Talented graduates are the target of a Pounds 500,000 initiative to find attractive career opportunities for them in County Durham and stop the brain drain from the north.

Research commissioned by the local Training and Enterprise Council reveals that despite a preference to remain in the region the county's most highly qualified graduates tended to migrate because they were sceptical of career prospects at home. About half of County Durham's graduates leave the area, a higher proportion than most other counties.

The TEC also found through other research that small and medium-sized employers held negative attitudes towards graduates.

Some thought they would not remain with the company long enough, and others believed that high-flying graduates would not want to work for small firms or that they would not get on with the rest of the workforce.

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Some were sceptical that graduates could get on with customers or possessed enough common sense. Just 20 per cent of firms said they were seriously considering taking on a graduate in the next 12 months.

With help from the European Union's single regeneration budget the TEC will support a graduate recruitment agency opening next month to offer guidance and job placements in County Durham.

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TEC coordinator Peter Chinnery said the agency would try to get through to sceptical companies and help them get graduates on board.

"This helps both the graduates and the local economy," he said. "One reason why we lose more graduates with first-class honours must be that people are not aware of what's on offer."

The research found that those graduates finding work in the area tended to be concentrated in the large service sector because there were thought to be few prospects in engineering, manufacturing or information technology.

The target is to find jobs for more than 500 graduates and offer advice to a further 1,000 over three years. The agency is already helping graduates with the help of County Durham Careers Service and Durham University.

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