Agenda item

(i)              Joint Report of the Assistant Chief Executive and the Corporate Director of Regeneration and Economic Development.

(ii)             Presentation by the Strategy Manager, Regeneration and Economic Development.

The Chairman introduced the Strategy Manager, Regeneration and Economic Development, Ray Brewis who was in attendance to give an update as regards the North East Combined Authority (NECA) and the “Devolution Agreement for the North East” document (for copy see file of minutes).

The Strategy Manager thanked the Committee for the opportunity to give an update on the issue and reminded Members that devolution was not a recent activity, the process had been ongoing for a number of years: with the powers being set out to create a Combined Authority; the Heseltine Report in 2012; looking for regional solutions to regional issues; and the creation of Combined Authorities, with the powers over transport and infrastructure.  It was added that the Scottish Independence Referendum and result of the 2015 UK General Election had moved the debate forward in terms of regional devolution.

Councillors noted that there had been 38 devolution proposals in England, and that all “asks and deals” were area specific, with no “one size fits all” approach.  It was explained that there had been different approaches in relation to devolution deals, for example Manchester, who were seen as being one of the driving forces for devolution, asking for the full range of powers available, contrasting with the approach in Cornwall which was of a much smaller scale.  Members noted that the current North East Local Enterprise Partnership (NELEP) area was pushed as being the geographical area for devolution for the North East, not including the Tees Valley LEP area, and that this was the starting point of the North East Strategic Economic Plan (SEP) to build upon, to ensure planning and investment was in place, or planned.

The Strategy Manager reminded Members of the Adonis Review, carried out in 2014, which had identified the North East as being unique within the UK, and as a good manufacturing area.  It was added that there was an ambition for “North East International”, noting the strengths of the area that could be built upon, and the key contribution the North East could make to the “Northern Powerhouse”.

The Committee were reminded of the background and the progress with the NECA, noting the shared vision to “create more and better jobs”, and the process of moving towards a devolution deal, with public consultations and discussions with the Treasury having ultimately led to the announcement on 23 October 2015 in relation to the proposed Devolution Agreement.  It was explained that the NECA had been asked to shape the proposals via a “Statement of Intent”, this having been submitted on 4 September 2015.  Councillors learned that the Statement of Intent had included several elements that looked to: raise skills; gain greater powers in terms of finance, housing, infrastructure and investment; control over public assets, both local and central Government assets; and how to be more accountable to local people.  Members noted that the Statement of Intent asked for: Human Capital Development; Long Term Investment; More and Better Homes; Export Responsibilities – “North East International”; Fiscal Devolution; Better Connectivity and Infrastructure Regeneration; and Regulatory Devolution to Councils and Local Communities.

The Strategy Manager reiterated that the Devolution Agreement had been signed on 23 October 2015, and that the agreement was conditional on approval by the Leadership Board, Councils, Ministers, legislative processes, and further public consultation.  Members noted that the Government’s Spending Review, to be announced 25 November 2015, may also have an impact on how devolution was taken forward.  It was added that a Mayor would be established, working as part of the NECA, and be subject to local democratic scrutiny and strong partnership with business, with elections for a Mayor in 2017.

The Committee were referred to the main headlines in terms of the benefits from devolution, namely:

·       The capacity to fund borrowing of £500million to enable NECA to create an Investment Fund for 30 years.

·       NECA to work with NELEP to bring forward 5 year programme for Local Growth Fund.

·       Borrowing Powers for NECA to be contained in Devolution Bill.

·       Intermediate Body status for European Funding.

·       Government to ensure “fair funding” for the constituent Authorities.

·       Business Rate growth retention scheme.

·       Government and NECA to establish a North East Land Board to identify suitable land, public sector or brownfield for housing or economic development use.

·       Create North East Planning Development Framework (not a spatial strategy), led by the Mayor.

·       Devolve Compulsory Purchase Powers from the HCA.

·       Creation of an Employment and Skills board.

·       Facilitate devolution of 19+ adult skills budget.

·       Join-up Business Support.

·       Work to devolve UK Trade and Investment (UKTI).

·       Set up a NECA/NHS joint commission reporting in April 2016.

·       Create the UK’s first integrated transport system.

·       Consolidated local transport budget including local highways and sustainable travel funding (£260 million).

·       Establishing and devolving a long-term funding programme to support the Metro.

·       Greater influence on franchising rail.

·       Extending bus franchising to North East.

·       Smart ticketing.

The Strategy Manager noted that longer-term there was scope to:

·       Work towards the devolution of rural growth programmes.

·       Review possibility of devolution of some regulatory, planning and licensing powers.

·       Work with Government to help the North East play a major role in the UK’s business, sports and cultural events.

·       Consider business cases for relocation of significant Government functions to the North East.

·       Look at Airport Passenger Duty.

·       Deal to be monitored by a joint Government and NECA Steering Group meeting quarterly with escalating issues of concern to Minister/Leaders.

·       Proposals for an appropriate relationship between the Mayor and Police and Crime Commissioners (PCCs), including in relation to the Fire Service, to be developed jointly with PCCs and Fire and Rescue Authorities.

The Committee noted that the next steps would include: a Business and Stakeholder engagement event to be held 9 November at County Hall; public consultation events across the NECA area in November; the announcement by the Chancellor of the Government’s Spending Review on 25 November; and the development of an implementation plan, to include governance and resourcing arrangements.

The Chairman thanked the Strategy Manager and asked Members for their questions on the presentation.

Councillor E Adam asked, in terms of the Mayor’s role, was it set out how the funding would be allocated for the position.  The Strategy Manager noted that in relation to funding for the Mayor’s office this would be top sliced, however, the powers and structure of the Mayor’s office have not yet been agreed and there could be a range of options from a Mayor and small team supported by Local Authorities, through to a large team, with staff moved from Local Authorities in the NECA to support the Mayor.  It was added that Government had not given any expectation in terms of how the Mayor’s support would be set up or staffed.

Councillor H Nicholson asked whether all 7 of the Local Authorities comprising the NECA were holding consultations on the issue of devolution.  The Strategy Manager noted that list of events would be made available on the NECA website in due course.

Councillor J Armstrong noted the statement relating to “fair funding” and asked who decided what was “fair”, adding that moving forward in terms of devolution would be dependent upon public opinion, the details of the Government’s Spending Review, and the fairness in funding allocations.

Councillor O Temple noted the Leader of the Council’s comments at the meeting of Durham County Council and asked if a Mayor was in place at the NECA, who would lead on issues such as transport, as currently the NECA leads in relation to transport for County Durham and Northumberland.  The Strategy Manager noted it was anticipated that the Mayor would lead on transport issues at a regional level.  Councillor J Armstrong noted he did believe in devolution, however, there was still a lot of work to be undertaken and clarification to be given in relation to the proposed devolution deal.

Councillor J Clare asked several questions in respect of: whether a Mayor at a devolved NECA could have authority as regards Local Authority assets, such as the current County Council site; whether the position post-devolution as regards any financial commitment to the Metro would be different; clarification in terms of the veto powers of Council Leaders over the powers of a Mayor; and whether any deal as regards devolution would be to accept or reject, or was there scope for negotiation in terms of what we wanted.  The Strategy Manager noted that, as he understood the situation, there would be scope for Local Authorities to put land and assets into the NECA, for example land to enable a rail station, however, this would be at the discretion of the Authority.  It was added there would be a Local Board that would look at what Government assets could be transferred to Combined Authorities under devolution.  In respect of the question as regards the Metro, the Strategy Manager noted there was not yet sufficient detail on this matter.  The Strategy Manager noted there was work to be done in terms of the governance arrangements, including the issue of veto, and this would be developed.

The Portfolio Holder for Economic Regeneration, Councillor N Foster noted that in terms of transport issues they would be by agreement, adding that it had been noted that Authorities were doing similar things albeit, for different reasons.  Councillor N Foster reiterated that Government had pushed for Mayors as a part of devolution, however, Government had left it for local areas to decide how devolution would look for them and arrangements would be up for negotiation.  Councillor N Foster added that it would be smart to look at several questions in terms of a consultation on the issue of devolution, to look at issues such as further powers, and to set out clearly the advantages, opportunities and any risks in relation to each issue.

Resolved:   

(i)              That the presentation be noted.

(ii)             That the Economy and Enterprise Overview and Scrutiny Committee receive a further update on the development of the NECA at a future meeting.