TWO major North-East town centre regeneration projects could be casulaties of a Government move to slash regional development budgets.

Bosses at England’s Regional Development Agencies, responsible for major strategic job creation projects, have been told they have to save £300m as a result of the financial crisis.

The cuts have put scores of redevelopment projects in jeopardy.

In the North-East, the Bishop Auckland Town Centre Renaissance Scheme and Auckland Castle Park projects have effectively been axed after One North East’s budget was reduced by £47m.

The Government has reallocated £300m to its HomeBuy Direct scheme, which helps first-time buyers.

Development agency Yorkshire Forward loses £40m.

With each development agency pound spent expected to generate another £4.50 locally, it means the region will miss out on more than £250m as it battles the economic downturn.

David Cramond, One North East director of capital development, said: “One North East has been through a rigorous budget-setting exercise this year to decide regeneration priorities.

“Significant reductions in our funding mean that our capital budget will reduce by £47m over the next two years.

“We have also re-prioritised £46m spending to provide immediate and direct support to businesses during the recession.

“Unfortunately, this means the schemes at Market Place and Auckland Park cannot be supported in the short-term.”

The £10m renaissance scheme has already seen work completed in Bishop Auckland, such as Fore Bondgate and Theatre Corner, which was repaved and a bronze statue of comic Stan Laurel erected.

Work was expected to continue with the redevelopment of Market Place, as well as shops and housing.

Plans to restore Auckland Park were running alongside the scheme and would have transformed the north end of the town.

However, both projects had been counting on support from One North East, Durham County Council and a number of other sources.

The Heritage Lottery Fund said last night it was unable to support a £2.9m grant for the park signalling the end of that project.

Ivor Crowther, from of Heritage Lottery Fund North- East, said: “While we recognised the historical importance of Auckland Castle Park to both the local community and the wider county of Durham, competition for our money is tough.

“We felt that plans for this project were not sufficiently developed, and so we unfortunately could not support it.”

Bishop Auckland councillor and cafe owner, Sam Zair, said the news was devastating for the town which is now effectively half finished.

He said: “The knock-on effect in terms of tourism and business is worth hundreds of thousands of pounds to the town, if not more.

“What we need to do now is make sure that we keep whatever money has been pledged to the town ringfenced so we can try and move forward.

“These are tough times we are facing and tough decisions have to be made and we have to make the best of it.”

Graham Wood, economic regeneration manager at Durham County Council, held out hope for the town and said it would look elsewhere for funding.

Meanwhile, One North East has said that despite cuts in public spending, there was still scope to fund redevelopment in the region.

Mr Cramond said: “One North East has approved funding for a number of other schemes across the region.

“Sites in County Durham include Durham City Market Place and Seaham North Dock.

“Other schemes that come forward will be assessed using the same, employment-focused criteria.

“We have worked closely with our local authority partners in County Durham to focus funding on priority schemes that will help get the region and businesses through the economic downturn in the best possible shape.”

Helen Goodman, the town’s MP, did not return The Northern Echo’s calls.

A Department for Business spokesman said: “The Regional Development Agencies (RDAs) remain key to the delivery of Government policies and they are making a real difference to the economy.

“But the current economic climate has meant that tough choices are needed on spending.

“RDAs have to work within their budgets and must reprioritise their investment decisions and financial commitments to be sure that their money is spent in the best ways to help their regional economies.”