COMPANY directors have said that regional development agencies have little impact on business at grass roots level - despite their £2.2bn annual budget.

The comments are in a survey of members of the Institute of Directors, with business chiefs feeling the agencies are not doing enough to support economic growth.

Fewer than a third of business chiefs surveyed by the IoD understood the role of the agencies, which were set up in 1999 to fund economic regeneration and promote investment. In this region, there are two agencies - One NorthEast and Yorkshire Forward.

The survey found that 30 per cent of IoD members had not even heard of their local agency and, of those directors who had, only 13 per cent rated its performance as good or very good in promoting business efficiency, investment and competitiveness.

However, one silver lining for the region is that, of the 500 IoD members questioned in the study, only five were from the North-East and 20 were from Yorkshire Forward's territory across Yorkshire and Humberside.

Bill McGawley, chairman of the North-East IoD, insisted that its 721 members had a very positive relationship with local agency One NorthEast.

He said: "The North-East is a small region and its business community is well co-ordinated and integrated. We all know each other and work closely together, and while we might not agree on everything there is a great deal of harmony.

"We do feel that One NorthEast need a tighter focus on regional business priorities, concentrating on practical initiatives to support and encourage entrepreneurs.

"They also need to initiate more urgent work to raise businesses' understanding of their role and responsibilities."

He said the findings of the IoD survey were more relevant to the South.

Over the past six years, One NorthEast has received more than £1bn in Government funding. This year, it will get £242m.

David Allison, the agency's director of business and industry, said there was an increasing need for agencies to focus on projects that would have the maximum impact on the economy.

"This greater targeting of resources, particularly towards the more practical, enterprise-related activities, can be seen in our investment of some £278m from 2005 to 2008 directly on business, enterprise and innovation, together with substantial investment in infrastructure, skills and other areas which support business creation and growth," he said.

Simon Foy, director of investment planning for Yorkshire Forward, said getting to the grass roots of business needs had always been one of its biggest challenges.

He said: "We have an excellent working relationship with the IOD in our region, and we regularly consult with businesses to gauge our progress in supporting them."