MAJOR foreign companies deliberately exaggerated the number of jobs they could bring to the North-East, a report claims today.

Some foreign companies that have invested in the region have been accused of overstating job claims in order to win Government backing and funding for their plans.

According to research by Newcastle University's business school, about 15,000 jobs promised over a 14-year period never materialised.

Researchers also said ambitious job targets trumpeted by companies hoping to invest in the North-East should be treated with "a high degree of scepticism".

Foreign companies, especially the so-called sunrise industries from Japan and the Far East, have brought investment worth millions of pounds to the region during the past two decades. But despite the promise of thousands of jobs, many of these foreign companies have turned their backs on the region.

According to the researchers, between 1985 and 1998 foreign companies promised nearly 49,000 jobs, but total employment in their plants was just over 34,000 in 1999, a shortfall of more than a third.

More than 9,000 of the jobs promised were in the 50 plants that closed before 1998.

Newcastle University researcher Dr Colin Wren said: "Rather than some other explanation, it seems the number of jobs may have been deliberately over-estimated.

"Although we only looked at the North-East we suspect the findings apply to other regions and countries which benefited from inward investment, such as North-West England, Wales and Scotland."

Dr Wren said larger job scales implied better treatment from inward investment agencies, in terms of help with land, premises and financial assistance.

The study, published in the Oxford Bulletin of Economics and Statistics, also reports that companies that received help for their business plants from the main investment agency at the time, Invest UK, were less likely to achieve their employment goals.

However, regional development agency One NorthEast criticised the findings of the report, which it said failed to take into account the huge benefits foreign investment had brought to the region.

Ian Williams, head of business investment at One NorthEast, said: "I don't think this is a very productive use of people's time.

"These figures have been put together based on companies' expectations.

"The fact is some firms far outreach those expectations and others fall short. But the same pattern probably emerges with UK companies.

"When you look at the situation overall you see that around half of the people employed in the region work for foreign companies so there importance to this area cannot be overstated."

Mr Williams also denied that investment agencies were wasting public funds on job promises that never materialised.

He said: "Grants given to foreign investors based on the number of jobs they are promising contain claw-back clauses, which means the money will be returned if those jobs don't come about."

But Dr Wren said he was sceptical about whether any of the Government funding given to companies over failed job promises had been recouped.

The study analysed statistics relating to 265 new foreign-owned plants, which undertook 416 projects in the North-East over 14 years. Looking more closely, the team discovered that while smaller plants achieved their employment targets, the larger plants fell some way short.

The study found that a large plant promising 250 jobs had only between half and three-quarters of these in place in 1999, while a plant promising 1,000 jobs had about half in place by that time.

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