Councils reject North East devolution deal over funding fears

7 Sep 16

Councils in the North East have rejected a devolution deal agreed with Whitehall under the Northern Powerhouse scheme over funding concerns, it has been announced.

In a meeting yesterday, four out of the seven councils in the region that together make up the North East Combined Authority voted against the agreement originally brokered last year by then-chancellor George Osborne.

Sunderland, Gateshead, Durham and South Tyneside councils blocked the plan, allegedly because they were not satisfied with reassurances on funding in light of the UK’s vote to leave the European Union and subsequent departmental changes.

Under the deal, combined authorities in the North East and Tees Valley regions would have seen directly elected mayors and around £2bn investment in infrastructure projects. The aim is to boost economic growth and development in the area, under the auspices of the Northern Powerhouse scheme, with £30m annual funding guaranteed for the next 30 years.

A report issued to NECA leadership ahead of the vote advised the board to accept the terms of the deal and press ahead with a public consultation, after receiving assurances in a meeting with local government secretary Sajid Javid a fortnight ago.

In further correspondence, the government appeared to restate its position on European Structural Investment Funding, which would affect the region, and confirm that an elected mayor was a still a prerequisite for the devolution deal to move forward. It was less clear, however, whether NECA’s request for the government to confirm that the remaining terms of the deal would stay the same had been properly addressed.

Following the rejection of the deal at the board meeting, Sunderland City Council leader Paul Watson, and NECA chair, said all seven councils support the principle of devolution for the North East.

However, he added: “Following the outcome of the EU referendum and the subsequent changes within the government, council leaders have been…clear that to move forward, the new government must provide assurances regarding the terms of the region’s devolution deal.”

Extensive discussions and negotiations had taken place with government and within the region over recent months, Watson said. “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.”

He said that although this was 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”.

In a statement, the government said it was disappointed with the outcome of the vote, but said its door “remains open” for further discussions.

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