PLANS for a £100m fund to kick-start the economic rebirth of the North-East have been revealed by Deputy Prime Minister John Prescott.

The Northern Way Business Plan aims to close the North-South divide by attracting investment and encouraging more people to start their own businesses.

It focuses on tackling skills shortages, improving transport links, getting people off Incapacity Benefit and back into work, and funding research and industry programmes.

For the first time, the plan sets out how cash pledged by the three North of England regional development agencies and the Government to the Northern Way Growth Strategy will be spent over the next three years.

Up to £5m will be spent creating a design centre at Baltic Business Park, Gateshead, incorporating the latest advances in science and technology, while more than £3m will be used to help establish a £6.5m National Industrial Biotechnology Facility at the Wilton Centre, in the Tees Valley.

Mr Prescott said: "We launched the Northern Way just over a year ago with a clear mission - to transform our Northern regions and narrow our £30bn output gap with the South.

"By working together, the three northern regions can help to build a stronger economy and a create a superb quality of life.

"The allocation of the £100m is a big step forward. It shows that we mean business and will help us to attract even more public and private investment and development over the next 20 years."

The priority areas for action include:

* £15m to help fund centres of excellence in leadership, innovation and skills;

* £12m to be spent on marketing the North-East effectively to target investors and tourists;

* £10m to develop two science research centres and encourage the transfer of knowledge from institutions to companies;

* £15m to meet employers' skill needs in areas of short supply;

* £8m to help encourage people into setting up their own businesses;

* £12m is to help get large numbers of people from Incapacity Benefit into work;

* £12m to produce transport improvements and develop the case for a new approach to transport investment in the North.

In the Tees Valley, the fund will aim to create a strong and diversified economy by supporting the development of a more competitive heavy industrial complex, nurturing new energy companies, including hydrogen, biodiesel and wind energy, and securing the continued expansion of Teesport and Durham Tees Valley Airport.

Alan Clarke, chief executive of regional development agency One NorthEast, said: "The Northern Way is a once-in-a-generation opportunity for the North-East to boost its economy by uniting our strengths with those of our northern neighbours."