The £900m North East devolution deal is ‘off the table’, said communities secretary Sajid Javid.
The news comes after four out of the seven local authorities voted against moving ahead with the deal. Mr Javid said he was ‘very disappointed’ that Durham, Gateshead, Sunderland, and South Tyneside voted against moving ahead with the deal, which he said would have brought ‘real benefits to local residents’.
He has now withdrawn the legislation for a mayoral deal and cancelled a House of Commons debate scheduled for Monday that would have enabled 2017 elections to take place.
However, he said he would be prepared to work with the councils that did ‘share Whitehall’s aim to boost jobs and opportunities’.
He said: ‘It is with regret that we have therefore withdrawn the legislation that would have brought this deal to life, which means local people will miss out on over £1billion of investment, and new powers on transport, planning, and skills.
‘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.’
In response, NECA chair Cllr Paul Watson 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.'