EVERY household in Dorset could be £1,000 better off every year if the South West could raise productivity to the EU average, it is claimed.

Dorset and the South West are lagging behind UK and EU levels because of poor management, lack of ambition and decades of under-investment, say officials.

South West Regional Develop-ment Agency chairman Sir Michael Lickiss said: "The question of productivity gives us cause for concern and embarrassment."

Incomes in the South West are currently 10 per cent lower than the UK average - 13 per cent lower in Dorset.

"Productivity in the UK is low compared with many world-wide competitors. Productivity in the South West is even worse," Sir Michael told government and business leaders at the South West Regional Renaissance conference.

The South West regional conference came in the wake of Deputy Prime Minister John Prescott's announcement on the future of regional government in England.

Sir Michael warned delegates: "Unless we are competitive on the world stage, the future is not very attractive."

South West RDA officials believe the future lies in developing the region's strengths - aerospace, marine, tourism and food/drink.

Accentuating the South West's quality of life would also help to attract and retain the visionaries and skilled workers needed to drive productivity.

Paymaster General Dawn Primarolo said: "It's about the potential, the ability, the understanding and the resources we have here in the region and how we use them in the future.

"All the examples we envy in other nations - high standards of recycling in Germany, childcare in Scandinavia, green technology in the Netherlands - they have been working at it for years and we haven't. It's not going to be quick. The day-to-day problems will not go away."

Chief Economic Adviser to the Treasury Ed Balls said: "Britain has greater regional inequality than any other EU country.

"If we make the right decisions now we can close the regional divides."

Every household in Britain would be £1,000 better off every year if Britain could match EU productivity levels, he said.

DTI Minister for the Regions and Employment Alan Johnson said the motor industry had boosted productivity by getting Japanese engineers to inspect UK factories and suggest new ways of working.

That programme, he said, had now been extended to "metals, chemicals and tourism. The success has been amazing."