CONSERVATIVE plans to axe the region’s development agency would prolong the economic slump and lengthen dole queues, its chairwoman warned yesterday.

Margaret Fay broke her silence on the growing controversy over the future of One North East by insisting no one – not even local Tory politicians – thought scrapping the quango made sense.

Her comments came as Ken Clarke, the Conservative business spokesman, confirmed all regional development agencies (RDAs) would be axed – despite ordering a review of the policy weeks ago.

But Mrs Fay found herself at the centre of a political row when Mr Clarke accused her of taking part in a “shameless election gimmick”

to promote the RDA, at taxpayers’ expense.

Along with all other RDA leaders, including those from Yorkshire Forward, the chairwoman attended a London press conference, at which Business Secretary Lord Mandelson described the agencies as indispensable.

Until yesterday, the RDA chairmen and chief executives, as independent figureheads for regional development, had appeared reluctant to wade into the row.

But Mrs Fay told The Northern Echo: “There are businesses that would not have survived, and people who would be unemployed, if it had not been for One North East’s swift reaction at the start of the downturn.

“I don’t believe there is any politician – not Liberal Democrat or Conservative – who doesn’t support keeping One North East.

They don’t want to lose us.”

She insisted she was unconcerned about her own position, as she is due to leave the post this year after six years in charge.

And she stressed how it was only an independent RDA that could take “tough decisions” – such as making cuts – without angering a particular political party.

She said: “I have no doubt that economic support is best delivered at a regional level, so we can think more strategically across boundaries – and we don’t have to worry about political balance, when taking tough decisions.”

Yesterday, Mr Clarke described the RDAs as “the remains of John Prescott’s failed policy of regional government” and insisted they would be replaced by town hallled local enterprise partnerships.

He added: “Peter Mandelson’s regional showcase today is nothing more than a shameless election gimmick.”

'Hand power to banks'

POWER must be handed back to local banks to end the lending drought damaging businesses, the Minister for the North-East said yesterday.

Nick Brown joined the criticism of high street banks – many of them part-owned by the taxpayer – for failing to lend, blaming faceless bosses far from the North-East.

He revealed he sometimes intervened personally after pleas for help from firms denied loans, although he insisted that happened only “very occasionally”.

And he admitted he had a rather romantic view of the way banks were run in decades past, adding: “I can’t bring it back on my own, but that doesn’t mean it’s wrong.”

Last week, it was revealed that lending to companies fell last year for the first time since records began.

Speaking at yesterday’s RDA summit in London, Mr Brown said: “There needs to be more local discretion, so the people making the decisions know the underlying strength of their customers.”