WE ARE "bleeding" employment sites in York because they are worth so much more as housing.

That is the warning from Coun Dave Merrett, Labour group leader on the City of York Council.

He fears that in the short term, small businesses seeking in vain to relocate within York may take their trade and jobs outside the city.

Coun Merrett's concern, shared by both york-england.com, the inward investment organisation and the York and North Yorkshire Chamber of Commerce, is triggered by a number of cases in which the city's planners have recommended approval of change of use from offices to homes.

He said: "We need to be protecting employment sites and our failure to do this is one of the reasons why we are doing so badly in the investment in jobs and firms coming to the city.

"We are bleeding employment sites because they are worth so much more as housing. We are losing job opportunities."

The shrinking opportunities for new factories and offices at the right place and price in the city is one of the reasons that inward investment failed to meet targets last year, he said.

Where the aim was to bring 80 jobs to York, 29 were achieved; and rather than the 20 companies it was hoped would be lured to the city, there were just three.

"And these targets were kept deliberately low because we recognised that the York Inward Investment Board was in a state of transition", he said, referring to the Board's transformation into york-england.com with a much wider geographical remit.

Planners have argued that the policy to protect offices from housing development generally applied to larger employment premises rather than small firms. There are alternative office sites which have been approved such as Monks Cross South and York Central.

But Coun Merrett said: "Monks Cross will be a prestige office development, upmarket and expensive and therefore not suitable for all employers' needs. Is it immediately available? No. It has not yet been built. Meanwhile we have a short-term issue."

Dave Taylor, marketing director of york-england.com, said: "We have lost a number of employment sites in York and clearly we want this to come to an end because it makes it more difficult to attract inward investment, particularly manufacturing or production companies."

Len Cruddas, chief executive of the 700-member York and North Yorkshire Chamber of Commerce, said: "We recognise that the city needs more affordable housing, but when it comes to business space let's not be lulled into a false sense of security, knowing that projects like Monks Cross South, York Central and Hungate are on stream.

"These won't be in place for some time. Meanwhile it is very important that we at least maintain the stock of offices and employment places we have. If we don't we might damage our future prospects. Would-be inward investors or relocators within the city tend to look only once and if they don't see what they need, may simply go away."

Steve Galloway, leader of City of York Council said new office developments in Poppleton and Clifton were suitable for some types of small firms seeking to expand, but conceded that small manufacturers seeking to "step up" had the alternative of considering incentive offers of purpose-built factories in South Yorkshire.

"Neither the council nor anyone else can exactly match the land and building availability to the timetable of individual companies which reach the point where they feel they have to expand"

Meanwhile, he said, there was the prospect of a steady supply of new commercial land on the vacated Terrys site, at Hungate, at York Central and at the university, all of which would provide good quality employment for the next five to ten years.

Updated: 10:00 Friday, July 16, 2004