A new Olympics legacy body will be set up as part of a plan to slim down London’s troubled economic development agency, its interim chief executive has indicated.

Peter Rogers has pledged a fundamental overhaul of the London Development Agency, abandoning its previous support for a multitude of community projects and seeking to win back the respect of the business community.

But the plan will require more than 170 of the LDA’s 649 staff posts to be axed, and the agency will no longer be responsible for ensuring the 2012 Olympic Games leave a lasting legacy in east London.

Rogers pulled no punches about the agency he was appointed to overhaul two months ago after Boris Johnson, London mayor, removed Manny Lewis, the former chief executive, and Mary Reilly, former chairman.

'What I saw here was not a well functioning organisation,' he says.

Financial Times