Devolution needs financial firepower to drive growth
The North East doesn't need more promises – it needs more power.
For too long, the North East has helped generate national prosperity without receiving the level of local control needed to shape its own economic future. If the Government is serious about unlocking growth, that has to change.
The Prime Minister’s recent proposal to allow mayors to retain a greater share of locally generated tax revenue and business rates is therefore an important and welcome next step in the devolution journey. It reflects a simple principle: decisions are better made closer to the people and businesses they affect.
Today, income tax generated by people from Berwick to Barnard Castle flows into Whitehall for London-based leaders to decide what to do with it. Yet local leaders understand their economies, communities and opportunities better than anyone. More of the wealth created in our region should stay here, invested in the priorities that matter most to the North East.
This is exactly the direction of travel the Chamber argued for in its recent response to the Government’s Northern Growth Strategy consultation. Devolution cannot simply be about moving responsibilities from Westminster to town halls. It must be accompanied by the financial powers and long-term funding that allow local leaders to plan confidently, invest strategically and deliver lasting growth.
The North East already has the foundations for success. We are leading the way in clean energy, advanced manufacturing, life sciences and digital innovation. We have world-class universities, internationally competitive exporters and ambitious businesses ready to invest.
What we need is the freedom to join these strengths together through local decision-making, backed by stable investment.
Our own policy work has consistently shown that businesses want decisions on transport, skills, infrastructure and economic development to be taken with a clear understanding of regional needs, rather than through a one-size-fits-all national approach.
Whether it is improving connectivity, supporting innovation or developing the workforce of the future, local knowledge delivers better outcomes.
The next phase is just as important. Greater fiscal powers must be matched by strong partnerships between mayors, businesses, education providers and local communities to ensure every pound retained delivers maximum impact.
Good growth is about more than headline investment figures; it is about creating opportunities that are felt in every town, city and rural community.
There is also one obvious area where Government should go further. Business rates remain an outdated tax that too often discourages investment rather than encouraging it. If greater business rate retention is part of the package, it should also mark the beginning of fundamental reform.
Devolution has always been about trust. Trust local leaders with more responsibility, trust businesses to help shape priorities and trust regions like the North East to build our own success.
If we get that right, the benefits will be felt not only here, but across the whole of the UK.
