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Leaders wary of RDA cuts

BUSINESS leaders have welcomed the government’s fast acting approach to reduce the deficit but have warned savage cuts on regional development funding could have a profound effect on the North East economy.

Regional development agencies (RDAS) were yesterday asked to find reductions totalling £270m in their programme budgets and a further £23m in administration costs in this financial year.

It remains to be seen what impact the spending cuts will have on One North East and business leaders last night warned against cuts that will stall the region’s economic recovery.

James Ramsbotham, chief executive of the NECC, said: “It is absolutely vital that cuts in public sector expenditure do not hamper the economic recovery which is still in its infancy.

“Whatever measures the Government does decide to take to this end must be designed to have a minimal impact on wealth generation in the North East.

“It doesn’t matter to us what name a regional development agency comes under or how it is branded, but having that organisation is absolutely imperative for the strategic objectives of the region.”

EEF, the manufacturers’ organisation in the North East, welcomed the early progress the government is making on repairing the public finances, but has also asked for clarity over their long term plans.

EEF North East regional director, Alan Hall, said: “Given the tough decisions it faces the government is right to make an early start and proceed with a focus on reducing the cost of government and ensuring value for money.

“However, the decision to freeze funding for frontline investments from the previous government’s Strategic Investment Fund could have significant consequences on investments already underway. Where commercial interests are involved these must be resolved as quickly as possible.”

Meanwhile, One North East said it remains fully committed to the region’s economy as it waits to hear how budget reductions will effect the organisation.

Chief executive Alan Clarke said: “We have channelled as much investment as we can into frontline support to help companies through the recession, to help them consolidate and grow during the economic recovery, as we have done in areas such as offshore wind and low carbon vehicles.

“We are greatly encouraged by the support demonstrated by local authorities and regional businesses for the continuation of economic development at a regional level in the North East.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .