SPENDING bosses have been forced to put together a list of regeneration cuts after the Government ordered North East cash be diverted to help southern housing.

Alan Clarke, head of development agency One North East, is awaiting approval for a revised plan which sees his budget for top projects slashed by 30%.

Prime Minister Gordon Brown last year said money intended to be spent on jobs should go to a national housing scheme which mainly benefited the South East.

And after £47m was taken, a recession-hit PM told Mr Clarke to use some of his 2010/2011 budget and spend it now on job support.

Government cuts mean spending bosses are now going over a new regional plan which will see the agency’s capital budget reduced from £136m to £86m next year.

As a result the region will have less cash to spend just as the recession is predicted to end. Traditionally the North East has one of the UK’s slowest economic recovery rates.

Mr Clarke said he has some “difficult decisions” to make and warned that the public sector will have to start “doing more with less”.

His agency has already had to stop funding for two projects in Bishop Auckland – a town centre renewal project and park restoration scheme – in the “short term”.

The expected blow to regional funding will come alongside huge cuts across the public sector.

Newcastle Council leader John Shipley said civil servants had made it clear to council finance chiefs that their spending projects should be built around a 10% cut in funding.

Last night Mr Clarke said One North East would still command an impressive multi-million pound pot, but was working with less money than originally hoped.