THE Government vowed last night to recover £17m of public money used to attract failed US electronics company Viasystems to the North-East.

Parent company European PCB Group (Cayman Islands) announced last night it had called in the receivers for its operations on Tyneside.

At the start of this month, after weeks of uncertainty, the company said it would close its Longbenton plant, with the loss of 525 jobs, while 325 of the 1,100 posts at South Shields would also go.

Now the future of the remaining workforce is in the balance.

The firm, which makes printed circuit boards, blamed a "significant and continuing downturn in the global electronics market".

Viasystems closed a factory in the Scottish Borders in 1998 with the loss of 1,200 jobs. It transferred to Tyneside with £24m of Government assistance - including £17m of public money, much of it in the form of Regional Selective Assistance grants.

Regions Minister and North Tyneside MP Stephen Byers has led calls for Viasystems to repay the cash if it breaks the terms of the grant.

A spokeswoman for the Department of Trade and Industry said last night: "The Government has begun action to recover the aid granted to Viasystems' Tyneside operations because of our responsibilities to the taxpayer."

She said the Government had been working closely with regional development agency One NorthEast to find a way ahead.

"Sadly, those efforts have not been successful," she said.

One NorthEast chairman Dr John Bridge said it was devastating news for employees, their families and the region.

"We have immediately put in a further bid for Rapid Response Funding to deal with the whole crisis," he said.

David Webster, chairman of European PCB, said: "We are deeply saddened by the announcement, particularly for our employees."