£34m regeneration cash for Newcastle under threat

Oct 21 2009 by Adrian Pearson, The Journal

MORE than £34m of regeneration cash could be under threat as the region again falls foul of “bureaucratic” rules preventing city leaders from creating hundreds of jobs.

Newcastle’s council chiefs had wanted Government permission to borrow the money, invest in the city and repay the loan via the increased businesses rates the spending would create. A slice of the much-needed building cash would have been spent on the vital Science City project, set to transform Newcastle both physically and economically. The cash would also fund improvements to the Discovery Quarter behind Central Station. Officers believe permission to borrow the cash would bring in £29m a year in just over a decade and generate more than 600 jobs in the short term.

But despite the Chancellor asking for cities to come forward with bids for the Accelerated Development Zone cash in his Budget, it is now looking likely civil servants will turn down all 80 nation-wide submissions.

Treasury officials are eager to keep the UK’s public sector borrowing requirement down, and as such are prepared to rule out any bank loan even if it creates hundreds of jobs and kick-starts the construction industry.

It is the second time the North East has come up against an unsupportive Treasury. Plans to set up a £100m green jobs loan fund using EU cash are expected to face a similar hurdle.

Last night Peter Allen, Newcastle Council’s executive member for corporate resources, said the Treasury had to be aware that unlike some borrowing, which needs to be repaid from day-to-day funds, the development zones would “pay for themselves”.