Snatching defeat from the jaws of victory

Snatching defeat from the jaws of victory

Simon Hanson, North East development manager at the Federation of Small Businesses, laments the failure of politicians to agree a devolution deal which could have helped local businesses close the productivity gap with London and urges them to think again.

The North East is the best region in the UK to start, grow and develop a business. As a region we will play a leading role in reducing the productivity gap between London and the wider UK. We have some world-leading assets to deliver this, whether in advanced manufacturing, automotive or in the digital and tech sector.

For the past two years the seven local authorities in the North East have been negotiating a devolution deal that would have helped us gain more funding and responsibilities to achieve this. The deal would have given us nearly £1bn in new funding to enhance our infrastructure both digital and physical, improve our skills base and continue to build on our key sectoral strengths.

It is hugely disappointing that the North East has missed out on the opportunity to get more powers and funding to grow our economy. After a year of negotiating, smaller businesses will be at a loss to understand why a deal hasn’t been possible. This decision will hold back the North East and have a detrimental impact on future regional and national economic growth, especially with Scotland getting more powers through its devolution deal and a deal progressing in the Tees Valley.

The North East has lost the chance to deliver some real clout in growing our economy through tailored solutions, like Scotland and the Tees Valley, on skills, transport and investment, putting it at a huge disadvantage.

Our members can’t understand why the North East Combined Authority Leadership Board rejected the proposed deal. They’ve said that this has been a collective failure of the civic leadership in the region and the business community should now be at the forefront. On the flip side our Tees Valley members are delighted that the five local authorities are continuing to work with the business community to ensure at least their part of the wider region is able to use increased powers and funding to deliver locally tailored solutions.

What next?

The North East is at a significant crossroads in how we grow the economy following the EU referendum result in June, the changing focus of the new Conservative Government to rethink regional policy, including the future of the Northern Powerhouse, and the burgeoning industrial strategy.

Agreeing the proposed devolution deal would have allowed the North East to be a significant voice in all of these, ensuring the region’s business needs were listened to and met. We expect to see London, Manchester, the West Midlands and Tees Valley to be given these opportunities.

We understand the proposed devolution deal in the North East was not perfect - but devolution is a process not an event. Take a look at what is happening in Manchester. The first deal they agreed did not include everything they wanted but it was a start. From this they have been able to leverage more powers and funding. The ambition has been clear from the outset.

In the Tees Valley there is a real ambition to tackle some of the big challenges the economy faces head on such as the closure of SSI. By agreeing a devolution deal the Tees Valley has created the Tees Valley Mayoral Development Corporation which will be able to help stimulate investment and grow the economy.

Compare that to the North East where, for many smaller businesses, it has felt like some of the politicians have tried to find any excuse to get out of any deal. This has ranged from the lack of funding that the region would receive, to the lack of real powers that have been given and then the need for certainty on the future replacement of EU monies which currently come to the region. That latter point is somewhat ironic for members given the results from across some parts of the North East in the referendum.

There were also some failures on the side of national Government too with the insistence on a metro mayor for any deal (despite Cornwall agreeing a deal without one) and the changes in legislation around Combined Authorities which meant only two local authorities were needed to form one. This effectively allowed councils to reject the deal without being the one that scuppered the region’s plans.

We’re calling on all the Leaders in the North East to get back round the table and agree a deal that will allow the regional economy to continue to flourish. We’ve got some big challenges ahead which require strong leadership from Councils and businesses alike.