Regional leaders have agreed the key elements of the first budget for the North East Combined Authority.

This agreement is an important step in paving the way for the authority to deliver on its ambitious economic aspirations for the region.

Highlights include:

• A transport revenue budget of £89m to protect critical transports services and concessionary travel for the people across Durham, Northumberland and Tyne and Wear.

• A £1m saving in the Transport levy for Tyne and Wear. This has been achieved through efficiency savings and use of reserves which have been made while at the same time services protected and improved. This brings the total level of savings to over £10m in the last four years.

• A capital investment programme of £119m which will bring in a further £26m of investment from partners, making a total investment of £145m and an increase of more than £50m in capital investment next year. This will include £93m of investment in new highway and transport projects and £52m of economic development and skills projects next year.

Major schemes will include further investment in the Metro system as well as:

• Infrastructure improvements at Merchant Park in County Durham – to support inward investment and supply chain development adjacent to the future home of Hitachi Rail Europe.

• Improvements to the A19 at Lindisfarne Roundabout to provide improved connectivity to the Port of Tyne and South Shields town centre and also at Silverlink to facilitate economic development and address capacity issues at Cobalt Business Park.

• A skills improvement package with investment in education and training facilities at five sites across the North East to support increased skills in key economic sectors including advanced manufacturing, offshore wind and low carbon energy technologies.

• A North East innovation programme to support technological advances in key industries and drive innovation in the area. For example, Sunderland Enterprise and Innovation Hub, which will provide the first ‘Fab Lab’ in the North East.

• Infilling of the redundant wet berth within the Swans Enterprise Zone to create development land with quay frontage and increase the supply of commercial land and premises linked to the offshore and renewable energy sector.

• NE Rural Growth Network infrastructure – a programme across Durham, Northumberland and Gateshead to address infrastructure gaps in key rural market towns and to grow the innovative, community-led network of rural enterprise hubs to support rural business growth.

• A package of junction improvements to the A1 corridor at Scotswood Bridgehead to ensure access for all modes of transport over the river Tyne to the employment opportunities in Newcastle and Gateshead.

• Match-funding of £1.1m to be made available to operate a Mental Health and Integration Trailblazer over the next two years.

Two elements of the budget – the proposed grant to Nexus and the resources for inward investment – require further consideration and a special meeting of the Leadership Board to discuss these issues will be held in the next few weeks.

Cllr Simon Henig, chair of the North East Combined Authority, said: “This signals the start of the journey which will deliver a better, united and stronger North East, where business can thrive and young people get the skills they need to succeed in life.

“Whilst it is set in the context of a national position of austerity and so has to be realistic, it also makes available additional capital funding to help deliver investment in transport and infrastructure and to provide incentives to help secure economic growth.”

Paul Woolston, chair of the North East Local Enterprise Partnership (LEP), added: “The North East LEP was successful in securing £289m as part of the Government’s Growth Deal. The first tranche of funding is due to be released in April.

“It is a hugely positive step for the North East that we are able to push ahead with these ambitious schemes. This progress underlines our commitment to delivering the strategic economic plan working closely with the Combined Authority and to creating a region in which there are more and better jobs for everyone.”

Key aspects of the budget were agreed by the leaders of the local authorities at a meeting yesterday (Tuesday, 20 January).