North East misses out on £500m transport funding because of refusal to do devolution deal

Half a billion pounds that could be available for improving transport in the North East is going begging because four councils south of the Tyne still remain reluctant to do a devolution deal with the government.

Seven other city regions in England have already started receiving payments from the government’s Intra-city Transport Fund, but none has come to Tyne and Wear because it does not have a devolution deal and what ministers regard as ‘appropriate governance’ – i.e. a mayoral combined authority (MCA) – covering its entire area.

The North East does have an MCA, the North of Tyne Combined Authority, but it covers only three of its seven councils – Newcastle, North Tyneside and Northumberland. The south of Tyne councils – Gateshead, South Tyneside, Sunderland and County Durham – rejected a devolution deal in 2016 and are members of the separate North East Combined Authority (NECA), which does not have a deal or a mayor.

Ministers are insistent on devolution deals before providing additional funding because they believe directly elected mayors, such as Ben Houchen in Tees Valley, offer increased transparency and accountability.

The consequences for transport funding of not having a devolution deal were spelled out by North of Tyne Mayor Jamie Driscoll to MPs on the Public Administration and Constitutional Affairs Committee this week. He said:

‘Sitting on the table is the Intra-city Transport Fund, which only becomes available if we change the governance, because the biggest transport asset in the region is the Tyne and Wear Metro system. It is half north of the river, half south of the river, so unless we change the governance we cannot get transport fully devolved. There is £0.5 billion on the table and that is a good reason for people to come together and decide to change the governance.’  

The £4.2bn Intra-city Transport Fund was announced in the 2020 Budget and confirmed this year. It is available over five years from 2022-23 to eight city regions including Tyne and Wear, provided they have MCAs.

Seven MCAs are receiving some cash this year to enable them to begin preparatory work:  £8.6m to Greater Manchester; £5.6m to Liverpool City Region; £5.2m to Sheffield City Region; £3.5m to Tees Valley; £4.1m to West of England, £8.9m to West Midlands and £7.4 million to West Yorkshire. But the North East is getting nothing because it has no deal and no mayor.

Mayor Driscoll told the MPs that a devolution deal for the seven North East councils (the LA7) could be done:

‘The LA7 deal is there to be done. I have been negotiating with government. There is a deal on the table. Not the finer points but the headlines are there, based on our comprehensive spending review last year, which we submitted, which would cost over the period of time £2.8 billion but would create 55,000 jobs. Our track record of delivering it is there.’

The North East’s £0.5bn share of the Intra-city Transport Fund, to put it in context, is more than the £379.6m Local Growth Fund awarded to the North East Local Enterprise Partnership to invest in the local economy over six years and compares with the £600m over 30 years granted to the North of Tyne Combined Authority in its devolution deal and £900m, also over 30 years, rejected by the south of Tyne councils in 2016.

The south of Tyne councils’ rejection of devolution has thus so far cost the North East at least £1.4bn., not to mention other benefits comparable to those that have gone to Tees Valley MCA such as a freeport and civil service jobs relocated from the Treasury and Department for International Trade.

Yet leaders of two of the four south of Tyne councils have reacted coolly to Mayor Driscoll’s comments that a deal is there to be done. Councillor Graeme Miller, chair of NECA and leader of Sunderland Council, told the Local Democracy Reporting Service that a deal was some way off and Councillor Martin Gannon, leader of Gateshead Council said there was ‘no deal on the table’.

This website reported in March, on the basis of comments by Durham City MP Mary Foy – a former Gateshead councillor – that the south of Tyne councils were ‘very unlikely’ to join a new devolution deal.