UK labour party leader Ed Miliband has called the coalition government’s move to abolish regional development agencies (RDAs) “the wrong decision”.

Speaking at an event in Birmingham and surrounded largely by Labour supporters he said: “Actually over time we had developed a good system. Not all the RDAs were as good as each other, but I think some, such as those in the West Midlands, were making a difference.

“So the idea that you can dismantle it all and start again, with these LEPs, which seem completely chaotic, I think it’s totally reprehensible frankly. And this is my argument with the government. The prime minister said that last year was about the deficit and this year is about growth, growth, growth. But actually, that’s only if you make the decisions that make growth possible. And I think abolishing RDAs will set back growth. So I think they made the wrong decision.”

Earlier the UK chancellor George Osborne defended the shake-up of the UK’s economic development structure. Under his plans, the government would establish local enterprise partnerships (LEPs), which he believes are more effective than RDAs because they are more local.

Mr Osborne said: “I think the local enterprise partnerships will be much more responsive and effective. I’m an MP in the northwest of England and if you have an LEP for the whole of greater Manchester or the whole of Merseyside, they are going to be pretty powerful and focused bodies.

“The new system will be better than what we had. For example, in the northwest, there was a body that covers the whole of the region from near the Scottish border to a couple hundred miles south. The LEPs will be better and more effective.”

The RDA versus LEP debate has been a major point of contention between the opposition and the coalition government. For the most part the RDAs themselves are not especially happy with the decision to convert to the LEP model. They are concerned that the leaner LEPs will have smaller budgets and will also result in several staff members losing their jobs.