Region's economic future after agency closes under scrutiny

Leaders from the region's 22 councils will discuss dividing the region into a series of "local economic partnerships", led by councillors and business leaders, instead of having the single regional development agency established by former Deputy Prime Minister John Prescott and which the coalition Government will abolish.

Discussions are expected to continue over the summer over how the partnerships should be set up but there is understood to be considerable support for bodies covering smaller areas, such as city regions, Leeds and its surrounding area and Sheffield and its surrounding area.

There could also be a Humber partnership, although there is likely to be debate around whether the north and south banks want to combine together or form individual partnerships, and a North Yorkshire one.

One of the key issues to resolve is whether there is any role for a region-wide organisation as well. Despite Yorkshire Forward winning credit for the way it has led the region's response to the recession and also for pushing the case for green technology, many Tories and Liberal Democrats are hostile to the idea of regional decision-making.

Businesses, which have been promised a strong role in the new partnerships, are keen for some sort of regional co-ordination and Labour will push strongly for giving the region more clout.

In Tuesday's Budget the Government promised a White Paper later this year setting out more details of how local economic partnerships will work, and Ministers will also have to address one of the key questions hanging over the changes – how much funding the new partnerships will receive, given Yorkshire Forward had a budget of 270m.

Council leaders will discuss the partnerships at tomorrow's annual general meeting of Local Government Yorkshire and the Humber (LGYH), a body which will co-ordinate their response to Ministers. LGYH said discussions will continue over the summer in anticipation of a letter from Government in September when decisions will have to be made.

Several council leaders have told the Yorkshire Post they favour sub-regional partnerships, and one said leaders were likely to agree "the death" of the regional tier of government.

Yorkshire Forward Terry Hodgkinson chairman said: "It is clear that Yorkshire Forward will not continue in its current form after March 2012. This is not news to us and we stand ready for change, which will further support our region's economy."