At a North East Combined Authority (NECA) meeting last Tuesday, four of the seven North East local authorities voted against the next step in the process, which would have seen the deal and funding package go out for public consultation.
The plan was supported by Northumberland, Newcastle and North Tyneside, but rejected by Durham, Sunderland, South Tyneside and Gateshead, which had wanted more reassurance on funding following the Brexit vote.
But the situation deteriorated on Thursday when Local Government Secretary Sajid Javid said that the deal was off the table and that a Commons debate on the legislation scheduled for Monday was cancelled.
This sparked Ross Smith, director of policy at the North East Chamber of Commerce (NECC) to say: “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.”
Mr Javid said: “Local leaders in the NECA have made a clear decision not to proceed with this ambitious and far-reaching devolution deal for their region – while I am disappointed, it is a decision I respect and so that deal is now off the table. It is with regret that we have therefore withdrawn the legislation that would have brought this deal to life, which means local people will miss out on over £1billion of investment, and new powers on transport, planning, and skills.”
Coun Paul Watson, NECA chairman, described the Government’s response as ‘very disappointing’, adding: “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.”
James Ramsbotham, the NECC’s chief executive, has urged both Mr Javid and the NECA to continue efforts to reach agreement.
In a letter to Mr Javid, he 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 only candidate to put himself forward for the role of mayor so far, Jeremy Middleton, said: “This is devastating news for the North East, our local authority leaders have let us down. They have turned down billions of pounds in investment for the sake of their own careers. After so many delays, it is no surprise that the Government has finally called their bluff.
“In light of this news, I have made the decision to suspend my mayoral campaign, but will continue to actively campaign for devolution for our region. The North East’s leaders, both in politics and business, need to concentrate on getting the best deal for the region they can. I remain committed to the belief that a mayor-led devolution is the best and most accountable way to bring powers and budgets from London to the North East.”