1. In the 2002 Spending Review, the Chancellor
announced a new Public Service Agreement target to,
"Make sustainable improvements in the economic
performance of all English regions and over the long term reduce
the persistent gap in growth rates between the regions, defining
measures to improve performance and reporting progress against
these measures by 2006."
This target with its commitment to reduce the gap
between the English regions marked a distinct shift in emphasis
in Government policy.
2. There is no doubt that action to tackle
regional disparities is needed. Six of the nine English regions
have consistently grown at less than the UK average, a gap which
is said to have persisted since the 1920s.
As we heard from the North East Regional Assembly, the regional
imbalances create problems for all regions,
"The persistent gap in prosperity between
the regions of the United Kingdom is socially unjust and economically
inefficient. It is unacceptable that someone born in the North
East of England is likely to have a shorter life, fewer qualifications
and earn less than someone born in the South East. It is also
unfortunate that those in the South East suffer poor quality of
life due to overcrowding and congestion. And, in an era of intense
global competition, it is simply not viable that large parts of
the UK should continue to contribute less to the national economy
3. As the quote from the North East illustrates,
the problems caused by economic imbalances extend across public
policy. For example, during this and our predecessor Committee's
inquiries into Empty Homes, Affordable Housing and Planning for
Sustainable Communities it has become increasingly apparent that
problems in the housing market are symptomatic of regional disparities
in the economy and are best not addressed in isolation. Similarly
in this inquiry we have heard how economic differences are at
the root of health inequalities.
4. We therefore resolved to undertake an
inquiry into reducing regional disparities in prosperity, focusing
in particular on the Government's new Public Service Agreement
Target. Our terms of reference were announced on 6 December 2002.
They were to consider:
- the importance of achieving
- whether and how the target can be achieved with
current and proposed policies, including:
- the impact of current regional
- whether the introduction of the nine Regional
Development Agencies has contributed towards a reduction in, or
increased the disparities between the regions;
- whether the proposals for regional assemblies
will make a difference to the achievement of this target;
- whether a coherent national
policy can be achieved; and, if so, how;
- what lessons can be learned from past regional
- what changes to policies are required to achieve
the target, including whether Government departments, agencies
and non-departmental public bodies should be moved to less prosperous
- how much additional funding is needed in the
poorest performing regions.
5. In response we received 61 written submissions
and took oral evidence from 35 organisations over one evidence
session in the North East, one in the South West and four in London.
Our inquiry concluded with evidence from the Secretary of State
for Trade and Industry, Rt Hon Patricia Hewitt MP, the Financial
Secretary to the Treasury, Ruth Kelly MP, and the Parliamentary
Under Secretary at the Office of the Deputy Prime Minister (ODPM),
Christopher Leslie MP. We also visited Germany. We wish to thank
our advisers David Coats, Adrian Healy and Professor Kevin Morgan.
We also wish to thank all those who gave evidence to the Committee
and the North East Regional Assembly and those we met in Germany
for their hospitality. The Treasury Sub-Committee has recently
taken evidence on Regional Spending and the Trade and Industry
Committee is currently carrying out an inquiry into Support
to Business from the Regional Development Agencies.
6. In a democracy, it is necessary to have
clear and accurate information, so that informed decisions can
be made. As our inquiry has progressed, it has become clear that
information about the economies of the English regions is limited.
Not only does this mean that that regional policy decisions are
being made on the basis of inadequate information, it also undermines
the Government's approach to monitoring performance against targets,
if the indicators chosen are not robust. We deal with the issue
of information in greater detail in Section 2 of this report.
7. Our report looks firstly at the differences
in prosperity between the English regions, the rationale for the
introduction of the new Public Service Agreement target and how
it is to be measured. We then look at the changes needed in central
Government to put in place the building blocks for economic growth
in the less prosperous regions, the measures available to the
regions and the role of regional bodies.
1 Chapter 5, 2002 Spending Review, Public Service
Agreements White Paper, HM Treasury, 2002 Back
Chart 1.1 and Paragraph 1.7, Productivity in the UK 3: The
Regional Dimension, DTI / HM Treasury, 2001 Back
North East Assembly, RRD09 Back
Dr Kirkup, Q772 Back
ODPM: Housing, Planning, Local Government and the Regions Select
Committee Press Notice 11, 2002-03 Back