BUSINESSES in the North-East and Yorkshire are leading the race for a £1.5bn Royal Navy contract that would create and safeguard about 1,000 jobs.

The Ministry of Defence (MoD) is in talks with several major arms manufacturers to upgrade the fleet's outdated weapons system and maintain it on a 30-year contract.

One of the front-runners is US corporation United Defense, which, along with its UK partner Northern Defence Industries (NDI), is hoping to sell its new Mark 45 system to the MoD.

If their bid is successful, the entire system will be manufactured in the North-East and Yorkshire.

North Durham MP Kevan Jones, who sits on the House of Commons Defence Select Committee, said: "This potentially is a great opportunity for the North-East.

"We have a way to go yet before a decision is taken and I will be working with NDI to lobby for it."

About 100 firms from the region gathered at an NDI conference in Newcastle Civic Centre yesterday, to hear how they could get involved.

The company is looking for one "prime contractor" capable of overseeing the entire project.

United Defense is talking to four large companies in the region over this role, but has refused to name them.

Tyneside armaments firm Vickers has ruled itself out.

NDI will provide a further 300 sub-contractors from the North-East and Yorkshire to produce the components.

The Royal Navy's weapons system is more than 40 years old. United Defense's solution is a gun that can fire several types of ammunition, including a guided missile with a range of 50 nautical miles.