THE agencies charged with rebuilding the economies of the North-East and North Yorkshire are being strangled by Government red tape, according to a report today.

The report, by the Commons Public Accounts Committee, attacks the Government's refusal to give regional development agencies (RDAs) the freedom to tackle local problems and urges Government to beef up their powers in an effort to speed up the regeneration process.

One NorthEast and Yorkshire Forward control budgets running into hundreds of millions of pounds, which can be spent on regeneration projects, business development and grants to safeguard jobs.

They have been charged with taking the lead in redeveloping the region's industrial wastelands.

But the Commons committee accuses bosses of trying to meet Whitehall targets ahead of regional needs.

The agencies have ambitious targets. Their regional strategies envisage creating work for tens of thousands of people over the next decade.

In its first year, One NorthEast said it had created or safeguarded more than 15,500 jobs and it set a figure of 90,000 by 2009.

But today's report says red tape is preventing the agencies working effectively.

As proof, it highlights the red tape that tangled up One NorthEast's Strategy for Success scheme, aimed at creating jobs in science, engineering and technology.

The £200m plan established five centres of excellence, but was held back by an inability to win funding from other organisations.

The MPs say the bureaucracy hindering the strategy illustrates the way the agencies concentrate too much on meeting "Whitehall objectives and too little on longer-term regional impact".

They criticise a lack of influence over spending on skills and transport, which it says are "vital components of regional economic development" and a "failure to take seriously the RDAs' concerns about delays in granting approval to proceed with projects".

And it urges the Government to make clear where power lies when an RDA and a Government department clash over funding decisions.

Committee chairman Edward Leigh said: "I am very disappointed that RDAs have had to tangle with the bureaucracy of overly complicated funding and delays in decisions.

"They have been given too little freedom to respond to regional priorities and have had too little influence over spending on skills and transport, which are so vital to regional development.

"As key players in regional development, it is vital the RDAs are given the breathing space they need to address local needs and drive through successful development and regeneration."

Mr Leigh urged ministers to "streamline the funding sources available, cut unnecessary red tape, and determine the respective responsibilities of the various players at regional and national level."

A spokesman for One NorthEast said the relationship between One NorthEast and Government was stronger than ever and added: "There have been difficulties in the past as the regional development agencies trod new ground, but they have now established their credibility."

Juliet Williams, regional development agencies' chair of chairs, said: "This report draws a line in the sand between the old top-down approach to the regions and the emerging culture of greater trust, freedom and flexibility that RDAs and central Government departments are determined to nurture. This is a solid platform for the future.