A FUND that has pumped £112m into poorer parts of the region – creating 25,000 jobs – has been quietly axed by the Government.

The scrapping of the Grants for Business Investment (GBI) scheme will leave North-East companies seeking smaller amounts of investment aid with nowhere to turn, it was claimed.

The Regional Growth Fund (RGF) only accepts applications for at least £1m – and its first round of bids was seven times oversubscribed.

To make matters worse, Scotland and Wales will continue with grant aid to persuade firms to set up in assisted areas.

Pat McFadden, Labour’s former business minister, said: “It is more important than ever to have an active industrial policy at a time when the Government expects the private sector to provide new jobs to replace the jobs it is cutting in the public sector.”

But the Department for Business, Innovation and Skills insisted the scheme would be wound down in line with the closing of the regional development agencies, in April next year.

The GBI scheme dates back to the early Seventies under different names, including regional selective assistance.

Recent grants to firms in the region include:

*Appletree Joinery Products, Bishop Auckland – £80,000;

* TMD Friction UK, Hartlepool – £407,000;

* BOC Ltd, Middlesbrough and Stockton – £621,600;

* Cellular Solutions, Sunderland and Durham – £135,000;

* Decorative Panels Holdings, Middlesbrough and Stockton – £249,000;

* Specialist Coatings, Bishop Auckland – £174,000;

* Flex-Ability, Hartlepool – £235,000;

* Advanced Modular Systems, Bishop Auckland – £85,000.

Most of the North-East qualified for the aid, which delivered £112m in grants between 2004 and last year, creating or protecting 25,000 jobs.

The Northern Echo revealed last year that the One North East development agency had been ordered to break GBI contracts with local companies immediately, wherever possible, to save cash.

However, confirmation the scheme has been axed was buried in the Government’s Local Growth White Paper.

Last week, it was revealed that the first round of the RGF – which has about £300m to allocate – attracted bids topping £2bn.

Furthermore, no bids below £1m will be accepted. Talks are under way with high street banks, which will be asked to collect smaller applications and tot them up to six figures.