THE Conservatives have admitted they will not scrap regional development agencies as they seek to end policy confusion just weeks before the General Election.

Two members of David Cameron's senior team, including former Chancellor Ken Clarke, were forced to send a memo to all Tory MPs in the hope of finally clarifying their proposals.

Labour last night claimed the Conservative position had descended into a "shambles".

In the letter, seen by the Western Morning News, Mr Clarke, the Shadow Business Secretary, and Shadow Communities Secretary Caroline Spelman, appear to row back from previous talk of subjecting the quangos to the "guillotine".

They insist the South West RDA will be "reformed" but not "scrapped". It will be stripped of housing and planning powers and "focused" on creating economic growth in the region.

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Today, the Tories will seek to seize the economic agenda with the publication of a review by Dyson vacuum cleaner tycoon Sir James Dyson into making Britain the leading hi-tech exporter in Europe. The Tories have also pledged to reduce corporation tax rates, scrap taxes on the first 10 jobs created by new businesses and promote green jobs.

But their apparent pledge to abolish RDAs had attracted sustained criticism from Labour, most notably Lord Mandelson's repeated claims the Conservatives were being "reckless".

Business leaders, including the CBI and British Chambers of Commerce, also opposed scrapping the SWRDA, fearing big decisions on strategic planning would be left to town halls.

In January, the Conservative policy was thrown into doubt when even Mr Clarke admitted it was "not crystal clear" and he was still "trying to add some detail to the policies".

In the letter to Tory MPs and candidates, Mr Clarke and Ms Spelman "thought it would now be helpful to confirm the key elements of our policy". They expect councils to "come forward with proposals for new local enterprise partnerships to replace the regional bodies" but do not commit to a wholesale scrapping of the RDA as has been suggested in the past.

"The boundaries of local enterprise partnerships will reflect natural economic areas," they say.

Some senior Conservatives have suggested Cornwall, Devon and possibly Somerset could go it alone from the rest of the South West region, which stretches as far as Gloucestershire and Wiltshire. But councils could decide to maintain the status quo, and leave the RDA untouched.

Conservative sources admit they hope the letter will draw a line under policy confusion, and reassure the business community in the Westcountry that, in the event of a Tory election victory, the future of economic regeneration will not be put at risk.

In the letter, Mr Clarke and Ms Spelman say: "The regional development agencies are the remains of John Prescott's failed experiment of regional government. Since they were formed in 1999, they have spent £17 billion, yet the gap between the greater South East and the rest of the English regions has widened. So, while we recognise the RDAs have had some local successes, we believe that the current arrangements can be improved. The Government has tacitly admitted this by deciding to cut RDA budgets by £300 million last year."

In recent months, Lord Mandelson has stepped up his defence of the RDAs, staging elaborate press events to make announcements about their spending and insisting they must play a key part in the economy's return to growth. But Labour's position has been undermined by the Government's decision to cut £26 million from the South West RDA's budget at the height of the recession.

Pat McFadden, Labour's business minister, said the letter was "a clear attempt to obscure the Tories' real intentions, rushed out as they panic about the unpopularity of their policy".

He added: "Labour believes the RDAs have played a key role in helping businesses through the recession and are critical to their future, which is why we will keep them – our clear and consistent position."