BREWERY workers were today coming to terms with the news that the birthplace of Newcastle Brown Ale is to close with the loss of 110 jobs.

Scottish Courage (ScotCo) will bring to an end 121 years of brewing in Newcastle when it sells the Tyne Brewery.

The Northern Echo revealed last year that ScotCo's parent group Scottish & Newcastle was working on a deal to close its Newcastle operations and move brewing to the Federation Brewery across the Tyne in Gateshead.

For the Federation's owner, Northern Clubs Federation Brewery, the deal with ScotCo is a lifeline.

The Federation Brewery was operating at only 40 per cent of capacity and had a £7.8m black hole in its pension fund.

The company lost £3m in the past two years.

ScotCo will pay £7.2m for the Federation Brewery and has made a further £16.2m offer for the Federation beer brands and wholesale business.

The company believes it will save £10m as a result of the amalgamation, which will see the 150 staff at Tyne Brewery and 130 Federation workers cut to a total workforce of 170.

ScotCo intends to close the Tyne Brewery next spring. It hopes the bulk of the redundancies will be voluntary.

The deal depends on the support of the 303 working men's clubs which own the shares in Federation. The board of directors at Federation is recommending acceptance.

Production of the Newcastle ale brands, including Brown Ale, will remain on Tyneside, while production of other ScotCo brands, such as Theakstons, will transfer to Tadcaster.

ScotCo will have to get permission from the European Union to cancel the protective status granted to Newcastle Brown Ale in 1996 which stipulated production could only take place at the Tyne Brewery.