BUSINESS leaders are on a collision course with politicians over an economic strategy which they say will stifle growth and leave the North-East lagging behind the rest of the country.

The North-East Chamber of Commerce and regional CBI say growth targets in the draft Regional Spatial Strategy (RSS) show a lack of ambition.

A five-week public inquiry into the RSS - the planning blueprint drawn up by the North-East Assembly to guide development up to 2021 - starts on Monday.

The RSS allows for growth of 2.8 per cent - which the authors say strikes the right balance between setting achievable targets and being over-ambitious.

However, critics say targets are so conservative they will stifle business by creating a potential shortage of development land and new housing.

They say the strategy conflicts with the Regional Economic Strategy (RES), the ten-year growth plan published last summer by development agency One NorthEast, which set a growth target of 3.4 per cent. It is awaiting ratification.

Sarah Green, regional director of the CBI, said: "The spatial strategy sends out the wrong message. The region needs to be as ambitious as possible. We signed up for the RES because we support ambition for the region and, after such a short time, for a second public body to propose a strategy with less ambition, we find very disappointing."

Andrew Sugden, policy director of the North-East Chamber of Commerce, said: "The RES is quite bold and ambitious and aims to set the region on a par with the rest of the country. The rates set out in the RSS only provide for us being a second-rate region."

The assembly believes the strategy allows for the expansion of ports and airports and the release of land for development, without impacting on Green Belt boundaries.

Chief executive Jo Boaden said: "It combines realism with ambition. This looks forward to the region doing better than it did in the past and better than some independent analysts think possible.

"We think it is possible the region may do even better than we are predicting."

One NorthEast chief executive Alan Clarke insisted there was no contradiction.

He said: "The RSS has to be more cautious as it allocates land for development, while the RES is an economic- focused strategy, running over a ten-year period rather than the 15-year lifespan of the RSS."

The CBI is expected to put its case to the inquiry at the Swallow Hotel, Gateshead, on Wednesday.

A report will be presented to the deputy Prime Minister later this year with the strategy likely to be adopted next year.

* Durham County Council is to press for the final RSS document to include proposals for a multi-million pound freight rail terminal at Tursdale, near Durham City. The 400-acre road-rail interchange would be close to Bowburn for easy access to the A1(M), A66 and the East Coast Main Line.

Council leader Ken Manton said: "We do not want this very large development opportunity lost."