As the headlines centre around a collapse in living standards, higher bills, tax hikes and increased unemployment the government has revealed how the North East will benefit from more investment and local decision-making. 

A majority of households will be worse off as a result of the Chancellor Jeremy Hunt’s decisions but levelling up now seems to have returned to the forefront of the Tory party’s policies after previous uncertainty.

Yet doubts have now been raised of how it will be funded. 

How does the Autumn Statement affect households and communities in the North East?

Read more: Autumn Statement LIVE: Tax rises and spending cuts in announcement

Council tax rise 

Local authorities will now be able to raise council tax by 5% without holding referendums, with the Treasury estimating that 95% will hike rates by the maximum amount.

This is an increase from the current 3% levy, with the new total being comprised of 3% in general council tax and 2% for the adult social care precept.

The government says it is giving authorities “greater flexibility” to set council tax levels based on the needs, resources and priorities of their area, including adult social care. 

Responding to the worrying announcement for households, Jonathan Dulston, leader of Darlington Council, said: “We are looking closely at all of the details of the statement made earlier today. It is too early to say what impact any of the announcements will have.  The council is preparing detailed estimates for the 2023/24 – 2026/27 Medium Term Financial plan and this will be presented at the cabinet meeting on Tuesday 6 December.”

And Paul Darby, Durham County Council’s corporate director of resources, added: “We will need to reflect on the implications of today’s announcements and await receipt of the draft Local Government Finance settlement next month to truly understand the council’s position. We will be taking a report to Cabinet in January with an updated budget and MTFP forecast factoring in the impact of the Autumn Statement.”

Levelling Up

The second round of the Levelling Up Fund will allocate at least £1.7 billion to priority local infrastructure projects. Successful bids will be announced before the end of the year. 

However thinktank IPPR North says the chancellor’s move not to ”inflation-proof” levelling up funding, means that £560 million will be lost from these two key levelling up pots: 

  • £223 million will be lost from the Shared Prosperity Fund, the government's replacement for EU structural funds over the next three years
  • £340 million will be lost from the Levelling Up Fund, named after the government’s flagship agenda, over the same period

Devolution 

Hunt told the House of Commons to expect a North East devolution deal to follow “shortly” as part of plans to increase the proportion of people living under a directly elected mayor with devolved powers in England to over 50%.

The huge proposal would result in significant shakeup of the North East’s governance, reuniting councils on either side of the Tyne years after an acrimonious split.

It would see the election of a new regional mayor covering Newcastle, Gateshead, Northumberland, North Tyneside, South Tyneside, Sunderland, and possibly Durham, with the region given control over substantial funding and decisions on crucial matters including transport.

The deal, which has been the subject of negotiations between local authorities and Whitehall for many months, has been thrown into some doubt over recent weeks – both by the chaos at Westminster and local political wrangling over a late attempt from County Durham to join the other six councils in the pact.

Durham had been seeking its own single-county devolution deal, but its Tory-Lib Dem coalition leadership announced last  month that instead wanting to join the agreement being negotiated by its northern neighbours. The leaders of the other councils are known to have been split on whether to allow Durham in or not, while  Labour MPs and opposition councillors in Durham have been vocal in their opposition to the idea of an ‘LA7’ deal.

North of Tyne metro mayor Jamie Driscoll said: “It would deliver billions to invest in jobs, homes, skills training, and much more. It would deliver greater control over things that matter to people – such as transport. It puts tackling inequality at its centre. It would empower us to take stronger action against the climate crisis.

“We just need Government to let us sign on the dotted line.”

Meanwhile, new ‘trailblazer’ devolution deals with Greater Manchester and the West Midlands Combined Authorities could devolve further powers to deliver levelling up in areas such as skills, transport and housing, including through consolidating funding. The Tees Valley Combined Authority could be chosen in the future. 

Tees Valley mayor Ben Houchen said: “While the detail is still being developed, I’ll continue to bang the drum for our region and work with central Government to get the further powers and funding that our region needs and deserves.”

Investment zones 

The government announced it will “refocus” the Investment Zones programme - essentially consigning the idea to the dustbin. The existing expressions of interest will not be taken forward, however it added it is “grateful to local authorities for their work to develop proposals”.

Council chiefs hoped the plans would pump investment into under-served areas in line with the Government’s levelling up promises. In last month’s mini-budget, then chancellor Kwasi Kwarteng laid out plans to heavily reduce taxes on businesses and relax planning rules in at least 38 local authorities, as part of Liz Truss’s growth plan.

The opportunity was embraced by authorities throughout the region with many working quickly to submit bids. Proposed investment zones were described as “gamechangers” for Teesside, creating high-wage jobs, securing millions of pounds of investment, and rejuvenating town centres.

They included: Teesside Airport, Middlesbrough, and Hartlepool.

Now, it says it will catalyse a limited number of the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths. Levelling Up officials will work closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards, with the first clusters to be announced in the coming months

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