Business leaders have raised concerns about Tory plans to scrap a major quango set up to boost jobs and redevelopment in Sussex and the wider region.

The Conservative Party has placed the South East England Regional Development Agency (Seeda) in its sights, complaining the organisation is over-bureaucratic and costly.

It wants to scrap the agency, along with England’s entire regional tier of government, and give its powers over economic development and business funding to local councils instead.

Shadow Communities Secretary Caroline Spelman said in a speech last week that under a Conservative government, England’s eight regional development agencies would “evolve” into “leaner, more focused” Local Enterprise Partnerships based on sub-regional economic areas.

But business leaders have warned against scrapping regional development agencies (RDAs) because of the difficulty in making strategic regional decisions.

Mark Froud, chief executive of Sussex Enterprise said: “We would prefer any new government to look at the current structure of RDAs and focus on reforming them to improve performance rather than completely lose the positive impact much of their work has on the economy.

“Transferring RDA responsibilities to local councils could cause problems when it comes to making decisions from a regional perspective.

It’s vital that any regional body is as efficient and cost effective as possible, and clearly this is an area where progress can be made.

The main point is that it’s crucial for businesses to be fully represented within any organisation that makes decisions about economic development to make sure business issues are a priority.”

EEF, the industry body for 6,000 engineering and manufacturing firms, said: “Local authorities lack the critical mass, the funds and the ability to step outside local politics to identify the priorities for their region, to set out how best to meet them and to make it happen.”

Seeda yesterday issued a strong defence of its credentials for bringing investment into the region.

A spokeswoman said: “Seeda has demonstrated its value to the region.

Between 2002 and 2007 our work added £2.64 billion to the economy of the South East and over a similar period we have assisted 137,500 businesses.

Our work in the past year has created or saved 8,000 jobs in the South East.

“We are restructuring to focus on helping business grow in the current challenging economy.

“The changes will lead to a 19% reduction in administrative costs.

“This leaner, more agile agency is integral to developing the South East economy so that it continues to create jobs and prosperity in the region.

“Many business representative bodies are expressing active support for RDAs and what they can deliver on infrastructure investment, economic development and region-led business support.

“Some have expressed concern that devolving responsibility for RDA activities to a more local level runs the risk of creating a fragmented approach to economic development.”