THE Conservatives are frantically rethinking their pledge to axe the Northwest Development Agency, after a furious backlash from business groups.

Ken Clarke, the party's business spokesman, revealed he had ordered a review – just weeks before the election manifesto is finalised – after admitting the current policy was "not clear".

The move follows criticism from the Tory-friendly CBI and British Chambers of Commerce that scrapping RDAs would fail to deliver the "strategic infrastructure which business thinks is so important".

It was immediately seized on by Labour as proof that the Tories were in disarray in a policy area crucially important in areas such as Merseyside.

Mr Clarke's intervention is also a humiliating slap-down of communities spokeswoman Caroline Spelman, who proposed replacing RDAs with town hall-led “local enterprise partnerships” with businesses.

Under that plan, the legislation that created the NWDA, and its counterpart in other regions, would be repealed and its funding streams from Whitehall cut off.

Ms Spelman later suggested a drastically-slimmed down RDA could survive where it was popular, but it would be stripped of powers over housing and planning, concentrating simply on business support.

Speaking to the Daily Post at Westminster, Mr Clarke said he was "insisting" on a review to decide whether RDAs should be axed and started with no "fixed views". He said: "We will then, finally, decide if there is any case for continuing with regional development agencies. I've been debating with my colleagues very recently.