Communities secretary Sajid Javid has announced the North East devolution deal will be scrapped after four local authorities rejected the latest government proposals for more power and funding.
Leaders of three councils voted last week in favour of putting the package out to a public consultation but the proposal was defeated when the four leaders of Gateshead, Sunderland, Durham and South Tyneside councils voted not to go ahead unless they received more reassurances from the Government over funding after the Brexit vote.
Mr Javid said: “It is with regret that we have therefore withdrawn the legislation that would have brought this deal to life, which means local people will miss out on over £1bn of investment, and new powers on transport, planning, and skills.
Following the decision at the meeting of the North East Combined Authority Leadership Board on Tuesday 6 September, Cllr Paul Watson, chair of NECA said:
“Each of the seven councils which make up the North East Combined Authority has always made clear that they support the principle of devolution for the North East.
“Following the outcome of the EU referendum and the subsequent changes within Government, council leaders have been equally clear that to move forward, the new Government must provide assurances regarding the terms of the region’s devolution deal.
“Extensive discussions and negotiations have taken place with Government and within the region over recent months but unfortunately, despite our best efforts, it has not been possible to reach an agreement which all of the seven local authorities feel able to support.
“Although this is disappointing we will continue to work together with Government to achieve our ambition of a stronger regional economy with improved opportunities for residents and businesses.”