Does it have to be higher taxes or more borrowing?

February 4, 2024

If we want better services, we’re told, it’s either higher taxes, or more debt. We’re told it so often – by the Government and the Opposition – that journalists don’t even challenge it. We just get cliché bingo. “We haven’t got a magic money tree.” Or, “You can’t pay the rent on the credit card.” Metaphors that imply cuts and low wages are somehow an inevitable law of nature. They’re not.

As North of Tyne Mayor I’ve raised no taxes and borrowed no money. I have the power to do both. I can put a precept on the council tax bills. But I think North East householders pay enough tax. Especially in the middle of a cost of living crisis.

That’s why for the fifth year in a row I have set the Mayoral precept at £0. I haven’t borrowed any money either. Zero tax raised from residents. Zero pounds borrowed.

Yet in my first term as Mayor, our programmes are creating 5,377 jobs. Building 1,948 homes on brownfield sites. Running child poverty prevention programmes in 100 schools. Training over 35,000 people a year to get better jobs and earn more. Not to mention youth centres re-opened, festivals and culture venues sponsored, and funds for community projects from rewilding to repair cafes.

So have I found a magic money tree? No. The only magic is building a good team and delivering good policies. We’re funded by our devolution deal, and from levering in £304 million of private sector investment so far, and counting.

Grid Finder is one example. It’s a video gaming start-up company founded in late 2020. It helps online racing gamers to find other people to race with across Playstation, Xbox and PC. eSports is a rapidly growing industry, already worth billions. So it’s clear there was a market.

There’s nothing particularly magical about this – just sensible financial management. Grid Finder got the funds they needed to grow. We took a stake in their company in return.

The founders have just sold their company to US-based motorsports group, RAFA Racing Club for a 7-figure sum. A huge windfall for them. And for the North of Tyne too. Because that £100,000 comes back to our investment fund with a huge return.

So we’ve helped a North East start-up to grow and become successful and we got a return on our investment too. It’ll be invested again, and again, and again. Devolution has allowed us to be more innovative and provide better value for money to the taxpayer.

Innovation is behind our financial success with skills training, too. The courses people need to skill-up for jobs – welding, catering, computer skills. Including green skills repairing electric vehicles and installing heat pumps.

Before adult education was devolved to us in August 2020, it was run from central Government. I felt it was organised in a scattergun way. The links between training providers and businesses were sparse at best. The links from Government to learners were even sparser. Neither learners nor employers seemed to have been asked what worked for them. Or why people might have dropped out.

When it was devolved, we change the approach. We created a long-term framework to give training providers certainty. They’re often freelancers and small businesses, who now have long term, rolling contracts, so they can plan ahead. They can retain their good staff, because they can offer security of work.

We spoke to learners to find the real barriers to participation – a lack of wifi at home or a course clashing with the school run. We worked to overcome them. We spoke to employers, and got them involved in recruitment. Many of our courses now come with a guaranteed interview.

We’ve increased enrolments from 22,000 a year to 35,000 a year. On the same budget. It shows what can happen when a branch of government listens to its people.

A 60% increase in value for money from a branch of government. In the old days, Sir Humphrey would have wanted to hush it up! Today it’s been rewarded by an expanded North East devolution deal – the best-funded deal in England. £6.1 billion for the North East, and I’m immensely proud of it.

For every £1 we invest in job creation, over £3 is returned to the Treasury in payroll taxes alone. The organisation I lead is a wealth-generating centre and has no net cost to the taxpayer locally or nationally.

So there’s no expensive layer of bureaucracy. No magic money tree. No metaphorical credit card. And no taxes. Just sound financial management. And more money for the people of the North East.