Examination of Witnesses (Questions 260-279)
6 JULY 2004
MR MARTIN
HAVENHAND, MR
TOM RIORDAN
AND MR
MARTIN BRIGGS
Q260 Mr Beard: Absolutely.
Mr Briggs: Our wider objective
is what I described as outcomes earlier on, which takes us back
both to the regional productivity PSA but also to the range of
things at the higher level, enhanced levels of innovation and
enterprising regions, greater levels of skills and qualifications
that we are trying to achieve.
Q261 Mr Beard: That is why I am asking
you to show me what you have got for it. Where are the innovations?
Where are the enhanced skill levels? Where are the new industries?
What is the improvement in productivity? We have been doing some
of these things for an awfully long time.
Mr Briggs: I think I can show
you in the statistics that are available patterns of economic
change in the English regions that show the English regions performing
better now than they were five years ago, particularly against
European comparators. We have to be very careful in this arena,
because you will have gone through with academic colleagues the
number of lags there are in this picture and, quite frankly, I
think it would be idle for me to pretend five years into the RDAs
that the regional economic statistics that are being generated
only now tell you much about what is happening now. They tell
you about what is happening in 2000 and 2001, and part of the
purpose of the Allsop Review, of course, is to improve the quality
of regional economic statistics. In a sense, the direct question
you put to me to show how RDAs have changed the regional economic
environment is simply not answerable on the basis of the statistics
available now. I can show you that changes that have been instigated
since the late 1990s appear to have improved the performance of
the English regions as opposed to those of other European regions.
Q262 Mr Beard: In 2002 the Government
introduced a new streamlined funding arrangement for the RDAs
where they received their allocations through a single pot. Has
this improved the budgetary flexibility of the RDAs? Again, what
can we see for it?
Mr Havenhand: Most definitely
it has improved the way we are able to perform. Previously we
had 13 different funding streams linked to particular national
targets. Breaking that down has actually been partly a step along
the way of making improvements. The Regional Development Agency's
fund now can actually make contributions to a cocktail of funds
that are necessary to make some things happen where previously
we were not able to make a contribution—perhaps in a transport
scheme, where previously we might not have been able to do so.
That has made a difference to enable something to happen. Again,
we keep coming back to the point that we have had the flexibility
of the single pot but the targetry framework itself is still somewhat
restrictive, so the kind of concept of tier 3 targets is not the
best way of actually measuring the economic performance, therefore
the work that is currently going on, which we have mentioned already,
the tasking of the RDAs, should now be a cross-Whitehall approach,
where we are linking national PSA targets to regional priorities.
We are quite hopeful that that will really make the single pot
work better than it did previously.
Mr Riordan: Back to the point
about productivity, RDAs' budgets are less than ½% of the
regional economy GDP. The RDAs have recognised quite early on
that they cannot do this on their own and they have to work in
partnership much more effectively, but also they need changes
in government and the way it operates. Examples include the way
the education and skills system is run, the way the benefits system
is run and has an impact on the ground—the points you were
making before—and the way transport decisions are taken,
if we do not get more flexibility and more change in the way
that works . . . If we do not get a recognition, for instance,
that research and development spending is extremely important
for economies like the North to grow, and we have some excellent
universities that we need to back and back in a bigger way than
we have before nationally. That all needs to happen to get his
feed through into regional productivity differentials. We cannot
do that on our own.
Q263 Mr Beard: As a Committee we visited
Pittsburgh. There has been a big change there and the mayor was
pointing out that he raised a bond issue to do various things
for the good of the city. How many regional development authorities
are actually pressing for the ability to raise money through bonds?
Is there any pressure?
Mr Briggs: There is pressure to
assemble resources in more innovative way. I could not answer
your question directly. I simply do not know.
Q264 Mr Beard: What sort of innovative
way are you referring to?
Mr Briggs: I could describe two
versions of that. First of all, the number of situations in which
RDAs have participated, particularly in companies limited by guarantee
with other partners who are free to go to financial markets for
resource. Biocity that I just described, for example, is a joint
venture which enables us to work with those two universities and
business partners to generate funds privately and independently.
The second thing is that I know my own region and the North-East
and I believe others as well have been looking to use as creatively
as possible the stock of buildings and premises that they own
to match those with private sector development resource. For example,
we are looking to establish a property fund in the East Midlands.
The component that comes from the RDA will in essence be the majority
of our property stock and we will put that into a joint venture
operation against cash raised by a private investor. So we are
looking for ways certainly of bringing in both equity and also
loan funding in more inventive ways.
Q265 Mr Beard: The RDAs have established
a number of sub-regional partnerships, some with local authorities,
to deal with progress at this sort of sub-regional district level.
How do you decide which aspects of policy are delegated or devolved
to these sub-regional partnerships? Indeed, if these are going
to be in every local authority are you not actually promoting
the disease that is already besetting you?
Mr Havenhand: If I could just
give an example of what is happening in our region, coming back
really to the role of the RDAs, to produce a regional economic
strategy and then ensure its delivery. I would like to pick up
on some of the points you have been making, that we have all these
different agencies investing in the region and we have to get
added value from all those investments as opposed to them all
being separate. Our approach to sub-regional investment planning
now is through sub-regional partnerships. We have not delegated
any responsibilities, apart from the identification of priorities
within that sub-region, and we have also built upon the infrastructure
that is already there, these local strategic partnerships which
actually involve a cross-section of business, community and the
local authority identifying the key things that they need for
their local community. The bottom up and the top down through
the regional economic strategy is a way in which we have now started
to align funding streams from a whole range of organisations,
not least European funds and the RDA, which is a fairly easy one
to do, but we are also now moving to the ones about the passenger
transport executive, the health service, learning and skills councils,
the JobCentre Plus—they are all looking at ways in which
how can they use their funds to address jointly the gaps in the
economic performance in each of the sub-regions. That has been
a very positive step forward, despite the number of organisations
that they are.
Q266 Mr Beard: Is not one of the implications
of what you are saying, Mr Havenhand, that the regions as they
are defined are too big and we are now having to invent smaller
ones?
Mr Havenhand: Our approach would
be that the concept and philosophy about having regional development
agencies is on the basis that the UK is so diverse and we would
also have to accept in the Yorkshire and the Humber that North
Yorkshire and South Yorkshire are very different, and therefore
our approaches to address their economic problems have to be appropriate
and the one-size concept does not fit all. So it is a matter of
working locally with partners.
Q267 Mr Beard: In this question of devolving
responsibility to partners at the local level, what is considered
the best practice amongst your colleagues in the different regional
development agencies? Are there differences of opinion, and some
do not devolve and some do?
Mr Riordan: I think it is different.
The RDA boards, if you like, have a real dilemma: Do they provide
very strong leadership and take all the decisions themselves or
do they pass down authority completely to the local level? In
either case they can be damned if they do and damned if they do
not. We have to avoid moving Whitehall from London to Leeds, Nottingham
or Newcastle. Martin has described a way of bringing together
the regional and the local. I think the Treasury have used before
the idea of constrained discretion, where you buy in amounts of
outcomes. You have a clear set of overall priorities but you are
not telling every local player exactly how things should be delivered.
You allow flexibility and you devolve that flexibility about how
things are going to be done, but you are clear about what needs
to be done.
Mr Briggs: All three levels I
think have an important role to play: national, regional and local.
Arguing for regionalisation is not saying that national is not
important, and, equally, as Tom has suggested, we have to listen
to our own messages that this is not about recreating a sort of
centre of power at one point within a region. I think there are
several things that we have tried to achieve in the East Midlands.
To come to your best practice issue, I think we do work hard to
try to learn from each other, though regional circumstances do
vary significantly and it is right to expect that there would
be variations in response to that. But we have been trying to
achieve two things within our region: first of all, to recognise
that diversity that Martin described, that in a region like the
East Midlands the needs of Lincolnshire or South Lincolnshire
are very different from the needs of the former coalfields, for
example, and it is unrealistic to promote a one-size fits all.
You have to have common themes that are translated into local
delivery by local partners. Secondly, we have been trying to achieve
really what we have seen at the heart of the Government's strategy
for RDAs as well, which is to promote effective public/private
partnerships. Our sub-regional partnerships comprise not simply
local authorities. They have grown bottom up. We have not imposed
them but we have asked public authorities to work with businesses,
business leaders in their locality, the voluntary sector and education,
to be seen to be having a single agenda to work to, in part to
overcome that description you made earlier on of the different
streams that hit that front line. In the end all of those different
streams hit a single business or a single person or a single community
and our job is to try to get the linkages made before they come
in such a fragmented form at the users of those services.
Mr Beard: Thank you.
Q268 Mr Mudie: I would like to explore
your relationship with government really. I cannot help feeling
when I look at it that government do not take you very seriously.
For example, the expenditure on yourselves is £2 billion.
Does anybody know offhand what proportion of GDP that is?
Mr Riordan: I think it is less
than 0.5%. It is about 1% of government spending.
Q269 Mr Mudie: I think it is ½%
of government spending actually. If I take Yorkshire, we would
probably get, if we got our fair share, about £250 million—which
sounds a lot but then that would be divided amongst nine district
authorities plus North Yorkshire plus Hull and various places
like that. When you start dividing it down, it is not going to
make much of an impact genuinely in terms of revitalising Bradford
or Halifax or Hull. Do you think they are taking you seriously?
Mr Havenhand: I think they are.
But, again, to an extent we are fairly new. I think it is a matter
of building up trust.
Q270 Mr Mudie: You are five years old,
Martin.
Mr Havenhand: I accept the point
you are making. It has been a gradual improvement and a gradual
approach to it. In our region we actually get £300 million
allocated through the RDA.
Q271 Mr Mudie: Marginally more when you
divide it, is it not, than I mentioned?
Mr Havenhand: Yes, I appreciate
that.
Q272 Mr Mudie: So we are in the right
ball game.
Mr Havenhand: We certainly are.
Q273 Mr Mudie: When you divide that amongst
your constituent authorities, a major scheme in one of the authorities
could take that just upon primary interaction. I do not think
financially they are taking you seriously. But that is not the
point I wish to make, it is just an indication, an indicator.
I have seen you—and I would like you to respond to this—taking
the job very seriously in the five years you have had, but your
preoccupation has been on getting your hands on that £2 billion
as unfettered as possible. Ignoring the fact that that we have
kept touch on it, without articulating it, that there is £400
million spent every year by Government and a lot of that is spent
on the areas that you need in effect to change—education,
transport, housing and the like. You have produced a document
for this Committee, and I thought that if the Treasury had seen
this it would probably have classified it, but I thought it was
a brilliantly honest document. After five years you have put 10
institutional barriers forward. The first, incredibly, is the
lack of a broad based regional policy. Martin, after five years,
if your document says, "We cannot get Government to have
a broad based regional policy," then they are not taking
it very seriously, are they?
Mr Havenhand: Some departments
are not. I think it would be fair to say that the Department of
Trade and Industry, the Office of the Deputy Prime Minister and
the Treasury have taken that role very seriously, and have therefore
focused their activities. Our concern about others buying into
a regional policy is about how we would want other departments
to be brought into the PSA 2 Target. So the issue of work and
pensions, which I think we are pushing at an open door, regionally
they want to buy into that. The Department of Transport, the DFES,
we think that there should be a greater regional dimension on
their particular work in the regions. That is the area we are
looking at.
Q274 Mr Mudie: It is interesting that
when we met the central civil servants we spent some time lamenting
the lack of interest from education, and it is interesting that
you did not mention education. Yet, when we come to skills, it
is absolutely crucial in skill in the workforce and finding a
workforce to attract industry, et cetera. Even in your other documents
we always come back to youths leaving school without qualifications,
et cetera, yet education seemed to be always missing in
any of the discussions, in any of the meetings, in any of the
participation.
Mr Havenhand: I am sorry if I
did not mention the DFES—I thought I had, and I intended
to do so. Clearly within the region we bring together the education
dimension and the Chief Education Officers through the Regional
Assembly and through an Education and Skills Commission.
Q275 Mr Mudie: You can, but they do not
affect Further Education Colleges, High Education, Learning and
Skills Councils, so bringing them in is dealing with only a very
small part of the education world. You see, you are on the defensive.
If I can explain it this way? I see Government's regional policies
giving you £2 billion and letting you getting pre-occupied
with fighting me over that, and you are very much on the margin.
Whilst the big policies in transport, education, housing and the
like drive on, are settled centrally with targets and objectives
that often conflict with what you are trying to do in a region—because
you have nine different regions so you cannot please everybody—and
I would like to know how you view that? You are obviously not
articulating what you have put in your own document because you
saw that as the first of the ten barriers, the fact that they
did this. Why are you not saying this publicly?
Mr Havenhand: I am sorry, clearly
I am not articulating that as well as it was written in that situation.
I would say that we are emphasising that sort of approach, and
the way that we are addressing it is through these investment
plans, of actually bringing these partners together. We would
like greater emphasis—so in other words a national direction—to
say that there should be a regional dimension to this work, there
should be regional proofing of it for each of our regions.
Q276 Mr Mudie: When we had a conversation
earlier you mentioned the Learning and Skills Council, and the
word you used was that there are "pockets" of success.
It seems to me that the Learning and Skills Council should not
spend a penny without coming to your table and discussing and
agreeing priorities. The point you have made is that, apart from
the fact that they do not, they are autonomous and have their
own brass, they also have their own master, do they not, who sets
them targets that are different from your targets? So how do we
make sense of that?
Mr Havenhand: The Regional Skills
Partnership is really an area where improvements are starting
to be made.
Q277 Mr Mudie: After five years. That
is a generation for a kid. The lad is in his 20s now, probably
married, probably starting a family, and he is unemployed and
unskilled, so we know what is going to happen to his children.
So we cannot say it is only five years. How much time does a Government
think they have in government? If they believe in regional policy,
if they believe in what you are doing why can they not do it where
they are in charge in Whitehall?
Mr Briggs: RDA Boards have the
same frustrations, Mr Mudie.
Q278 Chairman: Can I just interrupt you?
The point that George makes with departments is important. On
the radio this morning there was the announcement that there is
a new toll road between Birmingham and Manchester. Were you involved
in that? Were you consulted?
Mr Havenhand: The Advantage
West Midlands, the Lead for Transport have been involved in
that process. Advantage West Midlands was. How much they
were involved and how they influenced it, I am afraid I do not
have any more information on that, but they were consulted as
part of that process. Indeed, in both strategies, for the northwest
and the West Midlands, that particular link between Birmingham
and Manchester is seen as a key one.
Chairman: It was getting to George's
point with departments.
Q279 Mr Beard: Following George's point,
is it the case, is the problem that these departments, the Learning
and Skills Councils and the Department of Transport, and so on,
have not been briefed or told that they have to liaise with the
Regional Development Authorities? Do they see themselves ploughing
their own furrow and solving the problems, as they see them, on
their own, and they do not want the nuisance of having to consult
anybody?
Mr Havenhand: Hitherto there has
been that national dimension to it and so there has not been a
regional aspect, therefore the local Learning and Skills Councils
have actually been local delivery organisations of a national
policy. More recently, the shift within the LSC to appoint regional
directors is a step in the right direction. Our emphasis is that
it should not just be about management, it should be about a shift
in resources, to be able to deliver against the regional priorities.
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