Hopes for a new North East super council have stalled while city leaders try to secure Government backing for a £50m Nissan business park.
The Government has missed off the North East from a list of powerful new combined authorities set to get their parliamentary go ahead this spring.
It refused to make an order in Parliament for the new body because Sunderland had held back from giving its agreement, needed to get seven councils from Northumberland to Durham to work together on job creation.
Sunderland leader Paul Watson has not yet signed up because there is as so far no agreement on a City Deal linked to the new plans, which would see the Department for Transport (DfT) agree to a £25m investment package to build the new roads and drains needed for an automotive business park in Wearside.
While Sunderland waits for the DfT to unblock its share of the cash, and says it will sign up the moment there is an acceptable document prepared, other city regions are moving ahead.
The Government has decided it will back plans by Sheffield, West Yorkshire and Liverpool to form combined authorities similar to that in Manchester.
A parliamentary debate is expected in March, which gives the North East just a few weeks to secure an agreement or risk being left as the only Northern economic centre without a voice in Whitehall.
The Combined Authority will see councils merge their work on job creation, transport and skills. There will be no change to day to day services for local voters.
If the new authority gets the go ahead it would pave the way for the North East to have direct control over future devolved transport cash, and potentially free up millions of pounds to invest in new projects.
In Manchester the deal came with an agreement to let councils keep £1.2bn in business taxes to reinvest in the city.
The Journal understands Sunderland is ready to sign up to a Combined Authority should it have confirmation from Government on what exactly its City Deal will look like.
Last night the Department for Communities and Local Government denied there was a regional snub, and said blame lay with the North East.
A spokesman for the Department said: “Any questions about how councils in an area collaborate, and with whom, are matters to be decided locally. Where combined authorities are proposed the Government will consider carefully all representations it receives about the proposals before deciding how to proceed.”
Durham Council leader Simon Henig, nominated as chair of any eventual Combined Authority, said: “I can confirm that discussions are continuing with Government regarding the formation of a combined authority.
“We remain confident that the necessary arrangements can be made to enable the order creating the combined authority to be laid in the coming weeks.”
The latest threat to a potential combined authority comes after city leaders appeared to put aside their differences and agree to form a new legally binding authority.
The move was put in doubt earlier this year when Sunderland Council wrote to the Government saying that without further assurances it could not back the plan.
Mr Watson said that in many cases Newcastle had historically soaked up the benefits of big announcements, and that his council needed to be convinced all seven local authorities would benefit.
Crisis talks soon followed, with Sunderland eventually signing up to the deal only after securing a “fairness commitment” which ensure both that Wearside gets as much as Tyneside and that members will retain in effect a veto over group decisions.
If a City Deal is agreed with Government Sunderland would contribute around £25m itself to turn land around the Nissan plant into a new business park aimed at the manufacturing supply chain and advanced engineering.