We must be bold about devolution

Posted on the 30 August 2017

We must be bold about devolution

By Nigel Mills, Chairman of the Entrepreneurs’ Forum

Businesses on the cusp of scaling up make plans and predictions, but before they can realise their potential a leap of faith is required. In much the same way, the three local authorities north of the Tyne know the benefits of devolution, including how a regional approach can maximise the economic benefits of local companies growing; they now need to agree a deal and go through with it.

The progress already being made by our neighbours to the south in the Tees Valley cannot go unnoticed. At a time when the Teesside economy was reeling from the closure of the SSI steelworks the area’s five local authorities quietly took a no nonsense approach to devolution and it is already starting to pay off. The Tees Valley has elected a Metro Mayor who is energetically promoting local businesses and inward investment, while civil servants in Whitehall have an increased focus on supporting the area’s economic growth. Since May it has been reported that Tees Valley has seen more than £244 million in private business investment and at least 2,000 new private sector jobs.

While the success of devolution in Teesside is not in itself an incitement for the three councils north of the river Tyne to press ahead with their own deal, they should consider the relative strength of their position. Newcastle, North Tyneside and Northumberland have a larger combined population than the five boroughs that make up the Tees Valley, 810,640 compared to 667,469.

In terms of economic contribution the latest figures from Office for National Statistics show the three local authorities are also ahead of the Tees Valley. Northumberland, North Tyneside and Newcastle have a total Gross Value Added (GVA) of £16.8 Billion, which equates to more than £20,700 per head. In contrast, the combined GVA of Darlington, Hartlepool, Stockton on Tees, Redcar & Cleveland, and Middlesbrough is £12.6 billion or £18,169 per head.

By grasping the growth opportunities that devolution is presenting, we can become a region in control of its own economic future, able to think for ourselves and tackle the real issues that are holding us back.

One challenge we will face as a devolved region is finding funds to support business growth. Historically, this would have meant spending £1 for every £1 received from central government, but it is possible to take a strategic view and leverage the resources we’re given, as well as those we already have, to gain much more.

For example borrowing against the total value of the funding promised to the developed region could deliver hundreds of millions of pounds, which could form the basis of an investment fund. Similarly, the new Mayor and their Combined Authority might consider whether the public sector’s stake in Newcastle Airport could be better used to build new transport infrastructure.

Whatever models for finance, investment and business support we adopt as a devolved region, we must recognise that we have had too little control up until this point and that the decisions we take in future will have a direct effect on our lives and those of future generations.

To tackle the impending challenges we face, not least those created by the Brexit process, we need to secure devolved powers sooner rather than later and use them to attract desperately needed investment. Public and private funds can best be put to work tackling the scale-up challenges the region’s businesses face, as it is these companies that are responsible for all net growth in employment.

SMEs in the North East are leading the way in sales growth and job creation, now is the time for our councils to embrace change. We must be bold if we want to forge a better future.