The hands-off Chancellor?

WITH a splatter of statistics and a real fire in his belly, Gordon Brown yesterday threw his weight behind the campaign for an elected regional assembly.

Even though this is not the sexiest of subjects and even though he is regarded as a cold fish of a fellow, and despite breakfast barely having been digested, the Chancellor of the Exchequer wrapped up an enthusiastic speech to business leaders at St James's Park in Newcastle with a rabble-rousing tub-thumping finale: "The poll we are about to have represents, in my view, a major step forward for the North-East.

"Other regions will be watching what happens here. You will be centre stage, you are leading the way. This, my friends, is a great opportunity for the North-East to gain a powerful voice that will be good for jobs, good for business, a boost for the North-East economy. That's why I urge everyone in the North-East to use their referendum vote to say yes."

His speech, and the exclusive interview that followed, was a wide-ranging affair, dashing from the North-East's world-leading early 19th century economy to the extent of the 21st century North/South economic divide. It consisted of a history lesson about regional policy and an attempt - possibly for the first time in this campaign - to put a national perspective on a referendum that is seen as a purely parochial event.

And, just for good measure as this is the backyard of Tony Blair and his manifesto-writing assistant Alan Milburn, there were plenty of references to what Mr Brown will be ensuring Labour stands for at the next General Election.

The splatter of statistics set up the North/South divide. Unemployment in the North-East is twice the level of the south-east; the business start-up rate is half that of the rest of the country; 18 per cent of the North-East's 16-year-olds leave school without qualifications whereas just 12 per cent do elsewhere.

That's 110,000 youngsters missing out just because they live in the North-East. That's 125,000 jobs gone begging; that's 5,000 new business a year that are not being created.

"We have got to be honest," he continued. "The North-East accounts for only 1.6 per cent of the UK's total spend on research and development, compared to 24 per cent in the south-east." In simple terms, the North-East spends £50 per head per annum on R&D whereas, "unfortunately", the south-east spends over £500.

"That's a huge gap, a gap that must be made up," he said.

Then to the history lesson. The first generation of regional policy came in the 1930s to Scotland, Wales, the North-East and Yorkshire. "It was simply first aid," he said, "ambulance work to get help quickly to high unemployment areas, simply trying to pick up the pieces of what had gone wrong due to a world depression."

The second generation, he said, came in the 1970s when big incentives were offered to attract large companies, like Nissan, into the region.

"All of these were quite inflexible, they were top down, they were administered from Whitehall or Brussels," he said.

Now the third generation: the elected regional assembly, which he says will connect the universities' research scientists with the region's business people via the trainers who give the workforce the new skills for the new industries.

"This is not saying that manufacturing is an heirloom of the past," he said. "This is saying that research and development, from shipbuilding to information technology, from digital electronics to energy industries, will build in this region a modern manufacturing strength."

Without it, he said, the whole of Britain would suffer. "Balanced economic growth becomes impossible as we can see in our own country where we have unemployment, emigration and unused resources in one part of the country and congestion and overcrowding and huge inflationary pressures in the other.

"Regional economic policy makes sense not just for this region but for the whole of the country. That is the argument for a modern third generation regional policy, and it is also the argument for local control over it."

Afterwards, on the Yes campaign's bus heading for Newcastle Airport with an M-People song blaring out of the tinny speakers, he pressed home his point with such repetition that he sounded like a character from the TV comedy League of Gentlemen which featured "a local shop for local people".

"The critical drivers of the North-East in the future will be its indigenous sources of strength, like your skills, your ability to invent and innovate, your ability to create lots of small businesses," he said. "All these decisions about the resources you put to these challenges are better made locally, by local people about local needs, than by civil servants in Whitehall or by organisations that are unelected and remote from the people."

So, the acid test: Gordon Brown, name a decision that has been taken by Treasury mandarins in deepest London in the last fortnight that will, in future, be taken by elected local people in the North-East.

He replied at first with his smile, a smile so bright and unexpected that it had lit up the grey Quayside of a drizzly Newcastle day to such an extent that the photographers had had no need of flashguns.

Then the words: "In the last few weeks we have made decisions about public spending for the next three years taking us through to 2008, so we have allocated resources. We don't want the Treasury or Whitehall departments to decide all the priorities; we want local people to decide these priorities."

To ordinary people, this is the problem with the proposed assembly. It's rather nebulous. Its powers are unclear. It can't directly improve schools or hospitals. It won't empty the bins. It can only deal with such vagaries as "regional economic and spatial strategies". Even its budget is unclear as it will spend £350m and have "influence" over another £700m. Such uncertainties are why No campaigners are labelling it a talking shop and a white elephant.

Mr Brown replied: "So there's a billion to spend. Who's better at making these decisions? Civil servants in Whitehall? Organisations or quangos remote from the people? Or the people themselves?

"A lot of decisions affecting the future of the region revolve around the economic and social life of the region. It is not nebulous to say that local people should be making these decisions rather than unelected people from outside the region.

"When it comes to co-ordinating the use of resources and making decisions about transport or the skills of people after they leave school, or making decisions about how you can build a science base in the region, I think the assembly will have a huge influence.

"It will become the voice of the region."