RDAs to be scrapped

The RDAs, which employ around 3400 people in total, were set up by the Labour Government to create regional economic growth and support businesses and skills. They have also been responsible for developing low carbon regional economies and to help businesses reduce their energy and fuel bills.  

The RDAs have helped fund carbon reduction initiatives and green technology programmes at a regional level. Last year, the North West Development Agency, for example, was behind £10 million of funding for carbon reduction initiatives in its region, including £4.4 million to help small to medium-sized businesses fund investments in the environmentally friendly capital equipment.

Meanwhile, a number of the RDAs were a key part of the 'Low Carbon Economic Areas’ created under the previous Government. The Midlands, for example, was named a Low Carbon Economic Area for Advanced Automotive Engineering with both RDAs – Advantage West Midlands and East Midlands Development Agency – delivering a programme of projects. The South West Regional Development Agency, meanwhile, was supporting the South West to become a global centre for harnessing energy from the sea.

But the RDAs have been criticised for stifling private enterprise and backing public sector organisations or projects at the expense of private business, which they were set up to help.

A recent report by the Taxpayers’ Alliance revealed that in the financial years 2007-08 and 2008-09 England’s nine RDAs awarded £1.8 billion out of £2.9 billion of grants to the public sector.

A spokesman for the South West RDA, told BBC News that it accepted the plans and recognised "that funding available for economic development work will be more limited in the next few years given the need to tackle the public deficit".

Budget documents said the RDAs would be abolished through a Public Bodies Bill and replaced by LEPs, which would "enable improved co-ordination of public and private investment in transport, housing, skills, regeneration and other areas of economic development."

It is expected the LEPs will work more closely with local authorities to reinvest the benefits of growth back into local communities.

Chancellor Gorge Osborne announced swinging public spending cuts in yesterday's Emergency Budget as part of efforts to reduce a £156 billion deficit over the next Parliament.

It is not yet clear what savings replacing the RDAs with LEPs will bring.

Prior to yesterday’s Budget, the Coalition Government announced it would cut RDA budgets by £270 million this year as part of £6.2 billion worth of Government cutbacks.