Devolution deal is withdrawn by the government
Plans for the north east's first directly elected mayor have been scrapped and the relevant legislation withdrawn.
Four of the seven North East Combined Authority councils had earlier decided to halt plans amid fears over post-Brexit funding from the government.
Communities Secretary Sajid Javid said he was ‘very disappointed’ they had voted against the ‘ambitious and far-reaching devolution deal’.
He said: “It is with regret that we have therefore withdrawn the legislation that would have brought this deal to life, which means local people will miss out on over £1bn of investment.
“Handing power back to Northerners is a key part of our plans to build a Northern Powerhouse and our focus now will be on working to secure a new agreement for residents in those areas committed to progressing with devolution.”
Sunderland, Durham, Gateshead and South Tyneside councils said they were not satisfied with reassurances over funding following the UK’s decision to leave the European Union.
Newcastle, North Tyneside and Northumberland councils said they remained committed to the plan.
Cllr Paul Watson, chair of the North East Combined Authority, said: “It is very disappointing that the Government has chosen to end current discussions over North East devolution in this way.
“Throughout this process, all of the seven council leaders in the North East have repeatedly and clearly stated their commitment to devolution and to creating a stronger regional economy.
“And, although we were not able to reach a majority agreement to proceed to public consultation at this present time, we have reaffirmed our commitment to working together with the Government to achieve the right devolution deal for our region.
“Leaders in the North East will continue to fight for our region, to build our economy and create jobs and investment.”
The North East Chamber of Commerce has written to Mr Javid urging him to continue to work on the devolution deal.
Ross Smith, Director of Policy, North East England Chamber of Commerce said: “We’re at a loss to understand why, after a year of negotiations, it has not been possible to strike a deal. It’s extremely disappointing and bad news for the North East and UK economy. We sincerely hope something can be salvaged and will play whatever part we can to help. It’s positive that a deal is going forward in Tees Valley though and we look forward to continuing our constructive relationship with the combined authority there as that’s implemented.”
The organisaton has written a strongly worded letter to Sajid Javid, Secretary of State for Communities and Local Government.
In the letter James Ramsbotham, chief executive, said: “We believe it is essential to pursue new approaches to economic development in our region if we are to change the historic pattern of under-performance here. North East England contains huge assets not just for our local economy but for UK plc.
“In areas such as skills, transport, inward investment, business support, housing and culture, there is a need for a much more tailored approach. We believe devolution is essential to enable this.
“We urge you to continue efforts to reach agreement as we believe it is in the long-term interests not just of North East England but the UK economy as a whole.”
The Chamber is also urging the North East Combined Authority to reassess its position on devolution.
Mr Ramsbotham said: “It is baffling and hugely disappointing that after a year of negotiations it had not been possible to strike a deal with the Government. We are determined to play whatever part we can to secure meaningful devolution for the North East as soon as possible.
“We are very encouraged by the continued progress towards devolution in Tees Valley. We have a strong relationship with the newly-formed Combined Authority and are working with them positively on developing plans and ensuring the business community can make a full, positive contribution to making devolution work.”