THE North-East is set to grab powers from Whitehall as part of government plans to stop regional economies from withering away.
Ministers have shortlisted bids from the Tees Valley and Sunderland to take greater control of tax and spending, regeneration projects, transport and skills training budgets.
Deputy Prime Minister, Nick Clegg said the proposed City Deals would "free regions from the Whitehall leash" and place powers in the hands of local decision makers.
More than 22,000 jobs could be created and saved in the Tees Valley if its bid to develop a super cluster of energy and chemicals companies is approved, business leaders claimed.
Local enterprise partnership Tees Valley Unlimited (TVU) is one of 20 areas hoping to agree a City Deal. TVU reckoned it could also help the creation of 9,500 apprenticeships a year by 2022.
Sunderland wants to use tax revenues from a new manufacturing park to revitalise the city centre and create thousands of jobs.
Council and business leaders must now agree detailed proposals with civil servants before November's deadline.
The Northern Echo understands that the Tees Valley will get the go ahead even earlier if it can convince ministers it is ready to put its ambitious plans into action.
Winning City Deal status will not mean there is more money available, but it will give greater powers locally to decide how Government cash is spent, at a time when councils are being forced to make cuts.
Last July, Newcastle and Leeds were among eight English areas given City Deals in the first wave of the scheme.
In a speech last night, Mr Clegg warned that the economy was losing out on £41bn a year because successive Tory and Labour governments had "choked off northern cities potential" in favour of London.
Mr Clegg, added: "These deals help cities and their wider areas make once in a generation changes that will be felt by everyone across their region.
"Letting go of power and money doesnt come naturally to Whitehall. Over time, the economic importance of other parts of the country has been devastatingly downplayed, as the economic elite have narrowed the debate towards a London-centric view.
"Rather than let our industries and communities wither, we need to free up cities outside of London that have their own unique selling points."
NECC Director of Policy Ross Smith said: "The North-East is a huge asset for the UK economy but has the potential to deliver far greater economic returns. These deals will give two more parts of the region the chance to demonstrate that."
Minister for Cities, Greg Clark, said: "For years this area has had to put up with London laying down the law about how things should be done locally. These city deals are a revolution in that relationship. Who could be better than the people and businesses of the North-East to know what the area needs to achieve all it that is capable of?
"The Government should be there to support local ambition and that is what I will do in these negotiations." North-East business chiefs welcomed the announcement. Jeremy Middleton, head of the £50m investment fund, Middleton Enterprises, and board member of the North East LEP, said: “This is fantastic news for both Sunderland and the wider North East LEP area.
“If Sunderland’s City Deal bid is successful, I hope the money will give us the opportunity to further hone and develop the area’s already excellent advanced manufacturing industry by creating a national hub for this sector right here in the North East. I believe the best way to achieve this is by investing in the necessary infrastructure to boost the advanced manufacturing sector, and the creation of a specialist advanced manufacturing skills academy to ensure future generations are equipped with the necessary skills to enable this important industry to continue to flourish.
“I hope the regeneration of Sunderland city centre through the creation of a state-of-the-art central business district on the old Vaux site will also be a cornerstone of the bid, as this will attract future investment to the North East LEP area.
"I believe the bid has great potential to help everyone in the North East understand the power of the deals that can be struck with Government when local authorities work together, and I hope this is another step on the road towards a combined local authority for the region, which underpins North East economic strategy.” CBI North East director, Sarah Green said: “I am delighted that both Tees Valley and Sunderland have been successful in their bids. Both proposals were ambitious plans which have the capacity to deliver a real boost to the North-East economy.
“The Tees Valley city deal looks to build on the significant existing strengths that exist in the area in the chemical, advanced manufacturing and low-carbon sectors. There is a real opportunity for further growth in these industries which can provide just the type of skilled, sustainable private sector jobs that our economy requires.
“Sunderland’s city deal proposes to build on the outstanding success that has been the Nissan plant by attracting further advanced manufacturing businesses into the area, whilst at the same time providing the opportunity to regenerate parts of the city centre. We think it is a bold plan which could prove to be very successful.
“Giving cities the opportunity to bid for greater planning powers and autonomy over training and skills budgets should encourage investment in critical local infrastructure and help plug skills gaps.
“With three-quarters of the UK’s business activity taking place in and around cities, they are hubs of economic activity. These deals will give cities real powers and resources which, if implemented well, will help to regenerate local economies, stimulating private investment and growth.”