Council leaders in Yorkshire have agreed to give an embattled tourism agency £1m because closing it down ‘could cost more than £3m’.

North and West Yorkshire Business Rates Pool has agreed to give the private firm Welcome to Yorkshire £1m despite its past financial and management problems.

In July, an inquiry into expenses claims and bullying allegations found that Welcome to Yorkshire, which receives more than £1m in public funding each year, had little oversight on its expenditure.

Members of the business rates pool have agreed to the payment because a managed closedown of the company could cost more than £3m.

The new money will be paid to Welcome to Yorkshire in three tranches, each one depending on the private company meeting ‘firm conditions’, including the recruitment of a new board and chief executive.

Jacqui Gedman, chief executive of Kirklees Council, will be given the authority to provide the firm with strategic support and will have the power to draw down BRP funding as required.

‘The pool has been very firm from the start that it would only continue to support Welcome to Yorkshire if it was satisfied that significant progress had been made to strengthen its accountability, transparency and governance of public resources,’ said Tim Swift, leader of Calderdale Council and chair of the pool.

‘We also required clear evidence that strong action was being taken to address the issues within the organisation resulting from the behaviour of their former chief executive, as highlighted in the investigation reports.

‘They have evidenced sufficient progress in both areas at this stage and we recognise that financial uncertainty has been a barrier to those improvements happening at the pace required. Therefore we have agreed to release limited funding, subject to the board changes and other agreed conditions.’

Cllr Swift added that the pool members were in full agreement that the region requires a successful strategic destination marketing organisation, ‘but it must be one that upholds the same values and governance enshrined in the principles of spending public funds.’

A public sector-led four-month consultation about the future of regional tourism will also be launched.