North-East Devolution

Nicholas Brown Excerpts

Thursday 26th November 2015 Westminster Hall

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I beg to move,

That this House has considered the north-east devolution deal.

It is a pleasure to serve under your chairmanship, Mr Percy. I welcome the opportunity to debate these matters. We do not often get a chance to debate English regional development, so I express my thanks to the Backbench Business Committee for facilitating today’s discussion.

The north-east devolution deal is the latest initiative as part of the Government’s proposed devolution agenda, which is the mechanism by which they hope to drive local economic development. As I said, we do not often get a chance to debate these matters in the House, so I want not only to focus on the deal itself, but to consider it in the context of the Government’s wider regional economic development strategy, such as it is.

The recent signing of the devolution deal for the north-east of England makes now the right time to look at the record of the coalition Government and, more recently, the Conservative-majority Government on economic development in the north-east of England, as well as to consider the likely impact of the terms of the deal.

It is claimed that the north-east devolution deal will give the north-east more control over areas such as transport, skills and business support. The deal imposes on the region a directly elected Mayor, who will be chiefly responsible for transport arrangements. The Mayor will be a member of the North East Combined Authority, with each of the local authority representatives holding a specific cabinet post. The combined authority will have responsibility for a North East Combined Authority investment fund, a seat on an employment and skills board designed to review and redesign post-16 education and skills policy, and responsibilities relating to business support, connectivity and rural growth. A review body is also to be set up with Government to consider the possibility of devolution of health services at a future date. There are outstanding issues—that is probably the best way to put it, Mr Percy—in relation to police governance and the three fire authorities.

Devolution must have a purpose. It should be seen as a means to an end. My concern is that, under this Government, devolution has come to be seen as an end in itself. We must ask ourselves why we are devolving certain powers and how devolving such powers helps to meet our core objectives—in the north-east’s case, economic development. We talk a lot about the principle of devolution, which I am not philosophically opposed to, but we must also bear it in mind that decisions should be made at the most appropriate level. My concern about the Conservative Government’s approach to devolution is that where they devolve responsibility for a problem, there is no devolution of the capacity and necessary resources to tackle it. They essentially want to take Government out of the equation. Despite all the local initiatives and structures put in place, central Government remain the most powerful and influential agent in driving forward economic development and change. Government can be a force for good and should not take a back seat on regional issues.

The north-east has a range of needs. However, our overwhelming priority is, and has been for many years, the need to broaden, deepen and strengthen the private sector employment base in the region. Our unemployment rate is 8.6% and has so far increased throughout 2015; the national average is 5.3%. We have a historical structural gap in jobs. The region is calculated to need an extra 60,000 jobs to bring it in line with the rest of the country; that is a key objective for economic development strategies in the region. Consequently, our employment rate is below the national average. Our gross value added levels per head are just 74% of the English average, and addressing productivity is another key challenge for the region. Skills, employability and training is the third key challenge for the north-east. We have a higher inactive proportion of the working-age population than the rest of the country, and we need to build the skill levels of our young people if local youngsters are to fill the high-quality jobs that we want for the region.

Finally, the region suffers from an imbalance in infrastructure spend. Planned infrastructure spending per head is £3,386 in London; the figure per head for the north-east is £539. Even a modest redistribution would help to make big improvements to the north-east’s transport infrastructure and connectivity.

None of the issues that I have set out is new. They have been mentioned in every economic development initiative for the last decade, from the regional development agency, the North East local enterprise partnership’s economic review, the strategic economic plan for the region, the city deals agreed with local authorities in the region and in this latest devolution agreement. However, we are not making much progress towards achieving the objectives.

Real progress was achieved under the last Labour Government. From 1998 to 2008, employment in the region increased by 67,000—a 10% increase. By its own measure, the North East local enterprise partnership has stated that the jobs gap, historically estimated at 60,000 in the north-east, has reduced during the five and a half years of Conservative-led government to 58,900. The gap is simply not closing, and it does not give me great confidence that the local enterprise partnership has struggled for more than a year to appoint a chief executive. If it cannot fill one job, how can it be expected to oversee the creation of 60,000?

Regional productivity saw a 10% increase, compared with the England average, in the course of the last Labour Government. It has remained broadly static since 2010 and below the levels seen in the mid-2000s.

On skills and apprenticeships, a recent report for the North East Combined Authority branded the region’s target of doubling the number of apprenticeships “unachievable”. It reported a 33% decline in apprenticeship starts for 16 to 19-year-olds and a 42% drop in apprenticeships for those aged 19-plus. Those are declines of nearly 3,000 and 4,000 apprenticeships respectively in the north-east alone. The report also points to a growing skills gap in engineering and advanced manufacturing, while there is a lack of apprenticeship and training opportunities in the IT and digital sector, business and creative and cultural industries.

On infrastructure investment, the north-east receives just 16% of the funding per head that London gets. On transport funding, for every £520 spent per head in London, just £1 is spent in the north-east. We do not get our fair share, yet the Chancellor of the Exchequer cites infrastructure and transport as a core plank of the northern powerhouse plan. The north-east does not stand to benefit from the High Speed 2 scheme and could well face a reduced service if slower services are routed up the east coast main line.

The north-east has some of the most profitable bus routes in the country, and the old integrated transport board—that was the joint board set up after the abolition of Tyne and Wear County Council—quite reasonably was trying to improve services for customers. The proposed quality contract scheme, subsequently taken up by the North East Combined Authority, has been thwarted by a Government agency, citing concerns about the impact on profits for the large bus companies.

The Chancellor cites integrated, smart-ticketed transport networks as part of the way forward for northern regions, yet his own Government agencies are preventing that from happening. The north-east is only trying to implement what already exists in London. Why do we face opposition from the Government?

On economic development, the Government’s rhetoric simply does not match the reality on the ground in the north-east. Progress has been slow, minimal or non-existent. The momentum built up during the years of the Labour Government was lost in the misguided abolition of the regional development agencies and the resultant scramble of schemes and initiatives.

There is a strong case for having an intervention policy to deal with the problems faced by the region, led by Government and overseen by a Minister. For the avoidance of doubt, let me say that I think the present Minister would be a perfectly acceptable person to oversee such arrangements. The region needs serious, comprehensive, Government-led economic development, not a series of tinkering interventions dressed up as local government reform and badged as the new localism—without any say, incidentally, from the people of the north-east.

It is my contention that the coalition Government were wrong to abolish RDAs. If they wanted to reduce the agencies’ budget or scope, they could have done so while leaving the agencies’ core function of regional economic development in place. Since then, we have seen a plethora of initiatives designed to replace the RDAs and give the impression of a flurry of Government activity. Local enterprise partnerships were the coalition Government’s intended replacement for RDAs. LEPs were supposed to be the bodies that would drive forward economic development. They are, however, ill-defined and ill-equipped to tackle the problems we face in the north-east.

The Government’s city deal initiative was promoted aside from the LEPs and their enterprise zones. The regional growth fund was held centrally and its use decided in Whitehall. Lucky bidders were awarded allocations, and even luckier ones actually received the money. We have not heard much about the regional growth fund since May this year.

Alongside the regional growth fund—the responsibility of the Department for Business, Innovation and Skills—we had the creation of local growth deals, which seemed to be the competitor funds from the Department for Communities and Local Government, and which were announced with great fanfare in June 2014. A year later, however, mention of them seems to have ceased. The last press statement on the Government’s website about local growth deals was in January.

Now, the Government’s repackaged initiative is devolution deals, which build on the forced creation around the country of combined authorities—another wonky plank in the Government’s haphazard regional economic development platform. The Government’s regional economic development policy is unfocused, incoherent and unclear about what it is designed to achieve. I am not sure that it can be properly defined as a policy programme; rather, it is a series of confused, overlapping and disjointed attempts to portray the image of a Government spreading money around the country.

The Government have focused relentlessly on constantly changing and churning structures and the process by which that happens, to the extent that a concrete outcome is a distant afterthought. It is a tragedy for the north-east that we have wasted five and a half years so far arguing about structures and territorial delineations between the various bodies when the Government should have been driving forward a comprehensive economic development strategy.

I fear that the north-east deal is just the latest initiative in the Government’s disjointed regional economic development programme. There are concerns about the proposed governance structures, chiefly the imposition of a Mayor on the region. Whatever they say in public, the Government clearly made that a precondition for the granting of further powers. In much the same way as with the principle of devolution, little consideration has been given to whether a directly elected Mayor, or indeed a combined authority, is the most suitable way to tackle the stated problems that the north-east faces.

The region rejected the regional assembly proposition in 2004, and Newcastle rejected the idea of an elected Mayor for the city in 2012, but both structures have been imposed on us by Government. It would not be unreasonable to let the people of the north-east have a say about all that in a referendum. I note that Durham County Council is drawing up plans to let its residents do so, and I welcome that. I hope that other residents in the north-east will have a similar opportunity to vote on these proposals before they are enacted.

The Government’s intention in imposing a directly elected Mayor is to have a single figurehead who can drive forward the region’s priorities. However, the nature of the governance structures means that that simply will not be the case. The Mayor is essentially just an additional member of the combined authority, with decisions requiring a majority vote from the north-east council leaders, as well as being subject to a two-thirds veto. This looks very much like just another opportunity for gridlock and division.

I have concerns about the accountability and scrutiny arrangements for the Government’s devolution plans. Our RDA had a mixture of private sector, political opposition and governing party membership, and we—the then Labour Government—made sure that that was the case. The scrutiny and accountability arrangements under this Government are much weaker.

There are questions about LEP appointments. Do they really conform to Nolan principles? How will the Mayor and combined authority members be held accountable to the north-east as a whole? What role is there for opposition parties to hold such figures to account?

[Mr Kevan Jones (North Durham) (Lab)]

Does my right hon. Friend share the concerns of Mick Henry, the leader of Gateshead Council, about the fact that the chair of the North East LEP has been appointed to the board of a company run by a senior Conservative in the region? There does not seem be any transparency of the sort that would be expected for normal appointments.

[Mr Brown]

The concerns that my hon. Friend raises are widely shared throughout public life in the north-east of England, and I share the concerns that the leader of Gateshead Council has expressed. The potential overlap between public service and private interest seems to me to be too great. I cannot see how that can truly be said to be in conformity with the Nolan principles that I referred to earlier. Indeed, I have my doubts about whether any of the original appointments to the LEP board were truly in conformity with Nolan principles, and I know of no evidence that a Nolan-style procedure was followed in the making of those appointments.

Before my hon. Friend’s intervention, I was expressing my anxiety about the fact that opposition parties in the region are finding it difficult to hold any of those figures to account in any practical way. It is worth pointing out that the joint boards, which were the successors to the old Tyne and Wear county arrangements, contained a precise mixture of governing party and opposition party representatives. It is one of the great ironies of debates such as this that I am calling, as an Opposition Member, for the proper representation of the Conservative and Liberal Democrat parties, and the Conservative Government are resisting that, preferring a one-party arrangement made up solely of Labour politicians.

The details are not clear, and yet we are being asked at every stage to agree to these new structures without all the information. I have tried to tease the answers out of the Government through parliamentary questions, so it is not through want of trying. However, I have not really managed to extract any further detail, so we are left to assume that the Government do not know or that they have not decided yet.

The Government appear to intend—just in case anyone gets the impression that they are completely walking away from all this—to maintain a close involvement and a say in the workings and decisions of the new structures without accepting any responsibility for them. The proposed employment and skills board has no fewer than five Government representatives on it, from BIS, the Department for Education, the Department for Work and Pensions, and, separately, the Treasury. It is being chaired by a Minister, and—this is the great concession to the new localism—there will be a representative of the combined authority.

The Government propose to maintain joint responsibility on issues such as inward investment, proposals for a science and innovation unit and broadband roll-out, as well as keeping a say in the health and social care integration commission, the integration of transport services and any further devolution—no decision has been made on this yet—for the Tyne and Wear metro and the Northern and TransPennine rail franchises.

The Government talk enthusiastically about devolving power. However, it seems that they are less keen on letting go of the levers. They are not devolving the money or the exercise of control, just the responsibility. Uncertainty remains over the future relationship of the Mayor and the combined authority in relation to the local enterprise partnership and other regional structures. Only this week, local press have reported of in-fighting and turf wars between these organisations, and that is to be expected when the Government’s structures and responsibilities are so poorly defined.

In the deal, vague statements are made about police and fire services. Are they to come under the control of the Mayor or the combined authority? Are the different police force areas covering the north-east to be merged? What, then, would happen to the commissioners? They are another example of the Government’s pursuit of single figureheads that have been subsumed in devolution deals—in Manchester, for example. The deal needs to be seen in the wide political context facing the region.

Just yesterday, we heard the Chancellor’s spending review announcement, which includes cuts of 30% to the budget of the Department for Communities and Local Government and a 37% cut to the Department for Transport. Whatever the Chancellor is proposing to give the north-east in his devolution deal with one hand, he is doubly taking away with the other in the form of cuts to local councils and their services. It is estimated that local councils in the north-east will no longer even be able to fund statutory services, let alone other services, within the next few years. His 2% rate rise proposal will simply not fill the gap.

In Newcastle, the city that I have the honour and privilege to represent, the 2% rate increase would raise just over £1 million, which would leave an anticipated shortfall of £15 million a year in the adult care budget. The Chancellor’s business rates proposal will make matters much worse. North-east councils simply cannot raise the revenue locally. Our council tax is a much smaller proportion of the total council revenue on residential properties, largely because of the high number of lower-band properties.

The proposal would require large increases in the business rate—forbidden by the Chancellor—to plug the gap left by the removal of the central Government grant. Removing the local government grant also removes the redistributive element of local government finance. Therefore, more prosperous local authorities can see why this might be a reasonable policy to pursue, but those who rely on the redistributive element because they are poorer and have more demand for the statutory services that they have to provide are obviously looking at this with considerable concern.

Different council areas can raise significantly different amounts of money from local taxation. A 1% council tax or business rate rise in parts of London can raise tens of millions of pounds. The equivalent 1% council tax rise in Newcastle would not even raise £1 million. Any commitment in devolution deals to a “fair funding settlement”—to quote the Government—are completely worthless against this proposal. It is an unfair and deeply divisive proposition. The Government need to look at it again urgently before proceeding any further.

Economies gravitate towards their centre and it is a core duty of the Government to push back against that through focused regional policy. This would also have the effect of tackling congestion and overheating in the centre as well as strengthening the economic base of the rest of the country. It does, however, require a determined lead from Government, not a parcelling out of responsibilities to local authority leadership boards without the capacity to tackle the problem adequately.

The Chancellor’s northern powerhouse initiative is ostensibly his attempt to redress the balance between London and the south-east, and the north of England. As we have seen with the initiatives that preceded it, the reality does not match the rhetoric. The Government call for a “New pan-northern approach”, harnessing the endeavours of 15 million people to create

“a new scale of activity and rival the best trade centres in Europe”,

making it

“one of the easiest places in the world to do business”

with “transformative transport interventions”.

However, in their official answers, the Government cannot tell us where the northern powerhouse is. They delay our rail projects, refuse to intervene to save highly skilled manufacturing jobs in northern steelworks, and beg the Chinese to invest in the north, so the Government do not have to. There was one shimmer of hope in the spending review, however. Buried away in a footnote on page 10, it states:

“The north is defined as the North East, North West, and Yorkshire and the Humber regions.”

I am still not entirely sure that that means they know what turf their powerhouse concept occupies, but it is a step forward.

Yesterday’s spending review sets all this in context. The business rate changes will further impoverish local government in the north-east. The elected Mayor will be hobbled by the governance structures of the combined authority and the lingering hand of Government. The region will undoubtedly take more than its fair share of cuts in Transport funding and Communities and Local Government funding. Overshadowing all that is the ending of the redistributive element of central Government support for local government.

The more that the details of the proposal are examined, the weaker the case for it becomes. At the very least, the north-east should be allowed to vote on the proposals in a referendum. Ideally, the Government would have accepted their responsibilities and had the comprehensive, regional intervention that the north-east so badly needs.

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[James Wharton]

The fact is that over the past five years, Durham County Council has added more than £100 million to its reserves, but the rhetoric here is of a council that one might think did not have a penny to spare. It is welcome that local authorities look to find efficiencies and to spend money carefully. I do not deny that difficult spending decisions have to be taken, but it is right to challenge the assertion by some Members that the sky is about to fall in. That assertion has been made in all but those exact words so many times in this place over the past five years. We should put on record the reality and recognise that the spending power per head of Durham and Newcastle remains as it has for the past five years: significantly higher than the average spending power per head of local authorities across England.

Having put those matters on record, I want to focus on some of the devolution issues at the heart of the debate. We started with discussion of the old regional development agency. I agree with the right hon. Member for Newcastle upon Tyne East on some things, so he is clever to find an area on which he knows we do not agree. I was never a great supporter of the old RDA. I felt that it did not give Teesside the recognition it deserved. I accept that we disagree about the work of the old RDA, but I continue to be grateful for and pleased by the changes we saw when the local enterprise partnerships were introduced. Having the Tees Valley LEP allows the area to determine its future and to look to co-ordinate with more close local control on where we want our economy to go and what we want it to do.

I accept that there is disagreement about what the structures should look like, but it is important to put on record my support for the decisions that were taken and my ongoing support, particularly for my LEP. My desire is to see all LEPs, including those in the north-east or the rest of the north-east—however one might want to term it—being successful and contributing to and driving economic growth in the north of England and elsewhere.

[Mr Nicholas Brown]

Just on the narrow point of the performance of the north-east local enterprise partnership, is the Minister wholly satisfied with the progress it has made so far and how it has been conducting itself?

[James Wharton]

The right hon. Gentleman raises an important point. I recognise some of the good work that the north-east LEP has done, and I put on record the Government’s gratitude to those from the private sector, local authorities and the public sector who have, through their joint endeavours and contributions, been able to deliver some of the successes that have been enjoyed in the north-east. However, some genuine concerns are being expressed, not least in the regional media, about how that LEP is working. I want to see those matters resolved and to ensure that the private sector voice is retained, is strong and is recognised for the value it can bring. I also want to see the public sector and local authority representation working with that voice to deliver on the shared agenda to grow the economy of the LEP’s area.

I clearly recognise some of the great things the LEP has achieved and the good work done by many individuals contributing to it—I thank them for that—but I want to see the problems talked about in the media resolved. We know those problems exist, and I want to see real and lasting recognition of the need for that private sector voice and the cross-sector co-operation to drive forward the economy in the interests of the region.

[James Wharton]

I have lost count of the number of debates in which I have had the opportunity to discuss a range of issues to do with the north-east with the hon. Gentleman and he has named and targeted an individual Conservative from the region. We should focus on the bigger issue: how we get the LEP to do the best job it can for the communities that Opposition Members represent and for the area. We all want to see the area realise its significant potential. Some of the more party political or partisan comments do not contribute towards making progress in that direction and securing the sort of economic growth we want to see.

Economic growth, of course, is important. It comes in many ways to the heart of the devolution argument and discussion. We want devolution to drive economic growth. We recognise that the potential across the north of England is significant. If we can unlock that potential, it can make an even greater contribution to the UK’s economy. If between now and 2030 the northern power- house grows its economy at the average rate that the UK economy is predicted to grow, that will add in the region of £40 billion in real terms to our GDP. That will be good for the people who live in the north and good for the UK as a whole. We want to see that delivered. That is something that all parties can agree on. We perhaps differ on some of the detail of how it should be done, but there is agreement to some extent that devolution has a role to play in empowering local decision makers and unlocking economic opportunities.

The economic opportunities in the north-east are significant. We have had mention of Nissan, that great Conservative legacy to the region. We have seen announcement after announcement from Nissan in recent years about its plans for expansion and to extend the new lines that it wants to produce. That has a significant impact not only in Sunderland with the direct jobs that it delivers, but through the supply chain in the region and the whole UK. Our region should be proud that Nissan in Sunderland, in our region, makes more cars than Italy. That is a real achievement that speaks to the quality of the workforce, the dedication of the people of the north-east and the things that can be done if companies choose to invest there. It is a great showcase for what the north-east can do.

Along similar lines, the hon. Member for North Durham mentioned Hitachi at Aycliffe, another good news story and a significant investment in the region of just short of 1,000 direct jobs, with 8,000 or so jobs through the supply chain. We want to secure as many of those jobs as possible for our local economy and secure the value that the supply chain can deliver for the local communities surrounding that investment.

In the spending review yesterday, it was announced that there would be new enterprise zones across the north-east and Tees Valley areas. There will be significant extensions of zones that exist and new areas will be given enterprise zone status and support. There will be new opportunities to drive our economy and unlock the potential about which I have already spoken.

[Mr Nicholas Brown]

I wholly agree with what the Minister says about Nissan and Hitachi; they are very welcome corporate citizens in the region. He is right to give credit for the original Nissan investment to the Government led by Mrs Thatcher, but does he recognise that those great achievements of the private sector working with the Government to invest in the region and create stable and enduring jobs required Mrs Thatcher’s Government to take regional policy seriously and take charge of the negotiations and give a political lead, thus stimulating the eventual outcome? The failure of the Government’s current structures to get us anywhere near their accepting such responsibilities is my core complaint. So the examples that he cites underpin my argument, not his.

[James Wharton]

I will certainly join the right hon. Gentleman in recognising and praising the excellent work done by Mrs Thatcher’s Government in delivering Nissan. The core point that he makes about public and private partnership, with the Government looking at the private sector’s needs and working with it to ensure we deliver and secure the investment we want, is important. I suspect that we perhaps have differences in how that should be delivered, which is what I want to deal with when I talk specifically about the devolution deal in the north-east.

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[James Wharton]

The hon. Gentleman has asked that question many times, and I have answered it many times in the past. No area is compelled to accept devolution and no area will be compelled to have a metro Mayor, but where areas want a package of powers akin to that in Greater Manchester, there is an expectation from Government that a Mayor would come as part of the deal. That is what has happened in the north-east. I have a copy of the deal here. If it was more easily reachable, I would wave it energetically at hon. Members. It has been signed by local authority representatives, because a deal is a two-way thing. It recognises that we have reached a consensus on the powers and the structures that are agreed to deliver our shared objectives.

[Mr Brown]

I do not think we will be waving any document back at him this week.

If the people of Durham—if they are allowed more generally—vote against the mayoral model, and that is their will, will the Minister respect that and go ahead with the rest of the deal anyway?

[James Wharton]

The right hon. Gentleman has generously given me the chance to reach into my little red book and find the document in question, which I will now wave, signed as it is by so many of the great and good of local government in the north-east.

It is for local authorities to agree these deals through their leadership and to pass the resolutions to enact them through their democratic structures. If one local authority decides to remove itself from the deal, we will not allow that to prevent other local authorities from going ahead and delivering it, but, consistent with what I have already said, nor will we compel any area to be part of a devolution deal. If Durham decides not to pass a resolution, or through a council mechanism decides not to be part of a north-east deal, if the other local authorities want to go ahead, we will work with them to deliver it without Durham, should that be their choice. I hope, though, that that is not a choice that they will make—the hon. Member for North Durham and I disagree on that.

With a deal will come a number of areas of control and a number of possible levers with which local authorities will be able to help to drive the economic growth that we want to see.

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[Mr Brown]

Will the Minister say precisely how the elected Mayor will drive up inward investment in the region? What will he add to the work that is already done? Will he confirm that, for skills, what is on offer is a board member in a structure that effectively exists now? Is he saying that the whole of the will of the north-east of England—all the local knowledge and contribution that can be made—will be expressed through the cabinet member of the combined authority who is appointed to the skills group? I say this meaning no disrespect, but as far as I can see that group is composed of departmental officials who are not the elected representatives, or any sort of representatives, of the north-east of England.

[James Wharton]

In his questions, the right hon. Gentleman in some ways gets to the heart of some of what devolution is going to be about. On foreign investment and UKTI, the Government are saying that we want to see additional focus and support from that national body, which has been successful at selling our country abroad with its “Britain is GREAT” campaign, for the north of England to drive the opportunities that exist. With that additional support will come the opportunity to bring in more investment, but it is not for me to tell any future Mayor of the north-east—or of the Tees valley, Greater Manchester or wherever—how to go about doing their job and how to maximise the opportunities that exist. There are different opportunities in different places, which will require different approaches. That is the very essence of why devolution can be a powerful driver of growth. It is about empowering the people who know best what decisions are right.

I want to make a couple of points about the skills budget, because the right hon. Gentleman entered into an interesting area of debate. I know the importance of skills to our regional economies. I recognise the concern that he wants to project, but I do not agree with it. Having more localised control over skills is a significant positive step. The over-19s skills budget is going to be devolved to the north-east through the devolution deal that has been signed, and the north-east combined authority and Mayor will have more say over—and joint work to be delivered over—the 16-plus skills budget, which is to be welcomed.

Even more important than that—which is positive—is what devolution will allow us to do in future. It has started in this debate: we can already see that there are matters on which Members would like things to be a bit different or to go a bit further. There is a debate to be had about that in any devolution settlement. The value of the Cities and Local Government Devolution Bill, which has gone through its Committee stage and will no doubt come back soon to the House on Report and Third Reading, is that it gives us the powers we need to go further when it is appropriate to do so.

Greater Manchester is on its third round of asks for devolution of powers. When it has been given a package and agreement with the Government, it has either identified things that the Government were unable to agree to initially and asked us to work with it to deliver them, or, through the process of thinking about the powers it has, it has identified new opportunities and come back to Government saying, “We want to go further” in this area or that. It is saying, “We want to take the next step,” or, “We want to bring in a policy area that we had not even thought of before.” That remains on the table because of the nature of the devolution we are talking about: it is evolutionary and bespoke; it is custom-made for each area it affects; and it is being delivered along sensible and locally determined economic lines.

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[Mr Brown]

This has been a good debate. We have explored the context and the detail of this devolution deal far more thoroughly than we are usually able to do in the House. I am particularly grateful to my hon. Friends the Members for North Durham (Mr Jones) and for Croydon North (Mr Reed)—you will notice that they both represent the north, Mr Percy—for their contributions. I thank my hon. Friend the Member for Croydon North for pointing out the difference between the Government’s stated approach to the matters we are considering today and their approach to housing matters in the devolution deal, which we did not touch on, but which seem to be being centralised elsewhere.

The Minister, whose sincerity I acknowledge and whose interest and depth of knowledge I admire, made the best of pretty thin material. It is clear that we have not agreed on much; that is the nature of these things. The Government are walking away from their responsibility for regional policy, which is underpinned by their devolving their responsibility for the structures that they created in the north-east without devolving the money. In parallel, nationally they are walking away from their responsibility for redistribution by devolving business rates and making them a local government tax base, and getting rid of the redistributive element of the Department for Communities and Local Government grants. Indeed, it is clear that they intend to get rid of the grants and leave local authorities to get by on their own tax base, including their business rates tax base. That will have profound long-term consequences for our country and awful short-term effects on the north-east of England.

I urge the Government, even at this late stage, to think again about the structures and strategic approach that they are adopting nationally. It would be a mistake to walk away from the poorer parts of the country and say, “Get by on your local tax base” without any acknowledgement that the Government would be on the receiving end of all the centralising effects of the economy, but would have no responsibility for pushing back outwards or, in parallel, for dealing with the problems of the very poorest in our society. That is a long way from John Major’s vision of the Conservative party.

The key fact is that the poor are not distributed evenly around the country and do not form the same proportion of council tax payers in various areas. Morally, demand has to be met, but there is also a statutory responsibility. This debate is overshadowed by what will happen to local authorities when their funding has been so diminished that they are pushed back to carrying out only statutory functions, not carrying them out very well and then finding that they cannot do even that. It is no coincidence that the poorest local authorities in our country are also the most indebted. The Minister deployed the figures for reserves in the debate. It would also be good to look in parallel at the figures for indebtedness, because local authorities are of course responsible for the debts they carry, and there is a limit to how far that can be pushed.

I think the direction in which we are heading is wrong for our country. This debate is about just a small facet of that. Far from healing and giving new consents and justifiable resources to the areas that need them, the Government are doing the opposite in practice. I think that this deal will turn out to be unsatisfactory even from the Government’s point of view, because they have constrained the relationship of the elected Mayor—who will not come into play until 2017 in any event—with the combined authority.

The region needs strong leadership. I have no quarrel with the Minister over whether it should be a single person or done in a more collegiate way. There is strength in the single-person model, but it must be somebody who has got authority. I reiterate that there is a pretty strong case for having a regional Minister with the Government behind them to get involved and help. The Government should not abandon their responsibilities while retaining the right to intervene and meddle and devolving a sum of money that is wholly inadequate to the purposes to which it is supposed to be applied.

So there we have it. We have not agreed on very much. My fear is the broader issue of the cohesion of the country as a whole. When an elected local authority cannot discharge even its mandatory statutory functions, what happens then? That question hangs over this debate, and so far it remains unanswered. It is not a theoretical question; the north-east of England could be there within two years if present trends continue. That would be an absolute disaster for the people whom every single political representative in this Chamber is trying to help.

Question put and agreed to.

Resolved,

That this House has considered the north-east devolution deal.