REGIONAL assemblies for England would end a historic "devolution deficit" and help boost economic performance, Deputy Prime Minister John Prescott told MPs yesterday.

He was opening a debate on a Bill which paves the way for referendums on assemblies.

It is widely expected that the first referendum will be in the North-East, where the Government accepts that demand for devolution is greatest.

Mr Prescott said that "fit and lean" assemblies would strengthen democracy and bring growth and prosperity to regions which had fallen behind.

But he rejected claims the move was a bid to abolish Tory-dominated county councils.

The Regional Assemblies (Preparations) Bill would enable referendums to be held, setting out the referendum question and conditions such as the level of interest needed to set up an assembly.

Experts believe a referendum could be held in the North-East as early as May 2004.

Mr Prescott told MPs: "Devolving power and strengthening our democracy will help bring growth and prosperity to our regions."

But David Davis, for the Tories, said claims that regional assemblies would boost economies were "sheer unmitigated nonsense" as all the evidence suggested the opposite. He also warned that setting up assemblies would also cost the taxpayer billions of pounds.