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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 977-viii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE COMMUNITIES AND LOCAL GOVERNMENT COMMITTEE
Is there a Future for Regional Government?
Monday 16 October 2006 MR CHRIS LESLIE YVETTE COOPER MP, MR PHIL WOOLAS MP and RT HON MARGARET HODGE MBE MP Evidence heard in Public Questions 600 - 700
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Communities and Local Government Committee on Monday 16 October 2006 Members present Dr Phyllis Starkey, in the Chair Sir Paul Beresford Mr Clive Betts Lyn Brown Mr Greg Hands Martin Horwood Anne Main Mr Bill Olner Alison Seabeck ________________ Witness: Mr Chris Leslie, Director, New Local Government Network, gave evidence. Q600 Chair: Can we begin the session and welcome Mr Leslie, on behalf of the New Local Government Network, and your fascinating pamphlet. Can I start by probing your apparent scepticism about the value of city-regions? Do you believe that better performing city-regions would help the economic development of under-performing regions or not? Mr Leslie: I should thank the Committee first of all for inviting me and conducting this inquiry. I need to preface my comments on city-regions to make a distinction because I think city-regions, like cities, exist. Whether you see them as travel-to-work areas or amalgamations of authorities, they are a fact of geography and of demography. Our scepticism as set out in the pamphlet produced over the summer was much more directed at the concept of political institutions forming around the notion of city-regions. I am, in a way, very pro city-regions, working in collaboration, in federations, the idea that various local authorities within what might be described as a city-region can come together to work successfully. I am more sceptical about the concept of fitting everywhere an additional layer above local authority level just in what might be known as the city-regions. I hope that helps clarify. Q601 Chair: To a certain extent, although part of the idea expressed in the publication appears to suggest that the city-region model might weaken RDAs and therefore presumably disadvantage those parts of a region that were not within the city-region. Mr Leslie: The basic premise of the argument is that all corners of England deserve and need powers in order to generate economic growth, prosperity, decent-quality public services, and we are at a point in the development of the British constitution where we now have Scottish and Welsh devolution; London governance, because London is a particular case; and yet, in the rest of England we have this debate going on about what form of devolution we are heading towards. Whereas I think there are strong arguments around certain of the core city conurbations - Greater Manchester, Birmingham - where people naturally see a concentric so-called urban area, the city-region institutional model does not necessarily fit as readily on other parts of the country: the North East, West Yorkshire, South Yorkshire in particular. We know quite a lot about the question of the comparison, how a lot of people in London, for instance, will see themselves as Londoners rather than Islingtonites or Camdenites or Lambethites, whereas in West Yorkshire, for example, people will not see themselves as a lead city-regioner; they will see themselves as from Bradford or from Wakefield or from Leeds itself. This question of identity does matter. We are in a constitution with a great history that goes back a long way. You cannot fit a neat administrative model of a particular institutional design everywhere across the whole of the country. It was for that reason that we wanted to voice a note of caution about having one model of governance that would apply to all areas in that way. Q602 Mr Betts: Is the reality not that even outside London the cities are the powerhouse for economic growth? Is it not more realistic to build governmental structures on the basis of an economic footprint which actually relates to the way that people live their lives, when you might look at regional boundaries and say that, very largely, they are a government convenience? Sheffield has precious little in common with Whitby, and one end of the South West is certainly an awfully long way from the other end of the South West, and people really do not relate to those sorts of ways of administering government at all. Mr Leslie: No, and I think some of the argument about the Government Offices for the regions design has perhaps put some of the rationale behind the "no" vote in the North East back in 2004, why in the South East there is a disjoint between what the public feel is the relevant salience of governance to the way that the Government will administer issues on a Government Office region basis. The problem with city-region institutions is that, whereas there may well in reality be city-regions, where you draw the boundary is of course less clear-cut. To simply draw a boundary around a Greater Sheffield or a Greater Leeds would invariably mean somebody being on the other side of that boundary, and a lot of debate and discussion about structures, institutions, who is in, who is out. Those are the sorts of discussions that I think can be quite a distraction from some of the more important work about what actual policies you are going to pursue in order to boost economic prosperity and improve public services. If we get into a whole argument about regions versus city-regions, I think that is quite a distraction and I worry slightly that if we end up drawing boundaries for new institutions around part of England but not including all of England, in some respects, we are going to just perpetuate another disagreement about who is in, who is out, why one area has certain powers, why another area does not. Q603 Mr Hands: A follow-up question. You are sceptical about the need, if I heard you correctly, to have an additional layer of government. Is that informed by an experience with the North East referendum two years ago? Secondly, what if there is not an additional tier of government, and the city-region government effectively replaces one of the existing tiers of government? Mr Leslie: In the pamphlet we argue that really, as far as the public are concerned, the clearest identity, relationship within a constitution, will either rest with the national Parliament at Westminster or with local government. Any institutions that have ever tried to be established in between those two primary poles, even to a certain extent past-national at the European end, have always slightly struggled to gain popular salience and recognition. I do not think it is impossible to have strong, good governance in between those. I think the Greater London Assembly model of the mayor in London does work because of the nature of London; it relates to the actual place, but in a lot of areas we would struggle to see anything stronger than the local authority lead really garnering much public support. I would not say in one part of the country it would not be possible to have strong regional government or city regional government. It may well be possible for Greater Manchester or for the North East. All I am saying is that we should not assume we can impose a uniform model or a layer everywhere across all of England. Q604 Lyn Brown: Can I ask you a really straight question: is it that you simply do not like the idea of city-regions governed by elected mayors? Mr Leslie: No. I believe - and this relates to Mr Hands' question - if you have strong local authorities, if you know what the institution is, what it does, what its purpose is, then you can decide what sort of leadership you want for that institution. So a strong local authority can have an elected mayor and be successful, if it works and people are happy with that. So too, I do not see why in a Greater London city-region you cannot have a mayoral arrangement on top of that. What I think we have done, for some reason, is had a discussion about governance that puts the leadership question before deciding what sort of institution we need, what reason we need institutions for, what the purpose of them will be, if you see what I mean. You need to draw a conclusion about why you need a governance institution before you then decide what sort of leadership it should have. I am not against elected mayors per se. I just think we have to be careful about the way we design our constitution, so that it has as much public support and relevance as possible. Q605 Lyn Brown: You suggest that outside London there is a natural identity with large cities which would make it difficult to create city-regions. First of all, I would take issue with what you said about being a Londoner: I never call myself a Londoner; I am always an East Londoner; I am a West Hammer. There are also issues outside of London. I just wonder whether or not the model you have created is OK for Yorkshire perhaps but not for the West Midlands. Mr Leslie: I am fairly relaxed. We put a chapter in the report about variable geometry, that rather clunky term think-tankers use to basically explain that there is a case to be made for having a different governance arrangement in some parts of the country to others. I can imagine a Greater Manchester, for instance, that would say "Yes, we do have a common interest." It should arguably have a city-region institution above the local authorities. I can only question, though I suspect most of those local authorities might be a little wary of that layer, because people in local government are quite naturally and rightly jealous of the powers that they have because they are the primary local democratic institution in that area. It is possible that we could end up with the Manchester leaders coming together so frequently that they want to form an assembly, that they want to have a single mayor, but I am slightly sceptical that that will happen voluntarily. Q606 Lyn Brown: You mean turkeys do not vote for Christmas. But do you not think that in a situation where perhaps something like that was imposed upon Manchester, with a Greater Manchester happening, that over time people would begin to identify themselves with Manchester as the tier of government became more powerful and more prevalent? Mr Leslie: Sometimes having these institutions put in place by legislation, the public, who are not as interested in the detail as we are, will accept but my feeling about constitutional development is that it is far better to do these things by persuasion and through evolution rather than having the centre always impose a model which will potentially have elements that need unpicking years afterwards. I would not want to intrude on the London experience, but I think if you look at the design of the Greater London Assembly, whatever people feel about it, the fact that there has been a very charismatic, strong leader in London has actually taken the media and the public view away from some of the constitutional discussions going on between the borough councils and the GLA, where I think there is a lot of question about how settled those arrangements are. Q607 Anne Main: I do not want a long answer because I am conscious that we have a lot of topics to cover. I struggle a little bit when you say it will work in some areas and not in others. I am beginning to get a picture of a mosaic of what you like in some places and what you do not like in others. My concern is where these boundaries start to overlap, where you would get a city-region that would be quite large intruding into perhaps the county structure as we have it now or the regional area structure as we have it now. Can you not see that, unless you make your mind up to have a model that works in a fairly strong fashion, you will end up with a rag-tag of structures? Mr Leslie: I think going down a route which is always about new institutional layers is probably the wrong route. We live in an era of partnerships and networks and teams working together. Q608 Anne Main: That is my answer then. That is enough. Thank you. Mr Leslie: That would be better, to get that right. Q609 Martin Horwood: Representing a large town midway between two cities, in Cheltenham and halfway between Bristol and Birmingham, a lot of what you say about identity and the need for a variable geometry seems very sensible, very good critique, but I am less clear about what you are actually suggesting in place of what we have now or the city-region model. Are you suggesting anything at regional level other than city-regions? Mr Leslie: Yes. I think the regional development agencies, the regional assemblies, the Government Office arrangements that we have had for the last decade, some going back even further than that, have gradually developed to a point where the Comprehensive Spending Review in future needs to grasp issues and move that next step forward. We have an accountability deficit with RDAs and with others. The regional assemblies, representing local authorities, are supposed to fill that gap, but I think there is still more work to be done. The reason why I like and prefer a whole-England approach that makes sure all corners of the country have at least a say in the shaping of big, strategic policy decisions--- Q610 Martin Horwood: You are actually quite fond of the current regional structure? Mr Leslie: I believe that the current regional arrangements need a lot of improvement but they are about inclusivity, about making sure that nobody is left behind, making sure that if they break into smaller sub-regions, city-regions, they can all relate to one another. What you do not get with the existing regional framework is this idea of castles being built around particular areas and those outside being left behind or having different opportunities. I like the inclusive approach and I think we need to build on the regions we already have. Q611 Mr Olner: The Committee went to Lille to have a look at their regional government and the way they expand their regional process. In France the commune is still really the gene that causes it all. I just wondered: if you are going to give this freedom to regions to see what is best for them, to see what is best where they form their regional boundaries, what incentives are you thinking of giving to local authorities, whether it be at city level, shire level or whatever, to come together to form a city-region or a regional area? Mr Leslie: I think local government has to be the key component here in driving forward basically most aspects of local public service delivery and economic development. I think we need to excite and engage the leadership of those local authorities to recognise that their destiny lies in pooling together, working jointly and fighting for their own patch, whether it is a sub-region or a region, much more strongly than currently takes place. I think government could do a lot more by transforming the way decisions are taken, pushing those out to regions, to local government, a lot more, because if the carrot is there for local authority leaders to grab by working together jointly with each other, they will be more likely to do that. A lot longer answer about the current sort of quasi-dependency culture we have with local authorities in in relation to Ministers, where the grant regime and other things mean that local authorities are still too supplicant sometimes to Ministers and to Whitehall. I think that needs bouncing radically but that is another part of your inquiry elsewhere. There is a lot government can do to really motivate and excite local leaders to take an interest in the strategic policy opportunities. Q612 Lyn Brown: I enjoyed your thesis around local government being really important and possibly having additional powers. To tease that out a bit more, what would you think of? Probation service? Health service? Do you think that would help to strengthen local government and make it more relevant to people and, if so, given the situation that we have in London, should it go to the big capital city, or would it be better spent locally, in boroughs, for instance? Mr Leslie: Again, London is a very special place but typically I believe the default assumption should be for local leadership over local public services. Certainly national government has a right to set minimum standards of quality and expectation, but we should be much more relaxed about local variation above those minimum standards and have stronger local leadership for most of these things. There are lots of issues on skills, on transport, policing and health, where we could have a lot more of a democratic impetus to spur on better delivery, which is, I believe, one of the biggest pieces of unfinished constitutional business. Q613 Alison Seabeck: You talked about the current inclusive approach of RDAs. Are you absolutely convinced that they are inclusive? There is experience that RDAs do tend to focus on those towns and cities that will deliver the targets they seek to achieve and that will not necessarily mean all the significant towns and cities in their region. Is that an experience you recognise? Mr Leslie: There are plenty of failings in the existing system. I do not deny that, but I think that route, having the opportunity for every Cheltenham or Bradford or Plymouth or wherever to take part in the discussion about spatial strategies, economic strategies, development and so forth, rather than feel that they are excluded from those opportunities, is a better foundation for policy rather than going down a fragmented route. Q614 Alison Seabeck: So you would say the city-region option is potentially weakening the role of RDAs and therefore being less inclusive? Mr Leslie: As I said at the beginning, I am not against city-region working on a voluntary basis, grass roots evolving. What I query is the concept of formal legislative statutory institutions as the alternative and the only model to devolution as an alternative to regionalism. Q615 Alison Seabeck: What about the role of the RDAs therefore in reducing inequalities between regions? Are they not actually competing with each other and therefore how do they ensure that there is a much more level playing field and that some of the inequalities that currently exist are ironed out? Mr Leslie: There is a lesser spotted PSA2, Public Service Agreement 2, which many people often overlook, which is one of the tougher public service agreements that the Government has set out, and it gives a lot of that challenge to the regional development agencies, which is to narrow the rate of growth between the fastest and less fast areas of the country. That is a big job and it requires serious effort. I would be very worried if that target were to be reduced or diminished. That really is needed much more. It does mean different parts of the country shouting for their own corners. I do not think that is a bad thing. Having a bit more energy and enthusiasm to persuade inward investment to come in, whatever it takes, is a good thing. That is another reason why a regional approach still has a lot of legs to it. Q616 Alison Seabeck: Your pamphlet says that it is vital we ensure RDAs are given the freedoms that encourage new and innovative ways of working and confidence in the people they serve, and this means looking at how best to give clarity to who is responsible for their work. What does it mean? What is your evidence that the general public are exercised about this particular issue, or is it just elected authorities and elected members that are exercised about this? Mr Leslie: I would not claim that there is massive public excitement about regionalism. A lot of it is the hard-wiring bits of governance and management within the public service between national government and local government. But it is a vital bit of the picture, for economy of scale reasons, inter-city working, the specialist investment that you need. All of these reasons drive a regional approach which you cannot do without. Q617 Alison Seabeck: RDAs are seen as not accountable, something you touched on earlier, and the inter-relationship between regional assemblies and RDAs. In producing your pamphlet, what evidence did you get that RDAs are not being scrutinised or are not responding to scrutiny issues raised by regional assemblies? Certainly, we had evidence from the South West that they really felt that some of the things they were putting into the RDA were not being listened to. Is that something that came out when you were doing your research for the pamphlet? If so, how do you address it? Mr Leslie: There is quite good scrutiny that goes on via the regional assemblies of the RDAs but I think it needs a lot more. Q618 Alison Seabeck: It varies from region to region. Mr Leslie: It does vary from region to region. Q619 Alison Seabeck: Where would you say there is best practice? I am sorry to interrupt you. Mr Leslie: I know Yorkshire best. I think there is a relatively good dialogue that goes on there between the regional assembly and the RDA. The point I would like to make though is that I believe accountability has a certain number of prerequisites. First of all, I think you need the disinfectant of sunlight to come on through the media or through other forms of communication so that people know outside what is going on. People do not truly feel as though the public can access some of this sometimes quite esoteric regional debate. One of the ways around this - this is why we talked about local government, national Parliament as the two primary poles - local leaders should take a stronger role in the scrutiny process, but national Parliament should take a much stronger role too. Alison Seabeck: I think we are coming to that later. Q620 Mr Betts: You have suggested various ways in which we might make regional scrutiny better at Westminster. I do not know whether you can pick out the one which you think might be the most likely to succeed. In the end, do we not have to recognise that RDAs are in the end creatures of Whitehall departments? They are government departments out there in the regions. They are always going to be accountable to Ministers at the end of the day. People go and look at them and comment on them but the real accountability rests with Ministers, does it not? They are a creature of government in the regions. Mr Leslie: I think regional activity needs to be accountable to both local and at a national level because it is the meeting point between those two primary poles. Certainly, local government, either through a reformed regional assembly process or otherwise could have a louder voice. I also think that Parliament and parliamentarians - no disrespect to many of you, my former colleagues - could take a stronger and more thorough scrutiny role in overseeing the work of the RDAs and regional activity. That was the case certainly in Scotland and Wales before the establishment of the Scottish Parliament and the Welsh Assembly, and even to a certain extent in London. There are a lot of parliamentarians who could add a lot of value to this scrutiny process and, by the way, also bring a lot of media spotlight to some of this hitherto clouded area of public policy. Q621 Mr Betts: I listened to what you were saying about the concept of city-regions not being imposed but maybe evolving, but if you get a fairly strong evolution, as is beginning to happen in Manchester maybe, on the lines that Bill Olner was referring to in Lille, where local authorities come together in a federated way and say "Actually, this is how we want to act, as city-regions", in some ways they are going to actually be closer to and more accountable to their communities than any attempt to have a departmental regional select committee in Westminster looking at RDAs. Mr Leslie: As a localist, I would prefer that solution, but being realistic about other parts of the country, not everywhere has a Greater Manchester feel about it, a Greater London feel about it. There are some parts of the country that do not naturally fit into the idea of a city or a single identity and therefore often for those areas I think you need a different model of accountability. I would prefer it if local authorities led the process, held the reins and made the decisions, but I do think that you always need to look at those other parts of the country where national parliamentarians could add value, knowing the patch that they have, representing the area that they do, in supplementing the scrutiny that is currently undertaken through the regional assembly process. Q622 Alison Seabeck: How do you square what you have just said with criticism in the pamphlet that only MPs, parliamentarians, are on the Grand Committees? Mr Leslie: I would not want to intrude on the procedural niceties of parliamentary procedure because Grand Committees might exclude others. You might be able, dare I say it, to devise a new parliamentary process that does allow members from local authorities to join together. I think there have been ad hoc committees in the past where you have had local authorities, or members of the Scottish Parliament or Welsh Assembly at the same time as parliamentarians working together. I think it is possible to design a better, stronger, scrutiny arrangement. Q623 Martin Horwood: I am also puzzled as to how you think the involvement of MPs in this way is going to do much other than, by the sound of it, give us 12 times as many meetings to go to. Mr Leslie: You can cope! Q624 Martin Horwood: We cannot cope, especially not if it is about regions other than our own a lot of the time. It seems to me to be compounding the problem that you describe, which is drawing the whole idea of regional government more into Westminster and more into the Westminster world when actually the "disinfectant of sunlight" really needs to come from local level. The fact that local media take no interest in regional assemblies - I do not know whether they doing Manchester and Yorkshire but they certainly do not in the South West - is part of the problem. You need to somehow grapple with that, do you not, not draw it all up to Westminster? Mr Leslie: I would, as I say, far prefer strong local leaders to make enough of a fuss to hold their RDAs and their sub-regional activities to stronger account, but I do think that parliamentarians can add value because you have a constituency base, because within your own home regions you will know the priorities that your constituents want, and I would like that accountability to inform the decisions taken at a regional level. I think that would add value. I think it did add value in Scotland and Wales and led to other forms of devolution, which I also think is an issue Parliament should consider as well for England. Q625 Sir Paul Beresford: The way you are looking at it, as I read it, you are saying that you want some top-down and you want local government to come up from underneath. Yes? Mr Leslie: I do not necessarily think that parliamentarians in their scrutiny role are top-down. I am not talking about an executive piece of leadership. I am talking about parliamentarians going into scrutiny, local government leading the scrutiny. Q626 Sir Paul Beresford: There would be an argument to say that we have tried regional assemblies, nobody wanted to vote for them, most people do not want them, many people have not heard of them, they cost a lot of money, they interfere at every twist and turn, and really we ought to go back to your idea that the local authorities should be together doing that role without this monster that every region has dumped upon it. Mr Leslie: I do not think elected regional assemblies are on the agenda, certainly not for the next decade or so. Who knows? They may be on the statute book. But I do think there is a role for regional co-ordination of policy. The previous administration recognised it--- Q627 Sir Paul Beresford: You want local authorities to do it together. Mr Leslie: I would prefer local authorities to lead that, but from time to time I do think there is a case to be made for regional action and decisions that could be better led and scrutinised by local authorities, perhaps supplemented by other elected representatives. Q628 Chair: Briefly on this issue of regional scrutiny at Westminster, do you think it would be a good idea to have regional Ministers? Mr Leslie: Personally, I do think it would be worthwhile for a Commons Question Time that looked at Yorkshire issues or the East Midlands, West Midlands issues. It might be something you could look at at Westminster Hall. I think there are a lot of parliamentarians who know the priorities for their patch that go beyond their constituency or local authority boundary. As you know, in my reckless youth, when I was a Member of Parliament, I spent some time thinking of the major transport investment that was needed in Yorkshire. I would have dearly loved to have had more opportunities to press Ministers to think on a regional basis about what Yorkshire needed to improve its economic prosperity. That is an opportunity I would strongly commend to you. Chair: Thank you very much. Witnesses: Yvette Cooper, a Member of the House, Minister for Housing and Planning, Mr Phil Woolas, a Member of the House, Minister for Local Government and Community Cohesion, Department for Communities and Local Government, and Rt Hon Margaret Hodge MBE, a Member of the House, Minister of State for Industry and the Regions, gave evidence. Q629 Chair: Can I welcome you all to this session on regional government. Can I start by asking a question about PSA2, which commits three departments to make sustainable improvements in the economic performance of all the English regions and over the long term reduce the persistent gap in growth rates between the regions? Which do you think is the most important: to improve the economic performance of every region or to close the gap between the most dynamic and the least dynamic? Yvette Cooper: The reason that the PSA target was set up like that was exactly in order to prevent taking the easy way out of trying to do one rather than the other of the two aspects of the target, so in order to be clear that we do want to narrow the gap between the economic growth rates of the regions but not simply by slowing down growth of high-performing regions. Equally, we want all the regions to grow, but it is not enough to simply have economic growth in every region; we actually want to narrow the gap as well. It was deliberately done to put the two elements of the target in. If we had thought one was more important than the other, we could have just picked one of those two elements as the PSA target, and frankly, from the point of view of any government department, the simpler a PSA target, the better. Margaret Hodge: I think the two are very interlinked but if all the areas where GVA is less than the national average, if they all improved to the national average, we would find average GVA would be £1,000 more right across the country. In getting economic growth and in closing the disparity between the regions, you enormously benefit the whole of the nation. Q630 Chair: I am grappling with that mathematical problem. If you increase everybody to the average, you cannot possibly make the average better. Yvette Cooper: The average itself would then go up. It was the mean, but if you take the current average... Q631 Chair: We will worry about that one later. Can I ask you this, Yvette: the London super-region clearly does have an emerging growth strategy, part of it linked, for example, to the 2012 Olympics, but there does not seem to be a similar strategy for key provincial city-regions. Would you like to comment on or justify that? Yvette Cooper: The most immediate response is, of course, that we have the Northern Way, which is very clearly an economic strategy for the three Northern regions. Every area will have a slightly different approach and the geography will vary. As you know, there is clearly a specific strategy being developed for the Thames Gateway, which cuts across three regions but has a particular identity and faces particular issues of its own. Equally, each region has its own regional economic strategy, and the three Northern regions have come together to draw up the Northern Way, which I think is particularly important when it comes to the PSA target that you referred to earlier. It is inevitable, particularly around the 2012 Olympics, that the area round London should seek to make the most of that and to make sure that we can get as much economic benefit spreading much more widely than simply the immediate Olympic area as we possibly can, but I think it would be wrong to say that that means there are not strategies for other regions or other cross-regional partnerships as well, because the Northern Way is the best example, but other regions are developing their own approach. The Midlands have talked about a Midlands Way approach, looking at the East and West Midlands together as well. Q632 Chair: Can I just return to the issue about the gap between regions. What evidence is there that the policy is reducing that gap? Yvette Cooper: The growth figures are interesting. The most recent figures are 2003-04, which show that for the North Midlands and West regions, compared to the greater South East regions, the growth rate for the North Midlands and West is higher than the growth rate for the greater South East. Clearly, there are cyclical factors involved, so it would be wrong to base an assessment on any one individual year. What is also the case is that there is a slightly more complex position for London, which shows greater cyclical variations than other regions. Nevertheless, from my reading of the chart, which we can certainly make sure the Committee has a copy of, if you look at the three Northern regions compared to, say, the South East region, then actually for each of the last four years the growth rate in the Northern regions as a whole has been higher than in the South East region. I think that does show something quite interesting if you compare it to 100 years of a widening north-south economic divide linked to the industrial history and so on, and we saw that gap widen particularly every time there was a recession. So every time we had a national recession what it did was widen the gap between the regions. The fact of having the economic stability over the last ten years has obviously helped in that but these latest growth figures do seem to suggest also that we are having an impact in terms of the gap between the regions as well. The other factor that I think is significant that suggests that it is more than simply a cyclical issue is the fact that the skills gap is narrowing. If you look at the number of people with Level 2 skills, there is a significant narrowing of the gap over the last few years in terms of those with Level 2 skills. It has not seen the same impact yet in terms of some of the higher level of skills. Nevertheless, it is important, I think, that the skills gap is narrowing. Q633 Chair: Can you compare the resources that are currently going into the Northern Way and the resources going into London and the London Olympics? Yvette Cooper: I cannot give you immediate, specific figures for the Northern Way compared to things like the Thames Gateway. It is about £100 million for the Northern Way. What we do have is figures for the overall spending on services per region, which we can send to you, which show the total identifiable expenditure - because obviously some things are harder to identify than others, on services by region per head - which shows higher figures for the North East, North West and Yorkshire and Humberside compared to the southern regions other than London, which, of course, because of additional pay factors for London and additional cost factors alongside the deprivation, makes it obviously a more distinctive case. But we can give you those figures which show expenditure overall per region. Q634 Alison Seabeck: The Government Office for the South West told us when they came before us that they are currently implementing 46 public service agreements. That is obviously quite a wide range of formal tasks they are being asked to undertake. Given the complexity of that, and given the need for PSA2 to be met and so on, who in central government actually pulls all this together and ensures that central government's messages get out to the regions, particularly given that obviously, departmental expectations of Government Offices vary, and there is clear evidence that they vary? Yvette Cooper: The Government Offices' role has changed and expanded as we have devolved more out to the regions. Initially, when they were first set up, they were probably only dealing with a couple of departmental programmes of work. Now they deal with a whole range of departmental programmes of work and so the scope of work has changed exactly as we have tried to pass more out to the regions. That therefore means that the regional directors have a critical responsibility in terms of co-ordinating the work across the different departments. If lying behind your question is whether we should do more in terms of looking at the regions as a whole, then I think there is probably quite a strong case for that. Individual departments obviously have to take account of their own priorities in different ways. Q635 Alison Seabeck: Is there not a risk that certain departments will be able to pull strings more effectively with the Government Offices than others and therefore risk priorities being slightly skewed? It is all about leadership within the departments. Yvette Cooper: If that is a criticism of individual departments for not sufficiently engaging with their regional offices, perhaps that means there is more that individual government departments should do. Certainly, because we obviously do quite a lot of work with the regional offices, I have regular meetings with regional directors, for example, to talk about a whole range of different issues, including planning and so on. I think that is probably quite an important thing for Ministers to do but that will vary from department to department. Q636 Alison Seabeck: It is quite an interesting role for Government Offices in a sense, because they are stuck in the middle really. You have a real question about who pulls their strings. Is it government-down trying to implement government policies or should they be listening to what is happening on the ground in the region and making sure that that view is fed upwards to central government and therefore policies adapted accordingly? It does seem to vary from region to region, exactly that dynamic. It does not seem to be consistent across the country. You must have an oversight of this and experience of all regions. What is your feeling? Is the balance right? Are Government Offices willing to be slightly independent of government or are they simply extended arms of government? Yvette Cooper: My experience of dealing with regional directors is that they will do both; they will look at implementation and monitoring and progress with particular things that need to be done in different areas, but they will also feed back problems, difficulties, and I have certainly found them extremely helpful in terms of identifying problems and difficulties in particular areas, maybe around housing and so on, and being very good feedback mechanisms. What I think we should not do, however, is expect the Government Offices to do everything. They are linked through the Government; they are part of government. We made a decision for example, on housing to transfer the regional housing board from what was usually committees chaired by the Government Office to the regional assemblies. It was partly a Kate Barker recommendation that we needed to link housing and planning but it was also, I think, a sense that actually, those sorts of housing priorities, the recommendations on what the housing priorities were within the region, should better come from regional assemblies, who are a more responsive way of feeding back the real views within the region than the Government Offices. Q637 Alison Seabeck: So we should not expect the Government Offices effectively to stand up to central government; it should be the regional assemblies being in turn fed by what is going on in the region and the regional development agencies and what they are picking up. Is that what you are saying? Yvette Cooper: The Government Offices do provide important feedback mechanisms but we should not expect them to do something, to be something that they are not. The regional assemblies and the RDAs on economic matters play particularly important functions. We should not expect Government Offices to play those functions. Q638 Anne Main: If I can take you back a step, you said that there may be a problem of communication between government and the regional offices. Have you done any assessment to see how good the communication is, so that we have a picture of how well visions or strategies are being communicated? There does seem to be a bit of a grey area as to who is responsible. Is it coming from down or up? Are you sure that the communication is good? You have accepted that there may be a criticism. Yvette Cooper: No, it was an open question: if you want to put criticism to us that you have picked up, then obviously we will look at it. Q639 Anne Main: I just wondered if you had any information. Yvette Cooper: We are not aware of Government Offices raising systematic concerns about a particular department or a particular issue where they feel that the communication is not working effectively at all, and what I can say from my policy area is that, certainly around housing and planning, I have quite a lot of contact with Government Offices, and I find that that arrangement works extremely well, that they are very good at both being able to not simply look at what the policy execution is in particular areas but also to come back and say they have got problems with this or problems with that or we are going to have to change policy in a particular way to address particular things in particular areas. What I cannot do is speak for every government department, because clearly issues and policies will work in a different way. Q640 Alison Seabeck: British Chambers of Commerce expressed concerns that the RDAs were being given too much to do. They query their management of Business Link for example. Are their concerns about Business Link justified or are Business Link beginning to prove quite a useful tool available to the RDA? Secondly, do you have any evidence at all to indicate the devolution of tasks to the RDAs is affecting their performance? Margaret Hodge: I think it is too early to assess the success of the transfer of functions in relation to Business Link but we are looking at it, and the record of Business Link in terms of the amount of advice given to businesses, the number of formations of small businesses, the satisfaction of customers in dealing with Business Link appears fine; in fact, it is getting better. Have RDAs got too much to do? No. I think we are strengthening them and bringing together the strategy of responsibilities and functions they have with some delivery functions which are relevant to that strategy. So, for example, providing the support and advice to businesses in one place from a regionally based entity is more sensible than having two separate bodies, a small business service run from DTI and the RDAs run from the regions, both thinking that that is part of their central function. Indeed, we are considering, as you will know from the consultation paper on structural funds, devolving out to the RDAs the responsibility for allocating the old ERDF fund for regional economic purposes. I think, again, that is sensible, because if it is the purpose of an RDA to get regional economic growth and to tackle the regional disparities, it is sensible to give them the tools so that they can implement and meet the purpose we set them. Q641 Alison Seabeck: So you are content that they have the capacity to cope with you devolving additional duties to them? You do not see it as a problem? Margaret Hodge: I have not picked that up at all as a problem. Clearly, in response to their new responsibilities, they will take on the appropriate staffing, but beyond that, they are pretty lean, efficient organisations, and I am impressed by their capacity to be able to respond to the new challenges we give them. Q642 Chair: Is the DTI reviewing the effectiveness of RDAs as part of the Comprehensive Spending Review? Margaret Hodge: We are indeed. Having been in the job for just six months, Chair, I think there is something to be said for improving the evaluation that we have had so far of RDAs, and I am discussing that with RDAs. I think we need a more systematic evaluation mechanism which not only enables us to see whether they get the outputs which we require of them but also whether they provide value for money. I am interested in looking at what works best in the RDA context, and we can only do that if there is an evaluation which gives us strong comparative data on the performance between RDAs. Q643 Anne Main: The DTI has recently stated that the scrutiny of the RDAs by regional assemblies should not be confused with the issue of democratic accountability of the RDAs. What is the role of the regional assembly scrutiny, and are you satisfied that the different scrutiny arrangements put in place are proving effective? Also, how are you measuring them? Margaret Hodge: There is scrutiny of the RDAs by a number of mechanisms, of which the regional assembly is one. The National Audit Office, for example, is carrying out a value-for-money exercise. They have now completed that on two of the RDAs, and I think they will complete them all in the next year or so. I have responsibility for a relationship with the RDAs and meet the RDA chairs every six weeks, as Yvette meets the Government Offices, and appoint members to the RDAs and look at their regional economic strategies. So there is that scrutiny. The regional economic strategy itself, one of the ways in which it finally gets approved is through a proper consultation. There has to be a wide consultation with a number of partners. The regional assemblies are another mechanism for ensuring accountability. Have we got it right? I think these are really complex issues, Chair, and whether that is the best mechanism for ensuring democratic accountability is something we are looking at in the context of the Comprehensive Spending Review and the review of our sub-national organisation structures. Q644 Anne Main: Thank you for that, but I was wondering how you are actually measuring the effectiveness. What criteria are you using to measure, and if there are lots of different people doing this scrutiny, how are you collating all that information and coming to a view? Margaret Hodge: Parliament, for example, gets six monthly reports from the RDAs on the outputs that they achieve, so that is one way of measuring. We review the regional economic strategies and the business plans every year. The regional assemblies monitor the work they are doing. None of this is a clean, tidy, unified way of monitoring the performance of the RDAs but, given the wide area of responsibilities that they have and the geographic areas they cover, I think you are going to inevitably end up with a pretty diverse system of monitoring and evaluation. Can we do it better? I have said that I think coming out of the CSR and certainly coming out of the work I am doing, I want to get a more rigorous evaluation across RDAs which would allow us to compare the performance of RDAs. Sir Paul Beresford: If I can follow up on your penultimate answer, when we manage to break the bounds of this inquiry and the questions that have been set for us and ask some questions about regional assemblies, we have had some interesting answers. There is a general feeling, as I get it, that they are not particularly successful. They are unelected, but there is no appetite to have elected assemblies; they are distant; many of them are on artificial boundaries; they do not do the role they are supposed to do; nobody really knows about them; and they are expensive white elephants. You have just talked of a review. Is this possibly an opportunity to sit back and push the dogma to one side and actually look at regional assemblies and whether we really need them or should have them? Chair: The review, as I understand it, Margaret, is of the RDAs. Sir Paul Beresford: I was hoping the Minister might answer rather than the Chairman. Q645 Chair: I was merely pointing out that the review, as I understand it, was of the RDAs and that regional assemblies are a different department. Margaret Hodge: I think I am right in saying - both Yvette and Phil will know better - that 70 per cent of the people who sit on regional assemblies are locally elected politicians, so there is an element of democratic accountability there. Q646 Sir Paul Beresford: Except many of them do not feel that they should be there. For instance, in the South East. Margaret Hodge: I have met the regional assemblies in discussions about accountability from the RDAs and if you were to interview them as part of the process for this Committee, you would find a huge commitment to their role as monitoring the work of the RDAs. I do not think they would feel that. In fact, they consider the role important, they spend time on it and they value that role. Could we strengthen the accountability structures? I think there are issues around that but it is more about the make-up of the RDA, ironically, than the make-up of the elected regional assemblies. Yvette Cooper: If you abolished the regional assemblies, you would either have to re-invent them or you would end up giving a whole load of additional powers and responsibilities to central government. The work that the regional assemblies do, certainly around housing and planning, is extremely important, and I think it is right that recommendations about the way in which Housing Corporation investment should be spent across the region should come from the region rather than simply being decided in Whitehall. Equally, I think it is important that recommendations around the regional spatial strategy and the plan for the region, the number of houses that are needed, for example, should come from the region rather than simply from Whitehall. So they do have an important function. Clearly, we did have proposals for a directly elected regional assemblies and that was not supported. Nevertheless, it is critical. They do a job and it is a job, in my view, that should be done in the region and not centrally. Q647 Sir Paul Beresford: I am sorry. It sounds as though there are closed minds to this. What I am looking to is the reaction we are getting from local government, who are elected. They should be moving into that role and taking it as a combined effort on their part. They are elected, they do know the ground, they have gross root contacts, etc, and they should, as a combination, be able to do that without the expense and difficulties that we have with the regional assemblies as they are now. Yvette Cooper: Which is either simply re-inventing regional assemblies or alternatively is about individual local authorities simply taking their own decisions for their own areas. There are issues that cut across local authority boundaries, issues, for example, around housing and the number of homes that are needed across a particular housing market and across a region. There are a whole series of questions which do cut across administrative boundaries, and the regional assemblies are made up of local authority representatives across the region. If your argument is that you do not like the composition of regional assemblies because you do not think they should have outside members from other kinds of stakeholder bodies, voluntary sector bodies and things like that, who currently sit on regional assemblies alongside local authorities, it is a valid argument to make but it is not an argument against regional assemblies. I think it does benefit the regional assemblies to have the different voices as well, but it is clear that the vast majority of people on the regional assemblies should be local authorities so that they can actually reflect the views within their different areas. Q648 Sir Paul Beresford: But they are not. Yvette Cooper: Actually, they are. The majority of regional assembly members are. Margaret Hodge: I think it would be helpful if one thought about what issues you want to be determined and decided at which level. Q649 Sir Paul Beresford: What I am asking for is a review. Margaret Hodge: Hang on a minute. We would want most issues determined at the local authority level where that is possible, and that is the whole thrust of government policy, but there are certain issues, and Yvette has mentioned one. We can talk about others. Logistics is one; looking at the supply chain for economic activity is another; looking at skills is another. These are issues which have to be thought about at a regional level. You then have to think what is the best structure within that regional level to get buy-in from all the players. The structure we have is a regional assembly and the majority of people on that come from local authorities; they are elected politicians from local authorities. It is about 70 per cent. If you want that reformed in some way, there are other ways of configuring that, but we do need a regional structure. We do need some structure of accountability and decision-making at that regional level for issues that are best determined at that level. Sir Paul Beresford: I think we had better move on because Margaret Hodge and I could be in an argument for a good hour. Q650 Martin Horwood: I just want to ask about the relationship between RDAs and regional assemblies without venturing into the pros and cons of regional assemblies, because I must say, as a traditional supporter of the idea, it is not working in the South West. What proportion of the RDA budgets are actually scrutinised by the assemblies? Margaret Hodge: All of it. Q651 Martin Horwood: I do not think that is true in the South West, not by a long way. Margaret Hodge: It would be interesting to know why you believe the South West one is not working well so that one could look at that and see whether there are ways of improving it. These are relatively new bodies. There are other ways of structuring it, and none of us have a closed mind. Q652 Martin Horwood: Minister, I am more interested in the fact that you seem to think that they have scrutiny over the whole budget, they simply do not. Margaret Hodge: Sorry, not the budget. They scrutinise the regional economic strategy, I probably scrutinise the budget. Q653 Martin Horwood: They do not perform a scrutiny role over most of the RDAs' spending, do they? Margaret Hodge: To the extent that the regional economic strategy will then be translated into the budget proposals for the RDA, they will scrutinise it. We have given the RDAs huge flexibility with a single pot bringing all of their funding together, accountability for that, how is that scrutinised? Again, it is scrutinised partly by the regional assembly, partly by the NAO, it is doing its review to see that there is value for money. I will look at the business plans to vet those. I am not sure what else you want. That seems to me a pretty strong answer. Martin Horwood: I want local democratic accountability but I do not think we are getting it. I think you have illustrated the point. Q654 Anne Main: Many people have expressed concerns about the number of quangos and agencies working in the regions and many of them sit on the regional assemblies. Will you rationalise the number of quangos and agencies working in the regions? If so, which ones and when, or do you have any plans to? Mr Woolas: The premise of the question implies that there has been a deliberate policy of Government to increase the number of bodies that are generally referred to as quangos. Q655 Anne Main: I do not think I said that. I said "there are a number of" and are you going to reduce them. I have not said there has been a deliberate plot. Mr Woolas: The policy that we have in respect of quangos is that some of them will be reduced by merger. For example, it is outside our policy area but the probation service is merged with the prison service to form the national offender management system. The three countryside bodies are being merged into the natural England body so there is a reduction there. Many of the quangos that are referred to in these debates are quite small organisations so the Government's policy is certainly not to increase the number of quangos but the accountability of them, depending on which of the four structures and relationships they have with central government, I think we have a good record through the strengthening of the select committees, the National Audit Office, where appropriate, and indeed the regional assemblies as well. Q656 Mr Betts: One of the ideas that has been put to us by some witnesses is that we should return to the idea of having regional ministers, someone who can champion an individual region and act as a direct conduit between that region and government departments. Is that anywhere on the Government's radar screen at present? Mr Woolas: Parliament has its own debate about the Regional Affairs Committee which is there. There is a debate currently as to whether or not the resilience function requires a single ministerial point of view. Our general policy, to answer the question directly, is that through the strategy of local area agreements, of city regions, of getting the right decision taken at the sub-region and regional level, which we believe brings much better joined up delivery of services and much greater financial flexibility to the public sector bodies to get them out of the silos, that case means that the force majeure for a regional minister, as of course there did indeed used to be, is less pressing. Q657 Mr Betts: Was there any case then to have some more effective parliamentary scrutiny of what happens in the regions because really there is not any at present, is there? I understand there is a wonderful standing committee on regional affairs which last met in 2003/04. Obviously nothing important has happened in the regions since then. Mr Woolas: I have got a paragraph here that says the line to take and it says, "Be careful, minister, because this is a matter for Parliament". Q658 Mr Betts: That committee only meets at Government's request as I understand it to consider things that the Government wants it to. Mr Woolas: As I recall from my days in the leader's office, it can meet if a matter related to regional affairs in England is referred to it by a non-debatable motion passed on the floor of the House. Q659 Mr Betts: Government controls the business on the floor of the House. Mr Woolas: Unless it is a matter for Parliament. My predecessor took a positive approach to this by surveying Parliament as to its attitude on this and found a very low response, I think there were only a handful of members who responded. I should also have more help, the Secretary of State is looking at how we should take this forward, this relationship between Parliament and regional policy, and whether or not the Regional Affairs Committee is the best way forward because of course, the analogy is drawn with Scotland, Wales and Northern Ireland. Margaret Hodge: It does show the complexity of this issue because where do you want your accountability? Do you want your accountability to Members of Parliament, to a part of central government? Do you want accountability to local authority councillors and leaders who come there? Do you want your accountability out of the region, which is a bit what the RDAs are about, with business people out of the region, voluntary sector people out of the region, educational people out of the region. I think you can play those accountability structures lots of ways and then you are down to the question raised by Anne Main that you end up with proliferation. This is not an easy straightforward question, how you get that accountability going and not have a proliferation of bodies which then cost you money and take away from the frontline. Q660 Chair: Notwithstanding that, there is not any forum at the moment, any formal way, of MPs for a given English region to hold government departments to account. Does the department feel that there is a need for that or not? Yvette Cooper: I think the lengths of the answers that we have given reflect the fact that this is an area where it would be very helpful to have proposals from the select committee because it is matter for Parliament what happens in terms of the select committees. Personally, I think there is a very strong case for strengthening the accountability around the different regions but everybody will have their own views and this is something that should rightly be decided as part of a parliamentary debate and therefore perhaps a select committee recommendation might be the right way forward in terms of that debate. Q661 Alison Seabeck: It is my understanding that some government departments do have ministers allocated to specific regions, the Department of Health I know have asked their ministers to take particular regional accountability. Is there any cross-departmental working in the same way that there is for those ministers who have European responsibilities in departments because I understand currently that exists as well. They certainly do get together, but clearly if you have got one department giving ministers responsibility for regions and others not, there is obviously nothing going on within government departments at the moment. Yvette Cooper: Our department is probably more complex because all of the work we do is about place and so obviously Phil has to work on local government all over the country and equally I will work on initiatives around housing and planning all over the country. Obviously we do have ministers who take decisions around regional planning casework that comes in and also on the regional spatial strategies and so on. Also, around the Thames Gateway we have particularly identified ministers we will talk to within other government departments specifically around the Thames Gateway giving additional importance of co-ordinating across different departments there. It does happen but obviously individual departments will have different arrangements in place because of the nature of the business. Q662 Alison Seabeck: It is a bit piecemeal, is it not, at the moment. Yvette Cooper: Part of that is an inevitable consequence. Given Phil's work around local government, you would not expect there to be a local government minister for the North West, a local government minister for the North East, a local government minister for Yorkshire and Humberside because Phil needs to be talking to local government in every region. Q663 Alison Seabeck: In a sense, you probably need to be co-ordinating and other government departments perhaps feeding into your hub. The DTI might argue with that and it is part of the debate that we have got to have because it is complicated. Margaret Hodge: I do not think it would work for DTI. In some delivery departments where they deliver nationally, either health or education, it might work for those sorts of departments. Malcolm Wicks has responsibility for energy policy; I have responsibility for manufacturing policy. Alison Seabeck: It is quite interesting how it works really, as to how you take it forward. Q664 Mr Betts: I am going to look at city regions. How important do you think that cities are, particularly to enable Government to achieve the PSA targets about reducing inequalities in growth between the regions? Mr Woolas: The answer to that question is very. The policy that we are pursuing is based on two underlying principles. The first is that it is desirable for local authorities and their partners to have a greater role in economic leadership and economic regeneration and obviously because economies do not follow local authority boundaries, the multi-area arrangements around what have come to be known as city regions obviously become important. I would not want the committee to think that would be at the expense of the areas that are not in the city regions nor is it exclusive to the eight core city regions in England. For example, Lowestoft and Great Yarmouth is an economic entity that crosses local authority boundaries, counties and groups of counties have joint economic pastures. The second principle is exactly as Clive has just suggested which is that the city region's potential to maximise growth through collaboration on those matters which are clearly economic - skills and transport are two examples that come to mind - are the second pillar of our policy. Q665 Chair: Can I pick you up on that, Minister. One of the documents that we have had is some information about the Leeds city region. I was extremely surprised that city region accounts for 20 per cent of the population, 21 per cent of the business and 21 per cent of the GVA of the three northern regions. In other words, it does not seem to be performing any better than you would expect it to simply on the basis of the share of population who live in Leeds. Does that suggest that city regions are not that brilliant? Mr Woolas: If you look at that example, if you look at the success that Leeds as a city has had, for example, in financial services and look at the success that York has had, for example, on bio-sciences, that success has in part come about because of the deliberate decision and consensus between those two cities as worked out at the city region forum. I believe strongly that there are lots of examples like that around the country where the cities, and therefore the regions, have done better than they would have otherwise done by sensible collaboration. Preston and Blackpool, in terms of retail, would be another example where deliberate decisions have been taken and the recognition that city regions' economies and their surrounding economies can grow better by collaboration in that way. The State of the Cities Report which received quite extensive media coverage, which was published on 7 March, pointed out that the primary urban areas in England account for 58 per cent of the population and 63 per cent of jobs. The proportion of figures in Yorkshire speak for themselves but the importance overall to our economy of the city regions is significant. Q666 Mr Betts: Are we going to get a clear policy statement from the Government? Obviously city regions is something that is buzzing around as an interesting idea but we have not yet got a clear statement of Government policy. Mr Woolas: The answer to your questions will in large part be in the Local Government White Paper which will be published in the next few weeks, obviously there are questions of governance which are high in public debate. The policy that we are pursuing is one to ask the areas themselves what powers and what proposals they think they can best take forward. The series of city summits that we have had around the country starting 15 months ago, looking at the eight core cities in England, looking at groups of towns and cities such as coastal towns, looking at sub-regions in the 56 non-major cities, all of those have prompted a debate to come forward with proposals on powers, financial and otherwise, and flexibilities in terms of their approach to the local area agreements which are now going to be in place everywhere by April next year. What is very, very clear from that is the policy of not having one-size-fits-all is very, very necessary. It is difficult to answer the question in advance of the areas themselves coming forward with the proposals and, of course, the criteria that they will be judged by will be a part of the White Paper. Q667 Mr Betts: In some sense you are looking for collections of authorities to come together with proposals about what they need? Mr Woolas: Yes, we think that we have prompted a very positive debate in areas, whether that would be Cumbria where the districts and the county have worked together on various proposals - the democracy commission in Cumbria - whether that be the debate in Bristol and the surrounding area as to what their economic priorities are, what their drivers are and what obstacles there are placed, intentionally or unintentionally by central government and its agencies, to stop them pursuing those strategies has been a very positive debate and we intend that the White Paper will take that forward. Q668 Mr Betts: We might be waiting for the White Paper to decide precisely what powers might get devolved to city regions. Are we likely to see a situation where only certain city regions are going to be entitled to have these new powers, where there maybe governments saying, "It is all right for you but not all right for you?". Mr Woolas: We have clearly said already on several occasions, including in Parliament, that there is a relationship between power and accountability, that Government has a responsibility obviously to the taxpayer and to Parliament to ensure that arrangements which are put in place in sub-regional areas are accountable to the public as well as to the Whitehall departments and ministers, and provide value for money. The horses for courses bespoke strategy that we are pursuing, which I passionately believe is the right one, and I believe there is a consensus for that policy as well, certainly the Local Government Association has a strong support for that approach. Q669 Mr Betts: That is quite interesting to hear because it seems to be slightly different from some of the news that was coming out at one time which almost seemed to be saying that government is going to decide the right approach, it would offer a great big carrot, maybe not too big a stick but a great big carrot in terms of new powers and new finance, and if local authorities in an area did not really want it, then hard luck they would not get the powers and they would not get the finance. Mr Woolas: I think there is a hierarchy of powers that is linked to the direct accountability at a local level but our policy is not to have a one size fits all approach simply because of examples which I have given. You could not have an economic strategy in the governance approach in, say, the Southampton/Portsmouth area as you could have in, say, the Black Country. Q670 Chair: Is there a pre-determined model for achieving the accountability? Mr Woolas: There is a White Paper process on the way. Q671 Chair: Is that White Paper going to have more than one model within it? Mr Woolas: You place me in a very difficult position because I am accountable to Parliament and the White Paper is the property of Parliament when it is published. Q672 Anne Main: Just on the point of the one size fits all model, and some areas being allowed to be city regions, who is going to decide: the area that wants to be a city region or government? In which case what criteria are you going to use? Mr Woolas: Once one opens the devolution debate, those are the sorts of questions that inevitably are asked. There are some debates, for example, in the West Midlands as to whether or not Telford and the Wrekin is part of the economic sub-region of the West Midlands or not. I would guess - I do not know - that Telford thinks it should be; whether or not it is, is another question. Q673 Anne Main: Who makes the decision? Mr Woolas: Ultimately, of course, the Government makes the decision. That is one of the squares that you have to circle in this whole debate. Q674 Anne Main: You would have a power of veto over allowing the creation of? Mr Woolas: Clearly if it involved, as we envisage, a financial arrangement between government departments to try and replicate local area agreements at a sub-regional level then clearly government would have the final veto over that. I am not aware, having said that, of significant divisions and debates as to the areas that will be covered by city regions. There is something of a consensus because economic data drives it on the whole although there are exceptions. Q675 Chair: There is a disagreement certainly in the evidence given to us that Crewe and Nantwich, for example, want to be included in the Manchester city region but appear to have been excluded, I am not quite clear who by, presumably the rest of Manchester. Mr Woolas: By the Greater Manchester authorities. Q676 Chair: I think there are some problems. Mr Woolas: This is a fascinating debate, ultimately government decides. Q677 Anne Main: Do you think Crewe and Nantwich must go in? Mr Woolas: We could but then my strong guess is that - we are getting into hypotheticals and academia here - the Chair of the appropriate authorities would say we do not wish to co-operate. Q678 Martin Horwood: In your Government memorandum you said, "The boundaries of city regions are fluid". I represent a large town which is more or less midway between Birmingham and Bristol, Cheltenham. Could we decide which city region was offering us the best deal in terms of investment or the best deal in terms of taxation and decide to opt for one or the other, or are you going to decide which one we go into without us having any say on that? If we are not in either, what are we in? Mr Woolas: I am tempted to say that one's inability to cope with what the implications of devolution are is fascinating. Clearly, there are areas where functions would follow different geographical boundaries. One would have a debate about tourism as opposed to, say, skills and there are parts of the country that are putting forward proposals, local authorities across the political parties and across areas that are putting forward different arrangement proposals on different functions. Clearly what the Government's policy is is to ask local areas to come forward with proposals themselves and in advance of considering those proposals it is difficult to answer specifically. Q679 Martin Horwood: Who are you asking? Are you asking us or would you ask the city regions in which case presumably there is a scenario in which we would not end up in either? Mr Woolas: I would guess that if Cheltenham were to propose that it wanted to be part of the city region of Birmingham and the authorities of Birmingham and the surrounding area said they did not want Cheltenham then I guess that view would prevail. Q680 Martin Horwood: I cannot imagine that happening. If there is a possible scenario in which we are not in either city region then there is an obvious, and that is quite plausible in the current scenario. There is also a real fear in the middling size towns and counties that we are not going to get the ear of government in the way that the city regions would have when they emerge and we will lose out as a result, is that not right? Mr Woolas: I do not think it is. It is an important point you make, and it has been made by a number of the local authority associations and individual local authorities. We are keen to ensure - this is why I mentioned it in my opening remarks in this section of the questioning - that the arrangements that are there for pooling or relying on funding of the powers that can be devolved, of the simplification of targets, of the financial flexibilities, are there for all areas not just the eight core city regions, I did mention the other smaller cities and towns and indeed the county and rural areas, so that is our policy. Secondly, I want to emphasise strongly that the Government does not see the competition between areas as being one that is competing for scarce resources. We see that just as my example of York and Leeds co-operation have mutual benefits for York and Leeds, then so too if you looked at the coastal towns on the south coast and their co-operation with East Sussex county strategy, you would see that there is co-operation there across different areas. In terms of allocation of funds, of course that is why regional bodies have a role but in terms of enhancing local powers, we want everybody to be part of the process. Q681 Martin Horwood: That was not quite the question I asked you. For instance, if there was an issue over rail infrastructure or something like that, you can see that it would not necessarily be in the direct interests of the city regions to have new hubs developing for public transport outside of the cities in outlying areas. Would we get the ear of government in the same way in this scenario or inevitably, if you were listening to the regional point of view, would that not end up with you listening to the city regions? Margaret Hodge: That is why as well as the city regions cities have relationships with each other in their region and you will have a continuing need for a regional development agency or something of that nature. Q682 Martin Horwood: Which also represents the cities, does it not? Margaret Hodge: No. They represent the region of which the city or the city region is a part. Cities have relationships with each other on things like transport infrastructure and those sorts of issues need to be determined at that regional level, that is why we have RDAs. Q683 Martin Horwood: A place like ours would have no distinct voice separate from the city because the RDA would represent the city within it as well. Mr Woolas: Let me try to reassure you. In practical terms the large conurbations already do act jointly on a number of initiatives, the passenger transport authorities that exist in the eight areas in England already are statutory bodies at a city region level. There is, in practical terms, an element of the big cities having a big voice already. I would challenge any local authority to say that they have not had a good bite of the cherry. I think the other point that is very, very important is that if you look at how the regions are developing their policies, we already have a situation where there are decisions taken at a regional level, such as transport and there has been some devolution to the regions as you know, there are sub-regional strategies, particularly on an economic point, that are conscious decisions of the region in collaboration with the areas within it, whether they be counties or urban areas of then, of course, there are the local authority areas. The point I want to make is that if one sees, in economic terms, our policy of saying that we believe local authority areas should have greater responsibilities and powers for economic leadership then we are not setting up one area to compete with the other to knock it down, we believe that all boats rise with the tide. The evidence of the summits that we had right across the country, not just the core city ones, was that was exactly the case, that enhanced co-operation led to mutual benefits. Q684 Anne Main: Does that mean you are absolutely committed to having city regions outside London? Mr Woolas: We are absolutely committed to asking the local areas what proposals they have and what powers do they need over these issues. If you are asking me if I have a blue print, then no, I do not because you cannot have on the one hand a devolutionary policy and a blue print on the other. Q685 Chair: Before I bring in Paul can I ask about capacity for these putative city regions. Are you making any provision to enable the city regions to build staff capacity so that they can have added value rather than being a collection of existing authorities? Mr Woolas: The thrust of our policy is through local area agreements. The four funding blocks for the local area agreements include the crucial funding stream of economic regeneration. Most of the city regions, although not all, look at multi-area arrangements across local authority areas particularly on that four funding block. It is too early to say what the precise shape and structure of that should be. What we are not about is the deliberate creation of institutions, we are about the use of powers, particularly financial powers, but the answer to your question is it is too early. Yvette Cooper: If I can add, Phil talked particularly about the economics side but there are issues around housing and planning that are relevant here as well. I think there is a different way of looking at the city regions which is to say that they are just particular cases of sub-regional economic markets, or sub-regional labour markets, sub-regional travel to work areas, sub-regional housing markets and so on. Yes, it is the case that cities are often the greatest drivers in terms of economic growth but equally, in order to have sensible housing strategies and in order to have sensible approaches to local plans, you also need to look across the travel to work area. That might include a city, but it might not, for example, it might have three regional towns in it and it will vary from one area to another. That is one of the reasons why it is wrong to think that there is a precise set of arrangements or a blue print for one area that will apply to every other area because if you are looking at what is the housing market, something that happens in one part of the housing market within the same travel to work area will often effect somewhere perhaps in a neighbouring local authority which is within effectively the same housing market. All across the country local authorities are already working together within those kinds of sub-regions in order to look at the housing markets. East Lancashire is a good example of the renewal pathfinder where they are looking together across the housing market at how they work together to address some of the problems that they face. I think it is important to put it in a wider context and the new planning policy around housing, the PPS3, encourages local authorities to do more of that working within the sub-regional framework but that is not an alternative to saying there are still some big regional questions about what the distribution is between the different sub-regions, that is exactly why the RDAs are so important and that is exactly why the regional debate is so important as well. Q686 Sir Paul Beresford: Can I follow Martin's theme and expand on it a little. If you have got a region or a sub-regional area where you have got a city region, it is conceivable that for perceived self-defence the smaller towns and the rural areas might want to pull themselves together as a rural region, is that acceptable? Mr Woolas: If one accepts that the premise of the policy is a greater economic leadership role for local councils and their partners through LSPs and the other mechanisms, then it is wrong to see their coming together as a representative function, they are coming together as an economic function. If you took - I am trying to think of a region to be helpful to you here - Newcastle and Gateshead and the authorities in that urban area as coming together for clear economic and mutual benefit then the idea of Alnwick and Durham coming together as an alternative would not make sense as part of an economic strategy. Q687 Martin Horwood: I want to come back briefly. You seem to be equating economic interest with being in the same travel to work area. We are clearly in the travel to work area for Bristol, that does not mean our economic interest is always completely aligned with that city so there may be competing and differing economic interests even within quite close geographical proximities. Yvette Cooper: That is right and there often are. Q688 Martin Horwood: In a sense, they might even be more competitive because they are close together. Yvette Cooper: When you are talking about a common travel to work area there will also be issues that might affect the whole travel to work area. For example issues around the transport policy across the travel to work area, whether there are bus lanes put in or something like that, there might be things that affect the whole travel to work area. Equally, there will be things in terms of the level of housing needed within the travel to work area, it will matter if there are a lot of new homes being built in one part of the travel to work area that may well have an impact on the housing market in other parts of the travel to work area. That is not to say that everybody within that travel to work area has the same precise economic interest or the same interest in particular policies and so on, it is simply saying that it is important for the local authorities within that travel to work area to work together. The ways in which they might work together might be different for different areas but if they operate in isolation, particularly when you are looking at something around housing, for example, but other issues as well, then they will probably operate less effectively than if they work together. Q689 Martin Horwood: Housing is a brilliant example because that is one of the beefs we have with the RDA at the moment where we think one level of housing is adequate and in our interests and a higher level frankly is not. If we are going to be regarded as a dormitory for Bristol and the housing is going to be planned on a city regional level, that might well be even more detrimental to our economic interests and our quality of life. Yvette Cooper: That is exactly the kind of issue where the decisions that one local authority takes about housing will have a much wider impact than simply on their own area. If you have a whole series of individual local authorities in a particular travel to work area who all say, "We do not want any new houses, the other local authorities can have the additional homes" and everybody takes that same view so no additional homes are built, overall you have a serious problem because there is rising demand for housing, rising numbers of jobs that require homes and nobody is building them. That seems to be a perfect example of where you cannot have local authorities working effectively on their own and the consequences for people living in every single area will be rising prices for first time buyers. To complete the point, I am not specifically saying that is the choice that your local authority has made at all, I am simply saying housing is a good example of where the sub-regional approach matters. The regional approach also matters because at the regional level you are able to take account of different things and the relationship between different sub-regions but the housing market level matters as well. Q690 Martin Horwood: The point is if somewhere like ours is accepting 8,500 new houses and there are other areas which think they are not getting enough housing, if there are rural areas and smaller towns and villages, places like Cornwall which think they are not getting enough housing, then one of the obvious responses to this is to hand more democratic accountability down but you seem to be saying precisely the opposite, you are saying in the end the Government and these new city regions are going to say "There is a regional issue here, so tough". Yvette Cooper: If there are more homes which are needed either within that sub-region or within that region, it is far better that the recommendations should come from a sub-regional housing market from local authorities working together, being honest about their problems and facing up to them and far better that recommendations should come from the regional assembly through a regional spatial strategy than it simply all being drawn up centrally. Q691 Martin Horwood: Do you imagine them being able to turn around to you in a way that the regional tier is not at the moment and say, "We do not want this level of housing here. We do not think it is economically viable or viable in terms of quality of life or ecology"? Would you give them that right? Yvette Cooper: What they need to do is what they are supposed to do in the current process which is to look properly at what their housing need is within that sub-region. One of the things we are in the process of doing is setting up a new national advice unit to provide much better localised information, regionalised information about what the level of housing need is, what the level of housing demand is, what the consequences are for house prices and so on so that decisions can be taken on the basis of much more rigorous information about what is happening in housing markets rather than it simply being based on a particular preference of an individual local authority about how many homes they do and do not want. Q692 Martin Horwood: That is obviously good. When you say they are supposed to do what they are supposed to do, supposed by who; by you presumably? Yvette Cooper: If they do not, what is the consequence for people who live in that area? What we are asking individual local authorities and sub-regional housing markets to do is to look honestly at what the demand for housing is and what the need for housing is in their areas. That is why we have a whole process where we have independent panels who then test those processes, independent panels who then test the evidence in order to find out are the local areas facing up to what the needs and the demands are or are they not. I think it is right that they should be tested and that is the way the system works. Q693 Mr Hands: First of all, can I apologise for having missed the start of this presentation. If my question was covered in that then I do apologise. I am very concerned about what you seem to be saying, that there are no clearly defined or objective criteria for deciding what a city region might be. The impression was that it is all down to the local people and to local choice to themselves define whether they are a city region or not. Correct me if I am wrong if that is your central premise. One of the things that greatly troubles me with this is the potential for people to see this as being in places politically motivated, by which I mean, let us say if you take - and you know the region better than I do but say - Manchester, where there might be a natural feeling on behalf of the City of Manchester to grab some of the outlying areas of Manchester in Cheshire, grab a larger tax base, but not give those areas of Cheshire so much representation that they have a risk of losing political control of the city region. Unless you have objective criteria, how are you going to avoid charges which might be made by the people of certain parts of Cheshire that they are subject to a tax grab where they are not going to be given any say as a result of the city region. Mr Woolas: Let me try and answer your very important question that you have put which we did not fully cover in detail before. Of course there will have to be a decision and if there is not a consensus coming forward from an area then clearly the Government will have to decide, but to reassure you on the example that you give, the city region - to use that phrase - of Greater Manchester, which consists of the ten Greater Manchester authorities, exists by consensus of those ten authorities. The possibility of grabbing a bit of Cheshire would not come about because first, we would not let them and secondly, Cheshire would not cooperate and it would not be possible therefore to reach an agreement. This is based on financial agreements with the local authorities in the areas. Q694 Mr Hands: Would it be fair to say that nobody will find themselves in a city region unless they themselves want to be in it? In terms of a local down to a district council level. Mr Woolas: It is certainly the case that we are moving forward on consensus. If you take Greater Manchester, as you rightly say, it is the one I personally know best, there is a political consensus across the ten councils to move forward together on some of these areas. If that political consensus broke down, which could be within the political parties because of geographical interest as well as between the political party - in fact, I personally think that the former is more likely - then the process would not be able to go forward in a strong way. That is, in part, why we link powers to accountability. In conception we have to understand that it is the public who hold these things to account ultimately but I think you should be reassured because it is certainly not our intention, our intention is to allow councils to co-operate particularly on economic matters. We are waiting for their proposals, as part of the White Paper process, so we have got our hands a bit tied behind our backs as your committee deliberates on this because we are waiting to see the proposals for the area ourselves. Q695 Lyn Brown: I do apologise for having to come in and out. Can I go back to Greg's question and talk about Greater London and whether or not there are any suggestions that there might be a move to expand the boundaries of Greater London, I presume to provide access to the sea. I wondered whether or not this would be made on a consensus and, if so, of whom? Mr Woolas: The White Paper process will not involve changing the boundaries by which I mean that if there is consensus in an area to abolish a boundary then that might happen but we would not do what the previous review, the Banham Review, did of looking at moving boundaries for obvious reasons, well maybe they are not so obvious. There are proposals in some of the areas to co-operate across local authorities outside of their sub-regions. You could take, for example - I am trying to choose one that members will be familiar with - tourism in the North West, there is a clear relationship between the Lake District and Manchester, Merseyside and the West Riding of Yorkshire and greater co-operation on that makes a lot of sense. There is not a lot of sense in coming together on bus transport between Barrow and Stockport. We do want to encourage that flexibility for arrangements across but I would emphasis again that the foundation stone of this policy is the local area agreement and that is an agreement. Margaret Hodge: For Lyn's area, because it hits mine too, there is co-operation on the Thames Gateway which goes across a whole range of authorities outside Greater London, three RDAs and when I was engaged more directly there was some really innovative work being done around skills and education with a huge number of higher education and further education institutions to try and get better skills standards and higher education qualifications among the people in the Thames Gateway. Around issues like that, there is co-operation even beyond the boundaries of London. Q696 Mr Betts: On the issue of accountability, I do not want to tempt you, Minister, down the road of telling me what is going to be in the White Paper, but you can at least probably tell us what is current departmental policy even before the White Paper is issued. One time it appeared that you were only going to give them the powers for a city region if they also agreed to an elected mayor. Virtually every witness who has come in front of us, apart from the IPPR, who has a connection with local government in city regions has said we do not want elected mayors, that would kill any developments stone dead. I think at the same time the Secretary of State was saying at the Labour Party conference that "All right, elected mayors may be a little bit more on the back burner but models will still need more than an informal partnership working". Where does that leave us in terms of accountability and methods of Government decision making? Mr Woolas: We have seen that the White Paper process as being a very open evolutionary process which started with the local vision debate in spring 2004. We have talked openly in that process about the criteria that could be used to judge these things. Clearly value for money for the taxpayer is an important criterion. Secondly, the neighbourhood empowerment agenda, what is referred to no doubt by the IPPR as "the localism" is very important. Our third point touches exactly on where you are questioning. We see the hierarchy between powers being linked to accountability. You have to have clear strategic leadership if you are to devolve power, particularly over significant sums of public money. We believe that the accountability arrangements for that executive power are as important as the executive power itself. Therefore, we will be waiting for proposals from areas themselves and we will link the devolution of powers to the strength of the accountability. You quite rightly say that to some extent, I am certainly not keeping a secret in my back pocket and not sharing it with you but to some extent we have to wait for the detail of that criteria to be published in the White Paper. Q697 Mr Betts: Are you waiting to receive those proposals then with a presumption that there will have to be some form of direct election in order to have a strongly accountable system or would you still be looking at the possibility that systems could be accountable enough, even if they did not involve direct election. Mr Woolas: What we have tried to do over the period is to encourage local authorities individually and together where appropriate, to be radical in their proposals. That is something we have done with the Local Government Association's co-operation and built a strong consensus on that. We are obviously aware at an official level as well as a ministerial level of the evolving proposals in those areas, not just the eight core cities that are elsewhere, particularly in the counties. We have been encouraging that and looking and testing some of the problems that are emerging, particularly on financial arrangements and whether or not statutory changes will be needed and what statutory changes they would be. As I said before, once you accept that one-size-does-not-fit-all, the powers and arrangements that your area would need are different from the powers and arrangements that say Cornwall would need for obvious reasons. We see this as an evolution and a debate that will have conclusions drawn in the White Paper. Q698 Chair: For example, Manchester is suggesting a cabinet system, that is a possible system for delivering accountability. Mr Woolas: I will give you the spectrum of suggestions if that is helpful. Some people, although there is not a consensus as Clive has said in any of eight areas, want a city region mayor; some people do not want executive power to lie in the hands of an individual appointed by the constituent local authorities; some people are debating the idea of a federal leadership whereby all of the councillors in the area, across the local authorities, would themselves elect a leader for the city region or indeed a county area. There are a range of debates taking place. Some people are looking at the idea of a directly elected executive as opposed to a directly elected mayor for the local authority area. What the White Paper process has to do is draw the boundaries on what is possible and what is not because whilst we say one cannot have a one size fits all and one has a devolutionary approach, there are limits to that which allow, for example, a local authority to choose to abolish its ward boundaries, maybe in some areas you would want that. That is the range of debate that is taking place and, as I say, the criteria that we have already mentioned includes that accountability. Q699 Anne Main: On that point, can I ask you to flesh out a little bit more, because one of the criticisms against the regional assemblies is that some of those people serving on there are not elected. Are you saying that any new model would have people directly elected only on it or do you envisage a percentage still being non-elected members whatever model we have? Mr Woolas: Crudely put, the greater the direct accountability, the greater the powers that will be available. It is called democracy, holding people to account. Q700 Mr Betts: Whether the public want another set of local elections? Mr Woolas: Again, the proposals that come forward from local areas will have to look at democratic arrangements, they will have to take a judgment on that. Chair: Thank you very much indeed, Ministers. |