In this second of his four-part series, John D Clare explains the Devolution Agreement’s PROPOSALS FOR BUSINESS.

‘Devolution’ is not about new powers and funding, but about transferring existing functions from the government to the region.  What you think about devolution, therefore, will depend on whether or not you think that regional officers can do a better job for us than Whitehall civil servants.
SOME POSITIVES
Durham County Council Regeneration officers, for example, desperately want to control the EU funding process, and also UKTI (the department which oversees exports and inward investment) – both of which are poorly managed by the government.
There will be a £30 million a year grant.  It is true that this sum is less for the whole region than the government is cutting from DCC’s budget next year alone.  And yes, it might allow us to borrow an investment fund of £1.5 billion, but at the end of the term we will have to pay it back plus interest.  However, the opportunity here is that assured funding would allow regional officers to develop a long-term economic plan, rather than the year-by-year budgets they have at the moment.
In addition, the Devolution Proposal offers a single allocation of the Local Growth Fund to support a programme of investment – though the amount is undefined.  Again, despite disappointments over the sums, the key opportunity here is for the region – not the government – to control regional investment.  Here, therefore, is a chance for a partnership with business which will see growth policies explicitly designed to help the North-East economy.
There are some attractive further offers on the table – the area “will receive” extra Enterprise Zones to attract business.  There will be an emphasis on rural growth.  There will be a science and innovation programme with local universities to create more ‘catapult’ (innovation and development) centres in the region.  We are also promised the roll-out of 4G broadband.
Other offers are more vague.  We are assured that the North-East will not be “disadvantaged in relation to the tax freedoms granted to the Scottish government” (our greatest fear being over Airport Passenger Duty).  There is also a promise of “fair and equitable” funding to local councils in the future – whatever that might mean.
A CONCERN
The biggest worry is the government’s scheme for Business Rate retention; because the North-East economy is so weak, this will actually mean a reduction of income to local councils.  The Devolution Proposal allows the Mayor to increase Business Rates to fund investment … but, since wealthier areas may reduce their Business Rates to attract firms, this is not a feasible policy.  Having said this, retention of Business Rates is happening anyway, whether or not we join the Devolved Authority.
MY VERDICT
Some risks, and inadequate funding … arguably outweighed by the opportunity of greater control over our own destiny economically.
This is my interpretation only, and not official DCC policy.  You can read the full Devolution Proposal here: http://bit.ly/NECADeal
Next time: Skills and Transport.