Regional assembly plans in ruins after North-east votes 'no'

The leader of the campaign to set up an elected assembly in the North-east of England conceded defeat early today as the region's electors voted decisively against the scheme.

The result means that John Prescott's dream of a network of elected regional assemblies across England is in ruins.

As counting of the votes continued, Ross Forbes, director of yes4thenortheast, said: "It looks at the moment that we are heading for defeat. Unless something dramatic happens that we don't know about, it looks like it will be a defeat."

A higher-than-expected 46 per cent of the area's 1.9 million electors turned out to veto the initiative. Their verdict on his pet project scuppered any chance of devolution to any other English region for the forseeable future.

The rebuff came after opponents of the assembly mounted a vigorous and effective campaign against devolution, which they denounced as an expensive talking-shop with few real powers. They adopted an inflatable white elephant as their symbol, burnt fake £20 notes in protest against the scheme and warned it would drive up taxes.

Although supporters of the move included Labour, the Liberal Democrats, many business leaders and local celebrities, they fought a lacklustre campaign which failed to capture the public imagination.

Tony Blair, whose constituency is in County Durham, staged a photo-call in Newcastle with Charles Kennedy, the Liberal Democrat leader, to urge a "yes" vote. Gordon Brown, the Chancellor, and Ken Livingstone, the Mayor of London, also made campaigning trips to the region. But Mr Prescott was irritated that cabinet members failed to do more to bang the drum in the North-east for devolution.

He had hoped that a late surge of votes in the mainly postal ballot, with 55 per cent of electors turning out in some areas, would close the decisive lead built up by the assembly's opponents. With hours to go to the close of voting, he was insisting the vote was "neck and neck". But his optimism was shattered as details of the count at the Crowtree Leisure Centre in Sunderland emerged. It is understood that many ballot papers had been spoilt, with voters saying they would only back an assembly with more power.

The assemblies were intended to give a voice to regions distant from London, and the North-east was considered fertile ground by ministers because of the widespread feeling that the region had lost out to Scotland, which won devolution in 1999. A survey last year suggested that 51 per cent of people in the region backed the initiative.

The assemblies would have handled a budget of £500m and have had the same powers as the Greater London Assembly, with influence, although limited power, over economic development, transport, planning, housing and culture and tourism. A tier of local government would have been axed to make way for the new bodies.

Mr Prescott had already delayed plans to stage referendums on establishing assemblies in the North-west and in Yorkshire and the Humber. The official explanation was that the two regions were not ready to stage all-postal ballots, but the suspicion was that ministers hoped that a vote to create an assembly in the North-east would create a "domino effect" across the north of England.

The effect of last night's result is to kill off any immediate prospect of English devolution, which has been a Labour commitment for more than a decade. Colleagues said Mr Prescott had been resigned to defeat for several weeks and knows he will face withering criticism over the result. They insisted he remained more committed than ever to the principle of decentralising power from Whitehall.

The voters of the North-east were given two weeks to cast their ballots by post, but some opted to hand them in at town halls.

Tony Travers, a local government expert, said Mr Prescott had failed to produce a plan for an assembly that had strong powers. "It is possible people who never wanted a regional assembly got together with people who wanted one, but was stronger than the one that was on offer," he said. He added that the Government was not offering the North-east the prospect of the powers of a US state or a German region. "Inevitably the stakes were not so high."

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