MINISTERS have been warned a £5m cash snub risks jeopardising Tyneside's offshore renewable energy industry.

The money had previously been awarded to the region in order to help American firm Clipper Windpower build a turbine factory linked to 1,000 jobs.

But those hopes were dashed over the summer when the firm announced it would be pulling out of a Government contract.

Since then the region has placed its hopes of creating thousands on manufacturing jobs in plans for an enterprise zone partly covering the banks of the River Tyne. But city leaders have privately said the task of enticing in major turbine manufacturers will be made far more difficult without the £5m infrastructure fund.

It is thought more than £22m is needed to prepare areas such as the North bank of the Tyne for a new era of renewable energy jobs, covering new roads and land preparation.

While much of this can be paid for through the taxes on firms entering the enterprise zone locations, city leaders fear the task of getting those companies to locate to the North East, and bring with them thousands of jobs, will be made much more difficult without the cash.

In an attempt to save the fund a letter setting out the position was sent to cities minister Greg Clark, signed by Newcastle Council leader Nick Forbes, North Tyneside elected mayor Linda Arkley and Paul Woolston, chair of the North East local enterprise partnership set up by the Government to act as a voice on the regional economy.

In their letter they stress that the infrastructure cash is increasingly vital in order to “ensure that the North East remains at the heart of a manufacturing-led economic recovery, whilst helping the UK to remain at the forefront of the rapidly expanding offshore wind industry.”

Their letter adds that “at present, the facilities built for Clipper Offshore in Newcastle are the only tangible investment in offshore wind turbine manufacture in the UK.”

The factory is built on land owned by Shepherd Offshore, with Clipper’s parent company having signed a 25-year lease on the site.

Now Mr Clark has said the money is no longer available, but instead called on Tyneside to work with businesses to bid for a slice of a £500m fund, effectively ordering the region to compete for cash it has already been awarded once before.

Newcastle Council leader Nick Forbes said he was “disappointed”. He told The Journal there had been a united effort to save job creation cash, but that the plea appeared to have been dismissed out of hand.

Mr Forbes said the need for the low-carbon investment was as strong now as it was when the money was first announced three years ago.

In his letter to the leaders, Mr Clark said he agreed there was “great economic potential” in the North East, adding that the Government’s £500m Growing Places fund was well aligned to those aims and “may be an opportune source for meeting your funding gap.”