Brussels sounds warning over region's future

Nov 15 2010 by Adrian Pearson, The Journal

THE European Commission has sounded a dire warning over the region's future as the Government considers withdrawing millions of pounds in European funding.

Senior officers at the commission have said the coalition Government’s policies will leave English regions such as the North East without a voice, a situation almost unique in Europe.

They also questioned the merits of depriving the region of a dedicated jobs fund.

Since the general election, ministers led by Communities Secretary Eric Pickles have axed job-creating agency One North East and scrapped the region’s voice in Whitehall, Government Office North East. They are also reported to have banned the word “region”.

Last year, the agency spent more than £340m, including substantial European funds, but by 2012 it will be closed down, with no successor to pick up its work.

Paul Callaghan, ONE’s chairman, is leading a battle to secure for the North East a business loan fund which was set up last year with £125m worth of dedicated regional support.

Using European Investment Bank cash, the Finance for Business fund should have had a long lasting impact as repaid loans were recycled into another loan fund, providing job support for another decade.

But as a result of the development agency being scrapped, the fund is now at risk, with the Government considering administering it from London and using repaid loans to help Southern firms.