PAYOUTS from an EU fund set up to ease poverty in the North-East have been suspended following the Brexit vote, putting thousands of new jobs and the Northern Powerhouse scheme at risk, it has emerged.

The European Regional Development Fund (ERDF) was halted indefinitely by the Government, just days after the vote to leave the EU.

The fund is used to bring jobs and investment to declining industrial regions and areas whose development lags behind the European average.

Tees Valley is using its allocation to fund ambitious plans for research and innovation, IT skills training, low carbon schemes and support for small businesses.

Dave Budd, Chair of Tees Valley Combined Authority, said: "Tees Valley secured a commitment to £169.8m (£94m from ERDF) over the current EU funding period.

"This is vital for the Tees Valley economy and forms a key element of our Strategic Economic Plan.

"We are already calling on Government to guarantee that any loss of this critical investment is replaced by additional devolved funding."

The ERDF cash is awarded by the EU on the proviso it is matched by funding from the UK Government.

In total, the UK was due to receive about £3bn between 2014 to 2020 and about 20 per cent is thought to have been given out already.

In a report on the website of The Independent, Professor Iain Begg, a research fellow at London School of Economics' European Institute, said any delay to the payment of funds would have to be coming from Theresa May's Government, rather than Brussels, as the UK remained entitled to ERDF funds as it is still an EU member state.

"I suspect it would be for austerity-type reasons, rather than anything at the (European) Commission level," he said.

Roger Vickerman, professor of European economics at Kent University, said that any loss of ERDF funds would hit hardest in areas of the country like Cornwall and the north of England that voted heavily to leave the EU. "The most significance is on areas that voted most strongly for Brexit – one of the more delicious bits of irony," he said.

Professor Vickerman suggested the Government might be concerned about having to pay for projects that run past the date of Brexit if the EU money is no longer available.

The North-East has benefitted from EU development funds more than any other English region between 2007 and 2013. During this period the region was handed £195.4m in European Social Fund grants and £296.8 million in European Regional Development Fund grants.

Following the EU referendum on June 23, chair of the North East LEP Andrew Hodgson sought reassurance that EU funded projects already signed off by Government would continue to be delivered.

He said:“It is important to realise we will not be immediately losing the opportunities that EU funding has historically brought to the North-East.

“Millions of pounds of projects are still likely to go ahead, bringing new jobs and closing the skills gap in the North-East. The truth is that we just don’t know yet if or when we will see changes.

“EU funding has hugely benefitted the North-East over the last few decades and we are lobbying Government for clarity and seeking assurances that any potential future funding gap will be filled. We urge the Government to provide this guidance quickly to ensure opportunities to create jobs and growth are not lost.”