Examination of Witnesses (Questions 120-133)
3 FEBRUARY 2004
MR NICK
MACPHERSON,
MR ROB
SMITH, MR
PHILIP COX,
MR MARK
GIBSON AND
MS ROS
DUNN
Q120 Mr Mudie: When we were in Pittsburgh
the mayor started a cluster by looking at the strengths of his
regions which were different from New York and San Francisco.
What Mr Gibson is saying is that each area has its own strength
and you try to build a cluster based on that indigenous strength.
Is that not it, Mr Gibson?
Mr Gibson: It depends on how you
define regional policy. We see regional policy as trying to encourage
every region to grow as well as trying to ensure that the poorer
regions improve their performance relatively otherwise. We definitely
do not want to see clusters in any one part of the country damaged
and we are keen to see the RDAs intervene actively across the
country.
Q121 Mr Beard: One nucleus for a cluster
could be the regional universities and the Lambert report has
spoken of ways they could extend their links to businesses. What
incentives and funding will be available to the regional universities
to do this?
Mr MacPherson: We would not want
to pre-empt the spending review at this stage, but clearly Lambert
raises a lot of important issues about knowledge transfer, the
role of the RDAs and so on. This clearly is going to be an important
input into the spending review and in terms of Philip pulling
together what the regional policy coming out of the spending review
is, this is going to be a component.
Mr Cox: That is absolutely right
and we are talking to the people who are thinking about implementing
the Lambert review. There is an official group looking at implementing
the outcome of the innovation review that the DTI published before
Christmas and we are represented on that. It is very much a question
of how we promote innovation in the regions.
Q122 Mr Beard: Have you considered the
Lambert report in the group that you represent and if so what
are your conclusions?
Mr Cox: We did some work ourselves
on innovation. We were hearing from the regions pretty much what
the Lambert review heard about the importance of proximity for
promoting innovation, particular amongst SMEs. We will want to
continue to talk to the Lambert team about how that recommendation
is taken forward. I think the other aspect of this is that we
should focus on why we want to promote innovation. Innovation
is about encouraging firms to produce new, innovative, attractive
products. A key aspect to this is about helping firms in the regions
access the good science and the good innovation that is taking
place in universities outside of those regions. There has already
been an element in the latest round of HEIF (the Higher Education
Innovation Fund) that helps to promote that.
Q123 Mr Beard: Could we go to what some
people see as the reverse side of the innovation and that is regulation.
Is there any evidence on the degree to which regulation affects
different regions differently, for instance because of the industrial
composition of a region?
Mr MacPherson: I think these things
are important. There is a trade-off. There are certain aspects
of regulation which are national standards and you do not want
to have a second class area, for example health and safety issues.
The idea that you would somehow say that the North East could
have lower standards, I think most people would find repugnant.
However, having said that, on issues like planning there may well
be reasons for having a different approach to planning in the
North compared to London for example. There is a planning bill
and Rob is the expert on it.
Q124 Mr Beard: Mr Smith, has anyone looked
at the differential effect of regulation on different regions?
Mr Smith: In terms of planning,
that is one of the things within the scope of this PSA and there
is a piece of work on looking at how different regions are affected.
Q125 Mr Beard: What about the wider interpretation?
Mr Smith: I think at the moment
they are probably being looked at within each of the functions.
Mr Cox: Right at the start of
this we looked across the whole of Whitehall to try to identify
the key things we thought we should focus in on. We did have a
couple of conversations with the part of the Cabinet Office responsible
for regulations, the Better Regulation Task Force and so on. It
may well be the case that there are one or two areas where that
organisation or the other parts of the Cabinet Office responsible
for regulation perhaps could look at the extent to which regulations
impact differently on different regions. The point at which we
were doing our work and the conclusion we came to was that probably
some of the issues around skills and so on and so forth were probably
a more important area to focus on so we have not taken that forward
actively.
Q126 John Mann: Is that why the A1 is
going to take four years? The Highways Agency decides that if
there is one objector—Friends of the Earth who object to
any new road—therefore there has to be a public inquiry
et cetera, et cetera, et cetera. Is that at the heart of
the problem?
Mr MacPherson: The Government
is committed to speeding up considerably the sort of lag in the
process around your roundabouts.
Q127 Angela Eagle: We have had some evidence
of scepticism about enterprise areas in which the 2000 most deprived
wards have been given this status and have various benefits, including
an exemption from stamp duty. One of the issues we have had evidence
on here is that there is an awful lot of dead weight: you could
exempt most of Canary Wharf from stamp duty because it is in a
deprived area, ie the Isle of Dogs and you are not really
hitting the issues because the exemptions are worth a small amount
of money and they are not actually at the margins of decision
making. Do you think that enterprise areas are misconceived for
that reason?
Mr MacPherson: I do not think
enterprise areas are misconceived. I think the stamp duty exemption
could have a useful effect and clearly we will need to monitor
it and evaluate it in a very transparent way so that we can learn
from it.
Q128 Angela Eagle: The dead weight point
seems to me quite an important point.
Mr MacPherson: What you are raising
is a fundamental issue about any tax relief or social security
benefit. There is a trade-off between simplicity and targeting.
No doubt you could come up with some even more sophisticated targeted
relief, but it ties in why there is a low take-up of schemes.
The more complex you make it, the less likely it is that anybody—apart
from the very well advised—will take it up.
Q129 Norman Lamb: Do you have concerns
about how well this particular stamp duty initiative is working?
Mr MacPherson: I would not say
I have concerns. Like any relief it costs money and it is very
important to monitor the outcome.
Q130 Norman Lamb: Has the evaluation
not started yet?
Mr MacPherson: I am not an expert
on it but I imagine there will be an evaluation.
Q131 Mr Beard: Moving on, how did the
European Commission react to the Treasury proposal to renationalise
the distribution of European Union structural funds by bringing
responsibility for regional policy back to Britain?
Ms Dunn: I think it is very important
to make the point that it is not just a Treasury initiative; it
is a UK Government initiative and worked up very much in partnership
with the DTI. The answer is that we do not yet know in the sense
that the Commission is due to publish its Third Cohesion Report
very shortly in which it has promised not only to set out its
own proposals but also to comment on the various proposals that
are being put forward by member states during the period of the
run-up to the Third Cohesion Report. It would not be giving anything
away to say that our proposals have not met with unanimous support
from other member states, but we are still at a relatively early
stage in the process and a lot will depend, as we move forward
on consideration of the budgetary aspects of the next financial
perspective and member states start to look at the overall package
in terms of the support in the next financial perspective. I think
it is too early to say where we are going to end up.
Q132 Mr Beard: What evidence has the
Treasury put forward to say that decisions on funding taken at
a national level would be more effective than taken at the regional
level?
Ms Dunn: I cannot remember the
precise wording, but the evidence was very much put in terms of
the application of the principle of subsidiarity where the argument
was that it was important to distinguish between those cross-community
activities where there was a clear added value in EU intervention
and those where as much could be achieved through the application
of the principle of subsidiarity within the context of an overall
framework for EU regional policy but leaving member states with,
as we described it, the financial and institutional strength to
do so, to fund that regional policy themselves whilst working
within an overall framework of regional policy across the EU.
Q133 Mr Beard: How much less would it
be likely to cost to administer these funds through the United
Kingdom rather than through the European Union?
Ms Dunn: I do not have precise
numbers, but the answer is almost certainly less.
Mr Beard: Thank you very much for your
answers this morning. We are exploring quite a few things in relation
to regional policy. You have mentioned several things which you
will provide us with in writing and we will be very grateful for
that. Thank you very much.
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