THE minister in charge of delivering elected regional assemblies clashed last night with the boss of the Confederation of British Industry (CBI) over the Government's devolution plans.

At a fringe meeting in Blackpool, Local Government Minister Nick Raynsford said he would press ahead with plans to allow regions such as the North-East to hold referendums.

But Digby Jones, CBI director general, said the Government's proposals would lead to regional assemblies being nothing more than talking shops.

"It could make a bad situation even worse," he said.

He called on Mr Raynsford and his boss, Deputy Prime Minister John Prescott, to "stop and have a rethink".

Mr Jones said he was in favour of stronger regional government - but it should be through an enhanced managerial role given to more powerful regional development agencies such as One NorthEast and Yorkshire Forward.

There was "no evidence" that assemblies would improve economic performance. It would be "all talk and little positive action".

He said regional government should not be left to yet more politically-motivated politicians.

However, Mr Raynsford said the Government was merely giving regions that wanted it the option to go further down the devolution road started in 1997, with the creation of a Scottish Parliament and a Welsh Assembly.

"In the past, Labour governments saw the answer to regional problems was to move more investment from one region to another," said Mr Raynsford.

"What we are now doing is recommending that policy needs to be decided more in the regions than decided by Whitehall."

He said the assemblies would be "small and, above all, focused", with only 25 to 35 members. They would be a "new style of authority, with a strong focus on delivery and action".

Mr Raynsford said they would be "effective powerhouses, not talking shops".

All the signs coming out of this conference are that November's Queen's Speech will be the start of the legislative process that will allow the North-East to be the first region to have a referendum on an assembly within the next couple of years.