Fears for schemes to revive region as £40m cut

Government cuts to the budget of regional development agency (RDA) Yorkshire Forward this year have led to funding for regeneration projects to be slashed by more than half, throwing the pressures on public spending into sharp focus at the start of the General Election campaign.

Yorkshire Forward has been holding talks with every council in the region to discuss what projects will have to be delayed or even cancelled because of the cuts, which have been imposed partly because of a 300m raid on the budgets of the nine RDAs to help first-time buyers.

Among the projects facing delays are the Rotherham town centre regeneration plan, expected to pull in 2bn over 25 years. Officials in North Yorkshire expect funding to be halved, while schemes in Bridlington, Goole, Hornsea and Withernsea could also be at risk. Other councils are still calculating the impact.

It has led to a furious attack by the Conservatives, whose plans to strip powers from the RDAs and give them to councils have been heavily criticised by Labour which claims the move would leave a "great big gaping hole" in support for the economy.

It also comes after the Yorkshire and Humber select committee – made up of five Labour MPs – criticised the cuts being imposed on Yorkshire Forward.

Shadow Secretary of State for Local Government and Communities Caroline Spelman said: "Despite the Government's assertions that RDAs are an important level of regional bureaucracy it seems that their actions don't match their rhetoric. Previously a Labour-dominated select committee has admitted that the Labour government has slashed funding for the regional development agencies.

"And now, the Government has been yet again caught out by slashing its Yorkshire Forward funding."

The Government cutbacks have seen Yorkshire Forward's "geographic programme" – which gives money to councils for regeneration – slashed by more than 50 per cent, and with funding uncertain beyond March 2011 there are fears of further reductions to come.

In 2009/10 the agency spent about 70m on urban and rural renaissance projects but this has been cut to around 30m this year. As well as money being diverted to help people get on the housing ladder, this year's budget has also suffered because 24m was spent last year to stimulate the economy.

Later this week councillors in Rotherham will be told the cuts will have a major impact on plans, with an anticipated 8m allocation falling to just 4.8m.

In a report to the council's Regeneration Scrutiny Panel, which will meet tomorrow, John Smales, the authority's development team manager, warns of "severe cutbacks" and, although he insists none of the schemes will be scrapped, he says work is planned to minimise delays from the lack of funds.

Money worries have been an issue for those behind the 25-year Renaissance plans for several months, with the plug pulled completely on a plan to replace the All Saints' Building.

Annual funding in North Yorkshire is expected to be slashed from 8m to 4m, with senior officials from the York and North Yorkshire Partnership admitting several schemes would now be delayed and the uncertainty meant there was a reluctance to plan for new projects.

East Riding of Yorkshire Council has admitted that some projects may have to be phased differently and possibly over a longer period that originally planned.

Speaking in Leeds at the launch of the local Labour Party's election campaign, communities secretary John Denham said RDAs such as Yorkshire Forward have a "critical" role to play in the regeneration of the region and the development of the local economy.

"The RDA is crucial," Mr Denham said. "They provide funds for regeneration, they coordinate the development of the local economy, they can help develop the industries which are going to provide jobs in the future – and if you take away the RDA there's nobody who's going to do that.

Yorkshire Forward is unable to comment during general election campaigns.