Nissan Motor Co. Starts Production Of Infiniti Q30 Vehicles...An employee handles a side panel of an Infiniti Q30 automobile on the production line at the Nissan Motor Co. production plant in Sunderland, U.K., on Thursday, Dec. 3, 2015. Nissan rose 0.7 percent at the close Thursday in Tokyo trading. Photographer: Luke MacGregor/Bloomberg
A worker on the production line at Nissan's Sunderland plant © Bloomberg

The government has kept its promise to support the growth of Nissan’s Sunderland car plant but has cut potential funding for other business projects in the north-east of England.

The north-east’s Local Enterprise Partnership is believed to have bid for about £150m of the £556m the government allocated to the north of England in the Autumn Statement. However, it has been awarded only £49.7m, of which the lion’s share of £42.2m has been earmarked for just one project: the development of the International Advanced Manufacturing Park (IAMP), next to Nissan’s factory.

The park, a proposed base for high-tech industries and advanced manufacturing, is expected to attract more than 5,000 jobs and bring in more than £300m of private sector investment during the next decade. While Nissan will not be the sole beneficiary, the IAMP funding is in line with the UK government’s pledge to the company to increase the use of British companies in the automotive supply chain.

However, that investment leaves only £7.5m for the rest of the area. Andrew Hodgson, who chairs the north-east LEP, said the allocation of cash from the Local Growth Fund was “potentially damaging” to the area’s strategic plan, which aimed to create 100,000 jobs over a decade. The north-east has the UK’s highest unemployment rate.

“Our [funding] allocation gives us no scope to fund a range of projects which would have driven new growth and provided real impetus to business development,” said Mr Hodgson. This would have also helped the north-east contribute more fully to the Northern Powerhouse agenda, he added.

Of the money pledged to the north, Greater Manchester received the biggest single allocation with £130m. That was almost twice the £67.5m that went to the Leeds city region, which is slightly bigger.

The Autumn Statement allocated £1.8bn from the Local Growth Fund across the country without giving details of specific projects. Along with the £556m for the north, London and the south-east are to receive £492m, the Midlands £392m, the south-west £191m and the east £151m. Details of how these funds will be carved up is due in the coming weeks.

Tom Bridges, Leeds council’s head of regeneration, complained that there was “increasingly an east-west divide” across the region when it came to public investment. James Ramsbotham, chief executive of the north-east England Chamber of Commerce, said the way the money had been parcelled out sat oddly with a day when the government was unveiling an industrial strategy to rebalance the economy and release its potential.

The government has made clear it will favour areas that have agreed to adopt directly elected mayors, and some observers said this had been a factor in the allocations. Greater Manchester and Liverpool city region are due to elect mayors; Tees Valley will also do so but councils covering the rest of the north-east rejected a devolution deal, including a mayor, last year. Tees Valley, which is not part of the north-east LEP area, was allocated £21.8m from the Local Growth Fund.

Andrew Hodgson, who chairs the north-east LEP, said he had no doubt the region’s decision not to back a devolution deal affected the size of its allocation. “The government has made it quite clear it’s its preferred governance model,” he said.

The IAMP, on the edge of Sunderland and South Tyneside, is expected to secure more automotive supply chain jobs following Nissan’s recent announcement that its new Qashqai and X-Trail models will be made at its north-east plant from 2020. That news followed a meeting between Theresa May, prime minister, and Carlos Ghosn, Nissan’s chairman and chief executive, in October.

One other eye-catching project announced in the Local Growth Fund allocation was £21m for a new conference centre at Blackpool’s Winter Gardens. The resort hopes this will help to bring political parties back to the city for the first time since 2007.

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