The Cabinet has backed the Tanaiste's proposals to create one overall agency to support Irish-owned firms. Ms Mary Harney pledged yesterday that the new agency, which draws together Forbairt, the Trade Board (An Bord Trachtala), and the business training element of FAS, will be far more efficient and focused.

The proposal has received a cautious welcome from employers' groups but the chairman of the Trade Board, Mr Sean Murray, said last night that bigger was not necessarily better. He said there was a danger that the Trade Board's work could be "downtrodden" in a larger agency.

Mr Murray said the move was based on recommendations contained in the Culleton Report and the situation had changed greatly since that was drawn up. He said the suggestion then that Ireland was not export-orientated was "dead and buried" and the Trade Board had refocused itself hugely to take account of changes in the past three to four years.

Ms Harney, who is Minister for Enterprise, Trade and Employment, said yesterday that her proposals would involve having clearly defined programmes that firms actually want, "coupled with efficient and effective mechanisms for delivering these programmes".

She promised that businesses would have a single point of contact to access State support and that the Government would cut down on the number of schemes - which she said, total at least 45. Ms Harney said a restructuring implementation task force would be established, to oversee the amalgamation of the agencies.

Trade unions and staff interests will also be involved, she said, adding that there would be no forced redundancies in the process. The new agency is expected to commence operations by June.

Ms Harney maintained that the new approach was modelled along business lines. Everything firms need in terms of support will be housed under one roof, "whether that is help with business planning, research and development, operations, marketing at home or abroad, human resources or finance", she said.

Ms Harney said that no business person can afford to shop around the different agencies in the hope that they will find what they are looking for. She said an independent study has found that 60 per cent of the Trade Board's client base was shared with Forbairt.

Ms Harney claimed that the new agency would not simply be an amalgamation of the agencies. She said companies would have access to an identified contact person who would be responsible for facilitating their development.

IBEC welcomed the plans to restructure the agencies. However, it said it was concerned that the very focused support to exporters currently provided by the Trade Board should not be lost in the new structure. ISME said it welcomed "the recognition of the need to rationalise industry support programmes". However, it said the announcement must be treated with some caution as similar proposals in the early 1980s came to nothing.

"Then there were just 15 development agencies," it said. "Today, despite the commitment to rationalise, there are close to 70 which includes the County Enterprise Boards, Area Partnership Boards and the various leader programmes," it added.

The Small Firms Association, said there was a strong case for rationalising the "160 agencies supporting small business". However, such rationalisation must be constructed in such a way as to ensure more efficient and effective services to small business.

The SFA said the new agency's remit should be expanded to provide greater support to service sector companies who currently make up 80 per cent of Ireland's small business community. "At present these companies are excluded from the services provided by Forbairt and FAS," it said.

FAS welcomed the Minister's proposals saying it looked forward to making the transition "seamlessly and speedily" without any disruption to its clients.