MORE than £8.5million is set to be pumped into local economic regeneration after a council-owned company cashed in more than three million shares.

Lancashire County Enterprises Ltd, a company owned by Lancashire County Council, sold its shares in Enterprise Plc last week.

It sold 3,467,174 shares -- almost five per cent of the issued share capital of Enterprise plc.

Enterprise plc, which was taken over by Leyland-based ARM last year and now concentrates on utility and council contracts, was first created when Lancashire Enterprises Ltd was privatised by Lancashire County Council in 1989.

Lancashire Enterprises Ltd was originally launched in 1983 as the job creation arm of the council with Blackburn-born Jim Mason as chairman, a post he held until 2000.

At the same time, Lancashire County Enterprises Ltd was formed, and has acted as the economic development arm of Lancashire County Council ever since. A county council spokesman said: "The decision to sell the shares was simply a business one.

"Although it has not been decided exactly how the money will be spent, it will be used within the company for economic development."

Lancashire County Council currently faces the prospect of having to add up to 7.5 per cent to its share of council tax after the Government's standing spending assessment.

Band D Properties could face paying £855 a year if councillors refuse to budge on their predicted spending levels. They have now been set new targets to keep the rise to just 5.2 per cent -- including £4.4million off education, £4.5million off environment and £500,000 off socials services.

But the county spokesman said: "We cannot use this money to offset council tax rises, it isn't allowed.

"It will have to stay within the firm, which is wholly owned by Lancashire County Council."

When Lancashire Enterprises Limited was privatised, two firms were formed. Lancashire County Enterprises Ltd, owned by the county council, carried on promoting economic development and job creation in the county, while Lancashire Enterprise Plc, expanded its operations, working at regional, national and continental level.

By 1997, Lancashire Enterprises plc had changed its name to Enterprise plc. The public-private partnership between Enterprise and the County Council has been repeated across Europe to promote economic growth.

Economic development projects in East Lancashire included the regeneration of Eanam Wharf, Daisyfield Mill, both in Blackburn, and Newhallhey in Rawtenstall.