Examination of Witnesses (Questions 230-239)
6 JULY 2004
MR MARTIN
HAVENHAND, MR
TOM RIORDAN
AND MR
MARTIN BRIGGS
Q230 Chairman: Good morning and welcome
to our inquiry into regional productivity, with particular emphasis
on regional development agencies. For the sake of the shorthand
writer, please could you identify yourselves.
Mr Riordan: Tom Riordan, Director
of Strategy, Yorkshire Forward.
Mr Briggs: Martin Briggs, Chief
Executive, East Midlands Development Agency.
Mr Havenhand: Martin Havenhand,
Chief Executive of Yorkshire Forward.
Q231 Chairman: The regional development
agencies were set up five years ago and have enjoyed substantial
increases in funding and responsibility. I think the funding for
next year is going to be about £2 billion. What are the goals
of your regional economic strategy? How is that helping raise
productivity in your area? Why do we need a regional dimension
at all?
Mr Havenhand: The regional economic
strategies are very much focused on addressing the challenges
and gaps we have in each of our different regions. The reason
for having a regional policy and a regional approach from my point
of view is very much recognising that there are differences and
therefore one single approach does not address all the challenges
that we are facing. We inherited a budget that had a number of
legacy programmes, so a substantial part of it, nearly 90%, was
on single regeneration budget funding and, indeed, on land and
property previous commitments, but over the last few years the
amount of money that is available for flexibility under the single
pot has gradually got more and more. In our particular case in
Yorkshire and Humber the amount of money we have been investing
in business support and, indeed, business enterprise, has increased
during that period from, initially, when we started in 1999, a
budget of around less than £10 million, and then over the
last 12 months a budget that is going up towards nearly £60
million spending on business support and business enterprise activities.
Mr Briggs: I would add that there
are two fundamental reasons for RDAs being set up. One is the
increased emphasis we have seen in the UK, over the last 15 years
really, on the competitiveness of the UK overall, what it needed
to do to respond and quickly to the challenges of globalisation
and liberalisation. That competitiveness theme is still at the
heart of regional economic strategies, because the second element
that has driven that has been the question of disparities between
the English regions, the different levels of rates of growth and
what might be done to address that. Regional economic strategies
themselves, which are not owned by development agencies but very
much by that partnership of interest both public and private in
each region, are about identifying the key drivers of change,
many of course of which are national. It is not about saying that
regions are self-contained islands of economic development but
homing in on the issues that can be attacked at the regional level,
either in relationship to the private sector of businesses in
the region or for that matter in terms of effectively deploying
public investment to reinforce the competitiveness of the region.
Q232 Chairman: The Treasury are always
telling us that as regional bodies demonstrate good governance
and results, then targets and controls from Whitehall will reduce
and there will be much more regional autonomy. Has that happened
as much as you expected?
Mr Havenhand: I think it would
be fair to say that in the last 12 months there has been a recognition
that that needs to be done. Prior to that, we were very much focused
on a process of tier 1, tier 2 and tier 3 targetry, and therefore
the tier 3 targets, although focusing on business growth and,
indeed, some employment statistics and derelict ground, did not
properly demonstrate performance by the RDAs working with many
other partners. So the concept of tasking the RDAs and looking
at an integrated improved relationship between national PSA targets
and regional implementation is a positive step in the right direction.
We are anticipating around October to have an agreed position
where we will implement new targetry framework from next April.
Mr Briggs: I think this spending
review has seen a fundamentally different approach to this whole
question, first of all by the degree to which regions have been
invited to say what their economic strategies imply for public
policy in the economic field. That has really been a very important
part of the process from our point of view. Secondly, I think
the new emphasis on (what is called, in the jargon, tasking the
RDAs) getting a better and broader framework for measuring both
specifically what RDAs are charged to achieve with their resources
(outputs, in the jargon) and also outcomes—how the changes
we see in regional economies reflect PSA targets, for example—is
a much more sophisticated exercise than we conducted just two
years ago. I think it is a journey but I think we are confident
that we have seen good progress, particularly over the last 12
months, as Martin says.
Q233 Chairman: I notice the comments
of the Audit Commission in June 2004, when it stated, "The
current institutional arrangements, the complex interaction of
national programmes, initiatives and targets, and complicated
partnership arrangements confuse lines of responsibility and accountability
and hamper delivery at a local level." First of all, so you
agree with that? Secondly, how many different organisations do
you work with?
Mr Havenhand: We can always continue
to improve the way we operate at a regional level. There needs
to be some rationalisation. I think we are gradually moving in
that direction. In our region, we are particularly well served
by the regional assembly and the strategic partnership that is
operating there, where we have all committed to working within
a framework called "Advancing Together". The regional
economic strategy is a fundamental part of that strategic framework.
The regional spatial strategy, the previous regional planning
guidance, sustainable framework is all part of a suite of strategies,
so in that sense it does focus the region as opposed to moving
it in different directions. When you ask the question how many
organisations we deal with, there will probably be several hundred
at different levels, particularly on the business support agenda.
Q234 Chairman: Do they blur responsibilities
and accountability?
Mr Havenhand: The approach we
are adopting, through the targets and through the contracting,
is to get that greater clarity.
Q235 Chairman: We want simple answers
to simple questions here. There are three of us who are pretty
frustrated as MPs when we see things at a local level. I have
been an MP for 17 years and when I want to get something done
at the local level there is always some tier above us and there
is another tier at the side and then it goes further up on that.
To me, we are not delivering at local level. In my own area, Glasgow,
they have 80 different window shops for helping people in terms
of business. All that does is confuse people. It is with that
in mind that I am asking you about complexity. With due respect,
Martin, I do not want bureaucratic answers.
Mr Havenhand: Fair comment. At
a local level, if we just take the business support, clearly there
are too many agencies actually doing that delivery. Of that there
is no doubt. An attempt though to overcome that is actually working
through the BusinessLink process to try to arrange a more appropriate
brokering, so that all the groupings are working together for
the common objective, so that they are not all providing separate
solutions, so the concept of a no-run door is an area of approach
that we have tried to introduce at a local level to overcome some
of that confusion and some of those concerns locally.
Mr Riordan: It is back to the
question you asked about why have regional policy. I think one
of the things that characterises Whitehall is that it does tend
to operate in silos. It is the way it is organised. I think a
lot of effort has been made over the last couple of years to join
up the different initiatives. The problem we have fed into the
policy debate—which I think RDAs have helped with—is
that, when it eventually hits the customer, if you like, whether
that is a person in the street or a business, all these different
initiatives that come down are, as you say, too complicated, and
it is how we achieve much more effective delivery by getting people
to join up earlier and deliver through existing partnerships.
Q236 Chairman: We have been talking about
that for years and there does not seem to me to be any progress
on that. We still have the complexity. We still have the numerous
organisations that are involved.
Mr Riordan: The example I would
use of some progress is urban regeneration companies, which are
basically joint ventures between the RDAs, the local authority
and English partnerships often, and they have a single purpose
of regenerating the city centres. They are starting to have some
success in actually making change happen on the ground, so that
is one example. In other areas, like area based initiatives, I
agree with you, I think there is a lot more to be done.
Mr Briggs: RDAs, as you know,
have business-led boards who feel the same frustration intensely.
Most of those board members are not familiar with or very sympathetic
with many of the public policy governance questions. From our
point of view, the point of the RDA, there are two points we would
make. We think we have the capacity, both regionally and locally,
to work much harder to simplify things than is actually possible
to do at national level, providing there is a discipline about
national initiatives, which are extremely difficult to rein in.
Secondly, again there have to be some really hard judgments made
about closing down structures and shapes which have outlived their
usefulness. If you ask me, "How are you getting involved
in that?" though people do not make a lot of noise about
it, I think the way in which RDAs are handling the exit from the
single regeneration budget shows that it is possible at regional
and local level to exit from schemes and bodies in a disciplined
way that does reduce numbers. We have not done as much of it as
we want to do, but I think we would say, for example in business
support—which no doubt we will come on to—that there
is a big job to be done there and we, with our local partners,
are better placed to do that than very often central policy makers
are.
Q237 Chairman: On that point, the Chancellor
and the DTI have produced a paper on regional productivity and
the Chancellor says that is a key driver of his policy. He wants
to reduce the productivity disparities between regions and increase
the growth levels. The report that we make will be going to the
various departments. The Government recognises that regional autonomy
is important but we still have this plethora of schemes. If you
were presented with a blank sheet of paper and asked to ensure
that regional disparities were minimised and you would bring growth
to an area, how would you go about it?
Mr Briggs: If I can answer first
on that, I think there are three particular areas on which I would
focus. One is the delivery of industrial and business support
policy across the regions of England. I think the time really
has come to trust regional economic strategies and RDAs against
those testable outputs I described, to have autonomy in the way
in which they shape enterprise and innovation policy, and how
they work with local and regional structures to deliver them.
So I do not think we need to impose national frameworks in that
area. There are two other vital policy areas where I do not think
we have yet gone far enough to integrate our planning and thinking
about substantial sums of public investment and how they can be
used both to raise competitiveness overall and narrow disparities,
and the two areas I pick on in particular are the education and
skills arena, particularly adult skills—and we may want
to explore that a bit more—and also transport funding, where
I think nobody is arguing against the need for a coherent national
transport policy framework but there needs to be much greater
effort to integrate transport priorities of spending with regional
economic strategies.
Q238 Chairman: We are coming on to skills
later on.
Mr Havenhand: The only other one
I would add to that, agreeing with transport and skills, would
be the flexibility of funds coming to the region itself rather
national targets having the primacy.
Q239 Chairman: You would want a pot of
money and you could decide what you do yourself, an economic development
budget.
Mr Havenhand: Yes, to one extent
most certainly. Also, I think we have to be careful about the
RDAs being seen as wanting more and more powers and more and more
funds. Our view is that there are some key regional organisations,
such as learning and skills councils, where we would like them
to have greater flexibility in their funding, in the way they
can administer it to achieve regional targets and regional priorities.
Mr Riordan: If you look at the
capital investment that is going into the education system, health,
economic development over the next five years, it is a huge amount
of money. At the moment it is very difficult to work together
and co-ordinate that money as it is going in, not just in terms
of making most efficient use of it but also making sure regions
have the skills in the construction industry, for example, to
deliver what is coming through. I think regions need the ability
to work together more effectively and make this money go further
and link back into the local economy, so that local people get
jobs and local businesses get the benefit of that investment that
is going in. Where the economy is at the moment, that public investment
is playing a big part in keeping the economy going and I think
we have to use that more effectively.
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