WALES is set to snatch millions of pounds of overseas investment away from the Bristol area, a regeneration boss has claimed.

The Government is axing regional development agencies, which were set up to attract jobs and money, and is replacing them with smaller, less costly organisations.

In Bristol, the agency has been instrumental in the creation of the SPark Science Park in Emersons Green, as well as a number of contracts in the aerospace and finance industries.

But the disruption caused by changes due to come in 2012 will allow Wales to fight more strongly to attract so-called "inward investment" from outside the region, particularly from foreign firms, MPs were told yesterday.

Key workers in the South West Regional Development Agency are already being head-hunted for new jobs by the Welsh and Scottish administrations, which means personal relationships that can prove vital in negotiations could be lost.

Agency chief executive Sir Harry Studholme told the House of Commons business select committee there were already pressures before the Government announced its plans to scrap the RDAs.

He said: "In the South West relative to Wales, even before the discussions we are having now, obviously there are challenges; for instance, on inward investment, which is a very key instrument for relative economic development. Most of the inward investment success derive from pre-existing relationships."

The coalition wants to take back responsibility for inward investment, innovation, business support and access to finance from the agencies and return it to Whitehall.

New Local Enterprise Partnerships will be set up to focus on planning, housing, transport and infrastructure, employment and enterprise and business start-ups.

It means 75 jobs at the South West RDA will go this autumn, 50 through voluntary redundancy and the rest through staff finding new jobs or retiring.

Speaking after the committee hearing, Sir Harry said: "There's a lot of loyalty to the South West. A lot of staff really care about the economy of the South West but it's inevitable in any transition that people have to make sure they are in employment."

The Government has announced plans for 56 LEPs across the country, including one for a West of England partnership. Ministers will now consider the proposals in detail before publishing a white paper on regional economic growth later this year.

Local government secretary Eric Pickles said: "We are facing economic problems that need solutions from local communities.

"The secret to the success of local enterprise partnerships will be working on the basis of local economic geography – gone are the artificial political regions of RDAs – this will better serve the needs of local business. Local enterprise partnerships are a way of tying council and business interests together, and creating the conditions for business to thrive and prosper."