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North of Tyne wins big investment fund and weakened mayor

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The investment fund agreed as part of the North of Tyne devolution deal announced at the Budget is worth significantly more per head than the abandoned North East deal, LGC analysis reveals.

Further details of the North of Tyne deal were unveiled by Treasury minister Andrew Jones and Northern Powerhouse minister Jake Berry on a visit to Newcastle on Friday. The three councils involved – Northumberland CC, Newcastle City Council and North of Tyneside Council – began discussions with government on a deal following the collapse of a proposed deal for the North East CA in September 2016.

In common with other mayoral deals it includes a promise to devolve the adult education budget, compulsory purchase powers for the mayor and the power to set up mayoral development corporations as well as commitment to closer working with the Department for International Trade to attract trade and investment. The area is also to become a “rural business scale-up champion”.

Mr Jones, exchequer secretary to the Treasury, said the deal, which the government is minded to approve subject to public consultation, would give “the people of the North of the Tyne a bigger voice and greater power over their future”.

Newcastle leader Nick Forbes (Lab) said the deal was “our region’s next step towards creating a North East economy with above average wages and below average unemployment”.

The deal comes with an investment fund worth £600m over the next 30 years, equivalent to about £736 per head of the North of Tyne’s 815,000 population. Of the mayoral combined authorities only the West of England CA’s investment fund is worth more per head. The North East devolution deal, which would have covered a population of almost two million, came with an investment fund worth the equivalent of £461 per head.

Last week chancellor Philip Hammond also announced a £337m investment in the Tyne & Wear metro, which serves both north and south of the River Tyne. However, unlike other devolution deals the North of Tyne will not include devolution of transport powers or funding, and unlike other metro-mayors the mayor will not have the power to introduce bus franchising.

A paper on the deal, published on Friday, said it had been agreed on the “understanding that the current transport arrangements for the seven local authorities in the North East will be maintained”. This will require the creation of a statutory joint committee to exercise the transport powers and functions currently overseen by the NECA.

The North East deal - which also included Durham CC, Gateshead Council, South Tyneside MBC and Sunderland City Council - collapsed earlier this year after those councils rejected it, citing concerns over the replacement of EU funding post-Brexit. Confusion over the government’s position on the requirement for elected mayor at that time also fostered opposition to the deal amongst councillors.

No veto for North of Tyne mayor

The North of Tyne mayor will be unable to veto decisions taken by the combined authority in an arrangement that could make them significantly weaker than most other existing metro-mayors.

Under proposed governance arrangements published on Friday the mayor would instead be able to require a ‘mayoral review’ of a decision. This was the arrangement planned under the North East devolution deal but differs from that in other mayoral devolution deals where decisions on matters devolved to the combined authority must be approved by a majority of combined authority members, including the mayor. The Greater Manchester devolution deal is the only other deal not to specify such an arrangement.

In population terms the North of Tyne deal would be the second smallest mayoral devolution deal after the Tees Valley. The new combined authority will also have the fewest councils as constituent members.

As a result the mayor’s cabinet will include the leader of each of the member councils, as in other devolution deals, but also another politician from each council. However, each council will only have one vote on the combined authority.

The North East Local Enterprise Partnership will also have a seat on the board, although no voting rights, while the mayor may also appoint a “mayor’s ambassador for business”.

The new deal will mean the break-up of the North East CA, which has been in existence since 2014, and the creation of a new North of Tyne CA.

Centre for Cities policy officer Simon Jeffrey told LGC the deal should ideally include Gateshead and South Tyneside as data on the local economy, including travel to work areas, showed they were part of the North of Tyne economic area.

“Having a deal that doesn’t reflect the area people live their lives over or even that the transport operates over is gong to blunt the effectiveness of the devolution deal,” he said.

A mayoral election is scheduled for May 2019 but before the North of Tyne deal can be implemented the councils involved must conduct a governance review which must include consideration of the economic impact on the other councils in the North East CA. This will be followed by a public consultation before the communities secretary makes the final decision on whether the deal should go ahead at the end of January 2018.

The late chair of the North East CA, former Sunderland leader Paul Watson, previously promised not to stand in the way of the North of Tyne deal. In a statement on behalf of the councils south of the Tyne, a spokesperson for North East CA said: “Our ambition to provide the best possible conditions to boost growth across the North East remains.

“All local authorities across the region will continue to work together to create more jobs, investment and increase living standards, ensuring the North East is an excellent location to do business, live and prosper.”

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