A PROJECT to create 350 jobs in Weardale has been left up in the air after losing a £1m grant in One North East budget cuts.
The finance was to be used to start work on the Eastgate Renewable Energy Village, on the site of the former Lafarge Cement works, near Stanhope, County Durham.
But the cut has left the project in limbo, making it one of the biggest losers in yesterday’s £32.9m budget cut programme, imposed on the organisation by the coalition Government as part of its £6.2bn public sector spending cuts.
Others to lose out include the development agency’s Grant for Business Investment programme, which has helped scores of firms to expand at a time they are struggling for finance. Its budget was cut from £19m to £16m.
The Business Link service, which helps firms start up and develop, saw about £5m slashed off its budget, with a number of planned business support and job creation projects also facing hefty cuts.
While yesterday’s cuts could see 3,000 fewer jobs created in the North-East this year, they are likely to be only the tip of the iceberg.
One North East chief executive Alan Clarke conceded that the cuts from this year’s budget were likely to be superseded in 2011 to 2012.
One North East, which will be abolished in March 2012, has already been advising some partner organisations that it will not be able to fund them as anticipated in the next financial year.
The regional development agency will find out its budget for next year at the Government’s Comprehensive Spending Review next month. Mr Clarke said: “I think that it is likely to be a very tough settlement across the public sector, but when you are working for an agency being abolished, I anticipate it will be much, much tougher for us.
“We obviously have legal commitments. We will be employing staff, but the numbers of those will be reducing very significantly.
“We will have redundancy costs and winding-up costs and I think it is likely we will get a very tough settlement.
We will know on October 20.”
Andrew Sugden, policy director at the North-East Chamber of Commerce, said: “There is a sense of inevitability about these cuts with the abolition of the regional development agency and changes to public finance.
“What is most worrying from a wider business perspective is that these cuts are immediate and happening within a year.”
Pat Glass, Labour MP for North-West Durham, whose constituency covers the Eastgate project, said: “This is hugely disappointing news.
Eastgate Renewable Energy Village would have made a huge difference. It is a vital part of the economic regeneration of Weardale.”
Money is being withdrawn from phase three of the project, which involved the start of works on the site, planned for this year, along with installation of the required infrastructure.
Planning permission was granted in September last year. The eco-village, which was to be built on the site of the former Lafarge quarry, was planned to include 65 houses, more than 8,000sq metres of business floor space, visitor and education centres, a 60-bed hotel, shops, cafes and a new terminus for the Weardale Railway.
A hot springs spa was also planned by drilling boreholes deep into the ground.
Councillor Simon Henig, leader of Durham County Council, which is leading the project in partnership with the company Lafarge, said he was particularly disappointed at the loss of the £1m, but said it was “not the end”.
He said: “The council has for some significant time been working with private sector parties to establish a clear way forward and this good work will continue.”
However, sources told The Northern Echo the project had “stalled” not only because of a lack of public sector funding, but also a lack of available finance from the private sector.
Major cut in ski centre allocation
INDOOR SNOW SKI CENTRE, SUNDERLAND (£406,750 CUT)
THE ski centre – plans for which were unveiled in October last year – forms part of the Sunderland Stadium Village, which already boasts Sunderland FC’s Stadium of Light and the Sunderland Aquatic Centre. A total of £506,750 was allocated to be used in this financial year to acquire a 6.2 acre brownfield site for the ski centre, but that figure has now been cut to £100,000. Should it be built, the ski centre would include a real snow ski slope, ice rink, hotel, leisure facilities and car parking. Earlier this year, regeneration company Sunderland Arc announced it was tendering for developers to build the centre.
Development plans for airport hit
DURHAM TEES VALLEY AIRPORT (£545,000 CUT)
TOTAL of £545,000 of funding has been cut by One North East – money which was to be spent on “acquisition and infrastructure around the airport for future development uses”. No further information was available from the agency, nor the airport on the planned spending. A number of developments have been planned for land around the airport, the main one being the £110m “Skylink” International Business Park being built on 250 acres of brownfield land to the south of the runway. The park, first unveiled in 2008, and which was to create up to 2,000 jobs, involved building sheds for airport freight companies and would have meant the construction of an access road from the nearby A67. Like the Eastgate project, Skylink has never gone past the planning stage, having been hit by the economic downturn.
Project to transform town suffers
BARNARD CASTLE VISION (£211,850 CUT)
BARNARD Castle Vision – a 20-year investment project aimed at transforming the County Durham market town – loses £211,850 from the original £711,850 budget allocated to it by One North East this year. Among the vision’s aims is to create a “21st Century rural service centre, a heritage destination of regional significance, a hotbed of entrepreneurialism”. It has helped organise projects including cultural exchanges, the restoration of the Market Cross building and grants for businesses to set up in empty shops.
Reduction in grants for businesses
GRANT FOR BUSINESS INVESTMENT AND RESEARCH AND DEVELOPMENT (£3M CUT)
THE so-called Grant for Business Investment (GBI) is one of One North East’s major investment programmes and aims to encourage capital investment in projects that lead to long-term improvements in productivity, skills and employment. Assistance through the programme is provided to help establish new businesses, or expand and modernise existing ones, set up research and development facilities and also enable firms to take the next step from development to production. Grants can range from tens of thousands to millions. David Dean, director of Teesside Precision Engineering, a Middlesbrough firm that received a £95,000 GBI to start up, said: “This news is potentially a massive blow for businesses in the North-East that are trying to get a foothold in the market. “Cutting the grants that One North East can award could see new businesses stagnate and struggle in those vital, early stages of development when you need a helping hand.”