Gareth Thomas says the WDA could lose key staff

Gareth Thomas has broken ranks to call for an inquiry into the decision to scrap the Welsh Development Agency.

The WDA, the Wales Tourist Board and post-16 education body Elwa will be taken over by the assembly government by April 2006.

But Clwyd West MP Mr Thomas said the Welsh economy could suffer in the long term.

He was also worried by the lack of consultation with any of the three quangos before the announcement.

This is the wrong bonfire under the wrong quango Gareth Thomas MP

Mr Thomas said the WDA - Wales' main economic development body - had earned "an excellent international reputation over the last 25 years".

"One has to be very careful indeed before scrapping it and, at the very least, there should be consultation," he said.

Mr Thomas said he was "all in favour of the bonfire of the quangos".

"My point is, this is the wrong bonfire under the wrong quango," he said.

"I think the WDA has done a very good job in helping regenerate the Welsh economy and bringing millions of pounds of inward investment into Wales.

"The decision to scrap it could be very counter-productive in terms of the long-term interests of the Welsh economy."

'Brain drain'

Last week's announcement to scrap the quangos was the biggest upheaval in Wales' administration in recent years.

The announcement to cut the quangos was made in the assembly

First Minister Rhodri Morgan described the move as "the end of the quango state as we have known it."

Under the current set-up, the WDA is a semi-independent body which acts at arm's length from the assembly government.

The new structure will see it become part of the assembly administration and under the direct control of ministers.

On Thursday, Graham Hawker, the chief executive of the Welsh Development Agency, resigned from his post.

Mr Hawker told his staff he was ill-equipped to lead the WDA into the civil service.

Mr Thomas said the existing arrangement allowed the WDA "to respond in a creative way".

"What will happen now is the WDA is going to lose credibility," he said.

"We know the chief executive has resigned, apparently in protest at this decision, and one suspects there may be a brain drain of very good people.

"I can't stress too much that right across the world, other countries and other regions have modelled themselves on the WDA."