LEADING figures in North-East politics and business yesterday issued a rallying call for action to deal with the region's continuing economic ills in the wake of the dramatic rejection of a directly-elected assembly.

Within hours of voters delivering their verdict on the proposed assembly, senior figures from all sides of the debate demanded there be no return to the status quo, in which the North-East has lagged behind the rest of the country.

Yesterday, as the scale of the No vote was beginning to sink in, the region's decision-makers were searching for some sort of consensus on the way forward for the region.

Meanwhile, the Government was considering the implications of the rejection of its proposed assembly - pilloried by voters as a powerless talking shop which would not address issues such as the North-South divide, the outdated Barnett Formula or the region's transport problems.

Senior figures in the victorious North-East Says No campaign were yesterday putting forward the case for a minister for the North-East - sitting within an economic department such as the Department of Trade and Industry or the Treasury - to put the case for the region in all aspects of Government policy.

Speaking in a personal capacity, Graham Robb said: "It's time we had a minister for the North-East and a select committee for the North-East, looking at every Bill to see what we get out of it for the region."

He also called for elected mayors in every unitary authority and powers devolved to hospitals and schools.

He said: "Our politicians need to raise their game and stop sitting on their hands. They have to realise that regionalism has been firmly rejected and we need the political community to look at ways of devolving power down to local levels."

John Elliott, his former North-East Says No colleague, said: "There is nothing to rejoice about.

"There are structural problems across the UK. There perhaps ought to be a government minister to deal with them - maybe a minister specifically to reduce the North-South divide.

"We shouldn't be begging for things we are entitled to. We should get a fair slice of the cake."

Their former opponents at Yes 4 The North-East - still shell-shocked from the scale of Thursday's defeat - called for a period of calm to examine the deep-seated problems that bedevil the region.

Professor John Tomaney said: "Any serious intervention should come after a period of reflection and assessment. There are massive challenges for the region and we certainly need answers to them.

"But perhaps we shouldn't be producing knee-jerk solutions the morning after the night before."

Alistair Arkley, of the Tees Valley Partnership, said the vote gave a strong message to local MPs that the public expected them to play a central role in regional regeneration and called for the setting up of a Scottish-style Parliamentary grand committee for the North-East.

He said: "I believe that it underlines that what people are looking for is for our existing politicians - both at local authority and Parliamentary level - to work with all sections within our local communities to tackle the very tough challenges which the Tees Valley and other parts of the region undoubtedly face."

Having seen his dream of a directly-elected regional assembly rejected, Deputy Prime Minister John Prescott pledged to continue working towards regional prosperity.

He said the decision now made the existing bodies Government Office North-East, the regional development agency One NorthEast and the unelected North-East Assembly key to the future of Government regional policy

Assembly chairman and Stockton Borough Council leader Bob Gibson said: "The North-East region continues to lag behind the rest of the country, and the gap in economic prosperity between this region and the South-East is widening."

He added: "The North-East Assembly will continue to make the case to Government for more powers to come to the region in areas such as economic development, skills and training, and transport and identify opportunities for more decisions to be made and influenced at the regional level."

Margaret Fay, chairwoman of One NorthEast - which would have been answerable to the elected assembly - said the size of the No vote demonstrated the passion felt in the region.

But she added that the work already done by the agency, which claims to have created or safeguarded 70,000 jobs over the past six years, would continue with vigour alongside developments such as the Northern Way, championed by Mr Prescott. She said: "This is the first time the people of the North-East have collectively voiced an opinion and that is the way forward."

The region's business leaders, who were at the forefront of calls for a No vote, last night called for more effective use of existing mechanisms.

George Cowcher, chief executive of the North-East Chamber of Commerce, said: "The people of the region are not foolish and won't be fobbed off.

"We still have some significant infrastructure issues in the North-East.

"Transport remains a key issue and we have very significant skills issues.

"The Government must now formulate a new strategy to provide a real difference."