Up to £500m of extra investment and 14,000 jobs could be created in the North of Tyne through a new regional wealth fund, a new paper argues. Regional Wealth Generation, written by North of Tyne mayor Jamie Driscoll, is the first in a series of events and papers on levelling up from the RSA (Royal Society for Arts, Manufactures and Commerce).
The paper argues for greater powers to be devolved to the North of Tyne – and potentially other areas - to help boost economic growth, improve public services and address inequalities.
The powers being called for include: -
- The establishment of a regional wealth fund to invest in SMEs, job creation and other projects. The report estimates that this could raise up to £500m and create an estimated 14,000 jobs by borrowing at lower interest rates.
- Setting up a levelling up board, chaired by the mayor, bringing together ministers and officials from across national and local government, so local knowledge can improve national schemes in the English regions.
- Piloting a new ‘invest-to-save’ approach to long-term health problems, which allows the future money saved by improving housing and public transport to be invested upfront.
Jim O’Neill, former Treasury minister and chair of the RSA Cities Growth Commission, which led to the first devolution deal in Manchester, endorses the recommendation in the report’s foreword, arguing that further devolution of fiscal powers is critical to greater growth. In a separate development, Andy Haldane, RSA chief executive, was recently appointed to lead the government’s levelling-up work on a secondment from the RSA, though the series is independent of government and Haldane’s role.
In a separate paper published alongside Jamie Driscoll’s essay, the RSA sets out its own definition of levelling up which will be fed into Whitehall stakeholders. It says the UK government must include three key dimensions to make the idea a success.
- Economic development - meeting net zero, productivity, regional economic imbalances and raising wages.
- Social cohesion - stronger public services, with a focus on wellbeing, life chances, environmental justice, poverty and inequalities.
- Community voice and identity - a focus on building ‘social capital’ such as volunteering and neighbourhood trust.
Jamie Driscoll, North of Tyne mayor, said: “The best way to improve people’s lives is to put more money in their pockets. That means generating more wealth here by investing in our economy and paying good wages. That requires investment in skills, in transport and directly in local firms.
“The challenges of the climate crisis are coming at us whether we are prepared or not. The drag of poverty is just as urgent as the climate crisis and it causes long-term scarring to our whole society. They are two sides of the same coin. This paper offers solutions, long-term solutions, without increasing taxes. It pays for itself with the wealth it generates. Forget levelling up, this is levelling beyond.”
Dr Alice Mathers, director of research at the RSA, said: “The north east is not a problem to be solved, but a national asset we have under-invested in. The levelling-up debate is often polarised between cities versus the red wall, London versus the north, or GDP versus wellbeing.
“In truth, we need an approach with four key elements - growing local economies, powerful local governance, public services focused on reducing social inequalities and stronger community voice. All of which require commitment to effective participatory approaches, creating an equal platform for more local people to have a voice on matters that affect them, to help shape future services and systems. This will be challenging, but as this report shows, devolving powers is essential to meeting these four key strands of levelling-up.”
Jim O’Neill, crossbench peer and former Treasury minister, said: “During Covid-19, I became a public voice calling for regional equivalents of some so-called sovereign wealth funds, citing the example of Singapore’s Temasek, as what might be considered around some areas of the UK to try and provide more patient capital to help truly develop a new economy, with stronger productivity, higher incomes, higher shared wealth and a better society, in the spirit of never letting a crisis go to waste.
“Jamie’s proposal for a specific such fund for the north east is an idea that is easy for me to endorse, given the scale of the area’s challenges. I hope it isn’t dismissed out of hand, or even worse, ignored by Whitehall.”