A QUANGO that opponents say only invests 14 per cent of its budget in the North of England is to be given responsibility for securing all of the country’s inward investment once the regional development agencies (RDAs) are axed.

The handing of the powers to UK Trade and Investment (UKTI), a Whitehall-based quango, led to claims by Labour MPs that the three northern regions – North- East, Yorkshire and North- West – will lose out in favour of the south.

Mark Prisk, the Conservative business minister, revealed the new powers for the UKTI yesterday at an inquiry by the Commons business committee into the role of Local Enterprise Partnerships’ (LEPs), which will replace the RDAs.

It means the LEPs will not have direct control of attracting overseas investment into their areas.

Mr Prisk denied that the Labour MPs’ 14 per cent figure was correct, insisting 47 per cent of recent investments by UKTI had gone to the northern regions, or 27 per cent in cash terms.

Questioning Mr Prisk yesterday, Labour MP Jack Dromey said: “UKTI’s track record is clear. Is this not a recipe for the Midlands and the North losing out?”

Mr Prisk said the quango would have “strong roots” in each region, but added it was nonsense to have separate bodies “jostling” for the same business on trade missions overseas.

“Particularly abroad, it is very important there is a clear single voice trying to attract inward investment,” he said.

Asked what roots in the regions meant in practical terms, Mr Prisk replied: “We are getting ahead of ourselves.

That will be set out in the coming months.”

In July, Business Secretary Vince Cable agreed there was a danger that most UKTI-led investment would flow to the South-East.

Asked then if LEPs could enjoy similar powers to development agency One North East over inward investment and key sector development, Mr Cable replied: “Yes, we would be sympathetic to that approach.”

There is speculation that the Government will announce as early as next week that two LEPs will be set up in the North-East – one covering the five councils of the Tees Valley and the other from Durham to the Scottish border.

It comes as the proposed LEPs prepare to hear whether they will receive their own funding, or merely co-ordinate bids to the Government’s regional growth fund – worth £500m a year, between next year and 2013.

Without separate funding, the shake-up will deliver a massive funding cut for economic development in the North, just as huge public sector job losses are likely.

The North-East Chamber of Commerce, which represents about 4,500 members, had led calls for a rethink of the proposal to hand the RDA’s powers back to London.