£ 180 m of European aid, exposed to the risk of North East cuts

Resources from the European Union have contributed to creating jobs in the North East.

With pressure on public expenditure have less money available in the region of.

But one source of funding appears to be still in plentiful supply, comes from the EU.

The European Regional Development Fund (ERDF) exists for the creation of jobs in the North East.

The last program began in 2007, with ￡ 360 m available to tenderers in the region.

She has two years to run and have up to ￡ 180 m still remains in the pot.

But it seems that cuts public sector in the United Kingdom actually could prevent the North East, getting his hands in a large part of this money.

The EU insists that the grant from the Fund only ever able to finance 50% of the cost of a project-the imposition of the applicant to raise the rest. Without evidence that each project has with the remaining 50% of the funding will be paid on the spot not European subsidy.

In the past a large part of this ' match funding ' as is known, has come from the Agency for regional development of one North East, or local councils.

But one North East has had its operations, reduced in preparation for its elimination and the tips are cutting back.

Companies who want European subsidies, are at risk of being left high and dry.

Hugh Morgan-Williams from the regional CBI says in the last rounds of cuts, banks have stepped in an alternative, but this time they are proving reluctant to undertake.

And in any event, he says, companies that want to get access to the EU money are sometimes risky proposals, which will attract the banks.

They often begin with unproven business ideas.

One example is the UK Haptics in Newcastle. When it started the first, the company struggled to find all financed.

UK Haptics using European assistance to develop systems for virtual reality to help medical personnel practice their techniques.

It uses the technology of nedokazalite to a large extent is virtual reality. The company is saved however, when it secured ￡ 50 000 from the Fund, which is composed of the money from the ERDF and one North East.

This helps it develop systems, allowing the medical staff to practice procedures for virtual patients.

Business has just won ￡ 1 m contract with the pharmaceutical company and plans to double the work force. But managing director Gary Todd is clear that the activity would not if it is not for a grant.

And by 2007, assessed the ERDF money have created jobs for 2 500 and helps the 5000 companies.

So you can add to these data to lose?

North East Labour MEP Stephen Hughes thinks so. He believed that the Government is pulling the carpet in the region.

He says, without European aid to the North East can be a huge disadvantage in a time when each project to additional questions.

His Conservative colleague Martin Callanan admits match, financing from public authorities is now in short supply. But he believes that good projects will still be raising funds from the private sector.

And he says that there is some doubt as to whether the ERDF has offered North East value for money in the past.

It will be some time before we know whether the EU will end up unspent. There are still more than two years in order to find new sources of funding for the match.

But some doubt the Government can not too heartbroken if the North East does not succeed.

Although the money initially will return to Brussels, a large part of this would then be returned to the United Kingdom as a reduction of contributions to the budget of the EU of t is.

So that North East loss would still finance profit.

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