Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority (Establishment and Functions) Order 2018

Lord Bourne of Aberystwyth Excerpts

Tuesday 30th October 2018 Grand Committee

Moved by

[Lord Bourne of Aberystwyth]

That the Grand Committee do consider the Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority (Establishment and Functions) Order 2018.

Relevant document: 40th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this order was laid before the House on 4 September. At Budget 2017, nearly a year ago, we announced that we were minded to agree a North of Tyne devolution deal with the three areas which will be the constituent councils of this combined authority: Newcastle upon Tyne, North Tyneside and Northumberland. The deal will devolve major powers and budgets, including £20 million a year of devolved funding over the next 30 years, control of the 19-plus adult skills funding, and powers for the combined authority to acquire and dispose of land. The mayor will have powers to take forward compulsory purchases and establish mayoral development corporations as a foundation for the North of Tyne’s housing and regeneration ambitions. In return, the area has agreed appropriate governance for these new powers and budgets centred on a combined authority with a directly elected mayor. Such mayors can provide a focused single point of accountability for the powers and budgets being devolved, and can be a powerful voice raising the profile of their area with business, with government, and internationally, helping to promote inward investment and growth.

The order before the Committee, if approved by Parliament and made, will implement this deal—a deal which is yet another step along the way of our devolution agenda. It recognises that North of Tyne is a coherent economic area, which generates almost £17 billion in economic output, has a number of significant growth sectors and is home to more than 815,000 people. The deal will support the delivery of the North East local enterprise partnership’s strategic economic plan, which sets a forward direction for industrial growth across the north-east.

The background to this deal is that when in September 2016, the four authorities south of the Tyne—Durham, Gateshead, South Tyneside and Sunderland—chose not to participate in the agreed North East Combined Authority devolution deal, the Government were clear that they would continue to work with those authorities committed to devolution. As a result of this, the three North of Tyne authorities that supported the original deal have worked with government to agree this new mayoral devolution deal on this smaller North of Tyne geography. Although ideally we would have wished to see a deal that covered the area of all seven councils, we are clear that this North of Tyne geography is an economic area that can rightly support a devolution deal that will bring considerable benefits to both that area and the wider north-east. As my honourable friend the Minister made clear in the other place, we in the Government pay tribute to and thank the leaders of the three North of Tyne councils—Nick Forbes, Norma Redfearn and Peter Jackson—for their vision, work and commitment, which have led to this deal and the benefits it will bring to both their communities and the north-east more generally.

If approved by Parliament and made, the draft order will implement the deal. It is made pursuant to the provisions of the Local Democracy, Economic Development and Construction Act 2009 as amended by the Cities and Local Government Devolution Act 2016. It will put in place the necessary governance arrangements. It will establish a combined authority for the areas of Newcastle upon Tyne, North Tyneside and Northumberland. It makes provision for a directly elected mayor for that area, to be elected by all the local government electors for that area. The first mayor will be elected on 2 May 2019 for a term of five years, with the next election taking place in May 2024, then every four years subsequently. The initial five-year term is to bring these mayoral elections in line with mayoral elections in other city regions where there are elections of metro mayors, such as Greater Manchester and the West Midlands.

The order also makes provision for an interim appointed mayor in the period before the mayoral election takes place. This interim mayor will be appointed by the members of the combined authority, and while he or she will be chair of the combined authority they will not have any powers devolved to them. The order is equally the instrument through which certain powers, as envisaged in the deal, are devolved to the area to be exercised by the combined authority and, in some cases, by the mayor, once he or she is elected. These include local authority powers of compulsory purchase and the power to create and establish mayoral development corporations.

To allow for the establishment of the new mayoral combined authority, this order removes the local government areas of Newcastle upon Tyne, North Tyneside and Northumberland from the area of the current Durham, Gateshead, Newcastle upon Tyne, North Tyneside, Northumberland, South Tyneside and Sunderland Combined Authority and changes the name of that combined authority to the Durham, Gateshead, South Tyneside and Sunderland Combined Authority.

Most importantly, to ensure the continuity of the delivery of integrated transport arrangements across the two combined authorities across the north-east, the order also makes provision for the establishment of a joint transport committee. The new combined authority will appoint three members to this committee, one of whom must be the mayor unless the mayor decides that he or she does not want to be a member. The existing combined authority will appoint four of its members to this new joint transport committee. The new joint committee will exercise all the transport functions of the two combined authorities. It will produce a joint transport plan covering the area of both combined authorities. As with all combined authorities, an overview and scrutiny committee, as well as an audit committee, will be established for this joint committee.

In laying the draft order, we have followed the statutory processes specified in the 2009 Act as amended by the 2016 Act, which I mentioned. Establishing a combined authority is centred on there being a triple lock: a combined authority can be created only if the councils concerned consent, the Government agree and Parliament approves the necessary secondary legislation. The three councils that will be the constituent councils of the new combined authority—Newcastle, North Tyneside and Northumberland—have consented to the provisions in this order that will create the combined authority. The original combined authority and the three councils leaving it have consented to the change of that combined authority’s area. All seven councils and the original combined authority have consented to the establishment of the joint transport committee and the associated constitutional changes that this order brings.

We have considered the particular circumstances of this proposal in relation to establishing a new North of Tyne combined authority and the changing of the boundaries of the existing combined authority, as the law requires. We have concluded that all the statutory conditions are met. We also consider that it would be appropriate to establish this combined authority while having regard, as the 2009 Act requires, to the need to reflect the identities and interests of local communities, and to secure effective and convenient local government.

--- Later in debate ---

[Lord Wrigglesworth (LD)]

My Lords, I declare my interest as chairman and shareholder of the Durham Group and a former chairman and shareholder in UK Land Estates, which, among other things, owns Team Valley, still the single biggest industrial estate in the UK, with some 800 acres of businesses of all sorts.

I speak in this debate not just from that point of view but from having been the regional chairman of the CBI and of the Northern Business Forum. I was a member of the board of the Northern Development Company, which succeeded in bringing Nissan, Fujitsu, Komatsu and a variety of other businesses to the region in years gone by. I was delighted and honoured to be the founding chairman of the NewcastleGateshead Initiative as a result of an invitation from the Labour leaders of Gateshead and Newcastle city councils. As a result of an invitation from Gateshead Council, I was chairman of the Baltic Centre for Contemporary Art, which was in financial difficulty and which we managed to pull back from the brink.

I have also been chairman of the Port of Tyne. It dominates a large part of the business life of the region. All the cars from Sunderland are exported to the rest of Europe and other parts of the world from the Port of Tyne. It is the fourth-biggest import- export car terminal in Europe. It is the biggest trust port in the country. It is bigger than Dover. It makes an enormous contribution to the whole of the subregion.

Colleagues will understand that in all those different roles I have had a fair amount of interest in and experience of dealing with local authorities and other bodies in the Tyneside area. Although I support what the Government are doing and I have every sympathy with the Minister in trying to bring these things about, it is a tragedy for the area that we have not been able to bring all the authorities together as was envisaged. It would have been better to have had a separate Wearside LEP and a separate Wearside combined authority, with Sunderland and Durham working together. There has been an historic problem of Sunderland being overshadowed by Newcastle and the Tyneside area, which seems the natural conurbation for the region, rather than including Wearside in it. If we had been able to get a combined authority for the whole of the seven authority areas, it would have been very much to the advantage of the region. This is very much a second-best solution.

It is also in sharp contrast with the success that there has been on Teesside, which includes my home area and which I represented in the other place for many years. There, the Conservative mayor and the Labour local authorities are working extremely well together, bringing resources to the area, developing the area and working together for the benefit of the whole region in a way that I have never seen in my lifetime in the north-east. The contrast between what is happening in the south of the region and what is happening in the north of the region illustrates the damage that is being done by the parochialism and the antagonism across local authority boundaries by the leadership of the local authorities in the southern part of Tyneside.

Although I am happy to support this first step—as it has been described—we should not in any way underestimate the damage that this mix-up and this weird split of the north part of the north-east into these two areas—north and south of the Tyne—will have. As I said, I was chairman of the NewcastleGateshead Initiative, the destination marketing agency for both sides of the river, which made an enormous impact. We put in a bid for European Capital of Culture. It has had a massive impact in the area on both sides of the river. How is the NewcastleGateshead Initiative going to work with a combined authority on one side of the river and the other authority on the other side of the river? It is going to be extremely difficult at times. It will certainly make life much more complicated, as it has been in the past.

The Port of Tyne, on the north bank of the River Tyne, straddles both sides of the river. On the north side is the international passenger terminal, with 30 cruise ships every year, paying visits and bringing an enormous amount of money and economic activity to the area. There are car and other activities going on on the north bank. On the south bank, we have the major dock facilities, with all the cars and the exports going out of there. There are wood chips and coal coming in, a whole pile of scrap being exported, and tea and a whole range of goods being imported on the south bank of the river, where the port will have to deal with South Tyneside. Instead of dealing with one authority for the whole area, the port will have to deal with a combined authority on the north bank and two authorities on the south bank. It will make the best of it, but this illustrates the difficulties when there is such a split of responsibilities and staff.

I mentioned the Team Valley. For 25 or 30 years, I have been developing factories and offices, probably creating more jobs throughout the region than I have ever done in Westminster. You have to work with the economic development departments of different local authorities. If I build a big shed in South Tyneside and I want to let it to somebody, I will have to go to the LEP, to the combined authority and to Gateshead Council. I will have I do not know how many economic development departments to deal with in trying to fill that factory with people working there for a company. If I am going to embark on a project like that, I will have to work with all those bodies to make a success of it. That makes life very complicated.

I do not know what will happen with representations from the area on economic regeneration. I think of MIPIM, the great property event in Cannes in the south of France every year, and more local ones here in London. Are all the authorities going to be sending representatives down? They probably will. But if there were one combined authority for the area, we would have one group of people and one strategy and everybody would know who they were dealing with. Frankly, it would also be much cheaper for the rate payer and taxpayer if that were to be the case.

Although I support what is happening as a first step, it is a tragedy for the area that we do not have a single united authority. I would prefer one for Tyneside and one for Wearside. We already have the successful one on Teesside.

The transport issue illustrates the problems—it will be the same on housing and other areas—where all the bodies have to work together and staff will have to be employed to carry out the work in different bodies. It will be less efficient and less effective and it will not have the impact of one authority for the whole area.

I support the regulations with a heavy heart. I shall be interested to hear from the Minister if any discussions are going on with the authorities south of the river to try to bring them to their senses and join in, so that everyone knows where they stand, with one authority for the whole area.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords for their contributions and I shall seek to deal with the points that have been raised.

No one on the Government side seeks to suggest that this is an ideal arrangement. We would have much preferred the councils south of the Tyne to participate in the deal. I agree, therefore, with the points that have been made by all speakers—with differing amounts of stress—that this is not the first choice. That said, it takes us forward. Again, most participants would agree with that, with the possible exception of the noble Lord, Lord Beith. I do not think that he was fair in suggesting that I was not keeping a straight face about this—it was probably said tongue in cheek; he is normally very fair—because I have no doubt that this is a good step forward for the region. I emphasise that, given the circumstances, this is the best way forward.

I shall try to deal with some of the points that were made. I agree with the noble Lord, Lord Beecham, that this is not the most desirable arrangement and that anyone who did not know would think that Gateshead and Newcastle were as remote from each other as Sydney and Melbourne, rather than being connected by the Tyne Bridge. It is a mystery to me, but that is where we are.

I do not want to suggest that £600 million over 30 years—although we should not underestimate the amount that will be put into the deal—will solve all the problems of the north-east. That is clearly not the case. Nor is it the sum total of the investment that goes into the north-east. Significant amounts, for example, go into the LEPs and the borders growth deal, of which the noble Lord, Lord Beith, will be aware. The Northern Spire Bridge attracted £82 million of government money and the International Advanced Manufacturing Park is another example. I shall come on to the money earmarked for the Metro system.

We cannot both say “Let us set up this devolution deal” and “What is the Government’s policy on x, y, and z?” It is for the combined authorities and the mayor to decide. It will not have escaped everyone’s attention that, although some metro mayors are Conservative, they are not all Conservative. This one—although I have no doubt it will be a close run thing—may not be a Conservative. I remind the noble Lord, Lord Beecham, that we are giving significant power to the mayor and the combined authority to decide on policy in the areas that we devolve.

The noble Lord mentioned the airport and air passenger duty. That issue will not be devolved. The Government are looking at that to balance all the needs of the different parts of the UK. He is right to refer to the problems of Scotland in competition with Newcastle; similar problems are felt in relation to Bristol and Wales. The Davies review has formed some of the policy in this area.

There is a significant housing element here, but that will not affect, for example, the existing provision for social housing, nor the £2 billion that the Prime Minister recently announced from 2022. There is no doubt that that will be bidded in for.

Adult education is not devolved by this. I agree with the noble Lord about the need for authorities to work closely together, as they do at the moment in many cases. The NHS is also not devolved by this arrangement—of the metro mayors, I think only the Mayor of Greater Manchester has that devolved power. Similarly, justice will not be devolved and so probation will not be directly affected, but I agree with him about the need to work across borders and to adapt arrangements in the light of circumstances. That is a fair point and we will approach it very much on that basis. The noble Lord asked about investment in the Metro system. In Budget 2017, £337 million was announced.