The full challenge facing George Osborne’s plan to create a “Northern Powerhouse” is today highlighted by a former global banker who points to years of transport failures in the region.
Jim O’Neill, former chairman of asset management at Goldman Sachs, has published a report from his City Growth Commission in which he describes how the UK economy is being held back as officials in Whitehall keep control of local transport and infrastructure decisions.
The call to hand the North a bigger say over its own future comes weeks after the Chancellor said he wants to rebalance the economy away from the South East, with a major new high speed rail network linking up the likes of Manchester and Leeds among the projects proposed.
But without handing city leaders a say over improving outdated infrastructure, the commission says, the Chancellor faces a tough task in matching that ambition with real change.
In his report Mr O’Neill warned that meeting Mr Osborne’s ambition would require “significant change” from Government.
The report, based on hearings in Newcastle and other cities, says Metropolitan areas like Tyne and Wear must be given a bigger say over their own future. The commission found that the UK loses billions of pounds every year as a result of poor, overly-centralised decision-making that fails to encourage greater links between cities.
Plans for a new high speed rail network must be improved so links from the North are prioritised, the commission said.
Talking of the need to strengthen Northern “metro” areas, Mr O’Neil said: “We recommend the Government considers making two bold decisions regarding its infrastructure policy. The first is to provide metros with a strong, powerful voice that can influence and guide decision making at a national level.
“For too long, our cities have not had a seat at the table, and this has been to the detriment of Northern metros in particular, as well as the economic growth of the UK economy as a whole.
“The second is to place connectivity between metros at the heart of any infrastructure investment, in particular via multiple transport links between cities and better broadband technology.
“Whilst the UK is starting to move in the right direction – with the creation of Infrastructure UK and the Chancellor’s recent proposal for a connected ‘Northern Powerhouse’ – there is still some way to go.”
Those transport concerns were last night backed by Gateshead MP Ian Mearns, vice-chair of the All Parliamentary Rail in the North group.
He said: “The difference in spending on transport between London and ourselves is about 520 to one, and even just changing the funding system now will not address the historic deficit we face. Time and time again we have lost out, and will continue to do so while the Government makes spending decisions based on congestion rather than on helping us grow.”
The lack of a Northern advocate in Government has again been highlighted after yesterday’s Government reshuffle.
Former regional minister Nick Brown warned: “The position of the English regions is weaker now than before the reshuffle. The surprise announcement of William Hague and the dilution of Greg Clark’s City Minister responsibilities leaves the English regions even less represented than they were before. This is a Home Counties reshuffle.”
The Government recently went some way to addressing the transport issues facing the region with its local growth fund announcement. With local contributions, the Government decision paved the way for £95m of infrastructure improvements. A “Provisional Allocation” of £78.7m was also announced for a number of further schemes due to start in 2016.
Ministers have also recently signed off on a new North East super council, the Combined Authority, which they say will be used to devolve new powers down to city regions.
Source – Newcastle Journal, 16 July 2014
Regional economic policy must be revamped if the North East is to get a fair deal in the wake of the Scottish independence vote, a national research director has said.
Dr Angus Armstrong, director of macroeconomic research at the National Institute of Economic and Social Research, said the Treasury does not prioritise the North East and politicians must form a strong and unified voice to correct the imbalance.
At a debate on how September’s vote will impact on the region, regional leaders also heard of a “growing realisation” Scotland may not lower corporation tax, allaying fears the country would suck business from its neighbours.
It comes as all seven North East councils, from Durham to Northumberland, agree a Combined Authority which will allow it to bid for more Government funding.
Dr Armstrong said regional policy is not a priority for the Treasury when it calculates how to spend Government cash and the North should look to reconsider a regional assembly to be heard above its southern counterparts and in Europe.
He said: “I used to work for the Treasury during the crisis and regional policy does not register. I hate that that is the case, but I really don’t think it is part of Treasury policy. I think the whole concept of regional policy needs to be re-thought.”
He added: “People in the South East underestimate the extent to which power is centralised, so, although they have a feeling there is something of an imbalance, that imbalance is greater than that feeling would suggest.
“The reason I say that is because of the financial crisis. The only reason they could support the City of London is because of the taxpayers of the rest of England.
“When it goes wrong we pay, it is quite remarkable and I find it amazing that places outside of the South East don’t have more to say about that. I do think the degree of imbalance is extremely significant.”
Pat Ritchie, chief executive of Newcastle City Council, said the region’s airports and universities could lose out due to a possible relaxation in border controls which might see students flock to Scottish universities.
She added there were fears changes to the Air Passenger Duty tax could see carriers opt to begin routes from Scottish airports.
Ms Ritchie, however, said there was an opportunity for the region to export goods to the country and, with Edinburgh closer to the region than London, collaborate with Scottish national leaders.
She said: “We should and can be confident in our strengths. This is a region which exports more than any other region and it is already used to working with different markets.
“Whilst not wanting to marginalise what is an important debate, we should not get too hung up on what Scotland might or might not do.
“We need to really develop the strongest possible economic offer that we can for the North East and collaborate as local authorities and businesses and be confident.”
Professor David Bell, professor of economics at the University of Stirling, also spoke at the debate, organised by the Institute for Public Policy Research (IPPR), and said Scots are keenly aware of the need to collaborate with the North.
“I don’t think that the North East is particularly disadvantaged because for Scotland to get anywhere with these negotiations there would have to be a cluster of compromises, and it would make no sense to have poor relations with its near neighbours.”
He added the North East faced being drowned out by the South East but there was a “growing realisation” that Scotland could not drive down corporation tax as it risked becoming a tax haven for businesses.
He said: “I go to talk about independence on a regional basis and the elephant in the room is the lack of political impetus, particularly in the North East.
“It is just not there and it isn’t part of the issue.
“If Scotland votes yes or if it votes no and gets more powers, you will have a heavily asymmetrical system in England which cannot continue to be stable.”
Source – Newcastle Journal, 28 March 2014
A new super council will be formed on April 1, allowing the North East to compete for millions of pounds in Government funding.
After months of internal rows and territorial battles, the North East’s seven council leaders have secured Government backing to form a Combined Authority.
The move means, for example, that decisions over major transport and jobs investment in Northumberland or Newcastle must be made only after the views of the other council leaders have been taken into account.
There will be no changes to local councils, with voters still electing their local councillor and the same group collecting bins and looking after those in care.
> But we won’t get to vote in matters directly involving this super council ?
But behind the scenes the North East Combined Authority will be seen as the lead voice for the region in Whitehall.
The seven leaders, and their chief executives, will share decision making over skills, transport and investment, have the chance to secure control over any devolved Government budgets and a say in how the region bids for the £2bn Government Growth Fund.
> And no doubt they’ll also share an extra wad in their pay packets.
Cities minister Mr Clark has told MPs he thinks it is “a huge advance in the North East” and called for council leaders, MPs and other jobs groups to come together to formally discuss with him the next steps for the region.
> And will we – those most affected by any decisions – have any input ?
Former regional minister Nick Brown recently secured a series of regular meetings with the cities minister amid concerns the region’s case was not being heard in parliament.
Last night he told The Journal: “If we want access to the money we have to comply with the Government’s preferred structures, and it is very important that members of parliament are involved and can represent their constituents.”
The combined authority sees Durham County Council, Gateshead Council, Newcastle City Council, North Tyneside Council, South Tyneside Council, Northumberland County Council and Sunderland City Council form a legally binding structure with the power to borrow cash and the responsibility to share risk.
Simon Henig, the Durham council leader set to chair the combined authority, said: “Working together is the best way to promote jobs and growth and to secure devolution of funding, powers and responsibilities from Government.
“We share ambitious plans for the future of our area and we are determined to work together to deliver them.
“We are therefore delighted to receive today’s news from Cabinet Office and look forward to the necessary formalities being progressed so that we can launch on April 1 this year. This is an important and exciting moment in our history and we are ready now to deliver on our ambitious plans.”
Hopes of forming a combined authority had appeared slim earlier this year when Sunderland Council had halted the process amid concerns that Newcastle would hold too much influence.
Ministers, civil servants and council officials put pressure on Sunderland to drop its objections, but it was only once leader Paul Watson secured a stronger negotiating hand on the leaders’ board that it could go ahead.
There were then further delays when Sunderland decided to hold out for a multi-million pound investment package from the Government for Wearside before going ahead.
This Sunderland City Deal, set to see some £50m spent on a new business park based around Nissan, is now in the final stage of negotiations.
> So it’s all decided, signed, sealed and delivered. You had no input, it doesn’t appear you’ll ever get the chance for meaningful input… but then, this is all about the really important people, like councillors and businessmen. Business as usual, in fact.
Source – Newcastle Journal, 06 March 2014