Selby MP John Grogan called for Yorkshire Forward's powers to be handed over to councils or the emerging Leeds city region, criticising the "bureaucrat-led" agency's record of standing up to the Government.

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He highlighted how ministers had bypassed the publicly funded regional development agency and insisted the assessment of the Leeds Arena is carried out by a Whitehall-based committee of advisers, known as the Industrial Development Advisory Board.

Mr Grogan said Yorkshire Forward had expanded beyond its original remit of business support and now makes regeneration decisions which could instead be handled by councils.

Speaking at the inaugural grand committee meeting of Yorkshire MPs in Barnsley, he said: "There are disadvantages in a bureaucrat-led system –which is what it is, with a veneer of business involvement and indirect democratic accountability.

"One is that when a decision goes against Yorkshire, Yorkshire Forward finds it difficult to voice the anger within Yorkshire and to make the case to the Government or other agencies that the decision should be different."

He highlighted the Leeds Arena saga as an example, adding: "It seems odd that there is a body called the Industrial Development Advisory Board in London, chaired by an accountant who is a senior adviser to Credit Suisse.

"Why is that body deciding whether there should be an arena in Leeds?"
Yorkshire Forward needs the approval of Lord Mandelson's Department for Business, Innovation and Skills (BIS) to make investments of more than £10m.

The agency's proposed £18m outlay for the arena would account for about 25 per cent of its cost, with the rest of the cash coming from the council.

Leeds council has agreed a fallback finance plan which it says guarantees the arena will be built, even if ministers continue to prevent Yorkshire Forward from spending the money.

Mr Grogan described Yorkshire Forward's chief executive Tom Riordan as a "magnificent man" but added: "It would be a better system if democratic Yorkshire councillors, whether in their own councils or combining together, could act together to take decisions."

Pudsey MP Paul Truswell also called for funding decisions to be "open and transparent".

But he gave only qualified backing to the arena, saying: "Some people might argue that the money needed to make that happen might be better spent on other priorities, such as the NHS, housing, care for older people, schools, transport and police.

"However, if the money that we are talking about is narrowly earmarked for economic schemes, the belief in Leeds is that the city should get its fair share – it needs an arena."