Examination of witnesses (Questions 260
- 279)
TUESDAY 30 JUNE 1998
MR JOHN
BALLARD, MR
PHILIP WOOD
and MR PAUL
EVANS
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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