On the day deep cuts in public spending were revealed, Vince Cable gives the North-East cause for optimism.

BUSINESS Secretary Vince Cable last night held out hope that a high-speed train factory could still be built in the region despite public spending cuts that are expected to have a devastating effect on the North-East.

Speaking exclusively to The Northern Echo only hours after Chancellor George Osborne revealed the deepest cuts in decades, Mr Cable said the train project – and the promise of thousands of North-East jobs – was still very much alive. Campaigners had feared the worst when Mr Osborne failed to mention the Inter-City Express Programme in his spending review speech to the Commons.

Talking about Hitachi’s £7.5bn plan for a factory in Newton Aycliffe, County Durham, Mr Cable said: “There are encouraging signs.

We have had a very good application.”

The Business Secretary’s announcement was one of the few positive notes on a day when the Chancellor laid out how the coalition would save £81bn over the next four years.

Among the high-profile casualties of the cost-cutting drive were major road improvements to the A1 in North Yorkshire and the A19.

And some local councils warned of “financial collapse”

after suffering some of the deepest cutbacks. Town hall leaders, who must implement savings of 28 per cent over the next four years, spoke of “real pain and anxiety for millions of people”, with social care in the firing line.

But Communities Secretary Eric Pickles insisted the cuts could be made painlessly if councils made the efficiencies he expected.

The cuts to frontline spending would have been even deeper but for the Chancellor’s decision to cut a further £7.5bn from welfare bills – including limiting most sickness benefit claims to a year.

Police budgets will be cut by 20 per cent by 2015, threatening a loss of 18,000 officers, as part of an overall £81bn reduction in government spending.

Durham and North Yorkshire police immediately warned of civilian job cuts.

Mr Osborne insisted his long-awaited spending review hit top-earners the hardest and contained a plan to restore economic growth, pointing to measures to boost transport, science and skills.

But the Institute for Fiscal Studies rejected the first claim – saying it only punished the rich if the Treasury included tax rises announced by Labour before the election.

The Work Foundation think-tank warned that most growth would be “in London and the South-East”, while areas with the weakest private sectors – such as the North-East – would struggle.

Ministers confirmed that local enterprise partnerships – the replacement for development agencies – would have no direct funding, ensuring a massive cut in spending on economic development in the North.

It was immediately clear that the biggest loser was Mr Pickles’ local government department.

It must cut 62 per cent from its budget.

Iain Hasdell, KPMG’s head of local government, predicted “financial collapse” at some town halls, saying: “I am expecting this challenge to be beyond some councils, which will run out of cash.

“Central government is likely to have to effect financial rescues of a small number of local councils.”

But, speaking to The Northern Echo, Mr Pickles said services could be protected if councils “cut deep into their administration”.

Speaking about the Inter- City Express Programme, Mr Cable said: “My colleagues in the Department of Transport are looking at it (the bid) in detail.

I do not want to build up expectations, but it looks to be a good project.”

Sedgefield MP Phil Wilson, who has been campaigning with The Northern Echo to bring Hitachi to Aycliffe, said: “The glass is still half full.

That it hasn’t been mentioned in the statement means the door has not been closed.”

The Department for Transport said the A1 Leeming to Barton upgrade, in North Yorkshire, was “not considered realistically likely to receive funding in the current spending review period or the next one” and has been cancelled.

The upgrade – work on which was due to start in 2014 – would have meant about ten miles of dual carriageway being converted to a threelane motorway.

Work on the section from Dishforth to Leeming has already started and is due to be completed in 2012.

Meanwhile, upgrades to the A19 at Seaton Burn and Moor Farm – considered crucial by the North East Chamber of Commerce – have also been cancelled.

Mr Osborne hailed a “tough, but fair” spending review, telling MPs: “Today’s the day when Britain steps back from the brink, when we confront the bills from a decade of debt. It is a hard road, but it leads to a better future.”

Shadow Chancellor Alan Johnson said: “This is a reckless gamble with people’s livelihoods and the case for it is unravelling fast.”