Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of witnesses (Questions 260 - 279)



  260.  A cost per job of £6,500 is pretty good value, is it not? What lessons can be drawn from that?
  (Mr Evans)  I am very cautious about taking that number in isolation, because the particular mix of activities that an urban development corporation carries out in any one year, or any small period of years, is difficult to judge against the specific timing of the outcome of jobs. For example, the Limehouse Link was a very significant piece of expenditure the benefits of which will be felt for a long time. Where that expenditure falls is not necessarily directly relevant to the number of jobs being created in other parts of the activities of the corporation during that period. On the whole, we believe that the cost per job in that sense has proved to be reasonable compared with other elements of government programmes which have that as one of their activities.

Mrs Dunwoody

  261.  I want to ask about local authority housing. There is very clear evidence that a lot of the housing stock is in a very poor state. What estimate has the department made of the time that it will take to put local authority housing into a good state of repair if present spending levels are maintained?
  (Mr Ballard)  There is a chicken and egg here in terms of resources. The question arises whether at the present level of resources one is making any inroad into the backlog. In the context of the spending review there has been discussion of the central question of how to come to grips with that issue and what level of resources is needed, how it can best be managed and so on. Obviously, I cannot pre-empt the conclusion of that but it ought to be available shortly. What I can say is that in relation to 1997-98 and 1998-99 the Government are determined to make use of the capital receipts that are available. They deployed £174 million in 1997-98 and something like £570 million in 1998-99. I can give output figures in relation to that.

  262.  That would be helpful. But are you saying that once the review is out of the way it will be possible for the department to explain to the Sub-Committee how it reached that estimate and what it believes will be the timescale involved in dealing with the problem of the housing stock?
  (Mr Ballard)  I would have thought that we would be able to give the Sub-Committee some indication of the pace at which that backlog would be tackled.

  263.  As to PFI schemes, what is the estimated value that you are working on for 1998-99?
  (Mr Ballard)  Are you thinking of PFI for housing?

  264.  Not just for housing. Housing is just one part of it. I am referring to PFIs in general?
  (Mr Ballard)  Across the department?

  265.  Yes.
  (Mr Ballard)  We are now a large department, so that must include transport where over five years we expect PFI schemes to bring in £3 billion of investment. This includes road schemes where the figures are also substantial. I think that it is best if I give a note that sets it out. If I may continue with housing, the main area where we expect substantial funds to come forward is large-scale voluntary transfers. Over the past three years the amounts of money coming in by way of receipts have been: £192 million, £259 million and £482 million. Those initiatives have generated private finance that has been levered into schemes thereafter of the order of £419 million, £488 million and £800 million. Those are very substantial sums to tackle needs in the area of housing.

Mrs Ellman

  266.  When you referred to the cost per job creation you spoke about comparisons with other initiatives. Did you compare what you were doing with the approach of the enterprise boards in, say, Lancashire, Yorkshire and West Midlands?
  (Mr Evans)  I do not know that any specific comparison is made with those, but as part of the underpinning analysis and evaluation on the regeneration side in common with a number of other economic development programmes we are looking at whether it is a reasonable figure in relation not only to the individual cost per job on the economic side but the difficult question of whether it brings in a whole range of other benefits in the local area. The direct economic schemes are often quite specific, for example subsidies to firms that can be related more or less directly to the improvement in the employment base. Typically, regeneration programmes will be doing a wide variety of other things. It is unusual to identify the small section of that which is directly related to individual job creation measures. Therefore, we must take a broad view of the cost-per-job figure. However, on the whole the regeneration programmes are proving to be effective in that way.

  267.  But you have not made any kind of comparison?
  (Mr Evans)  I am not aware that direct comparisons of the kind you refer to have been made.

  268.  What advice would you give to the regional development agencies based on your experience of regeneration?
  (Mr Evans)  The lessons that we have drawn from the regional development corporations, and the lessons that are beginning to come through from them to the single regeneration budget—the latter will move on to be administered by the regional development agencies - are that, although there is a place for direct and simple physical development, it is extremely unlikely that that on its own is sufficient intervention in a local area. One needs to look at physical measures alongside broader social, economic and other factors. It is equally rare that one can have an effective intervention in an area unless one does so in the context of a reasonably broad strategic understanding of what is intended either at regional or significant local level. For that reason, when the new Government came in they made some changes to the guidance relating to the single regeneration budget which put in place regional statements that gave the bidders an indication of the broad regional framework within which their bids would be assessed. That seemed to be very helpful. They understood more clearly the context within which they were working and were able to make better bids. In a sense, the regional development agencies automatically bring forward more of that; they are going to provide regional strategies. Therefore, the whole ethos of the single regeneration budget has a much more comprehensive regeneration aim than a single purpose. For example, the UDCs were concerned much more with physical regeneration.

  269.  Do you think that there are any pitfalls that the regional development agencies may face given the way that they are to be structured?
  (Mr Evans)  I do not think so. It is the job of the Government to make sure that they are set up in a way that will capitalise best on the experience of regeneration programmes and development programmes more generally.

  270.  What budgets will the RDAs have from 1999?
  (Mr Evans)  From my perspective they will have two main components. They will take over the regional activities of English Partnerships. They will also take over administration of the single regeneration budget. From that one can identify new budgets for the new bodies. We can look at commitments and what is happening already on those programmes. But in terms of sums we have to await the Government's final decisions on the comprehensive spending review and the allocation of resources. Therefore, the particular number to be used for each regional development agency will depend on the total resources available in those key programmes.

  271.  Concerns have been expressed that investment decisions will still remain within the DTI and decisions about allocations for significant training and advice particularly for the TECs and Business Links will remain with DfEE. What assessment have you made of how much of those departments' budgets would be spent by the regional development agencies?
  (Mr Evans)  The lesson coming through very strongly from regeneration is that although there is a special purpose programme like the single regeneration budget or English Partnerships a good deal of what is always done in local partnerships and schemes brings to bear a wide variety of other programmes, whether it is local authority programmes or other mainstream programmes. The combination of regional development agencies and government offices in the regions, with their links to central government, will make sure that all of those budgets are delivered most effectively.

  272.  What assessment has been made of how much funding from current DTI and DfEE budgets will be spent in the regional development agencies in pursuing their responsibilities?
  (Mr Wood)  Perhaps I can try to help. As to the big programmes, there will be no transfer because the Government decided at the outset that the RDAs would not be responsible for some major DfEE and DTI programmes, such as TEC contracting and Regional Selective Assistance. The great bulk of the expenditure of RDAs will be inherited English Partnerships and single regeneration budget expenditures.

  273.  Does that mean that an assumption has been made before they begin that they will not be using significant investment funds from DTI?
  (Mr Wood)  Yes. Last December the Government announced in the White Paper that selective regional assistance would not be transferred to the regional development agencies.

  274.  It says "not transferred", but this Sub-Committee was given an assurance that there would be full co-operation. What assessment has been made of the funding from DTI sources that will be available to the regional development agencies?
  (Mr Wood)  The decision is clear: the funding will not be transferred. You are quite right in your reference to full consultation and partnership. We see a very big role for the RDAs in bringing to bear their view of strategies and priorities and their influence. To take TECs as an example, there is quite explicit recognition that the views of the RDAs will not only be sought but taken notice of. That is quite different from transferring the moneys which will not be done.

  275.  I did not ask you about transference. I asked what assessment had been made of how much of those other departments' funds would be utilised by the RDAs in pursuing their functions?
  (Mr Wood)  None will be utilised by them.

  276.  None will be used in association with the functions of the regional development agencies?
  (Mr Wood)  The functions of the RDA belong to the RDA. The RDA will not have these programmes. There may be some misunderstanding.

  277.  I am trying to establish the validity of the assurances that we have been given previously by the department. What assessment has been made of how much of the DTI's selective assistance or related funds will be utilised by the RDAs in pursuit of their objectives?
  (Mr Wood)  None would be utilised by the RDA.

  278.  None would be utilised in association with RDA functions?
  (Mr Wood)  It will not be utilised by the RDA. The process is that the RDA will establish its own regional economic strategy. It will take a view on the needs and priorities of the regions. For those programmes where it does not have direct responsibility for the programme expenditure it will bring to bear its views on those who are responsible for spending that money.

  279.  That appears to be in conflict with the assurance that we were given which was not to do with transferring budgets but close association in the work.
  (Mr Wood)  I assure you that there is no difference between us. There will be such close association, but that is profoundly different from transferring the money.

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