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The Progressive Policy Think Tank

Anna Round Analyses the North of Tyne Devolution Deal

The North of Tyne Devolution Deal, announced in last Wednesday’s budget, has been greeted with enthusiasm and not a little relief. It recognises the commitment to devolution in these three Local Authorities and gives them a much-needed voice alongside the north’s other Mayoral areas.

The Deal includes measures to build on established regional strengths, including an impressive track record of exporting and attracting inward investment and a wealth of natural and institutional assets for low-carbon energy generation. Commitments from central government to help sustain and grow these will be welcome, especially with the approach of Brexit.

Eighteen months after the first round of Devolution Deals, this new one offers important opportunities for innovation a new ‘smart data’ initiative, reflecting the impressive reputation of north east universities and businesses in digital technologies.

And there’s a fresh approach to rural devolution. Unlike most other Devolution Deals, the North of Tyne area encompasses some of the most sparsely populated parts of England and so it includes a range of measures to boost the rural economy, and make the most of links between the countryside and neighbouring urban areas. For too long it’s been assumed that northern devolution is all about cities, and this represents a major broadening of its scope.

Is it a good deal? Some commentators note that the funds and range of powers on offer are fairly limited. But compared to other Devolution Deals to date – especially the ‘first step’ ones offered to areas outside Greater Manchester – this presents a fair selection from the standard ‘menu’ as well as some attractive ‘specials’. And as the Budget demonstrated, a gap is opening up between the powers and funding on offer to regions that accept the Mayoral model and those that don’t.

A system where Combined Authorities must behave well to stay in the good books of successive Santa Chancellors is not, in the long-term, a great way to do devolution. But while that’s the route to increased investment, autonomy and clout, it makes sense to work with it, using local expertise, partnerships and track record to maximise the returns. The £337m for the Tyne and Wear Metro, in the form of a direct grant rather than PFI, is a vital investment in the north east and a signal of trust in local leadership.

Real and sustainable shared prosperity, across communities, jobs and society, is a long-term priority in the north east, and the deal stresses measures to deliver inclusive growth, through initiatives on education, skills and employment and links to the industrial strategy. This focus is encouraging, but realistically it must be set in the context of the gloomy national economic outlook. That won’t be easy for a region, or a sub-region, where big historical imbalances of investment and power have cast a long shadow.

That’s not the only challenge. The North of Tyne has a small population with which to ‘do’ devolution – bigger than Cornwall and the Tees Valley but less than a third of the size of Greater Manchester and West Midlands. Making devolution work will need careful management, and effective collaboration with the wider north. And the new Combined Authority also has to work with its neighbours and erstwhile partners south of the Tyne. Businesses and public alike will now take some relish in comparing the relative fortunes of the partnerships on either side of the river. Nevertheless, the region has a lot more to gain with this deal than without it.