Regional economic policy must be revamped if the North East is to get a fair deal in the wake of the Scottish independence vote, a national research director has said.
Dr Angus Armstrong, director of macroeconomic research at the National Institute of Economic and Social Research, said the Treasury does not prioritise the North East and politicians must form a strong and unified voice to correct the imbalance.
At a debate on how September’s vote will impact on the region, regional leaders also heard of a “growing realisation” Scotland may not lower corporation tax, allaying fears the country would suck business from its neighbours.
It comes as all seven North East councils, from Durham to Northumberland, agree a Combined Authority which will allow it to bid for more Government funding.
Dr Armstrong said regional policy is not a priority for the Treasury when it calculates how to spend Government cash and the North should look to reconsider a regional assembly to be heard above its southern counterparts and in Europe.
He said: “I used to work for the Treasury during the crisis and regional policy does not register. I hate that that is the case, but I really don’t think it is part of Treasury policy. I think the whole concept of regional policy needs to be re-thought.”
He added: “People in the South East underestimate the extent to which power is centralised, so, although they have a feeling there is something of an imbalance, that imbalance is greater than that feeling would suggest.
“The reason I say that is because of the financial crisis. The only reason they could support the City of London is because of the taxpayers of the rest of England.
“When it goes wrong we pay, it is quite remarkable and I find it amazing that places outside of the South East don’t have more to say about that. I do think the degree of imbalance is extremely significant.”
Pat Ritchie, chief executive of Newcastle City Council, said the region’s airports and universities could lose out due to a possible relaxation in border controls which might see students flock to Scottish universities.
She added there were fears changes to the Air Passenger Duty tax could see carriers opt to begin routes from Scottish universities.
Ms Ritchie, however, said there was an opportunity for the region to export goods to the country and, with Edinburgh closer to the region than London, collaborate with Scottish national leaders.
She said: “We should and can be confident in our strengths. This is a region which exports more than any other region and it is already used to working with different markets.
“Whilst not wanting to marginalise what is an important debate, we should not get too hung up on what Scotland might or might not do.
“We need to really develop the strongest possible economic offer that we can for the North East and collaborate as local authorities and businesses and be confident.”
Professor David Bell, professor of economics at the University of Stirling, also spoke at the debate, organised by the Institute for Public Policy Research (IPPR), and said Scots are keenly aware of the need to collaborate with the North.
“I don’t think that the North East is particularly disadvantaged because for Scotland to get anywhere with these negotiations there would have to be a cluster of compromises, and it would make no sense to have poor relations with its near neighbours.”
He added the North East faced being drowned out by the South East but there was a “growing realisation” that Scotland could not drive down corporation tax as it risked becoming a tax haven for businesses.
He said: “I go to talk about independence on a regional basis and the elephant in the room is the lack of political impetus, particularly in the North East.
“It is just not there and it isn’t part of the issue.
“If Scotland votes yes or if it votes no and gets more powers, you will have a heavily asymmetrical system in England which cannot continue to be stable.”