HELP for struggling South Devon businesses, regeneration efforts, and netting vital Euro funding would be threatened by further cash cutbacks, it has been warned.

The spectre of additional spending cuts and their impact, as a result of the post-recession squeeze on public finances, has been raised by regional regeneration chiefs with MPs at Westminster.

The South West Regional Development Agency, tasked with boosting the economy of South Devon and wider region, has already had its capital coffers raided by the Government to the tune of £26million, leading to projects having to be ditched or scaled back.

On top of these cash cutbacks, the RDA has also seen its income plummet from land sales because of the recession.

Now the RDA has warned of the threat to its revenue budgets as a future government — whichever party wins the next election — wrestles to balance the nation's books which have plummeted into the red.

Members of the Commons South West Committee heard that this would impact on RDA investment in business support and Urban Regeneration Companies, and also raise a 'big question' over the ability to secure European cash that require match-funding.

This comes as private sector cash is 'drying up' because of the economic downturn, placing increased emphasis on public money to draw down money from Brussels.

Business Secretary Lord Mandelson has put the RDA at the centre of the economic recovery, arguing the body had played 'an indispensable role' during the recession, and were good value for taxpayers' money.

However, this did not prevent the Government from previously slashing its budget to fund a bailout of the ailing housing market.

And the risk to funding remains according to the RDA.

Asked about the 'tyranny of budget cuts', RDA chief executive Jane Henderson told MPs: "In the past year we have suffered some cuts in our capital budget — around £26million over this year and next year which came on top of us losing income from our own investments and operations because of the recession, and that was tough.

"As many in the region know, we have had to stand back and take some difficult decisions, withdrawing from projects we have been working on with partners over a period of time — they would have been good projects — and we have had to prioritise more sharply than before."

She added: "The next possible threat will come to our revenue budgets, and that raises a host of different issues.

"We invest a lot in business support, because we contract for the Business Link service and other support for business.

"We support quite a few 'arms-length' bodies, including local authority capacity urban regeneration companies and so on, which would come into the frame.

"By no means least, there will be a big question over our ability to match the European funds coming into the region; they are disproportionately large in relation to our Government grant, and that would therefore put at risk our ability to draw down vital European funds for the future."

Nigel Jump, SWRDA chief economist, said: "While we have no idea what the eventual outcome may be, the RDA's revenue budget is under threat in the same way as all current public expenditure is under threat from the need of the government, of whatever persuasion, to get UK public sector deficits under control in the years after the election.

"We would like to think that, at this difficult time for the economy, priority will be given to providing the kind of support we offer for our businesses and our workers to be competitive in the long run. In the present environment, however, we do not know how this might play out."