Memorandum by the Confederation of British
Industry (CBI) North East (DRA 01)
SUMMARY
1. The CBI North East welcomes this opportunity
to submit its comments to the Select Committee on the Government's
proposals for the creation of Elected Regional Assemblies (ERA)
in England and on the draft Regional Assemblies Bill. Members
of the CBI in the North East employ over 400,000 people (around
65% of those working in the private sector). Virtually all the
region's bigger companies are in membership, although the average
member company has about 70 employees.
2. The CBI North East has considerable scepticism
about the proposals for an Elected Regional Assembly. There are
a number of key issues:
— there is no clear definition of the
roles of the ERA and we have significant concerns about the likely
overlap of functions and lack of clarity in terms of responsibilities;
— business has key concerns about the
likely effectiveness of the proposed ERA and its ability to deliver
genuine benefits for business and the regional economy;
— experience elsewhere suggests that
costs will be high and business focus could be lost, in particular
we are concerned that the independence of the Regional Development
Agency could be jeopardised;
— there are a number of areas where
policy is becoming more regionalised, regardless of the establishment
of an ERA, and it is not clear what the proposed ERA would add.
3. This submission sets out these concerns
in more detail. We highlight a number of important challenges
reflecting business priorities that we do not believe have been
satisfactorily addressed.
INTRODUCTION AND
BACKGROUND
4. The CBI North East Council (membership
list attached) has debated the Government's devolution proposals
for England several times since they were first mooted some years
ago, and the wider membership has been canvassed regularly over
that period. Opinion has remained remarkably constant. In short,
the broad mass of member companies do not believe that the proposals
set out in the White Paper "Your Region, Your Choice"
are relevant either to the future economic performance of their
businesses or to the prosperity of the wider region.
5. The CBI North East Council has a clear
position on the issue of regional assemblies. It consists of the
following four elements:
— A real and significant decentralisation
of decision-making from Whitehall to the North East, with clear
lines of responsibility and accountability, would be likely to
enhance the region's economic performance;
— There is no evidence that the creation
of an elected assembly, per se, in the absence of any real
decentralisation of policy-making and delivery, will have any
beneficial impact on the region's economy;
— The government's proposals offer
little in the way of real devolution to the north east. Indeed,
there are certain aspects of these proposals that could prove
detrimental to the region's economic performance;
— In particular, the proposals will
do little to address those very real problems that beset many
of the English region's, namely slow and uncoordinated decision-making,
and threaten the long term independence of a business-led Regional
Development Agency.
6. The Council has therefore been unable
to support the proposals as they stand and has consistently expressed
considerable scepticism about the added value that the region's
business community could expect from an elected regional assembly.
7. In the autumn of 2003, the CBI North
East and the North East Chamber of Commerce submitted a joint
statement to the ODPM setting out ten major concerns relating
to the government's proposals. Meetings were subsequently arranged
with the Deputy Prime Minister in January and May of 2004 to discuss
these. None have been satisfactorily addressed.
8. The recently-published, Draft Regional
Assemblies Bill has done little to remove our concerns. If anything,
they have been heightened.
THE TEN
KEY CHALLENGES
9. We set out ten key challenges which business
believes need to be addressed for the establishment of an ERA.
These are attached as Annex 1. In this section we highlight the
ODPM's response to some of the main issues raised which underline
our continuing concerns:
10. Clarity of Remit: the ODPM said that
this would become apparent when the draft legislation was published.
11. Strengthening Economic Performance: the
request for evidence that the creation of an elected assembly,
in and of itself, would lead to improved policy delivery and economic
performance in the North East (a government claim) has still not
been met. And experience suggests that significant costs will
be incurred with the establishment of an ERA.
12. The Future of a Business-led RDA:
a future assembly would control the Regional Development Agency's
budget, appoint the Board and approve the Regional Economic Strategy.
Maintaining the independence of the RDA, and ensuring that the
Board continues to be business-led has always been a crucial "issue
of confidence" for the CBI. The ODPM has argued that our
fears were groundless, however as highlighted later in the document,
experience in Wales suggests that these concerns are very real.
13. Ensuring Top Quality Political Leadership:
the quality of the region's political leadership has been another
major issue for business. We have asked the ODPM to set out the
practical steps that might be taken to upgrade the leadership
skills of the region's politicians and civil servants but no response
has been received.
14. Speed of Decision-Making: we remain
to be convinced that the creation of a regional assembly will
lead to an improvement in the speed and quality of regional decision-making
(see Sections C and D below).
15. Business Engagement with an Elected Assembly:
despite the emphasis on the assembly's role in improving economic
performance—and the Deputy Prime Minister's reassurances—there
are no substantive proposals to involve business interests in
the Assembly's work. Indeed, how business is to be engaged will
be left largely to the discretion of the Assembly.
THE DRAFT
REGIONAL ASSEMBLIES
BILL—MAIN
POINTS OF
CONCERN TO
THE CBI NORTH
EAST
16. Some of the main concerns for business
are set out below.
17. Firstly, the Bill is, of course, a draft
and is, by the Government's own admission, an unfinished document.
There are still provisions to be inserted, and others to be modified.
The Bill itself, introduced only after a region votes for an assembly,
is also likely to be amended as it proceeds through parliament.
There are therefore significant uncertainties for business.
18. Secondly, the explanatory note accompanying
the Bill states clearly and frequently that the role of an assembly
will be to promote the region's quality of life, particularly
by improving regional economic performance. This might suggest
that the Bill's provisions would go some way towards meeting regional
businesses' concerns (the Ten Key Challenges). However, this is
not the case. Not only has there been no attempt to address these,
there is every reason to believe that the Bill takes us even further
away from this objective. Overall, the Bill is not consistent
with the CBI North East's basic position on the issue of elected
assemblies.
19. Thirdly, there is no clarity about the
differential impact of an ERA in comparison to what is happening
more generally at the regional level. Several of the provisions
that do provide for some (very limited) decentralisation of policy
making and delivery—presented in the Bill as being linked
to the introduction of an elected assembly—seem to consist
of measures that will be introduced into all of the English regions,
independently of the existence of such an institution. There is
currently a focus in Whitehall over how far and how fast policy-making
and delivery should be decentralised to English regions irrespective
of whether they have opted for an elected assembly.
20. Fourthly, we believe that the Bill,
if passed in its present form, could actually lead to confusion
and delay in the formulation and delivery of policy in those areas
that are of vital importance to business (see Section D below).
21. Fifth, whilst the Bill imposes certain
obligations on central government to consult an elected assembly
during the preparation of policy, it is clear that an assembly
will have to act in many important areas in accordance with guidance,
advice, or objectives laid down by "the Secretary of State".
The allocation of real "freedoms" seems to be largely
illusory.
SOME SPECIFIC
POINTS OF
CONCERN
22. The draft Bill confirms the proposal
set out in the White Paper that the RDA will become accountable
to the Assembly which will control its budget and have the power
to appoint the Chairman and the Board. The concerns of CBI members
that the RDA may be subject to political interference and lose
its independence have been ignored. Furthermore, there is reason
to believe that the Board and the Chief Executive will be subject
to potentially conflicting objectives set by different masters—the
Assembly and Whitehall. This can only lead to further delays and
confusion in policy-making and delivery.
23. Moreover, an important precedent has recently
been set which seems to justify our concerns for the future independence
of the RDA. A key issue for the CBI has been that RDAs should
be genuinely business-led. Fears expressed by the CBI some years
ago that the Welsh Development Agency would lose its independence
with the creation of the Welsh Assembly were finally realised
earlier in the year when the Agency was absorbed into the Welsh
Assembly. Essentially, the Assembly has abolished the WDA, the
Wales Tourist Board and ELWa (the Welsh version of the LSC) and
has decided to take the functions in-house. This was done with
no consultation with business, despite the fact that the Government
of Wales Act required it to do so. Our fears are that without
an independent, business-led board, the economic development functions
in Wales will lose commercial focus, market reality, customer
responsiveness and will become subject to too much political tinkering.
This could be a vision of the future for the North East and undermine
the region's economic growth.
24. Proposals to give elected assemblies
more influence over regional skills policy are likely to create
confused lines of accountability in this vital area of activity
for regional business, with the Regional Director of the LSC reporting
de facto to both the Assembly and his own Head Office.
Having two "bosses" is never conducive to efficient
working and this could lead to delays, confusion and friction
in the delivery of skills policy. For the North East, currently
in the vanguard of moves at a regional level to introduce a more
market-responsive skills policy, it has to be seen as a retrograde
step. The arrangements for managing skills policy in regions that
have not opted for an elected assembly would appear to be simpler.
25. Proposals to introduce some limited,
but strictly controlled, decentralisation of policy-making and
delivery, for example in the fields of transport, skills and housing
are presented as though they were conditional upon the existence
of an elected assembly. In fact, they appear to form part of a
broader move to introduce limited decentralisation across English
regions, irrespective of the existence of elected regional assemblies.
26. One of the key issues for business is
actually to resolve the current morass of overlapping responsibilities
and improve co-ordination to ensure that policy is delivered effectively
at all levels. Current arrangements are extremely complex and
it is difficult for business to navigate the different structures
and agencies. There is concern that these proposals, instead of
clarifying responsibilities and improving delivery, could further
complicate the situation.
CONCLUSIONS
27. The content of the draft Bill suggest
that there has been little evolution in policy since the White
Paper was published two years ago. Where additional proposals
for decentralisation have been incorporated, these seem likely
to be introduced elsewhere, even if there is no elected assembly.
The draft Bill gives a different impression—that decentralisation
is tied to the establishment of an elected assembly. To that extent,
an elected assembly appears to be not much more than a "bolt-on"
to what is happening—or what may happen—anyway.
28. However, it is an extremely unhelpful—and
potentially expensive—"bolt-on". The role envisaged
for the Assembly, for example in respect of skills, and the blurred
lines of responsibility and accountability being introduced could
actually lead to longer, more complicated, and possibly conflictual
processes that will place the North East at a disadvantage to
other parts of England.
29. Recent developments in Wales cannot
be ignored as evidence of what could happen to the independence
of a business-led RDA in the North East. The possible loss of
this independence has always been a key issue for the CBI. The
draft Bill contains no guarantees or mechanisms to prevent this
happening.
30. None of the Key Challenges that the
business community set out has been satisfactorily addressed.
This undermines business confidence in the proposals and reinforces
our concerns about the potential impact of an ERA on regional
economic development.
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