THE Government last night dealt a devastating blow to plans for a £300m North-East container terminal - and 5,500 jobs - by insisting it was not needed.

Whitehall's long-awaited national ports policy review concluded that plans to expand ports in the South would provide sufficient capacity for Britain's deep-sea services until 2020.

The report is a huge blow to hopes that PD Ports would get the go-ahead to build a deep-sea container terminal on the River Tees.

Regional development chiefs have been pressing the case for a North-East terminal at Teesport for more than a year. At stake is the fate of one of the region's biggest inward investment projects of the past 20 years.

But yesterday's review merely suggested that the Tees, along with ports in the Humber and Scotland, should look to expand as "feeder berths" for cargos unloaded in the South or on the continent.

The verdict was condemned by PD Ports, which has campaigned to halt expansion at the ports at London Gateway, Felixstowe and Bathside Bay, near Harwich.

It had argued growth in the South would jeopardise the plans for Teesport.

PD Ports, along with The Northern Echo, lobbied for the Government to implement a national ports strategy before it made its decisions on the southern ports.

But the Government ignored the pleas and gave Felixstowe and Bathside Bay the go-ahead to expand. It is "minded to approve" the application on the Thames, at Shell Haven.

PD Ports director Martyn Pellew said: "We will be challenging it when we make our own submission to the review.

"We feel vindicated in what we have been saying all along, which was that the review should have come before the monumental decisions that have been taken.

"The review fails to recognise the extra congestion on the roads and the railways from trying to move products from south-eastern ports to the North. We are calling for containers to be handled at northern ports such as Teesport because that will help environmental policies by preventing that congestion."

Mr Pellew said PD would be pressing ahead with securing planning permission for the terminal.

The study by consultants MDS for the Department for Transport concluded that national demand for deep-sea supply would rise to 11,196 TEUs - a measure of container length - in 2020.

But it said the South-East could cope with 11,010 TEUs once the three port expansions were in place and that 1,867 TEUs were already available elsewhere.

The consultants concluded: "This capacity will be sufficient to accommodate the forecast growth in direct call demand to about 2020."

It is only in 2025 that further capacity would be required, the report said.

Teesside MPs met Ports Minister Stephen Ladyman a year ago to try to persuade him to put the block on the expansions of southern ports, pending the Teesport application.

In the end, the review was delayed from last autumn, during which time decisions were reached on London Gateway, Felixstowe and Bathside Bay.

PD did not submit its plans until last month, although it believes its terminal could be operational by 2009, ahead of two of its rivals.

Teesport's plans have been supported by the Northern Echo's Support Our Port campaign.

The Association of North East Councils has also been backing the port's case.

Councillor Mick Henry, chairman of the Association of North East Councils, said he would be making a "robust case" to the Government for the port's expansion.

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