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Quangos slammed over public sector awards

Controversial quangos set up to boost England's regional economies award almost two-thirds of all grants to other public sector groups, research found today.

Of a total £2.9 billion in grants paid out by regional development agencies (RDAs) in 2007-08 and 2008-09, £1.8bn (62%) went to public sector organisations or projects, an investigation by the TaxPayers' Alliance revealed.

The research also found that £3.1m was awarded to trade unions, with the Trades Union Congress (TUC) and its regional divisions handed £2.6m, while large private companies such as E.on, BAE Systems and JP Morgan also received funds.

TaxPayers' Alliance chief executive Matthew Elliott said the findings called into question the RDAs' claims to be focused on supporting local business as he accused them of lacking "either success or legitimacy".

RDAs were set up under Labour to "spread economic prosperity and opportunity to everyone in the nine regions of England", according to the bodies' website, but the coalition Government pledged to scrap them.

The RDA website also says the bodies "take a business-led approach and bring vitality and expertise to the task of economic development and regeneration in the regions".

After obtaining details of every grant made by RDAs through Freedom of Information requests, the TaxPayers' Alliance found:

:: London Development Agency awarded £379,041,210 in grants to the public sector, out of a total of £452,714,267 (83.7%);

:: North West RDA awarded £361,609,021 out of £488,416,796 (74%) to the public sector;

:: One North East awarded £228,644,794 out of £315,234,287 to the public sector (72.5%);

:: Yorkshire Forward awarded £259,045,651 out of £451,104,915 (57.4%) to the public sector;

:: South West RDA awarded £126,066,997 out of £235,119,625 (53.6%) to the public sector;

:: South East England Development Agency awarded £123,663,498 out of £238,218,427 to the public sector;

:: Advantage West Midlands awarded £133,225,289 out of £281,660,197 (47.3%) to the public sector;

:: East of England Development Agency awarded £98,974,435 out of £224,333,318 (44.1%) to the public sector;

:: East Midlands Development Agency awarded £70,945,864 out of £192,121,079 (36.9%) to the public sector.

Big companies also benefited, with the North West RDA awarding grants worth a total of £4.3m to global defence firm BAE Systems, as well as handing £550,000 to investment bank JP Morgan.

The South East England Development Agency awarded energy giant E.on £50,000 in 2008-09, while One North East handed 3M - the makers of Scotch tape and Post-it notes - £270,000.

The coalition Government pledged to replace RDAs with "local enterprise partnerships", bringing councils and business together.

Previous calculations by the Liberal Democrats estimated that scrapping the bodies would save £2.3bn a year.

Mr Elliott called on ministers to act quickly, saying: "The regional development agencies are hugely wasteful and ineffective, and they should all be abolished.

"These quangos have claimed for years to be focused on business, but in reality the majority of their grants have been going to other bodies in the public sector.

"With a huge budget deficit, the RDAs should be at the top of the list for abolition to save money.

"We simply can't afford to spend billions on organisations that fail to fulfil their mission, and the RDAs lack any claim to either success or legitimacy."

Local Government Minister Grant Shapps said: "The Regional Development Agencies are too distant and unaccountable, meaning that taxpayers' money meant for regeneration and economic development have not been spent in the best way possible.

"The new Government will devolve down their funding and role to new partnerships of local councils and local firms, to ensure that taxpayers and deprived communities get a better deal."