News story

North East joins the unstoppable momentum of Northern Powerhouse

Devolution deal signed with the North East Combined Authority.

Chancellor George Osborne hailed the ‘unstoppable momentum’ in the drive to strike devolution deals with cities and regions, as the North East today (23 October 2015) became the latest area to make a historic agreement with the government to take on new powers.

The agreement delivers another significant boost to the Northern Powerhouse as the Chancellor signed a deal with the North East Combined Authority.

Voters in the North East will now choose a directly elected Mayor in 2017, who will take on a raft of new powers as part of plans to take power out of Whitehall and hand it back to local people.

The deal presents a significant financial boost for the North East who will receive £30 million a year over the next 30 years, enabling the region to compete in international markets with a new Investment Fund being set up thanks to a guaranteed £900 million from the government.

The new Mayor in the North East will oversee a range of powers devolved from government and the Chancellor announced recently that Mayors will also have the power, if they have the support of the local business community, to raise business rates to help fund new infrastructure, enabling them to build for their city’s future.

The North East deal, provides for the transfer of significant powers over transport, strategic planning, employment and skills from central government to the region and it paves the way for further devolution over time, and for the reform of public services, including potentially health and social care, to be led by the North East.

Today’s announcement, alongside a similar deal also being announced in Tees Valley, brings the number of city regions across the north signing up to game-changing mayoral devolution deals to four, with Greater Manchester and Sheffield also creating powerful new metro Mayors.

The deal requires support from each of the local councils within the region, as was the case with previous deals to Sheffield and Greater Manchester.

Devolution deals underline the government’s commitment to building a Northern Powerhouse to help rebalance the economy and ending the old model of running everything out of London.

Chancellor George Osborne said:

This announcement shows that our revolutionary plans for devolution are gathering an unstoppable momentum. The civic leaders of the North East have worked incredibly hard to reach this point and as a result today we are signing this historic agreement which will give the area significant new powers and investment.

Once again the Northern Powerhouse is leading the way in our ambition to take power out of London and give it to the people who know their areas best.

Northern Powerhouse Minister James Wharton said:

Our long-term economic plan seeks to rebalance growth and build a Northern Powerhouse. By ending the ‘one size fits all’ approach of the past, we are giving local people the powers they need to boost jobs and skills.

“Today’s deal means the North East is leading the way, with significant new powers and nearly £1 billion of government investment over the next three decades. This will enable the region to compete nationally and on the international stage. I look forward to seeing how a future Mayor and combined authority work with the business community to make their ambitions a reality.

Councillor Simon Henig, chair of the North East Combined Authority, said:

Today’s signing of this proposed agreement marks the start of a new way of working in the North East.

With devolved powers and responsibilities over both our urban and rural economies, transport, skills and investment and the creation of the new health commission, this brings new opportunities to make a difference to the lives of local people.

Not only does this demonstrate the level of our ambition, it also underlines the key role the North East has to play in re-balancing the national economy.

We welcome the opportunities which devolution presents and we will now begin further consultation with our partners, residents, business, trade unions and the voluntary and community sector so that everyone can be part of this process as we move forward.

Simon Stevens, Chief Executive of NHS England, said:

The NHS is ready willing and able to explore new partnerships in the North East - which already has some of the most innovative and high performing parts of the health service.

Further information

The Mayor will exercise certain powers with personal accountability to the electorate, devolved from central government in London to the North East:

  • responsibility for a devolved and consolidated transport budget, with a multi-year settlement to be agreed at the Spending Review
  • responsibility for franchised bus services and, through Rail North, franchised rail services, contributing to the delivery of smart and integrated ticketing across the North East
  • powers over strategic planning, including the responsibility to create a North East Planning Development Framework and to chair a new North East Land Commission to release land for development
  • powers to place a supplement on business rates to fund infrastructure, with the agreement of the local business community through the local enterprise partnership, up to a cap

The North East Combined Authority (NECA), working with the Mayor, will receive the following powers:

  • to create a North East Combined Authority Investment Fund, bringing together funding for devolved powers and used to deliver a 15 year programme of transformational investment in the region
  • control of a new £30 million a year funding allocation over 30 years, to be included in the NECA Investment Fund and invested to boost growth
  • joint responsibility for an Employment and Skills Board, that will undertake a comprehensive review and redesign of the post-16 education, skills and employment support system in the North East, delivered through the area-based review of post-16 provision, devolution of adult skills funding by 2018/19 and co-design by government and NECA of employment support for harder-to-help claimants
  • responsibility for a devolved approach to business support from 2017, to be developed in partnership with government, and further devolution of UKTI export advice services
  • joint responsibility for the rollout of broadband across the North East
  • increased devolved responsibility for rural growth

The government and the North East Combined Authority will also establish a Health and Social Care Commission for the North East to review the scope and basis for further health and social care integration

The Chancellor also signed a deal with the Shadow Tees Valley Combined Authority.

Image by Elvin on Flickr used under creative commons.