A NORTH-EAST assembly will be a sham and a failure if it does not have real power to make a difference to the lives of people in the region, the minister responsible for devolution warned yesterday.

Stephen Byers, the transport and regions secretary and a Tyneside MP, was speaking as the North-East became the first English region to give the Government detailed proposals about how it wishes to run its own affairs.

He said: "If we are to have a successful regional assembly it has to have the power and the responsibilities to make a difference to people's lives. If it doesn't, it will be seen as a sham and it will have failed. It has to be relevant and meaningful to the people of the North-East.

"It has a huge potential. For too long, the regions have been neglected, and if we are serious about economic regeneration and social renewal we have to do it through the regions."

Yesterday's proposals have been put together by the existing North-East Regional Assembly (Nera), a collection of appointed councillors and businesspeople. Along with the Campaign for a North-East Assembly (CNA), it wants to create a directly-elected assembly which would take control of the regional policies of the disparate agencies, quangoes and Government offices, in areas such as economic development, tourism and sport.

Receiving the proposals in Newcastle yesterday, Deputy Prime Minister John Prescott repeated his belief that the North-East could be the first English region to hold a referendum on the issue before 2003.

But he could not quantify how popular the issue is among ordinary people.

He said: "I don't honestly know about public support. My gut feeling, as I am surrounded by people who want different forms of regional government, is that I don't hear many voices against it.

"Devolution has been successful in Scotland and Wales in giving people a say in their decisions and the argument is now whether the North-East wants the same tools."

Mr Prescott also hinted at the concerns in south Durham and Teesside that an assembly could be dominated by Newcastle.

He said: "You must be very careful that, in the name of decentralisation, you don't centralise within a region. There are sub-regions and sub-economies."

The Nera proposals steer clear of the vexed issue of where an assembly would be based, although CNA's proposals state: "We must make use of the existing sites within our region and we also strongly advocate meetings in various parts of the region."

Yesterday's document is designed to influence Mr Byers' department as it draws up a White Paper on regional government early next year. It is hoped that Paper will go before Parliament later in 2002.

With some towns in the North-East opting for directly-elected mayors and House of Lords reform holding out the possibility of regionally-elected peers, Mr Byers was asked whether with councils, MPs and Euro MPs more elected regional politicians were required.

He said: "It is a sign of how centralised Britain is that people feel uncomfortable when giving new powers to people."

Although much debate is required before the proposals become concrete, the move is supported by both Labour and the Liberal Democrats.

However, the North-East's Conservative MEP, Martin Callanan, said the proposals were a distraction from the real issues facing the region. He said: "I'm not sure how many consultations are required before it is recognised that regional devolution is simply not something that the people of the North-East are at all interested in.