North East deal will sharpen competition with Wales

Further pressure on Welsh local authorities to extend and deepen their collaboration with each other has come from an unlikely source – the north east of England.

While Welsh Ministers despair at the wariness of Welsh councils in their dealings with one another, seven councils in the north East of England have decided to pool their resources on transport, economic development, regeneration and skills training in a legally binding combined authority that may lead to the re-creation of the Tyne and Wear Metropolitan Council that was abolished by Margaret Thatcher in 1986 – effectively another city region.

The move, aimed at emulating the combined authority that exists in the Greater Manchester area, is the result of pressures created in the last year by three reports:

• The first, last October, by Lord Heseltine, arguing that substantial funds should be devolved to local enterprise partnerships in England.
• The second, last November, by the Northern Economic Futures Commission, that looked at the whole of the north of England.
• A third, just over a week ago – the North East Independent Economic Review – commissioned by the area’s local enterprise partnership, and led by Lord Adonis and a team of experts.

Lord Adonis is pressing the government to pass legislation to give the proposed combined authority a statutory basis. The new authority would run all major transport schemes and would be responsible for “shaping the strategic direction of Newcastle International Airport”.

Many thought that England’s Metropolitan County Councils were abolished in the 1980s because they had become too powerful. It was largely through the work of the Tyne and Wear Council that Nissan established its car plant in the north-east.

The north east of England vies with Wales and Northern Ireland at the bottom of most economic league tables in the UK, and was one of the regions that lost out when the incoming coalition government scrapped England’s regional development agencies, replacing them with more localised enterprise partnerships. Last year Treasury Ministers made it clear that if councils did not get together they would not see money devolved to the region.

The move by the seven councils underlines England’s drive to strengthen city regions, and is in contrast the more guarded approach to the city region concept by local authorities, particularly in south east Wales.

The Adonis report would make for familiar reading in Wales. The report advocates:

• Creation of North East International to promote the region at home and abroad.
• Big improvements in transport infrastructure, including faster rail journey times to London, as well as the adoption of an ‘Oyster car’ ticketing system within the region.
• Creation of a single local growth fund, including a replacement for the EU backed Jeremie Fund (that is currently administered even for the north east by Finance Wales).
• Creation of a regional business bank, or the location of the headquarters of a  British Investment Bank in the north east.
• the development of innovation and growth clusters, with strong linkages to the region’s universities.
• The need to improve urgently the performance of the region’s secondary schools.

Some will ask, what is the relevance of this for Wales? After all, unlike England’s north east, we have our own Welsh Government to provide this strategic thrust. But it does underline how several English regions are beginning to get their act together following the abolition of the Regional Development Agencies in 2010.

Rightly or wrongly, the regions of the UK are in competition with each other. Had Wales managed to agree a coherent economic development policy a decade ago, we might have enjoyed a long period of competitive advantage, vis à vis English regions, in terms of both indigenous development and in the attraction of inward investment. The opportunity was missed. Despite its institutional weaknesses the north-east has had a much better record than Wales on inward investment across the period.

Since 2011 there has been more progress in exploring ideas and shaping policy Welsh policy through a multitude of task forces and sectoral panels, but the outputs of these panels so far have been variable. There is, for instance, a stark contrast between the clear, funded strategies that have emerged on the bio-science side and the opaque work of the creative industries panel.

These developments in the north east of England – that are also being emulated in places like Leeds-Sheffield – demonstrate that we have no room for complacency.