MPs out of 27

There are two main reasons the south of Tyne four rejected the deal on offer in 2015-16, outvoting their north of Tyne colleagues, plus a complex of socio-cultural factors.

The first main reason was that after years of austerity cuts they did not regard the £30m-a-year grant as enough. This was both a category error and an error of judgement.

It was a category error in that the £30m was never meant to compensate for the cuts. The cuts affected revenue spending on day-to-day core services, while the devolution grant was to support investment in the economy.

The error of judgement was to believe that they could hold out for more. £30m was the amount accepted in Greater Manchester, Sheffield, Liverpool and the West of England, while North of Tyne eventually got £20m on doing its own deal and Tees Valley accepted £15m. Only the West Midlands (£36.5m) and West Yorkshire (£38m), both with substantially greater populations than NECA even with its original seven members, have received more

It is perhaps the case that councillors did not fully understand what they were turning down when they rejected the £30m a year for 30 years. They should have known, because NECA was presented with a report by its officials on 24 March 2016 explaining how the grant could fund up-front capital investment (p. 7) of up to £1.4bn over the first 15 years rising to more than £1.8bn over 30 years.

The second main reason the south of Tyne four did not like the idea was that it required them to accept a directly-elected mayor. Mayors go against the tradition of English local government, which is collective. When referendums were held in ten cities, including Newcastle, in 2012 all but Bristol rejected the idea.

Politicians either supporting devolution or opposing Labour, or both, have their own views about why the south of Tyne four rejected the deal on offer – that they feared a Conservative might win the mayoralty or that even if Labour won its chosen candidate might be someone from outside the party’s town hall establishments who would upset their cosy, if adversarial, cabal.

This brings us to the socio-cultural factors underlying the four councils’ rejection of a deal.

Relations between the four, and with the North of Tyne three, are complicated. The fact that Labour dominates the whole area most of the time unites the councils in opposition to a Tory government and in forever complaining about unfair funding, but does not otherwise prevent mutual rivalry based on history and geography.

In the North East local identity trumps regional identity. There is particularly strong resentment of Newcastle, which is perceived to get special treatment and behave with arrogance because of its position as regional capital. It was against this background that a strong campaign – the Campaign for Real Devolution (CARD) – against the devolution deal within the Labour and trade union movement was able to make headway, while the Conservative Party’s feebleness in the region at the time meant there was little countervailing pressure in favour of the deal.

CARD argued that the type of devolution on offer was far from  ideal, which was true enough. But it also argued that it should therefore be rejected, when nothing else was available, which was not a sensible strategy. The deal could, and arguably should, have been accepted as a hopefully interim measure until something better came along – if it ever did. There was nothing to lose and £30m a year to gain.

Council officials and the business community were generally in favour of the deal but lacked a presence where it mattered – in the private meetings of the Labour groups on the local authorities, where the trade unions campaigning against the agreement were strong and sometimes even in a majority.

Waste Of Money

Secondly, governments as well as councils have to be persuaded that deals are worth doing. While it is true that the government did offer NECA a deal in 2015, once agreed it was not one it was prepared to improve under pressure or to leave on the table indefinitely. After months of talks, the NECA Leadership Board met the Communities Secretary, Sajid Javid, on 23 August 2016 and he told them unequivocally that a mayor was required if the deal was to go ahead. 
When NECA still failed to agree the deal at its meeting on 6 September 2016, Javid took it off the table.

It is worth remembering that Chancellor George Osborne had his reasons when he specified in his Northern Powerhouse speech of 2015 that city regions seeking devolution must agree to have elected mayors. ‘It’s right people have a single point of accountability: someone they elect, who takes the decisions and carries the can’  he said .

Though Osborne did not say so, the government doubtless wanted a single person that it too, as well as local voters, could hold to account for the powers and funding it was handing over. Councils seeking devolution received independent advice to this effect at the start of the process. Ministers would expect them to be able to take tough decisions driven by economic necessity and the best long-term outcomes for an area, not temporary local political accommodation, they were warned: ‘The government, understandably enough, does not want to see deals which are reluctantly patched together but robust proposals which will not crack under the first sign of local tension’.

According to Professor Philip McCann, of Sheffield University: ‘Resistance to devolution from the centre arises from the fact that central government lacks trust in sub-national government competence or accountability’ (McCann, P. (2016) The UK Regional-national Economic Problem, p. 501. Abingdon: Routledge).

Although the Conservative Party has been pursuing devolution in one form or another since coming to power in 2010 and continues to do so, it has been with varying degrees of commitment and cannot necessarily be relied on to give way by councils trying to drive too hard a bargain. Professor Howard Elcock, of Northumbria University, looking back at the Labour Government’s regional policy of 1997-2010, commented that: ‘The Conservative Party had generally rejected all forms of regional government as a waste of money’.

Public Consultation

Nevertheless, supposing these two parties, the government and NECA, could have done a deal in 2016 or,  supposing the NECA seven (or six plus Durham) could be reunited, to do a deal some time in the future. What about the public?

We know that North East voters rejected Labour Party plans for a regional assembly by 78%-22% in a 2004 referendum. Their view was summed up in the title of a study by academics Colin Rallings and Michael Thrasher: Just Another Expensive Talking Shop (paywall). We also know that Newcastle voters rejected the idea of a mayor in a referendum in 2012. And we know that public interest in devolution was so low at the time of the Tees Valley mayoral election in 2017 that turnout was a mere 21.3% – low even by the standard of local government elections.

Public consultation was carried out on NECA’s provisional deal in 2016 and the results are open to interpretation. There were 750 responses and they were said to be ‘positive overall’, according to the official report (p. 47). There  was said to be strong support among a wide range of stakeholders from communities, businesses and partners for the principle of devolution and broad positive support for the proposals in NECA’s agreement with the government

However, the number of people taking part was tiny and the consultation was easy to dismiss. The only test of public opinion to involve a relatively large number of members of the public was a poll of all residents by Durham County Council. There were 81,964 responses representing 21.7% of the electorate. A majority of 59.5% thought that devolving some power and resources to the North East would be a step in the right direction. However, Durham County Council’s leader, under pressure from the Labour group on the council, still voted against the deal. That may or may not have anything to do with the fact that Labour lost its 100-year majority on the council in 2021.

Drift

What all this means for the North East, as opposed to Tees Valley, is that for the past six years the economic development of the region has been without firm political direction. The North of Tyne Combined Authority – Newcastle, North Tyneside and Northumberland – has its deal and the mayor, Jamie Driscoll, has been attempting for more than a year to negotiate a new deal which he has said he hopes will bring the region  together again. The Local Government Chronicle reported as long as in March 2021 that an outline deal had been agreed in principle. But more than a year later we are still waiting. 

So NECA is becalmed and politically directionless, facing council elections in which devolution is invisible beneath other apparently more pressing issues, and its failure to clarify its position on devolution is holding back its partners in the North of Tyne Combined Authority as well, for they control only half a functional economic area, split as it is along the Tyne. The only body with an overview of all seven councils is the North East Local Enterprise Partnership (NELEP) with its strategic economic plan. NELEP is fine as far as it goes but it is not democratic; it is a business-led technocracy. The North East needs and deserves better leadership than this

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