Sajid Javid ends North East devolution deal
Devolution for the north-east of England is "off the table", communities secretary Sajid Javid has said.
Plans for the area's first directly elected mayor have been scrapped and the relevant legislation withdrawn.
On Tuesday four of the seven North East Combined Authority councils decided to halt plans amid fears over post-Brexit funding from the government.
Mr Javid was "very disappointed" they had voted against the "ambitious and far-reaching devolution deal", he said.
Sunderland, Durham, Gateshead and South Tyneside councils said they were not satisfied with reassurances over funding following the UK's decision to leave the European Union.
Newcastle, North Tyneside and Northumberland councils said they remained committed to the plan.
"It is with regret that we have therefore withdrawn the legislation that would have brought this deal to life, which means local people will miss out on over £1bn of investment," Mr Javid said.
"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."
North East Combined Authority chairman Paul Watson said it was "very disappointing" the government had chosen to end discussions.
All seven council leaders were committed to devolution, "although we were not able to reach a majority agreement to proceed to public consultation at this present time", he said.
The region had been promised £30m in each of the next 30 years, as well as new powers over transport, skills and training.
Elections for directly-elected mayors are due to be held in a number of areas of England in May 2017, as part of the government's Northern Powerhouse programme.
The Department for Communities and Local Government said work continued on a devolution deal for the Tees Valley.