The deals, which have been reached following negotiations after the submission of proposals last month, are intended to boost economic development powers of combined authorities to boost local growth.
In the deal with the North East Combined Authority, up to £1.5bn could be devolved to an investment fund for the region to boost capital spending. Initially, the combined authority will be provided with £30m a year over 30 years to invest in projects. Transport spending in the region will also be devolved, including responsibility for infrastructure improvements and the development of smart ticketing across public transport networks.
In addition, a new North East Land Board will develop a target for housebuilding, while an Employment and Skills Board will be created for the region to take over funding of post-16 skills training and employment schemes.
The combined authority will also now work with NHS England to examine possible options for health and social care integration in the region.
Simon Henig, the chair of the combined authority and leader of Durham County Council, said the agreement marked an important day for the seven councils that serve the region, which also include Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside and Sunderland.
“The agreement being signed today will bring significant economic benefits and opportunities for businesses and residents,” he said.
“Those living, working and doing business here in our region represent our greatest asset – and through this agreement we will invest in the people of the North East and support business to grow and thrive.”
Osborne said the government’s devolution drive, which has already led to powers being localised to Greater Manchester and the Sheffield city region, now has “unstoppable momentum”.
“The civic leaders of the North East have worked incredibly hard to reach this point and as a result today we are signing this historic agreement, which will give the area significant new powers and investment,” Osborne added.
“Once again the Northern Powerhouse is leading the way in our ambition to take power out of London and give it to the people who know their areas best.”
The pact with the five councils of the Tees Valley combined authority – Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, and Stockton-on-Tees – will also lead to the creation of an infrastructure fund, worth £450m. Funding will be provided as £15m a year over the next 30 years.
The mayor of the combined authority, who will be first elected in 2017, will be responsible for a devolved transport budget, with a multi-year settlement to be agreed at the Spending Review, as well as a Mayoral Development Corporation to make better use of public land. The combined authority, working with the mayor, will also lead on a comprehensive review of the education, skills and employment support system.
Sue Jeffrey, chair of the shadow combined authority and leader of Redcar and Cleveland borough council, said the deal would enable the councils to work together to strengthen the region’s economy.
“Over the coming months we will be speaking to local residents and businesses about what the proposals mean for them,” she added.
“But we must not lose sight of the fact that while this is good news, there is still an immediate need to focus on actions to help the shock to our borough and our people which has been caused by the current crisis at SSI.” The SSI steel plant in Redcar went into liquidation this month with the loss of 2,200 jobs.
Responding to the devolution announcements, Local Government Association chair Lord Porter said that it was pleasing to see further progress on devolution deals.
"To build desperately-needed homes, create jobs, provide the dignified care for our elderly and boost economic growth, all councils need greater freedom from central government to take decisions over vital services in their area,” he added.
