CHANCELLOR Gordon Brown and Deputy Prime Minister John Prescott have chosen the North-East to announce a massive boost for the regions today.

As well as pledging hundreds of millions of pounds towards job creation and regeneration, the announcement may also bring the prospect of North-East regional government a step closer.

Mr Brown and Mr Prescott will unveil the plans in Middlesbrough this morning alongside Local Government Minister Hilary Armstrong, Trade Minister Richard Caborn and Education and Employment Minister Michael Wills.

They have called together the chief executives of England's eight regional development agencies (RDAs) for a special briefing before the announcement. Last night, one official close to the plans said: "This marks a major change in relations between Whitehall and the regions."

Ministers have pledged to release an extra £500m to help eradicate urban decay in some of the country's poorest areas.

In his Budget, the Chancellor signalled his determination to strengthen the role of the RDAs by giving them greater freedom to spend money.

By 2003/04, money for RDAs will stand at £1.7bn - an increase of £500m.

In the North-East, the funding shake-up will allow One NorthEast to press ahead with its ambitious employment creation programme which aims to create 10,000 jobs by 2015.

It will also bring a measure of relief to Teesside which has been hard hit by recent job losses in the steel industry.

The Northern Echo revealed last month how regeneration chiefs had put together a package of measures since the announcement by Corus that it was to axe 6,000 jobs - including 1,000 on Teesside.

The blueprint for prosperity includes proposals for site clearance, reclamation of the long-awaited Middlehaven docklands site, a wind farm and new roads.

Tax initiatives announced in the Budget this week will also speed up regeneration and VAT has been slashed on refurbishment of vacant properties.

The RDAs will relish the prospect of greater spending powers, but in return the Government is to lay down stricter targets for skills, innovation and new technology.

Ministers are also expected to announce new regional watchdogs, made up of businessmen and union officials, that will hold the RDAs to account.

In the longer term, Urban Regeneration Companies (URCs) will tackle problems in the worst-off parts of the North-East head on.

Aimed at renovating brownfield sites to create homes, transport and offices, the URCs will supplement work already carried out by One NorthEast.

The announcement was keenly anticipated last night.

Hugh Morgan Williams, vice- chairman of the North-East CBI, said: "The Government is considering significant transfers of power from Whitehall to the regions."

Alistair Arkley, chairman of the Tees Valley Partnership, added: "Flexibility for RDAs will help us.

"Urban regeneration measures and tax breaks on brownfield sites will be helpful to the Tees Valley area."

Although RDAs will have greater spending freedom from April, a recent study by Manchester academics claimed they would still fail because they lacked the power to make a real difference.

The report by Manchester University's Centre for Urban Policy Studies concluded: "It remains difficult to envisage the RDAs in their current uncertain form impacting significantly on the economies of the regions such as the North-East."

Today's high powered briefing is expected to see further backing from ministers for Home Rule in the regions.

Labour has long been in favour of devolving power and the idea could well form a central theme in its bid for a second term in office.

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