KEY staff who secure European development aid for the region will retain their jobs, as the Government moves to calm fears that the crucial cash will be lost.

Andrew Stunnell, the Local Government Minister, announced that about 30 workers at the doomed One North East development agency will transfer to work directly for his department.

The move follows criticism that European Regional Development Fund (ERDF) cash – worth £324m to the North- East over seven years – could be lost once the agency disappears, in April 2012.

The staff assess potential ERDF projects and provide most of the match-funding.

Now they will become employees of the Department for Communities and Local Government (DCLG), but will work in the North-East, because ministers believe they need to be close to the places they serve, so they are on hand to offer support and advice to projects.

The decision comes eight months after the announcement that the regional development agencies would be scrapped, when the future of ERDF applications was not mentioned.

But, it was welcomed by One North East, which described the fund as a vital tool in the effort to secure continued regional economic growth in the North-East.

But questions remain about how projects bidding for grants will receive the match funding without which their applications cannot succeed.

Although responsibility will be transferred to DCLG, the department – which will lose 60 per cent of its budget by 2015 – will not provide the missing cash. Co-funding must come from the £500m-ayear regional growth fund, run by the department for business, which was seven times oversubscribed in its first round.

Mr Stunnell said: “ERDF is a key driver for economic growth and I have seen some of the benefits it has brought to local communities. I have concluded that, in order to maintain compliance with the regulations and spending momentum, we should transfer the existing ERDF staff and functions into my department by the beginning of July.

“We want to encourage local communities to make use of ERDF. I have decided we must locate the ERDF teams, as far as possible, in existing towns or cities.”

The only place where the DCLG will not be responsible for ERDF funding is in the capital, where the role will continue to be devolved to the Greater London Authority.

A One North East spokesman said it was in a strong position to meet its target to distribute £79m of ERDF cash this year, adding: “One North East is working closely with DCLG for a successful transition of the programme to a successor, with the minimum of disruption.