The chancellor has announced a major new devolution deal in his Budget speech, which also offered significant new resources for elected mayors.
The three councils in the North of Tyne area are to be offered what is understood to be a mayoral devolution deal, with elections taking place in May 2019.
Meanwhile, West Midland CA mayor Andy Street (Con) has been offered a second, strengthened, devolution deal.
Liverpool City Region CA and Tees Valley CA have been told “the government will enter into discussions” with them ”to explore scope for further devolution to these areas, to promote local growth”.
Mr Hammond also announced a £1.7bn transforming cities fund. Half of this will be ”allocated via competition for transport projects in cities” while the other half will be shared by the six areas currently with elected metro mayors, “to give them the firepower to deliver on local transport priorities,” the chancellor said.
The lion’s share of this will go to the West Midlands CA (£250m) and Greater Manchester CA (£243m). The other combined authorities will receive far less: £134m to Liverpool City Region, £80m for West of England CA, £74m for Cambridgeshire & Peterborough CA and £59m for Tees Valley CA.
There was also £1bn of ”discounted lending available to local authorities across the country to support high-value infrastructure projects”.
Mr Hammond’s speech also heralded £300m to “ensure HS2 infrastructure can accommodate future Northern Powerhouse and Midlands Engine rail improvements”.
Meanwhile, the chancellor said Tees Valley CA mayor Ben Houchen (Con) would be be supported by £123m to invest in the Redcar Steelworks site including, according to the Budget red book, £5m to help enable the South Tees Development Corporation take ownership of the site.
Tyne & Wear Metro will receive £337m to replace aging rolling stock with ”modern energy-efficient trains”; this will ”cut running costs while boosting performance and reliability”.
The Treasury’s green Budget book said: “The government has agreed a ‘minded to’ devolution deal with the North of Tyne authorities, which will be subject to the consent of local partners.”
The mayoral election is due to take place in 2019 and they will have “powers over important economic levers including planning and skills”, the Budget book said. The deal also includes an investment fund worth £600m over 30 years.
Newcastle City Council, North Tyneside Council, and Northumberland CC were part of a devolution deal agreement with other councils in the North East only for it to fall apart last year over the requirement to adopt an elected mayor.
Nick Forbes (Lab), leader of Newcastle, said: “I’m delighted all of our hard work to put together a North of the Tyne deal following the collapse of the original North East deal has paid off.
“This is an important first step in our region’s devolution journey and it’s also vital we are at the top table where many of the major issues are being debated.”
To enact a deal for North of the Tyne will not be easy. For a start, Newcastle City Council, North Tyneside Council, and Northumberland CC will have to leave the North East Combined Authority, of which Sunderland City Council, Durham CC, Gateshead Council, and South Tyneside Council are also members. The Cities & Local Government Devolution Act 2016 requires such a move to gain secretary of state approval.
As such, it is not expected any new combined authority will be up and running until late spring 2018 at the earliest.
An agreement for the North of the Tyne is further complicated by the region’s metro system. However, it was once overseen by an integrated transport authority for five areas so it is likely that joint arrangements between the NECA and the new North of Tyne combined authority will have to be formed.
Details on the West Midlands’ strengthened deal were scarse, but it does include £6m for a housing delivery taskforce and £5m for a construction skills training scheme.
Lord O’Neill (Crossbench), the former Treasury minister and Northern Powerhouse Partnership board member, said: “I would always want more for the Northern Powerhouse, but what was announced on the devolution deal for North of the Tyne is very welcome, as are the marginal steps for other aspects of the Northern Powerhouse, on top of those announced at the time of the Conservative Party conference.
“I hope the government will continue to keep its commitment for Transport for the North, further educational and skills initiatives especially for those most challenged areas of the North, and I hope that next week’s launch of the Industrial Strategy will focus appropriately on the key prime areas where the North has genuine world class capability.”
Ed Cox, director of IPPR North, said: “We welcome the £1.7bn investment in the Transforming Cities Fund and news of further devolution deals but the onus should be on government as much as local authorities to bring forward new devolution deals.
“If the people of Yorkshire want a single deal for the whole of Yorkshire government should not stand in its way.
“We need to move away from a system where each chancellor behaves like Santa Claus with special prizes for well-behaved cities and become a modern democracy where cities and regions raise and spend their own tax revenues.”