The taxpayer-funded quango that is meant to boost businesses in the West Midlands gave almost half its grants to the public sector, figures revealed today.

Advantage West Midlands awarded £133 million out of £281m, 47 per cent of its funding, to the public sector according to the Taxpayers Alliance.

It found that nationally £2.9 billion was awarded in grants by regional development agencies in 2007-08 and 2008-09. But around £1.8 billion was awarded to predominantly public sector organisations or projects in grants  62 per cent of the total.

AWM was founded in 1999 with a remit to help businesses, boost regeneration and help people get training for jobs.

One of the grants AWM made was £119,603 in “business support” to Regenco, the company that was meant to regenerate West Bromwich.

But it was shut down at the start of this year after all its funding was pulled and Sandwell Council took on the job alone.

AWM gave £4.6m to Wolverhampton City Council, £3.9m to Staffordshire County Council, £820,000 to Sandwell Council, £592,000 to Walsall Council, £389,000 to Stafford Borough Council, £18,500 to Lichfield and £7.7m to Dudley. The majority of grants to private companies were three figures or under.

Matthew Elliott, chief executive of the Taxpayers’ Alliance (TPA), said: “These quangos have claimed for years to be focused on business, but in reality the majority of their grants have been going to other bodies in the public sector.

“With a huge budget deficit, the Regional Development Agencies should be at the top of the list for abolition to save money.”

Will Harpur, spokesman for AWM, said: “The TPA statement is over simplistic.

“The majority of our investment provides work and contracts for private companies.

“Economic development is, by its nature, a partnership activity. Investments are made to a range of organisations which deliver complex developments in the most effective way.

“Public sector bodies often manage these developments and sub-contract work to the private sector.”