COALITION pledges to “rebalance” the economy are being undermined by an investment “bias” towards the South East, MPs have been warned.

Respected think-tank IPPR North said close examination of the Government’s decisions in terms of funding infrastructure showed a “continuing over-reliance” on the South East. The warning to the Commons Communities and Local Government committee (CLG) comes as Deputy Prime Minister Nick Clegg has insisted the North East will benefit from the coalition’s economic policies.

Addressing the committee on the Government’s regeneration blueprint, IPPR North’s Katie Schmuecker said: “If you look at the targeted investments that are listed within the document – Crossrail, high-speed rail, the Olympics – there is a very heavy greater South East bias listed in those particular programmes that they have decided to highlight there.”

She added: “The Government has talked about rebalancing the economy away from an over- reliance on the greater South East.

“But if you begin to look at how the detail of some of these policies are likely to stack up in practice, I think you do get a picture of continuing over-reliance on the greater South East of England and also a focus on those areas where growth is more likely to happen anyway.”

She also warned the Government’s new low-tax enterprise zones could simply encourage companies surrounding enterprise zones to relocate rather than create new jobs.

But Nick Clegg has insisted the North East will benefit from the Liberal Democrat and Tory coalition’s plans to tackle the national deficit and get the economy back on track. “The North East for too long has suffered under Labour from an economy that was all about sucking up to the big banks in London and ignoring the things that the North East does so well like manufacturing,” said the Deputy Prime Minister in an interview with The Journal to mark the first anniversary of the coalition.