Northeast worries it is falling behind on foreign investment

Northeast England has a strong record of winning inward investment; Nissan's £3.5bn Sunderland plant, now the UK's largest carmaker, is a prime example.

For 30 years from the early 1980s, the region was proud of this success, which has played a major role in bolstering its economy.

Now, at the very time that it faces ever stiffer competition from an increasingly autonomous Scotland and from cities such as Manchester that is being promoted by the chancellor's "northern powerhouse" project, businesses say current arrangements for attracting FDI are failing the northeast and that change is urgently required.

The Confederation of British Industry in the region and the North East Chamber of Commerce have called in a new report for a single coordinating body where the public and private sectors would work together.

This body should cover the whole northeast, they say, recreating the regional development agency structure that was abolished by the coalition government.

"We suffer the double whammy; the national structure has changed in a way which is disadvantageous to us and we haven't managed to sort ourselves out locally and get the best out of what is available," says James Ramsbotham, chief executive of the NECC, which represents 4,000 businesses.

Many business people are critical of the region's local authorities for running competing inward investment activities.

Fergus Trim, a property company director who manages the Quorum business park in Newcastle, is part of an industry group working to promote the area. He says; "We're the ones who should be in competition with each other, not the councils."

Mr Ramsbotham says the councils' actions reflect their local political remit. "We blame our local authority leaders because of their parochialism but there's a structural issue here which national government doesn't understand."

A mixture of national and local factors underlie the present difficulty. The northeast RDA was well funded and effective. When it was abolished it was superseded by two Local Enterprise Partnerships with much less funding. This subdivided the UK's second smallest region with 2.6m inhabitants and the highest unemployment rate.

Tees Valley created its own Lep to cover five local authorities.

Meanwhile, the northeast Lep was formed in the northern area, covering seven local authorities. It has been without a chief executive since last summer. The seven local authorities have just created a combined authority; Tees Valley is still going through the process.

After the RDAs were abolished, the government decided inward investment should be promoted centrally. Inquiries are sourced by UK Trade & Investment and channelled to England's 39 Leps. This centralised model has no regional targets.

According to the CBI and chambers of commerce report the northeast since 2010 has slipped from third to fourth place in the FDI league table; London and Northern Ireland remain first and second.

Many English conurbations have focused their marketing on one city but the northeast Lep has two cities, three boroughs and two counties - the structural issue cited by Mr Ramsbotham.

While Newcastle has a recognisable brand - "It's not north east Brown Ale, it's Newcastle Brown Ale," observes city council leader Nick Forbes - any suggestion it is the leader of the region is resented by other councils.

However, the local authorities say they are now making progress on joint working.

"There's more coming together that has to happen; that can't happen overnight," says Paul Watson, Sunderland city council leader. Mr Forbes says there is a growing understanding of Newcastle and Sunderland's respective strengths. "If there's any rivalry it's on the football pitch."

The northeast has huge growth potential but resources are very tight, he says. But competitors are finding and focusing resources.

Mark Wareing, a senior official at UKTI's Beijing office has, in the past six months, received visits from groups representing Manchester, Leeds, Birmingham, Bristol, Edinburgh, Glasgow and Wales - but none from the northeast.

This matters, he says, at a time when China is opening up. "We need to understand the shop window from the regions."

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