THE North-East can be “confident”

it will still receive crucial European development aid despite a shake-up that will hand decision-making to London, Vince Cable has insisted.

The Business Secretary said match-funding would be available even after the axeing of the organisation – the One North East development agency – that currently provides most of that cash.

The European Regional Development Fund (ERDF) has pledged £324m to the region over seven years to 2013 – but grants are denied without match-funding.

Labour MPs have raised fears that funding will dry up once responsibility is transferred to the Department for Communities and Local Government (DCLG), which will lose 60 per cent of its budget by 2015.

Across the country, a total of £1.9bn was still to be spent from the fund by last November – about 65 per cent of the £3bn that is due to be delivered.

By Robert Merrick Political Correspondent newsdesk@nne.co.uk Asked by The Northern Echo about the prospects for future aid to the region, Mr Cable replied: “I think it can have a good level of confidence.

“We realised there were quite a lot of transitional problems once you get rid of the regional development agencies.

“We are trying to manage them, including having a capacity to get European projects launched and then funding them. There is a unit in DCLG that’s doing this. My department is working with them and we are confident that we have the capacity to handle it.

“There is a lot of emphasis on regional development and institutions like the regional growth fund are there precisely to provide the counterpart funding.”

However, the growth fund was four times oversubscribed when bidding closed last week – attracting applications for well over £2bn, with only £450m on offer.

At present, council and business leaders at One North East assess ERDF projects and provide most of the match funding – including for NETPark, in County Durham, and the Tees Valley Industrial Programme, to develop advanced manufacturing.

Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland, poured scorn on Mr Cable’s confidence. “It sounds like nonsense. It just doesn’t make any sense,” he said.

“If the regional growth fund is already four times oversubscribed, how can there be any money in it to provide matchfunding for European funds?”

Mr Blenkinsop said vital knowledge was also being lost, adding: “It takes a lot of knowhow to get European funding.

If a Government department is going to do it, that will elongate the process.”