A DYNAMIC £36m project to reverse 20 years of industrial decay and create about 2,000 jobs is under way.

Regeneration Minister Lord Falconer was in Middlesbrough yesterday to launch phase two of the Tees Valley's flagship Middlehaven scheme, that will transform the former dock area into a thriving urban village.

The reclaimed site, north of the town centre, will be transformed with 1,400 new homes, nearly 50,000 square metres of commercial floor space, leisure facilities, a primary school and community facilities.

The first part of the development, near Middlesbrough's Riverside Stadium, will see the creation of a business park.

Adressing an audience of developers and investors, including representatives from English Partnerships, One NorthEast and Middlesbrough Council, Lord Falconer said: "This next stage of the Middlehaven project is set to have a massive impact on the area.

"It will be a highly attractive development opportunity that will help to revitalise Teesside and bring about much-needed jobs, homes and business."

Work on the first phase of the development was completed in December at a cost of £15m by One NorthEast and English Partnerships, working closely with Middlebrough Council and the Tees Valley Partnership.

In total, the public sector is investing about £57m in the transformation process, in the hope that it will attract another £126m of private investment to complete the process.

Assembled dignitaries at the launch of Phase II were treated to a virtual reality simulation of how the finished development will look.

Lord Falconer said: "Phase two of the project is more than double the size of phase one and will continue to bring the area back to life."

Welcoming the next stage of development, John Foster, chief executive of Middlesbrough Council, stressed the immediate impact the development would have on the on-going regeneration of the town centre.

He said: "The Middlehaven project complements the exciting developments that are taking place in the town centre.

"With the funding now in place for the first and second development phases, we can offer tremendous opportunities to inward investors."

Paula Hay-Plumb, chief executive of English Partnerships, pledged the agencies' continued support for the scheme.

She said: "Together with our development partners we are bringing life to a vision for the redevelopment of Middlehaven that captures the aspirations of the area for a modern and vibrant mixed-use development.

Mike Collier, chief executive of One NorthEast, said: "This investment will allow us to drive our plans for redevelopment forward and exploit Middlehaven's full potential as a driver in the economic regeneration of the Tees Valley."