CHANCELLOR George Osborne will today be told it is “nothing short of an absolute scandal” that more than £120m in European jobs cash is at risk in the North East.

Mr Osborne faces criticism that his spending cuts have meant it is increasingly difficult for firms and councils to access the £123m left in the North East’s slice of the European Regional Development Fund – a regeneration super-pot which has created thousands of jobs through projects such as building the Sage Gateshead.

Strict European Union rules mean the cash can only be spent if it is “match-funded” with UK cash contributions, from quangos, councils or businesses.

Newcastle North MP Catherine McKinnell is one of many warning the Chancellor he must “bang some heads together” to bring forward job-creating projects because the region’s remaining funding must be earmarked by 2013.

If the cash is not committed by then it will be handed back to the Treasury for use in its efforts to reduce the national deficit.

Ms McKinnell has written to the Chancellor warning against further delay.

In her letter she said: “It is nothing short of an absolute scandal that over £120m of potential investment in jobs, growth, innovation and business support in the North East is being jeopardised in this way, as a direct result of ill-thought through and hastily-implemented Government policies, and particularly when my region faces the highest unemployment rate in the country.

“I am therefore strongly urging you to consider how this situation can be addressed, and as a matter of urgency.”