The region’s case for devolution will be stronger if councils back the combined authority with more money, the economist behind a major report warned.
Jim O’Neill, chairman of the City Growth Commission, called for councils to show their commitment to the North East Combined Authority to demonstrate the region is capable of taking control from Whitehall.
It comes after Chancellor George Osborne signed a £1bn devolution deal for Greater Manchester and Deputy Prime Minister Nick Clegg revealed deals will be drawn up in time for the Autumn Statement in December.
Mr O’Neill’s report says the region needed “robust governance, policy making and economic delivery functions in place” to be ready to handle the risks that come with greater control.
The report, which focuses on devolving power to city regions rather than wide geographical regions, revealed more devolution to Tyne and Wear could boost its economic output by an astonishing £1.7bn a year.
It would mean, however, the two cities formed an alliance to become one city region, which some have called ‘Newderland’ or ‘Suncastle’.
The former chairman of Goldman Sachs Asset Management said: “Greater Manchester demonstrated by the fact that the deal was done this week that in the eyes of policy makers they are regarded as the ones in the best place, possibly even more capable than London.
“I think in Newcastle and the North East things are changing pretty quickly. It was only in April that the combined authority came into existence because they realised that they have to start thinking differently.
“From what I hear they are making a bit of progress, but they have go to be serious about it.
“One of the questions I would like to ask them is what are each of you - Durham, Sunderland, Gateshead, Newcastle, etc - actually putting in to the combined authority. Are you putting in any money? How big is your commitment?
“It’s easy to say we are a combined authority but are you really doing it? They have got to push ahead with it, but I am impressed by how quickly they seem to be doing it.”
He added leaders needed to step up and show drive.
“It [devolution] might not be beneficial,” he said. “I don’t think you can dismiss underlying, powerful forces.
“Ever since my days at school, people have left the North to go to London to university because the forces that attract people are so big.
“I say that deliberately because if you really do want to make a difference then you have to have people who are trying to deliver it locally who are really ambitious and focused.
“If they are not then there is no point.”
He said regional leaders must now make their case.
“In this Government, Greater Manchester has got all it is going to get on devolution for now,” he said.
“Obviously, the Northern Pennines and the rail projects will centre around Manchester.
“If I were running Newderland - or whatever you want to call it - then I would not be sleeping this week.
“I would be getting my reports in now so that it was me next time.”