Civic leaders have renewed calls for the Government to let the North East seize control of its own destiny – after Ministers announced a massive devolution package for Wales.
Newcastle City Council leader Nick Forbes and former council leader Lord Beecham, now a Labour shadow minister, said giving the region the same level of freedom as Wales would be a first step towards cutting unemployment and closing the wealth gap with the south.
It follows an announcement that Ministers have agreed to give Wales the ability to fund major infrastructure projects without going cap in hand to Whitehall.
But last night, Newcastle MP Nick Brown said devolving fundraising powers could actually lead to cuts in central Treasury grant – with the region’s residents and businesses forced to make up the difference instead.
Under the Government’s plans, the Welsh assembly will be authorised to borrow money to pay for schemes. It will also be given control of landfill tax and stamp duty tax, giving it a means of repaying loans.
And a referendum will take place so people in Wales can decide whether some of their income tax should be devolved, in the same way as it is in Scotland.
If the Welsh people vote in favour of the proposal, it will effectively mean the assembly is able to raise even more funding itself.
The measure highlights the lack of progress in devolving real powers to the regions of England, Coun Forbes said.
“It is important that we have devolved powers and responsibilities because we know best how to stimulate the economy here,” he told the Journal. “We know where the infrastructure is needed in transport, housung, in economic sectors, far better than Whitehall does. I think we need a settlement for the North East that matches the settlement that’s just been announced for Wales and which is already in place for Scotland.”
In 2004, North East voters overwhelmingly rejected calls for an elected regional assembly in a referendum, with some areas voting against the plans by as much as 85%.
Since then, the region has lost various important regional bodies including the Regional Development Agency, One North East.
Now, campaigners say fundraising powers could be devolved to the combined authority, bringing together Durham County, Gateshead, Newcastle City, North Tyneside, Northumberland County, South Tyneside and Sunderland City, or to the region’s two Local Enterprise Partnerships.
Lord Beecham, who led Newcastle City Council for 17 years, said: “They are devolving this to the Welsh assembly, but I would argue strongly that the same principle should apply to the North East. This is something that would allow us to mobilise resources for development and given that our youth unemployment is higher than that in Wales and we are one of the most deprived regions, I would have thought that what is good for Wales should be done for us.”
But Mr Brown warned: “The obvious danger is that the central government devolves extra responsibilities, and devolves the ability to raise revenue to cover them, thus removing expenditure burden from the general taxpayer and placing it on the shoulders of the local taxpayer.”
He added: “It’s always the case that you get the responsibilities but not the money.”
Lord Heseltine, the former Deputy Prime Minister, has urged the Government to devolve up to £70bn a year to LEPs. The North East economic review led by Labour peer Lord Adonis called for the creation of a £500m North East Infrastructure Fund, partly to pay for an improved transport network.