The big idea that Blair ignored

Observations on the English north-east

New Labour used to be quite good at selling snow to the Eskimos, but its catastrophic failure to snow the voters of north-east England into accepting a regional assembly leaves Tony Blair (not to mention his dear departed friend Peter Mandelson) with some serious explaining to do. This casino-hungry government knew all along that its giddy little gamble with "local democracy" (which sent £11m of taxpayers' money slithering down the greasy Tyne), was a sop to the chronic realities of unemployment and job creation in the region. Whitehall could - and would - slap a veto on anything that it regarded as too uppity in the new legislature. A parliament of the north-east would have had as much real power as the Zoyland-cum-Slurrybucket parish council. With less job satisfaction.

So what was behind it all? And why, at a critical point in its first spin of office, did the government throw a blanket over an alternative scheme that just might have transformed the fortunes of one of Britain's most deprived regions?

The answer may be found in the run-up to the 2001 general election and, in particular, in Mandelson's mounting panic that he might lose his 17,500 majority in Hartlepool. Mandelson's period in charge of the Millennium Dome had been widely ridiculed, as had his £373,000 loan for a house in London. In Hartlepool, his airy dismissal of the notions of poverty and his prolonged absences on business down south (the MP was becoming known locally as "missing person") were getting up people's noses. He needed an issue, and quick, to dig himself out of a hole. After discussing it with Tony Blair, MP for the neighbouring Sedgefield constituency, he borrowed a juicy one (unbidden) from the closet of John Prescott, the Deputy Prime Minister and nominally the man in charge of regional development.

Mandelson began whispering into influential ears in the media. Peter Hetherington of the Guardian reported that Mandelson had "added the regions to his election agenda", though he was already Blair's spokesman on Europe. An admiring "exclusive" splash story in the Northern Echo revealed that Mandelson had abandoned his hostility to regional government and was now in favour of it, subject to a referendum. The then MP also let it be known that he now recognised that the government's efforts at fighting poverty, though hitherto brilliant, had failed.

Meantime, a very different sort of scheme for the north-east bit the dust. This was outlined in a NS article I wrote in December 2000. It called for a new ministry of international information technology, to be based in abandoned government buildings alongside a recently created outreach campus attached to Durham University. Academe and high-tech companies gathered in an adjacent business park would have created a world-class research city, its young workforce taking state-funded IT degree courses up to PhD level. The idea ignited enthusiasm across the region. Professor Andy Gillespie, executive director of Newcastle University's Centre for Urban and Regional Development Studies, offered to do a feasibility study. Durham University was raring to go. Stockton South's MP, Dari Taylor, frustrated that new Labour's revolution in the region seemed to be on permanent tea break, thought she could persuade her friend Sally (now Baroness) Morgan, then Blair's political secretary at 10 Downing Street, to launch the idea at a pre-election press conference.

And that was the end of it. Downing Street said "no" and Taylor stopped returning my calls. Letters to Prescott, Mandelson and Stephen Byers (MP for North Tyneside and the then trade secretary) went unanswered. John Burton, Blair's influential agent in Sedgefield, promised to fix up an interview next time the PM was at home, but didn't.

Taylor, who has the nimble-footedness you would expect of a leading light in the All-Party Parliamentary Tap-Dancing Team, is still not answering my calls. Just before north-east voters blew their raspberry and left a disheartened Prescott's ears popping, I had a message from her office: "She still thinks the idea is an excellent one, and is certainly something which could be taken up by the NE regional assembly."

Meanwhile, in Brussels, the man who believed in regional government - for as long as it took - is licking the cream from his lips.