Northeast fear over extra Scottish powers

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The decision by party leaders in the run up to the referendum to pledge additional powers to the Scottish government and a continuation of the Barnett formula will now intensify concerns that parts of England will be left disadvantaged.

Disquiet is particularly strong just across the border in northeast England, where unemployment – at 9.9 per cent – is the highest of any UK region, in contrast to Scotland’s jobless rate, which, at 6 per cent, is just below the average in Britain.

The battle for inward investment and support for business growth are areas of particular concern in the northeast.

James Ramsbotham, chief executive of the North East Chamber of Commerce, said his region was “uniquely exposed” to the changes set to occur in Scotland.

“Even with a No vote, considerable devolution north of the border, pledged by all of the UK’s major political leaders, has the capacity to impact on business confidence with the northeast closest of all to an increasingly assertive Holyrood.”

He said business expected London and Edinburgh to reach a devolution settlement that was clear, fair to both sides and swiftly executed. But this was not a decision to be reached in the corridors of Holyrood and Westminster alone; the northeast must be part of the settlement constitution, which must not undermine the region’s economic growth, he added.

“Scottish devolution should trigger a new debate on local autonomy in north east England, where policies are tailored to meet the needs of our region and not those of London.” There must be more influence over how taxes are spent. “Our businesses deserve a say in how a new, less centralised UK is governed in future,” he said.

Simon Henig, leader of Durham council and chair of the North East Combined Authority, welcomed the referendum’s outcome, citing the close links between Scotland and the north of England.

“It is now time to have a full debate about the devolution of power throughout the UK,” he said.

And, in a comment that highlights how the settlement to Scotland will now intensify demands from the north of England for a comparatively fair deal, he added: “If additional funding is guaranteed to meet the needs of Scotland it is reasonable to ask that funding is also guaranteed to meet the needs of northern England in areas such as transport and the economy.”

The government is now being pressed to create economic development bodies in the north of England with devolved powers and budgets, to focus on business growth.

New bodies, which would supersede the local enterprise partnerships set up by the coalition, are necessary to unlock the economic potential of the north of England and its manufacturing base, said Rob Johnston, chief executive of the Cumbria chamber of trade. “If we are going to have devolved powers, one has to be economic development powers.”

England’s regional development agencies, which the coalition government scrapped in 2012, evolved to cover too wide a range of activities, said Mr Johnston. “We aren’t asking for a return to RDAs.” But he does want the new bodies, like the RDAs, to be legally constituted, with real devolved powers and bigger budgets, but focused specifically on economic development and business growth. “We want to see focused economic development support in the north of England,” he said.

Mr Johnston also said he would welcome better regional local government but in Cumbria, where there are already district councils and a county council, the existing structure would need to be “tidied up”. “We don’t want a devolved assembly which adds another layer of bureaucracy.”

Simon Allport, senior partner at EY in the northwest, said the referendum outcome would fuel discussions at local level on whether or not there should be further devolution within England and Wales, with Greater Manchester and the northwest having been held up as potentially suitable destinations for powers in the run up to the referendum.

“Regional business leaders need to make sure they are a part of this debate,” he said.

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