Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence


Memorandum by the Chief Economic Development Officers Society (CEDOS) (RG 25)

INTRODUCTION

  1.  The Chief Economic Development Officers Society (CEDOS) provides a forum for Heads of Economic Development in upper tier local authorities throughout England. Membership includes county, city and unitary Councils in non-metropolitan areas, which together represent over 47% of the population of England and provide services across over 84% of its land area. The Society carries out research, develops and disseminates best practice, and publishes reports on key issues for economic development policy and practice. Through its collective expertise, it seeks to play its full part in helping to inform and shape national and regional policies and initiatives.

  2.  Successful and sustainable economic development is critical to the future of this country and all its constituent areas. In this context and in the light of the "no" vote in the North East devolution referendum on 4 November 2004, the Committee's Inquiry is very timely and CEDOS is pleased to put forward its memorandum of evidence, which focuses on the key issues identified by the Committee.

EXECUTIVE SUMMARY

    —  The validity and effectiveness of current regional arrangements are seriously questioned.

    —  As Regional Development Agency responsibilities increase, there is growing concern at their lack of democratic and political accountability.

    —  Alternatives to RDAs need to be considered, with a viable option being regional partnerships accountable to their sub regional partners.

    —  If RDAs are retained, there must be greater accountability and transparency in decision making, and a stronger scrutiny role for Regional Assemblies/Chambers.

    —  There is a need to maximise the devolution of powers from RDAs to local authorities with the capacity to deliver. County councils, city councils and unitary councils have a particularly crucial role to play.

    —  The management and spending of resources by the RDAs is over-complex and handicaps progress. Barriers, which impede the effectiveness of local authorities include too many funding streams and too much filtering of funding through too many layers of bureaucracy.

    —  Core cities are not the only drivers of regional economies. England's county areas—the county regions—have a crucial role. A balanced approach is needed that recognises the contribution that the county regions and their towns, cities and rural areas can and do make and provides for a more equitable share of national and regional resources.

    —  There may be a case for a city region approach in the metropolitan areas but county regions and county governance must continue to play a key role in most areas of England.

    —  There is growing concern that the increasing focus on the core cities will have a seriously detrimental effect not only on other towns, cities and rural areas but also on the goal of driving up national and regional economic performance and reducing regional disparities.

    —  The development of pan-regional strategic approaches such as the Northern Way further emphasises the democratic deficit in England at regional level and the importance of action not being constrained by arbitrary geographic boundaries.

THE POTENTIAL FOR INCREASING THE ACCOUNTABILITY OF DECISION-MAKING AT THE REGIONAL AND SUB-REGIONAL LEVEL, AND THE NEED TO SIMPLIFY EXISTING ARRANGEMENTS

  3.  CEDOS considers there is a need for effective action at regional, sub-regional and local level if sustainable economic development is to be achieved, but we seriously question whether the current regional arrangements provide a sound basis for such action.

  4.  Whilst the Regional Development Agencies (RDAs) in England are making a contribution, there is concern about their variable performance. Too often, they are remote, bureaucratic and inconsistent in their decision-making. A major concern is their lack of political and democratic accountability, which has intensified as they have assumed broader responsibilities and have become an increasing focus for receiving and distributing national funding eg Business Link contracts, former Countryside Agency initiatives and some of the skills funding. Whilst the business leadership of RDAs has benefits, it provides too narrow a focus, which can be influenced by sectional interests. This is in marked contrast with the best performing local authorities with their broader, more holistic perspective and their democratic and political accountability.

  5.  The appropriateness and relevance of the Regional Development Agencies must be seriously questioned and other solutions explored. Prior to the creation of the RDAs there were well established organisational frameworks involving strong strategic local authorities and other public bodies working together to formulate regional strategies for, amongst other things, transport and regional planning guidance. In the West Midlands, for example, the regional forum of local authorities was a medium through which the sub regions worked together on regional matters, creating regional offices such as the West Midlands office in Europe.

  6.  These earlier regional frameworks proceeded on the basis of cooperation and consensus. In contrast, the one unifying feature of the current RDA structures is the tension in all regions between a strong unaccountable regional body on one side and strong sub regional organisations on the other. Alternatives to RDAs need to be seriously considered. For this, a viable option would be tightly configured regional partnerships, which depend on and are accountable to their sub regional partners, which would agree the regional strategies and empower sub regional organisations to deliver them.

  7.  If Regional Development Agencies are retained, it is essential that there is greater transparency in their decision making, communication with stakeholders is improved, and that their actions are as accountable as possible within the region. The Government's Regional Assembly proposals offered a way forward but with the "no" vote in the North East referendum, other ways of increasing accountability will need to be explored. One would be to strengthen the role of the existing Regional Assemblies/Chambers, with a significantly increased role for democratically elected local government representatives; a direct involvement in setting RDA agendas; and increased weight being given to their involvement in scrutinising the work of the RDAs, so that they at least share the responsibility of Government Offices for reporting on RDA progress against objectives. At the moment, it appears that RDAs can ignore Regional Assembly views. Whether or not this is the case may well be illustrated in the West Midlands in three months time, when the Regional Assembly is to review how the recommendations contained in its 2004 scrutiny report of the RDA's policies on Regeneration Zones have been implemented by the RDA.

  8.  However much the role of the existing Regional Assemblies is strengthened, the fact remains that they are not directly democratically elected. Strengthening their role must be accompanied not only by an increased role for local authority elected members within the Assemblies, but also by increased devolution of the implementation of RDA economic development responsibilities to the sub-regional and local level.

THE POTENTIAL FOR DEVOLUTION OF POWERS FROM REGIONAL TO LOCAL LEVEL

  9.  The importance of local action and in particular the local authority role cannot be over-emphasised. Economic development and regeneration is an increasingly important part of the local government agenda and of Government's expectations. Local government action is central to a range of Government priorities, including achieving sustainable economic growth, creating sustainable inclusive communities, delivering prosperity by driving up productivity and competitiveness, and tackling the problems of deprivation. Local authorities play a crucial role at the sharp end of delivering economic development and regeneration not only in implementing regional strategies but also in providing the strategic leadership and action to ensure that local needs and problems are met and opportunities realised.

  10.  There is a clear need to maximise the devolution of powers from regional to local level but it is important to be realistic in assessing the potential for doing so. The Government's report Productivity in the UK: 4 The Local Dimension [2003] underlines the central role of local authorities in shaping regional economic strategies and in leading and developing partnerships to take them forward. At the same time, it acknowledges that this is a complex task, which requires a "significant corporate capacity to deliver". In this context, the strategic local authorities—the county councils, city councils and unitary councils have a particularly crucial role to play:

    —  they have a mandate to promote economic development as a key part of their community leadership in promoting economic, social and environmental well being;

    —  the linkages between their economic promotion activities and their other service functions, in particular land-use planning, transportation and education, mean they can take a wide ranging, joined up approach to economic development;

    —  they have the scope, the resources, and the specialist skills to tackle and take forward the big agendas;

    —  they have the strategic and corporate capacity to provide leadership and bring together and sustain the partnerships that are the pre-requisite of achieving and delivering successful economic development; and

    —  as big players and good joiners, they have the influence to get other key players to the table and to use their resources to lever in match funding to maximise the ability to drive forward economic growth.

  11.  The county councils, city councils and unitary councils have clear potential for increased devolution of powers. They have an established track record of action and achievement in supporting and harnessing the key drivers of growth—enterprise, innovation, competition, skills and investment to achieve sustainable economic development. Many examples are given in the report published by CEDOS and the CSS "England's County Sub-regions—Cornerstones of Economic Growth".

  12.  The strategic local authorities through their leadership and influence and their capacity to deliver have demonstrated their ability to develop, facilitate and lead the partnerships that are the instruments of successful economic development and regeneration. The past few years have seen the development of a range of sub regional partnerships and operational frameworks including local strategic plans and partnerships which could provide the mechanisms for delivering regional strategies at sub regional and local levels.

THE EFFECTIVENESS OF CURRENT ARRANGEMENTS FOR MANAGING SERVICES AT THE VARIOUS LEVELS, AND THEIR INTER-RELATIONSHIPS

  13.  The way resources are managed and spent by the Regional Development Agencies and the equally unaccountable sub-regional partnerships that many RDAs have set up to deliver their agendas are governed by over-complex bureaucracies and decision making which handicaps progress. In economic development, barriers, which impede the effectiveness of local authorities in managing and delivering services include:

    —  too much filtering of funding through too many layers of bureaucracy that inhibit the local solutions for local problems approach and run counter to the principles of localism and Local Area Agreements—something that surely needs investigation by the National Audit Office/Audit Commission;[12]

    —  too many partnership requirements imposed upon local authorities, leading to an over-complex partnership landscape and, frequently, partnership overload and fatigue;

    —  too many staff resources taken up by time consuming and uncertain competitive and other bidding processes;

    —  having to "jump through too many different hoops" to gain access to different funding streams with different application processes, criteria and performance monitoring arrangements;

    —  too often, RDA and other externally funded programmes are output driven to match the funder's own targets at the expense of other outcomes that could be more worthwhile; and

    —  decision-making on many strategic issues is too remote and may not take into account the special circumstances that apply to a locality.

  14.  Efficiency and effectiveness can be improved by more devolution of powers and funding to local authorities and an acceleration of the process of increasing local freedoms and flexibilities in programmes and spend, currently being introduced slowly through Local Area Agreements and related programmes. At the regional level, there is a case for carving up the regional "pot" according to regional priorities agreed by regional partnerships described above.

POTENTIAL FOR NEW ARRANGEMENTS, PARTICULARLY THE ESTABLISHMENT OF CITY REGIONS

  15.  There is always potential for putting in place new arrangements for governance whether at regional, sub-regional or local level. Existing arrangements need to be kept under review and alternatives examined. But before making changes, there is a need to be sure that changing structures and administrative/service delivery arrangements really are needed. For any reorganisation to work there must be genuine value for all involved. We must guard against the tendency to continually reorganise. Petronius' observation that it can be a wonderful method for "creating an illusion of progress, whilst producing confusion, inefficiency and demoralisation" remains as true today as it was in AD 60.

  16.  Any new arrangements that are introduced must:

    —  address the current democratic deficit at regional level;

    —  reduce the barriers, which impede the effectiveness of local authorities in managing and delivering services; and

    —  recognise regional and sub-regional diversity and avoid a "one size fits all" approach.

  17.  It is at the current regional level that new arrangements are needed to address the present democratic deficit, remove bureaucratic barriers and improve efficiency and effectiveness. The overwhelming "no" vote in the North East referendum has shown that the public has no appetite for a new tier of regional government being created. In this context, the alternative approaches referred to earlier in this memorandum could, if necessary, be pursued sequentially according to circumstances and preferences within each region:

    —  retain the Regional Development Agencies in England, increase the democratic legitimacy of the existing Regional Assemblies by drawing their membership entirely from elected local authority members and strengthening their scrutiny powers over RDAs; and

    —  dismantle the existing structures over time, allowing them to be replaced by new regional arrangements that are not imposed by central government but are achieved through democratically elected local authorities entering into strategic alliances, with other stakeholders where appropriate.

  18.  New arrangements formed from local authority strategic alliances should not be constrained by the straightjacket of arbitrary geographical boundaries being imposed. Administrative regions do not equate automatically to economic regions. Tourism regions are an obvious example. Another is "Motorsport Valley", which stretches from Norfolk though the Midlands and southwards as far as Hampshire. This is an economic growth region that transcends conventional administrational boundaries, underlining the danger of imposing a conventional administrative framework on complex economic sector "regions".

CITY REGIONS AND COUNTY REGIONS

  19.  There is currently much emphasis, indeed in our view an over-emphasis, on the role of the "core" cities and city regions. Increasingly, the core cities, expanded as city regions, are seen not just as the principal motor for regional economic growth but judging by a number of Government-sponsored reports—the only motor. This increasingly narrow focus is not only naïve—it risks being seriously counter productive. CEDOS believes that if national and regional economic performance is to be improved in a sustainable way, a balanced approach is needed. This must recognise the opportunities that county regions as well as city regions can offer.

  20.  In this context, it is important to make clear that the city "regions" should not be regarded as the equivalent of regions drawn at a broad scale as in the case of the standard economic regions within which the RDAs operate. In this broader context, both city regions and, in most cases, county regions are more properly considered as sub-regions but, for convenience, in the rest of this memorandum are referred to as regions.

  21.  It is important to improve the performance of the large regional cities in order to achieve regional economic growth, for as HM Treasury's regional productivity report stated: "large conurbations outside London have had generally poor labour market performance and have also fallen behind other urban and rural areas' productivity".[13] Despite the shortcomings in the economic performance of some of the core cities they are, or should be key drivers of regional economies but they are not the only drivers. The contribution of county areas—the county regions—to national and regional economic growth must be recognised and built upon and a balanced approach taken.

  22.  County areas are a large part of England—in local government terms, those parts of the country outside London, the eight identified core regional cities and the metropolitan authorities. Covering 121,653 square kilometres, they account for around 93% of the land area of the country. In 2002, their combined population reached 30,721,000—62% of England's, with the figure rising to 73% when London is excluded.

  23.  The county regions embrace both urban and rural areas. They include cities such as Chester, Derby, Hull and Stoke on Trent, and county towns and cities from Worcester and Warwick to Durham and Devizes—as well as large rural areas with their networks of market towns and smaller communities. Their very diversity is one of their strengths. Individually and collectively, they are vital to regional economic performance. Alongside the core cities and the other metropolitan areas, the county areas are key components of every region in the country outside London. They are a major part of our national social and economic infrastructure. Indeed, research by CEDOS in conjunction with the County Surveyors Society has shown that that the county regions account for around three quarters of England's economic activity outside London.

  24.  There may be a case for a city region approach in the metropolitan areas but it is not a panacea for most areas of England. As the recent report[14] by the New Local Government Network's (NLGN) City Region's Commission recognises, there are many areas of the UK where city regions would not be appropriate and where a county approach may be the best approach to strategic governance. The report makes clear that city regions alone cannot provide a comprehensive model of sub-national governance.

  25.  Whatever the future of the City region approach in some areas of the country, there can be no doubt that county regions and county governance must continue to play a key role in most areas of England.

THE IMPACT WHICH NEW REGIONAL AND SUB-REGIONAL ARRANGEMENTS, SUCH AS THE CITY REGIONS, MIGHT HAVE UPON PERIPHERAL TOWNS AND CITIES

  26.  Whilst new city region arrangements might be relevant in some areas, too much emphasis on the core cities, with the skewing of national and regional investment that this implies, will have a seriously detrimental effect on other towns, cities and rural areas. There is growing concern that the increasing focus on the core cities will adversely affect the county regions to the detriment not only of the county areas themselves but also to the goal of driving up national and regional economic performance and reducing regional disparities.

  27.  Core cities are, or should be, key drivers of regional economies but they are not the only drivers. In the West Midlands, for example, the economic system is polycentric, with many of the key developments of the regional economy taking place away from the core city. The revival of the core city is important, but here, as elsewhere, the revival of the core should not be at the expense of the county areas, where the new economy is often at its most vibrant.

  28.  England's county areas—the county regions—have a crucial role in regional economic development, but one they will only be able to fulfil to maximum effect if Government and the Regional Development Agencies properly recognise the contribution they make and provide a more equitable share of national and regional resources. A balanced approach is needed that recognises the contribution that the county regions and their towns, cities and rural areas can and do make and, as the ODPM Committee itself recognised in its 2002-03 session, acknowledges that each regional economy has different strengths, weaknesses and opportunities. This diversity means that different organisational responses are needed in different regions.

THE DESIRABILITY OF CLOSER INTER-REGIONAL CO-OPERATION (AS IN THE NORTHERN WAY) TO TACKLE ECONOMIC DISPARITIES

  29.  The need to compete effectively in the 21st century global economy can require closer inter-regional cooperation to tackle regional disparities. In this country, the "Northern Way" and the "Midlands Way" illustrate the interest being shown in developing inter-regional strategies to achieve economic growth, the leadership of which is being placed in the hands of the Regional Development Agencies. The development of pan-regional strategic approaches further emphasises the democratic deficit in England at regional level and the importance of action at regional level not being constrained by arbitrary geographic boundaries. It gives further weight to the need to consider seriously new regional arrangements in this country.






12   In the SEEDA region everything it seems has to have a regional level of administration eg local food initiatives have a regional co-ordinating group (and staffing); "Sustainable Business Partnerships" which are County-based and in part funded by SEEDA, have a SEEDA team co-ordinating them; SEEDA have put £250,000 into setting up a regional creative and media industries group (South East Media Network) which co-ordinates the county-based partnerships (eg Wired Sussex and Wired Wessex). In most cases, these co-ordination activities do not improve efficiency-they simply add another layer of bureaucracy and inhibit the local solutions for local problems approach. The same is true in the South West region, where regional strategies and coordination are constantly imposed on locally focused initiatives, with a consequent reduction in funding available, and may inhibit the potential for joint funding, added value and partnerships with sub regional agencies such as county councils and other local authorities. Back

13   Productivity in the UK: 3-The Regional Dimension. H M Treasury & Department of Trade & Industry. November 2001. Back

14   Seeing the Light? Next Steps for City Regions. New Local Government Network. December 2005. Back


 
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