Regional agencies offering support to industry face the axe after David Cameron appointed their most vocal critic to take charge of local government.

The new Prime Minister named Eric Pickles – who once called for regional development agencies (RDAs) to face the guillotine – as the man responsible for reorganising local government.

And one of his first tasks is set to be devolving the power and funding of the RDAs to local authorities.

Conservatives argue the shake-up of business support will help employers by ensuring decisions are made locally rather than unelected officials who report to Ministers in London.

But Birmingham Chamber of Commerce warned of “chaos” if the changes go ahead.

Plans to scrap RDAs were originally drawn up by Meriden MP Caroline Spelman in her role as Conservative Shadow Local Government Secretary, when the Tories were in opposition.

She now has a Cabinet role as Environment Secretary, placing her in charge of the Department of Environment, Food and Rural Affairs, which is one of the departments responsible for funding RDAs.

Under the Tory proposals, local councils will be invited to create their own local economic development agencies, which would receive much of the funding currently spent by the regional body.

Advantage West Midlands, the local RDA, spends £300 million a year providing training and other business support.

The coalition with the Liberal Democrats is unlikely to save the agencies, as the Lib Dem manifesto also warned that they could be scrapped.

It said: “Where existing RDAs have strong local support, they may continue with refocused economic development objectives.

“Where they do not, they will be scrapped and their functions taken over by local authorities.”

Vince Cable, the mastermind behind Lib Dem economic policy, is the new head for the Department for Business, another department responsible for funding RDAs.

And the joint policy document published by the new Government pledged: “The parties will promote the radical devolution of power and greater financial autonomy to local government and community groups. This will include a full review of local government finance.”

But the decision to appoint Mr Pickles as Local Government Secretary is the strongest sign that the days of Advantage West Midlands are numbered.

In an interview with the Birmingham Post before the General Election, when he was Conservative chairman, he said: “Basically, somebody asked me about what I actually quite liked about the RDAs.

“I won’t be shifted from this – I like the font on some of their reports. They’re very easy to read.

“What you want is real economic areas. Birmingham is a real generator of dynamism within the West Midlands, and you won’t be able to harness that.

“What we are saying is, if local authorities and other business go along with it, we’ll get rid of the middle man. We’ll give you the power to get cracking.

“And I think that’s something that an enterprising city like Birmingham and places like Wolverhampton would really welcome.”

John Lamb, of Birmingham Chamber of Commerce, said: “Scrapping RDAs and expecting local councils to work together instead will result in chaos.

“Councils will inevitably be biased in favour of their particular areas.

“The best scenario would be that we simply end up creating new RDAs, because there is a clear need for them.”

However, one policy announcement from the new government received a warm welcome from a key Birmingham business.

Birmingham International Airport welcomed confirmation in the coalition government’s policy document that a planned third runway at Heathrow will be scrapped, bringing more trade to regional airports.

Paul Kehoe, Birmingham Airport’s chief executive officer, said: “We welcome the Government’s new thinking, which seems to take a more pragmatic and equitable view.

“In these difficult times it makes sense to use and sensibly improve the assets that you have got, rather than building whole new runways.

“Aviation has its part to play in an integrated transport system, and rail must play a part in distributing the demand for international gateways, to Airports that have capacity. Birmingham is a prime example as it is just over an hour from London.”

Mrs Spelman, a businesswoman who helped run her family’s food and biotechnology firm before entering Parliament, said she looked forward to supporting agricultural industries as well as promoting the Government’s green agenda.