The board responsible for the economic development of the Highlands will be scrapped.
Deputy First Minister John Swinney stunned MSPs by suggesting that an “overarching” committee will replace the current Highlands and Islands Enterprise (HIE) panel.
The move has been branded a “blatant centralisation” that will leave HIE as a “branch office” of the Scottish Government.
A review of Scotland’s enterprise agencies had already recommended setting-up a national board to coordinate the activities of the bodies – but this is the first time the SNP administration has admitted it intends to scrap the HIE board altogether.
Mr Swinney said HIE and other organisations would retain “separate legal status” after the change.
But Scottish Labour Highlands and Islands MSP Rhoda Grant said: “I am outraged at this blatant centralisation.
“The loss of this board takes us back to early 1960 when Willie Ross said that no part of Scotland has been given a shabbier deal by history.
“Sadly the SNP Government appears to be rewriting history and offering an even shabbier deal.”
Scottish Liberal Democrat MSP Tavish Scott, who represents Shetland, also raised concerns.
He said: “This is the end for bespoke economic development in the Highlands and Islands. HIE will become a branch office of the Scottish government.
“There will be no board to provide a Highlands and Islands focus – instead once again there will be top down centralised control from the central belt.”
In phase one of the review, published in October, the Scottish Government announced it would create a new nationwide board to co-ordinate the actions of the agencies, including HIE and Scottish Enterprise.
Economy, Jobs and Fair Work Secretary Keith Brown said at the time he was “proud” of the work of the agencies but insisted they needed reform to ensure they worked “hand in glove” with each other to boost economic output.
A spokesman for HIE said last night: “We have been in close contact with Scottish Government throughout the review and will continue to work with them to ensure the economic needs and opportunities for the Highlands and Islands are addressed as we progress through phase two.”