£10m recession package to aid region 'just the start'

Sep 4 2008 by Jon Tunney, The Journal

MINISTERS last night unveiled their plan to beat a North East recession – and said a £10m package was just the start.

They announced full details of a plan revealed in yesterday’s Journal to head off the growing ecomomic gloom in the region.

And they said there could be millions more available if their initial £10m injection failed to stem the tide.

But opposition groups accused the Government of trying to solve "an economic crisis they created" as development agency One NorthEast admitted growth targets would be affected in the short term.

The £10m handout, which was welcomed last night, has been diverted from other One NorthEast funding.

It is the first sign that the growing economic troubles will have a bigger impact on the North East than previously thought, with regeneration bosses watering down their belief the region would "weather the coming storm".

One NorthEast chief executive Alan Clarke said that while he still expected to meet ambitious growth targets for the period up to 2016 the next 18 months were going to be difficult and that the agency was watching the situation on a "sector by sector" basis.

Mr Clarke said: "I’m not trying to pretend a £10m package will turn around the economy. But we think we are still better placed than other regions who have a much bigger dependency on the financial services sector.

"However, because housing and construction are now being affected we have to admit it is in our region. We are not trying to deny there are real economic difficulties at the moment."

The North East Chamber of Commerce welcomed the ONE funding, but refused to extend support to the Government, which it blames for making a difficult situation worse.

Newcastle Council leader John Shipley praised the development agency, but said the need for such measures revealed the extent of economic decline.

Mr Shipley said: "This is a wake-up call to the Government about the state of the North East economy.

"There is clear evidence of a major housing slowdown, but we must not talk ourselves into a recession.

"I welcome this package which will help a significant number of firms in the next few years.

"The credit crunch is starting to bite and now we need to make sure we have done enough to be on a strong footing when the upturn comes."

Shadow Tyneside minister Alan Duncan said the Government was "trying to take credit for alleviating a problem it created itself. This shows how they have mismanagement the economy and the North East now needs urgent first aid."

Minister for the North East Nick Brown said: "There is some evidence in the region of a slowdown, and it’s very patchy, it’s sector by sector, worst hit is the domestic housing market. That does not make this region unique, but we stand to benefit a lot by the Stamp Duty measures announced yesterday.

"We recognise the international credit crunch, we know that there are huge rises in oil gas and food prices and how we respond to that is the challenge for the region.

"Today’s announcement is a good start, it is not the last thing we are going to do, as the situation develops we have to have sufficient flexibility to respond."

Mr Brown has led a delegation from the region to meet the Housing Minister to ensure the region is not tied to Government housebuilding targets and can adapt to changes in the economy.

The Newcastle East and Wallsend MP refused to say how long he thought the development agency would have to be on what is effectively a "recession watch".