How can the North East capitalise on devolution?

The region stands on the cusp of historic political change, as voters from Northumberland to County Durham prepare to elect a regeneration boss to lead the new North East Mayoral Combined Authority.

The move, said to be worth £4.2 billion, pledges to create as many as 24,000 jobs and pump cash into skills, housing and transport improvements by transferring decision-making powers from Westminster.

Here, in the first of a series of six executive-level roundtable discussions hosted by Fairstone, the UK’s fastest-growing wealth advisory firm, alongside North East Times, regional business leaders analyse the seismic statutory shift in great detail, highlighting areas of opportunity and the actions needed to secure further growth.

Words by Steven Hugill

Photography by Angela Carrington

 

WHAT WILL DEVOLUTION MEAN FOR THE NORTH EAST?

It’s been a while coming.

Ever since George Osborne’s proposed devolution deal collapsed eight years ago, the North East’s political picture has been somewhat fractured.

While the Tees Valley readily embraced metro mayoral powers, the rest of the region – from County Durham to Northumberland – remained slower on the uptake.

Until now.

With local leaders having approved a revised £4.2 billion Westminster offer in late 2022 – which officials say will help create 24,000 jobs and leverage billions of pounds of private sector support – the majority of the North East stands ready to embrace a new political epoch.

But, said John McCabe, chief executive of the North East Chamber of Commerce, it will only be successful if the North East Mayoral Combined Authority’s figurehead is accompanied by a refreshed attitude to change.

He said: “Devolution is an opportunity to think bigger and act very differently to how we have in the past.

 

• John McCabe, chief executive of the North East Chamber of Commerce, centre, highlights the potential of devolution during the roundtable discussion. He is watched by Dr James Widmer, Advanced Electric Machines’ co-founder and chief executive, and Caroline Anderson, Fairstone head of marketing

 

“It is about making lives better, and it if works, it will deliver more job opportunities and career prospects, better housing and quality of life, and improve people’s ability to move around the region.

“It will also help increase our workforce.

“Regional unemployment stands at 4.7 per cent, with one in five working age adults economically inactive.

“Devolution will allow us to turn those things around – if we grab it.”

Lee Hartley, chief executive at Fairstone, the UK’s fastest-growing wealth advisory firm, whose headquarters are based at Doxford Park, agreed, urging the region’s commercial sector to play its part.

He added: “If we take the massive opportunity afforded by devolution, we can make the North East something really special.

“For that to happen, though, businesses must take control of the commercial agenda.

“Success will come from big business doing big things and creating jobs.”

Jen Hartley, director at Invest Newcastle, the body that helps firms relocate and expand across the city’s footprint, offered a similar take.

Spotlighting the scope afforded by devolution to redraw the North East’s corporate ambitions, she highlighted the opportunities at play from replacing de facto Whitehall policy and philosophy with greater local knowledge and input.

She said: “It’s imperative the gap between the North East and the rest of the country doesn’t continue to widen.

“A recent Centre for Cities report showed the Government’s ‘levelling up’ agenda isn’t working for us, that we have the highest levels of child poverty, high levels of unemployment and a lot of people far away from the labour market.

“We want research-intensive, highly-skilled jobs around which we can build ecosystems, as well as a good mix of foundational economy jobs, so we can reach into communities and ensure nobody is left behind.

“And devolution will allow us to dictate an industrial strategy that helps achieve those goals.”

 

GIVEN THE GEOGRAPHICAL POLITICAL FACTIONS OF RECENT HISTORY, HOW IMPORTANT IS A UNITED NORTH EAST TO ENSURING THE NEW DEVOLUTION DEAL IS A SUCCESS?

For any outsider to the region – and a good deal of natives too – the North East’s political scene makes for a complex web.

The North of Tyne Combined Authority; the North East Combined Authority; the Tees Valley Combined Authority; 12 local authorities – each and all different entities in a single geography.

The devolution deal, though, said roundtable members, can cut through the knot and create a much more streamlined and understandable environment.

John said: “It’s critical we get the two combined authorities working together.

“Day-to-day businesses don’t work within the boundaries set by politics.

“Employees, customers and supply chains exist across local and combined authority geographies.”

 

• Alison Gwynn, chief executive at North East Screen, talks about the organisation’s support of the BBC during the roundtable discussion. She is watched, left, by Jen Hartley, director at Invest Newcastle

 

Mark Stoner, chief financial officer at Port of Tyne, agreed, saying a united battleplan would strengthen potential ties with international partners.

He added: “We need to get out of our silos and do what is right for the North East.

“We need to use our infrastructural assets to grab the leading global businesses.”

Alison Gwynn, chief executive at North East Screen, which develops and champions the area as a film and television production hub, also pointed to the power of collaboration.

Drawing on the organisation’s ongoing work with the BBC, to expand the broadcaster’s production volumes in the region, she said: “It saw a problem that needed fixing, and partnership kick-started the solution.

“We were tasked with bringing the combined authorities and 12 local authorities together.

“We’re now two years into the project, and we’ve smashed every target out of the park.

“When the world knows you’re open for business, and you have ambition, then business responds really quickly to that opportunity.”

 

DOES THIS UNITY NECESSITATE A REWRITING OF THE REGION’S NARRATIVE?

The North East is many things, not least innovative and inspiring.

Yet despite those facets, it remains, to a large degree, introverted.

And, said roundtable members, if the region is to truly benefit from its devolution deal, it must shed its metaphorical cloak of modesty.

Speakers pointed to the ripple effect on investment decisions, saying the North East must identify and celebrate the sectors where it is leading next generation change.

Gary Chapman, head of the North East and industrials and infrastructure director at Lloyds Banking Group, said: “It goes against our culture sometimes, but let’s push ourselves a bit more.

“We need a proper narrative, one that showcases what the region is focused on.

“That could be advanced manufacturing or green energy, but it needs to have the right brand behind it.

“By clarifying what we stand for, our message would be more powerful and more easily understandable for investors.”

Lee added: “There is definitely a PR piece around the North East.

“Let’s not be meek or quiet; let’s be loud, brave and bold, and champion the brilliant businesses we have.”

Jen agreed, saying such moves would provide a framework to build upon existing investment that includes the recently announced £50 million North East Space Skills and Technology Centre, which is led by Northumbria University and counts global aerospace firm Lockheed Martin UK as a partner.

She said: “We’re still riding a wave of opportunity when it comes to direct foreign investment; over the last couple of years, the North East has outperformed all UK regions for FDI job creation on a per capita basis.

“And they are high-quality, well-paid jobs.

 

• Jen Hartley, director at Invest Newcastle, centre, chats during the roundtable discussion

 

“Furthermore, we’re carving important niches in areas like data, artificial intelligence and healthy ageing, which is attracting interest from outside the region.

“But we know we can do more, and devolution will allow us to speak with one voice, to promote our message globally.”

The implications of such, added Jen, would be far reaching, not least on the industry grapevine, where North East company advocates could help amplify the narrative.

Using her time as head of the Japanese inward investment desk at former regional development agency One North East, she said: “Global recognition is key to what we’re looking to achieve with devolution.

“What was particularly valuable about One North East was its offices around the world.

“I managed teams out of Tokyo and Osaka, which had daily conversations with companies like Nissan, Hitachi, Panasonic and Fujifilm – and there is a lot to be said for those in-country relationships.

“We’re wrong to think that all UK embassies, consulates and high commissions are always batting for the North East.

“If a company has a conversation with an overseas delegate and says, ‘I want to be in London,’ that delegate won’t necessarily question that, or won’t always put the North East forward as an alternative base.

“But if we use our partners in the marketplace, we can increase the region’s message.”

Mark said the North East must “generate excitement and ambition,” pointing to the PR machine behind Greater Manchester mayor Andy Burnham.

He said: “My concern is that we miss the wave.

“Devolution provides us with the board, and it’s imperative we get on and surf the opportunity.

 

• Mark Stoner, chief financial officer at Port of Tyne, said the North East Mayoral Combined Authority must help the region improve its face to market

 

“We need to look at how we bring another three Nissans, for example, to the North East in the next ten years – which we could do with markets we already have here like green energy.

“But to do that, we must improve our face to market and what devolution means for our population.

“Look at Manchester – when it makes an announcement, it does so in a very drilled way.

“We must do the same; too much noise won’t work.”

Malcolm Clarke, public affairs business partner at Northumbrian Water, agreed, saying the area’s new figurehead must complement Westminster connections with a strong grassroots presence.

He added: “The mayor has to be a very visible figure and has to push to create a profile that helps makes a difference.”

 

HOW IMPORTANT ARE SKILLS TO THE DEVOLUTION AGENDA?

Based within a goal-kick’s distance of Sunderland AFC’s Stadium of Light, the pocket of land by the River Wear once home to Monkwearmouth Colliery, stands the skeleton of the new Housing Innovation and Construction Skills Academy (HICSA).

It makes for a rather poetic scene.

For where miners once helped stir industrial revolution, HICSA is set to play its part in a similarly watershed period, by arming learners with the techniques needed to build, retrofit and create the accommodation of tomorrow.

And, said Iain Nixon, group vice principal – partnerships and commercial – at Education Partnership North East (EPNE), it is a textbook example of the long-term and regionally-focused planning that underpins devolution.

Referencing HICSA’s rollout, which will be overseen by EPNE’s Sunderland College arm alongside a number of fellow training-based associates, including the George Clarke-led Ministry of Building Innovation and Education, he said: “People and skills are critically important to how we seize this opportunity.

“We need more joined-up thinking, and what we are doing around construction is a good example.

“HICSA is there to support traditional trades, like bricklayers and joiners, which are not disappearing.

“It’s there to support industry as we decarbonise and introduce new environmental technologies and building techniques.”

Iain also reiterated the importance of relationships, both in HICSA’s operation and across the wider commercial landscape, which he said would help provide industry with a continuous conveyor belt of talent, rather than sporadic output that encourages cannibalisation across the skills market.

Referencing EPNE’s work with Fulwell73 – which aims to bring the £450 million Crown Works Studios film-making complex to Sunderland – he said: “When we look at devolution, and specifically manufacturers investing in the region, their biggest challenge will be starting production, because that requires skills.

“Historically, though, the region hasn’t invested to meet that need.

“Instead, we’ve seen a manufacturing factory established, which has then brought in skills from other companies.

“But if we plan better and train for growth – overtraining in some areas before those skills are needed –  we can avoid some of that competition.

“And our work with Fulwell73, to develop a skills strategy for Crown Works Studios, is a good example of how to get ahead of the curve.”

Iain added: “Devolution means we can invest in positive change, because we will have the ability to say, ‘these are the critical areas we need to focus on and invest in,’ rather than responding to how the Government says we should.

“And we must take everyone with us; we need a much more inclusive economy.

“At the moment, there are individuals that are forgotten about, like those with special educational needs, who have talent in particular areas but face barriers when it comes to workforce engagement.”

Malcolm mirrored Iain’s points, nodding to the supply chain benefits delivered by a more agile future workforce.

He said: “As a business, we have a commitment to spend 60 pence in the pound with local suppliers.

“The reason that isn’t higher is because for the majority of the rest of the 40 pence, there isn’t the technical expertise we need in the region.

“But if the new mayor could facilitate that being available, then we would be very happy to spend more locally on very large infrastructure work.”

 

• Iain Nixon, group vice principal – partnerships and commercial – at Education Partnership North East, makes a point during the roundtable discussion

 

Lee and Dr James Widmer, co-founder and chief executive of Washington-based Advanced Electric Machines, highlighted practical educational and infrastructure-related hurdles to be surmounted if the region is to nurture the skills base it craves.

Calling on the Government to revise the parameters of a flagship training pot, Lee said: “We can’t find a single course that is relevant to our Apprenticeship Levy funding.

“I need purposeful skills, things that are going to lead to high-value talent I can utilise across the business.

“But the courses just aren’t there.”

And placing the skills drive within the aforementioned regional narrative revamp, Lee added: “The North East needs to be a cool place to live and work.

“We have fantastic universities, but graduates see the region as a great place to come and study, rather than a progressive place to build a career.”

James, whose firm makes electric motor and powertrain systems for cars and trucks, cited the challenges caused by the North East’s location.

He said: “If you’re going to make something in this country, then the North East is the place to do it.

“The heritage of manufacturing means we’re able to attract a workforce that is incredibly expert and really hard-working.

“But the region is not commutable; you have to move here.

“We will develop our own skills for future industry, but that takes time, and you miss opportunities if skills are not mobile.”

 

WITH SUCH WORRIES IN MIND, SHOULD THE MAYOR’S DEVOLUTION BLUEPRINT PRIORITISE TRANSPORT AS A KEY AREA FOR IMPROVEMENT?

In a word, said Lee, yes.

With a brittle rail network augmented by ever-increasing road congestion and challenging domestic air travel, he said the North East is regularly left feeling like an outlier.

To that end, Lee said the region’s devolution deal must provide a springboard to improve all modes of connectivity.

He said: “It is still way too difficult to do business across the UK.

“The East Coast Main Line is very expensive; I can’t fly to Bristol and back in the same day and there is no direct flight into the heart of London.

“We need to make the North East much better connected, and make it cheaper and easier too.”

James agreed, pointing to the overwhelming investment benefits brought by a stronger transport network.

He said: “It’s so hard to get from the North East to the Midlands or the West Coast; in fact, it’s arguably easier to get to the Middle East than it is to Liverpool.

“And that has knock-on effects.

 

• Malcolm Clarke, public affairs business partner at Northumbrian Water, chats during the roundtable discussion

 

“The North East is a really good place to invest, but it is nevertheless remarkably difficult to raise money here.

“A significant factor is that the region isn’t ‘day-trippable.’

“It takes two days for anyone to come here and really grasp the opportunities.

“But getting investors from London to jump on the train for a two-day visit is almost impossible.

“We need big infrastructure investments – and a North East voice through devolution would help that.”

 

HOW IMPORTANT IS A ROBUST FUNDING STREAM TO THE NORTH EAST’S DEVOLVED FUTURE?

In a world of continuously increasing competition, roundtable members said access to cash ringfenced to catalyse expansion is a necessary component of any growth toolkit.

But, said James, achieving such in the North East, remains far from easy.

Describing the £23 million investment his business secured late last year, which will strengthen its workforce, product development and sales footprint, he cautioned how the firm had had to look beyond the region, to principal backers Legal & General Capital and Barclays Sustainable Impact Capital, for support.

He said: “It is very challenging to raise money in the region, so we end up raising money elsewhere.”

Pointing to Lloyds Bank’s £1 billion regional regeneration fund, which aims to plug such gaps within the wider devolution landscape, Gary said: “We need to ensure we meet opportunities with capital and are there to move forward the things that will help shift the dial on job creation.”

 

• Gary Chapman, left, head of the North East and industrials and infrastructure director at Lloyds Banking Group, discusses the North East’s brand and identity during the roundtable discussion. Dr James Widmer is to his right 

 

Both Lee and Jen concurred on the necessity of investment support, but added it was incumbent on firms and the wider region – using the devolution deal as a launchpad – to create persuasive plans.

Lee said: “There has never been more capital in the world to deploy, but the problem is the gap between the businesses on the growth journey and the creation of sufficient interest to pull mid-market investment to the region.

“It is easier to raise money if you have a compelling proposition.”

Jen added: “Some investors have historically only looked at London.

“But they are now realising there are better sector-based, innovative projects – and potential returns – in the regions.

“We therefore need to build our proposition and take it to those investors.”

John highlighted the deal’s headline-grabbing £1.4 billion investment fund – which officials say will provide as much as £48 million a year to drive economic growth and regeneration projects – to urge greater clarity across the financial support landscape.

He added: “There is an uncertainty around what the investment fund is going to look like and how it will be accessed.

“And that is important because businesses, particularly in the SME community, often say raising funds is a complex and costly process.

“Hopefully, the new fund will open things up, and if we’re allowed to structure the cash and deliver it according to the needs of our business community, rather than Whitehall and Westminster doing so, then that would be extremely beneficial.”

 

HOW VITAL IS IT THE NORTH EAST’S BUSINESS COMMUNITY AND WIDER POPULATION PROVIDES A FOUNDATION FOR THE ELECTED MAYOR TO MEET DEVOLUTION GOALS?

As much as responsibility for devolution’s success will sit squarely on the newly-elected mayor’s shoulders, roundtable members said their mission must not be a solo venture.

This, they said, would help drill deeper into the region’s priorities, therefore strengthening their mandate to fashion meaningful change.

Alison said: “The job for any mayor is huge; it is impossible for one human being.

“So, we need to showcase the champions of our region, who are all joined up in a single mission and ambition.

“We need to have big business, big talent and big individuals all singing from the same hymn sheet.

“And we can do that while using the learnings – good and bad – from other regions that have gone through devolution.

 

• Lee Hartley, chief executive at Fairstone, addresses fellow roundtable members during the discussion

 

“It’s what you would do in business, so let’s use it to our advantage.”

John urged the commercial world to talk about devolution and strip away potential complexity, which he said would generate greater buy-in that, in turn, would resonate along the corridors of Whitehall and Westminster.

He said: “It would be hugely powerful if our new mayor, on their first day, could go to the top of Government and say, ‘I was elected on a turnout of 60 to 70 per cent’.

“That, realistically, may be a struggle, but if they can nevertheless say a good majority of the region took part in the process, that would create a really powerful message.”

Lee agreed, bringing the discussion back to the region’s narrative and how its revision holds great potential to deliver lasting change.

He said: “It’s all about branding, messaging and PR.

“By working on that now, people in 30 years’ time will see a completely new identity across the North East, one that has replaced the enduring image of coal mining and shipbuilding, which hasn’t been the case for decades.

“We need clarity of message and purpose, and an understandable definition of what we want to achieve.”

 

The findings and discussion points from the roundtable series will be collated to create a Fairstone-sponsored white paper, which will recommend steps to catalyse the region’s growth agenda.

It will be published early next year.