SPENDING watchdogs are investigating if LG Philips should repay millions of pounds of aid to the National Assembly after axing 870 Gwent jobs.

The National Audit Office has been called in to see if the electronics giant should hand back some of the government cash it was given when it set up its Newport plant in 1997. Ministers are already in talks with the company over the possibility of repaying cash after the company last month announced it was to close its Newport plant.

And economic development minister Andrew Davies (pictured) yesterday announced the NAO had been called in.

In 1997 the Welsh Office offered LG a £247million aid package including £69.5million of regional selective assistance on condition the firm created more than 6,000 jobs. The jobs total was never reached so the company did not receive the full aid on offer.

Mr Davies has not revealed how much was eventually handed over because of commercial confidentiality.

"We are in discussions with the company about reclaiming some of the elements of the money," he said.

"We have been aware for some time now that the number of jobs has not been created." Mr Davies said some 800 workers would leave LG on August 20 at the end of the statutory 90-day.

The remaining 70 will leave at the end of the year after decommissioning. Gwent Tory AM Laura Anne Jones said the Assembly must learn the lessons of LG and not waste time and money on future projects which folded further down the line.