Exclusive by Matthew Legg Business editor

Last updated 07:21, Friday, 21 November 2008

The Government is ready to step in to bail out Cumbria’s two critical building projects that have stalled because of the credit crunch.

An artist's impression of how the New Squares development would have looked

Cash could be injected to revive the Carlisle Northern Development Route (CNDR), the city’s western bypass, and the Penrith New Squares shopping and housing scheme, the region’s top civil servant has revealed.

Speaking exclusively to The Cumberland News, Steven Broomhead, the chief executive of the Northwest Regional Development Agency (NWDA), said talks on a deal for New Squares are at an advanced stage and a decision will be taken next Friday.

A possible rescue package for the CNDR is further off and could be dependent on the content of the Chancellor of the Exchequer’s Pre-Budget Report next Monday.

It has been widely speculated that a spending splurge on big building projects will be a key plank of the Government’s rescue plan for the economy.

Loans or so-called “gap funding” are being considered for both projects, Mr Broomhead said.

He added: “We are looking to step in on a number of schemes delayed by the credit crunch. Penrith New Squares is one.

“(Our role) will be to lend or gap finance to get things moving.

“The first phase of New Squares is to move the football club. We are not too far away from taking a decision about that. We have to look what the investment would be.

“We are in dialogue with Eden District Council and Cumbria County Council at the moment. A decision will be taken at the end of the month.”

Colin Nineham, leader of Eden District Council said: “We are putting together our case for funding and are delighted to see that they are looking at it very positively.

“We hope that any funding forthcoming from the NWDA can be used to enable works on phase one of the development to be completed.

“We see the interest expressed in the development by regional and national Government as confidence that the development can progress and that other funding can be secured in the short to medium term.”

On CNDR Mr Broomhead said: “We want to see what’s in the budget statement on Monday.

“It is a project we have flagged up that could require some public funding The Government is aware of it.

“There is a long list of PFI (Public Finance Initiative) schemes in the area we have flagged up.”

Mr Broomhead said he was aware of the importance of the projects on developing Cumbria’s economy and pledged to do all he could to ensure they progress.

He added: “We can never guarantee in these unpredictable, unprecedented times. But we are going to give it our best shot to get these projects moving.”

The first construction stage of the long-awaited CNDR has been delayed by three months after the bank that was funding it fell victim to the credit crunch.

Dexia, the Franco-Belgian bank, was the subject of a £5bn Government bail-out after it hit trouble.

When finished, the road will skirt the city for five miles from Newby West, on the A595, to junction 44 of the M6.

Work on the £77m Penrith New Squares scheme ground to a halt on October 6 when National Australia Bank withdrew its funding.

Work has also been suspended on Penrith Football Club’s new stadium at Frenchfield.

When finished the scheme would provide a new shopping centre and housing and would include a 55,000 sq ft Sainsbury’s store.

An extended version of Mr Broomhead’s interview will appear in the December edition of Business Gazette.