Business leaders in the West Midlands are drawing up alternative plans for a new regional development agency to replace Advantage West Midlands, which is due to be scrapped. Leading business organisations, including Birmingham Chamber of Commerce and the CBI, are working on the proposals and have organised a conference, where they hope to win the support of local councils for their proposal.

Senior figures with a detailed knowledge of government, including Shadow Treasury Minister Liam Byrne (MP for Hodge Hill) and Shadow Business Secretary Pat McFadden (MP for Wolverhampton South East), have been drafted in as advisers.

Although business leaders have been critical of plans to scrap the RDA — a quango that spends £200 million a year to support the local economy — they have been forced to come to terms with the Government’s decision. They are likely to come into conflict with local authorities such as Birmingham City Council, which is keen to take over the RDA’s budget and its authority over planning, transport and economic development.

Plans to abolish the regional development agencies were confirmed in the Government’s Budget on 22 June. Business Secretary Vince Cable and Local Government Secretary Eric Pickles have written to council leaders and the heads of business organisations asking them to set out their proposals for new bodies called Local Economic Partnerships, which will replace RDAs and be led by local authorities.

In theory, a local partnership could cover a whole region such as the West Midlands. However, councils want to create smaller bodies, and adding a regional agency as well would create a two-tier system, which is unlikely to win Government approval.

The conference has been organised by Business Voice WM, a body that brings together business community representatives including the CBI, West Midlands Chambers of Commerce, the Institute of Directors, Birmingham Law Society, the Federation of Small Businesses and others.

James Watkins, executive director of Business Voice WM, said: “The business community is taking a very pragmatic approach. The West Midlands region happens, with the odd exception, to be a self-contained economic entity. For example, if you look at the automotive supply chain, it’s nearly all in the West Midlands region.”

He said that more than 60,000 people travel to work every day between Staffordshire and the conurbation of Birmingham, the Black Country and Solihull, while another 40,000 travel between Worcestershire and the conurbation. “Although we very much support the Government’s aim to give more responsibility to local government, the fact is that if one part of the West Midlands wants to develop their economic future, it is tied in to what happens on the other side of the region.

“So, it is common sense that we should work with local government and national government to see what sort of co-ordination is needed at regional level. Our approach is not grounded in dogma or ideology; it is about economic reality.”