Business minister Prisk warns that economic development policy could fail

Business Minister Mark Prisk warned of "strong concerns" and "considerable friction" from businesses uneasy about the policy to replace regional development agencies like Yorkshire Forward with Local Enterprise Partnerships covering smaller areas.

In a leaked letter to Business Secretary Vince Cable he said that the policy would be doomed to fail if major business organisations became "detached".

The letter reveals the concern felt by Ministers at the unease of the business community in recent months ahead of last week's decision to give more than 20 Local Enterprise Partnerships the go ahead, including in Leeds and Sheffield.

"I want to alert you to the strong concerns of the business community of our LEP policy; in particular, the way in which LEPs have been formed in recent weeks," said Mr Prisk in the letter, which was sent in September but has only just been revealed.

"I have had strong representations since my return from recess from a wide range of businesses and business associations including the British Retail Consortium, the Federation of Small Businesses, the British Chambers of Commerce, EEF, and John Cridland of the CBI.

"You will be aware that the Business, Innovation and Skills Select Committee has been gathering evidence on RDA wind down and LEP policy. The evidence provided by businesses at that session further confirms these points. I believe there is considerable friction from the business community on this policy and how it is being implemented. At worst, the danger is that the CBI and others become detached from this policy heralding likely failure in large parts of England."

While Leeds and Sheffield City Regions had their LEP bids approved, two submissions for partnerships in the Humber – one for a north-bank organisation and one covering both north and south banks – and one for a York and North Yorkshire partnership were turned down.

The CBI said last week it had been "sceptical" of the policy but said the Government appeared to have listened to its concerns. However the IoD said it is "highly questionable" whether the policy will work.