THE Government has blocked controversial plans for a retail warehouse complex next to Gateshead's MetroCentre.

Deputy Prime Minister John Prescott, in his role as Secretary of State for Transport, Local Government and the Regions, has overturned a planning inspector's recommendation that the development be approved.

Birmingham developer J J Gallagher wanted to build non-food stores, selling bulky goods such as household appliances, on the former Hannington Works site, which is the size of several football pitches.

Gateshead Borough Council initially refused planning permission, claiming the scheme would draw trade from neighbouring town and city centres, such as Newcastle, Sunderland, Consett and Stanley.

It later told a public inquiry into the scheme that its opposition was based on the fact that the developer had not complied with Government planning guidelines to look at other, possibly more importat sites for the development.

Planning inspector Susan Hesketh recommended that the plans should be approved, but Mr Prescott stepped in and ordered refusal.

He said: "There is strong evidence that suitable alternative, sequentially preferable, sites are available.

"In addition, it is likely that some of the retailing proposed will not be bulky goods and could be carried out from town centres."

Jerry Barford, Gateshead council's planning chief, said he thought the firm might try again to win permission.

He said that he expected the company to study Mr Prescott's decision carefully and look at whether an amended development might be acceptable.

Derwentside District Council opposed the development, fearing that it would take business from Consett and Stanley - only a few miles from the MetroCentre - and threaten their ability to attract new traders.

Its leader, Councillor Alex Watson, welcomed Mr Prescott's decision, saying any further development near the MetroCentre would be "over development".

He added: "The MetroCentre has affected towns like Stanley and Consett - it gets trade from here because it is only a few minutes' drive away and there is a good link.

"We have lost businesses since it opened. The furniture store, Conroys, had a place at Stanley and at the MetroCentre. They contracted and, at the end of the day, the Stanley store closed."

No one at the developer was available for comment.