The region's cultured pearls

The new music centres and art galleries are so big that they dominate the skyline of the Tyne, but it is not just Tyneside where this phenomenon can be seen.

The scale of the cultural regeneration in Shildon, with its new railway museum, is much smaller but no less important to the local economy.

The same can be said of Sunderland and Alnwick, in Northumberland, and may one day be said of the Wear Valley, where cultural plans are likely to fill the hole left by the withdrawal of the Blue Circle cement company.

On Tyneside, the opening of the Baltic art gallery, followed by the construction of the Millennium Bridge and then the Sage Gateshead have transformed the region's image.

These developments are the most recent in a long chain that can be traced back to the 1980s, when Gateshead Council started populating its derelict areas with works of art. The largest, and most famous of these, was the Angel of the North, which took root in a former pithead baths in 1998.

"Fifteen years ago, the region was at the edge, isolated, lacking in ambition, had a fractured leadership and was under-performing in culture, transport and tourism," says NewcastleGateshead Initiative's chief executive Andrew Dixon, formerly the North-East executive director of Arts Council England.

"The region was insular with few international connections and had the lowest levels of attendance in arts. Business tourism was bringing in less than £5m a year.

"When I got involved in the Arts Council in 1995, we launched a major capital strategy. It aimed to raise £200m for culture facilities and was about putting right 100 years of under-investment in the region.

"It was such an ambitious plan that it subsequently became a major driver for regeneration and development."

One publicly-funded cultural development, if correctly placed, can suck in privately-funded developments alongside it.

"In pure financial terms, the strategy has been principally led by public sector investment through Arts Council lottery cash, European regeneration development funding and local authorities," says Mr Dixon. "But, indirectly, it has led to a lot of quite significant private sector investment in housing, business and hotel development.

"For example, developments on the Quayside have led to more than 3,000 new homes along a two-mile stretch and a business park with 1.5m sq ft of office space.

"Cultural organisations in themselves have become an important part of the region's economy."

Altogether, there has been about £1bn of investment in the Tyne's river corridor. The Sage Gateshead has an annual turnover of £12m and employs more than 500 people.

"The region now offers cultural activities throughout the year," said Mr Dixon. "People who come to NewcastleGateshead or the wider region can expect cultural activities every day, which did not used to be the case.

"There has also been a growth in airport expansion; a lot of flights are outbound, but a sizeable proportion of routes are inbound, with many people coming for the culture and heritage of the North-East."

It is not just camera-laden pleasure tourists. It is businessmen coming to work and talk - the Labour Party's spring conference was conducted in front of a national TV audience at The Sage earlier this year.

On Tyneside, there has been a 25 per cent increase in demand in the past year for national and international conferences. About 1,000 new hotel rooms have become available in the past three years, while NewcastleGateshead is expected to realise £100m in tourism cash by the end of this year.

Another river, a similar story. In Sunderland, the National Glass Centre has had several years to bed-in and has become a hub for new housing and light industry development.

Chief executive Katherine Pearson says: "The centre has been very important in creating a focal point in a landscape that was post-industrial. Its development was significant in leading the ongoing and continuing regeneration of the River Wear in the area.

"It was instrumental in building confidence and encouraging the private sector development. There has been housing development near the business park, and the centre provides leisure and culture facilities for that environment, as well as education and employment opportunities."

She added: "Culture-led regeneration is one of the fastest- growing sectors in the UK, both in terms of cultural institutions and stimulating small and medium-size enterprises."

At Shildon, in County Durham, the Locomotion: National Railway Museum is helping turn around the fortunes of the town. Opened in September last year at a cost of £11m, visitor numbers were predicted to reach 65,000 in the first year, but exceeded all expectations by topping 200,000.

Museum manager George Muirhead said: "One of Locomotion's first impacts is that it has put Shildon back on the map. After the Shildon wagon works closed in 1985, the town suffered terribly - the number of shops fell to as low as 12.

"Shildon was synonymous with the wagon works and this takes the town the full circle.

"We know that nearly 40 per cent of our visitors come from outside the region. Shildon has had national and international exposure, and this has helped it find its heart."

The museum employs 18 local people and trades with 47 local companies, but the spin-off is wider. Shildon railway station has been refurbished and local house prices have gone up. A new estate agent has opened offices in the town.

John Holmes, One NorthEast director of regeneration and tourism, said tourists now bring £1bn a year to the region and about ten per cent of the workforce is employed in tourism-related industries.

Such is the area's turnaround that when Locomotion reached the finals of the Gulbenkian Museum of the Year Award, the name "Shildon" was spoken in the same sentence as a prestigious, country-wide, cultural award and no one blinked an eye. Who would have thought of that a decade ago?