Leaders of north east councils have rejected the region’s devolution offer from the government.
The deal had hung in the balance and at a meeting this afternoon they voted by four to three not to proceed.
The voting is understood to have seen Newcastle City Council, Northumberland Council and North Tyneside MBC favour the deal while Sunderland City Council, Durham CC and Gateshead and South Tyneside MBCs were opposed.
North East Combined Authority chair Paul Watson (Lab) said: “Each of the seven councils which make up the NECA has always made clear that they support the principle of devolution for the North East.
“Following the outcome of the EU referendum and the subsequent changes within Government, council leaders have been equally clear that to move forward, the new Government must provide assurances regarding the terms of the region’s devolution deal.
“Extensive discussions and negotiations have taken place with Government and within the region over recent months but 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.
“Although this is 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.”
Alexandra Jones, Chief Executive of the think Centre for Cities, said: “It is deeply regrettable that local leaders in the north east have been unable to agree upon taking forward the proposed devolution deal for the area…now may be the time to think instead about devolving power on a different basis within the region – for example, to a ‘Newcastle city region’.”