South Tyneside Council calls for devolution deal to be put on hold

A decision to devolve decision-making from Whitehall to council chambers across the north east - giving councils a range of extra powers - was on top of the agenda at a special meeting of South Tyneside Council's cabinet at Jarrow Town Hall this morning.

South Tyneside Council is one of seven local authorities in the region - under the umbrella of the North East Combined Authority - that are being offered the opportunity to rule more independently by the Government.

But South Tyneside Council Leader, Coun Iain Malcolm, says more time needs to be spent around the negotiating table before a landmark agreement can be reached.

Councillors heard that concerns exist over a guarantee of a £30m a year funding package for 30 years - and whether this would be impacted by changes of Government, caps on authority borrowing to invest in more housing, possible Air Passenger Duty increases at Newcastle Airport and a revamp of the business rate retention scheme.

The leaders of the seven North East councils are due to meet later today to decide on whether to submit the bid to central Government to create a North East Combined Authority, which would include an elected mayor.

The deal has been throw into doubt, however, after Gateshead Council rejected the proposals, with South Tynesdie joining Durham and Sunderland councils in opting to defer any decision until a later date - expected to be after the May local elections.

The deal, signed by North East authority leaders and Chancellor George Osborne last year, could mean an extra £30m a year for the region to spend – in addition to being given control of a £3.4bn pool of investment cash.

The region would also get extra powers covering employment and skills, transport and planning and business activity – all intended to drive economic growth.

But Coun Malcolm says more time is needed before council's can press ahead with plans.

Coun Malcolm said: "We will continue with negotiations, see where we proceed to, and aim to meet again in May.

"We will meet again once we have had discussions with Government ministers.

"I want to emphasise that it is important that we get the fiscal mechanics right.

"No one will forgive us if we find the elected mayor and the councils have responsibilities but do not have the financial clout to deliver what we need to deliver for the region.

"We need to get the best possible deal for the North East."

A spokesperson for South Tyneside Council said: “South Tyneside Council believes that the devolution of powers and resources to the North East is right for the region.

“To meet both the best interests of the region and South Tyneside, the central issue remains achieving the best possible fiscal package. There is still considerable work to be done to achieve this and we want to fully explore, through discussion and negotiation, whether this is possible.

“The Council’s Cabinet has therefore agreed to continue to negotiate with Government and to receive a further report for consideration”.