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


Memorandum by the Office of the Deputy Prime Minister (RG 32)

  The Select Committee has launched an inquiry into the future for regional government and has called for written evidence by 23 January. This memorandum is the Government's response to that call and addresses the areas identified in the Committee's Terms of Reference.

  This reply covers the ODPM family and, therefore, addresses the Committee's request to the Government Offices in the Regions.

  ODPM is the lead department for regional policy across Government. The development of a regional approach cuts across a number of Whitehall departments' responsibilities and, as the Committee has commented in previous sessions, one of ODPM's key roles is to influence the actions of other Government Departments. Therefore, this memorandum incorporates evidence from other Whitehall departments[25] approached directly by the Committee for evidence.

EXECUTIVE SUMMARY

Regional context (paragraphs 14-29)

  1.  The Government is committed to the development of fit-for-purpose regional institutions and to continue its clear policy to devolve and decentralise power to regions, where this adds value. This is integral to creating sustainable communities. The underpinning rationale for the Government's approach to the regions can be broken down into three main cases:

The economic case (paragraphs 31-53)

  2.  There are demonstrable differences in regions' economic performance and a greater understanding of these and their underlying causes allows regions, and therefore UK plc, to realise their economic potential. This also allows targeted and effective policy interventions, where necessary.

  3.  The Government also has a specific target to reduce the gap in economic growth rates between the regions. Business-led Regional Development Agencies have been created and are key strategic drivers of regional economic development working to promote, among other aims, regional competitiveness, regeneration and sustainable development.

  4.  The Government supports inter-regional co-operation where regions themselves identify an innovative approach to prioritising investment across their regions, including the Northern Way.

The strategic case (paragraphs 54-80)

  5.  Regional institutions bring a unique strategic perspective to policy development and spatial decision making; they bring together a range of expertise drawn from all levels and sectors within their region to better plan and integrate investment decisions. The regional level focuses on a strategic role rather than service delivery.

  6.  Regional assemblies are inclusive strategic bodies "of the region" and bring together representatives from key sectors across the region, sub-region, major cities and city areas and the rural areas. They also embrace the full range of political opinion in the region. This all-embracing nature places assemblies in an ideal position to contribute to and ensure consistency across regional strategies.

  7.  There are key spatial issues which need to be addressed at the regional level including housing and planning. These are issues which often cross local authority boundaries and entail investment over a number of years. Therefore, a regional strategic tier can plan successfully for a region's future.

  8.  The Government is ensuring deeper regional involvement in policy development through innovation, for example inviting regions to advise on their priorities through Regional Funding Allocations. This is intended to ensure full advantage is taken of regions' unique perspective across these funding streams and to assist them in planning for the longer term.

The pragmatic case (paragraphs 81-85)

  9.  There is a practical element to the Government's regional approach. There are some issues which are best decided and implemented at other levels, for example tackling disadvantage. The regional tier is not intended to replace such action. However, there are other issues which cross local authority boundaries which may not be best resolved locally and need a co-ordinated response. The regional tier is not intended to focus on service delivery, rather to provide an enabling framework for deciding priorities and ensuring co-ordinated delivery.

London (boxed text, page 16)

  10.  The governance arrangements in London are the most advanced example in England of devolving to a strategic regional tier in England and provide a particularly compelling case for regional government. These unique arrangements have been widely seen as a success. The Government is currently reviewing the GLA powers and responsibilities, with a view to devolving more power from national government to London bodies to ensure that there is an appropriate balance between the national, regional and local tiers.

Government Offices Network (paragraphs 86-93)

  11.  The Government Office Network operates as central government in the regions; its activities have been decentralised from 10 Whitehall departments. The GO knowledge of their particular region has added real value to policy development and to joining up Government activity. The Government has been reviewing the Government Office role and they are developing a more strategic, place-based policy role, including negotiating Local Area Agreements.

Regional relationship with other levels (paragraphs 94-118)

  12.  The Government's regional policy does not operate in isolation. It interacts with the national, regional, sub-regional, local and neighbourhood levels in a number of ways including: bringing local government together; providing the strategic framework tough decisions on difficult issues like transport; and, being flexible enough to consolidate and support sub-regional approaches where this is the best way, for example, to encourage growth areas.

Other Whitehall developments (paragraphs 119-133)

  13.  One of ODPM's roles is to engage with other Whitehall departments to support, influence and develop regional approaches. Ten Departments work through the Government Offices and there a demonstrable regional approach is developing in Whitehall in key areas including skills, health and policing. These developments will build on the regions' strategic regional role and promote strong, coherent and relevant regions.

INTRODUCTION: REGIONAL CONTEXT

  14.  It has been recognised by successive Governments that there needs to be a level of decision making and input into policy development between the national level, which can be seen as remote, and the local level which is not always a large enough unit.

  15.  For example, economic regeneration, transport and housing supply are inter-related and inter-dependent and decisions taken in one of these areas impact on the others. They often entail investment over a number of years and require long term planning so that the investment is phased effectively and delivered coherently. These decisions tend to impact across local authority boundaries.

  16.  It is the Government's responsibility to ensure that the right policies and institutions are in place to enable particular geographical areas to maximise their strengths and tackle their weaknesses. This is integral to creating sustainable communities.

Regional policy and institutions

  17.  There is demonstrable diversity within, and between, the regions of England and they face different economic, environmental and social challenges. To meet these challenges the response from key players needs to be innovative, integrated and flexible. Regional policy in England recognises the need to promote economic growth across all the English regions and that Government must create the conditions in which the regions can develop their indigenous potential.

  18.  The Government is responsible for developing innovative and effective approaches to policy development and delivery to ensure that action is taken at the level most likely to deliver positive solutions. It is in this context that the Government is committed to the development of regional institutions and to continue its clear policy to devolve and decentralise power to the regions, where this adds value.

  19.  This encompasses a range of policies and institutional arrangements, some where decisions and accountability belong directly to regional institutions; others in which regional institutions give advice to Ministers to inform Government decisions.

  20.  To enable regions to exploit indigenous strengths and to address weaknesses the Government needs to ensure that there are also institutions in place at the right level, with the right powers and accountability.

  21.  For example, Regional Development Agencies develop and drive economic growth through the Regional Economic Strategies which set out priorities for the region and local areas. These are agreed with key stakeholders and backed up with significant resources.

  22.  The Regional Assemblies prepare Regional Spatial Strategies which set out spatial priorities for the region, including the region's housing and transport strategies. The development of these strategies, taken together, provide the crucial framework and vision for the future economic and social development of the region. These strategies are strengthened as they have been developed by the region and, in particular, by those organisations who will be responsible for delivering on the agreed priorities.

  23.  The Government Offices operate as central government in the regions and provide an excellent example of activity being decentralised from traditional Whitehall departments, where their regional knowledge adds real value.

  24.  There remain issues which are best decided at the national level; other issues which are most effectively dealt with at the local level. For instance, tackling disadvantage at the local and neighbourhood levels remains the level most likely to effect positive change. A regional approach is not intended to replace such action.

  25.  Regions have an important role in drawing together different sub-regional groupings and ensuring that they work together constructively and consistently. The region can take a strategic overview to ensure that all areas of their region are represented, for example ensuring that rural areas are integral to the region's development.

  26.  The Government's regional policy also recognises the role of cities as motors for growth and the development of cities and city-regions should be seen within the current regional context. Regional institutions can enable city regions to act collectively to ensure issues such as connectivity and investment are considered strategically and to maximise benefits to the wider region.

  27.  Also, inter-regional approaches such as the Northern Way are excellent examples of innovative regional co-operation to tackle issues and focus resources to meet need.

Elected regional assemblies

  28.  As the Committee noted, a referendum was held in the North East on 4 November 2004 on whether to establish a directly-elected regional assembly. The proposal was turned down by voters and the Government accepted that decision. As the Deputy Prime Minister acknowledged in his statement to the House on 8 November 2004, there are no further referendums planned for any other region. However, should a region express interest in an elected regional assembly, the Government would consider the case further.

  29.  The Deputy Prime Minister also reiterated the Government's commitment to regional government and to continue to devolve and decentralise powers to the regions.

Rationale behind regional policy

  30.  The Government believes that a regional approach is necessary to create the optimal conditions in which policy decisions and the delivery of those policies can effect positive change to people and places. In this memorandum the underpinning rationale for a regional approach can be broken down broadly into:

  The economic case—there are demonstrable differences in regions' economic performance, for different reasons, and a greater understanding of these and their underlying causes would allow regions, and therefore UK plc, to realise their economic potential.

  The strategic case—regions bring a unique strategic perspective to policy development and spatial decision making; they bring together a range of expertise drawn from all levels and sectors within their region to better plan and integrate investment decisions. The regional level focuses on a strategic role rather than service delivery.

  The pragmatic case—there are issues which cross local authority boundaries and taking a view across a wider area ensures that resources are being invested effectively.

  These are each discussed in more detail below.

THE ECONOMIC CASE

  31.  The Government believes that to run successful economic policy there needs to be decentralisation and devolution to the regional and local levels. At these levels, institutions must have the capacity, leadership, flexibility and policy levers which enable them to deliver their objectives.

  32.  There are demonstrable differences in regions' economic performance, for different reasons, and a greater understanding of these allows regions, and therefore UK plc, to realise their economic potential. This also allows targeted and effective policy interventions, where necessary.

Regional economic performance

  33.  The Government has recognised for some time the need to be proactive on improving regional economic performance. This was made manifest in the setting of a Regional Economic Performance PSA Target (REP PSA) following SR2002, and revised in SR2004. The REP PSA is to:

  34.  "Make sustainable improvements in the economic performance of all English regions by 2008 and over the long term reduce the persistent gap in growth rates between the regions, demonstrating progress by 2006."

  35.  The target is shared between ODPM, HM Treasury and the Department of Trade and Industry. The Government's approach to this long-term target is two-fold—to tackle market failures in employment and the five productivity drivers (skills, investment, innovation, enterprise, and competition) in all parts of the country, and to build effective regional and local institutions with the local knowledge, economic capacity and vision to drive up economic performance in their area. The eight Regional Development Agencies and the London Development Agency,[26] and RDA-led inter-regional growth strategies such as the Northern Way, are therefore key to the delivery of this PSA.

Progress towards the target

  36.  Regional GVA per head is the main measure for the PSA. Although the final outcome can only be measured over a full economic cycle, 2003 and 2004 GVA results are encouraging, as the poorer performing regions have narrowed the gap in growth rates with London, the South East and East. This has been partly due to employment growth in the Northern regions, which has resulted in the average employment rate in the North, Midlands and South West regions rising to within around 0.5% of the average London, South East and East rates. (This gap was over 2% in 2001).

  37.  In the short term, the Government expects to further reduce the employment rate gap through DWP's Pathways to Work programme. This is helping to tackle Incapacity Benefit claim rates which remain higher in the Northern regions. As at February 2005, almost 10% of the working age population in the North East was claiming incapacity benefit, with an average of 8.6% of the working age population across the three Northern regions.

  38.  To achieve the PSA target will also mean increasing productivity in the poorer performing regions, which is a more complex and long-term challenge. However, effective working by inter-regional, regional, city, and local agencies has the potential to be transformational.

Regional Development Agencies (RDAs)

  39.  There are eight RDAs outside London and these are non-departmental public bodies, accountable to Ministers and to their regions (through regional assembly scrutiny). Their primary role is as strategic drivers of regional economic development in their region. The RDAs' aim to co-ordinate regional economic development and regeneration, enable regions to improve their relative competitiveness and reduce the imbalance that exists within and between regions.

  40.  Each RDA has five statutory purposes, which are:

    —  To further economic development and regeneration.

    —  To promote business efficiency, investment and competitiveness.

    —  To promote employment.

    —  To enhance development and application of skills relevant to employment.

    —  To contribute to sustainable development.

  41.  The RDAs have developed Regional Economic Strategies, in consultation with regional partners (seven of which are presently being reviewed; the other two were undertaken in 2004). In the six years of their existence, the RDAs have supported thousands of regeneration schemes, skills projects and initiatives to promote innovation and competitiveness.

Funding

  42.  The Government is providing RDAs with year-on-year resource increases from £1.8 billion in 2004-05 to £2.3 billion by 2007-08. ODPM is nearly doubling its support between 2000-01 and 2007-08 (£879 million to £1.598 billion).

  43.  Individual RDA budgets are allocated according to a formula based on population and economic strength. The formula provides more resources per head to poorer regions.

Performance

  44.  The Government and the RDAs have embarked on an impact evaluation of the effectiveness of the RDAs' regional economic delivery since their inception in 1999. This work is led by DTI, on behalf of Departments, and overseen by a joint RDA and central government steering group including ODPM and HM Treasury.

  45.  The first stage was the development of a methodology and evaluation framework which is now complete. The second stage, which has now begun, is the framework implementation phase primarily based on RDA self evaluation with support as needed from DTI-appointed consultants. The third stage will draw together emerging findings into an overall assessment, in preparation for the evidence-gathering phase of CSR 2007.

RDA Strategic Role: West Midlands
  
The West Midlands RDA, Advantage West Midlands, set up the "MG Rover Task Force" in April 2005 in the wake of the closure of MG Rover Longbridge plant. Led by Advantage West Midlands Chairman Nick Paul, it also includes Jobcentre Plus, the Learning and Skills Council, Birmingham Chamber of Commerce and Business Link, Birmingham City Council and Worcestershire County Council.
  
On 21 June 2005, 66 days after MG Rover's collapse, the MG Rover Task Force was able to report to the Prime Minister that the West Midlands was fighting back from the biggest company closure in years. Key progress that had been made by the Task Force since the closure was:
  
—nearly 1,250 former MG Rover workers had found new jobs;
  
—1,092 former workers had started training out of 2,200 booked onto courses;
  
—3,000 "at risk" jobs had been temporarily safeguarded in companies supplying MG Rover.


Inter-Regional Growth Strategies

  46.  Inter-Regional Growth Strategies are long-term plans focussed on achieving economic growth in the regions of the UK through regions working together to deliver policies pan-regionally where it is the right level to do so, building on what is already happening at the regional level, and concentrating on what they can do for themselves. They identify the key drivers that will improve economic performance across the regions.

The Northern Way

  47.  The Northern Way is the first and most developed example of an Inter-Regional Growth Strategy. The Deputy Prime Minister challenged the three northern Regional Development Agencies to develop a realistic long-term plan for creating a step change in economic growth in the North to add value to what already happens in each region.[27]

  48.  In response, the Northern Way took shape, directed by an independently chaired Steering Group and led by the RDAs, and set itself the target of narrowing the £30 billion output gap between the North and the UK average by promoting collaboration across the whole of the North.

  49.  Moving Forward: The Northern Way[28] is their long-term strategy to close the output gap. It identified: 10 key areas that would help accelerate economic growth eg tackling worklessness, strengthening the knowledge base and improving connectivity; and eight city-regions[29] (where most people live and economic activity takes place) as being key to achieving its goal. The report was welcomed by the Deputy Prime Minister and, to kick start the strategy the ODPM provided £50 million toward a Northern Way Growth Fund. This was matched by the northern RDAs.

  50.  In June 2005 the Northern Way published their fully costed Business Plan[30] covering the period from 2005 to 2008, which gives a costed work programme for each of the 10 investment priorities and presents the progress made by each of the city-regions.

Midlands and South West Ways

  51.  The value in pursuing this approach was recognised in the Midlands[31] and the South West[32] regions. Similarly, this work is being driven forward by the regions' RDAs working with key regional partners using structures that best fit their individual needs. Government has welcomed the regions leading the way for themselves and supports and facilitates this work where useful.

  52.  Unlike the Northern and Midlands' Ways, the South West's The Way Ahead focuses on intra-regional development. The South West is a relatively prosperous region but one that suffers the greatest intra-regional disparities in England with significant issues in terms of its geographical and economic diversity. There are a number of peripheral towns and cities in the region and The Way Ahead focuses on ensuring that the whole region benefits from growth not just the success stories in the east of the region.

  53.  A small advisory group has been formed to steer further work. It is focussed on five key areas—Bristol, Plymouth, Swindon, Exeter and the key Cornish towns—and developing key deliverables to support growth in these areas.

THE STRATEGIC CASE

  54.  Regions bring a unique perspective to policy development. The regional level is not intended to focus on service delivery; rather it is an effective level at which to decide priorities across a wide geographical area, bring together a range of expertise drawn from all levels and sectors within its region in order to plan and better integrate investment decisions.

Regional assemblies

  55.  The regional assemblies are voluntary, multi party and inclusive bodies established in each of the eight regions outside London. Local Government members make up at least 60% of the membership and at least 30% are regional partners from economic, social and environment sectors. Regional stakeholders provide a specialist and regional input representing a broad range of interests while the local authority members ensure the people in the region can have their views represented.

  The assemblies have three main functions:

  (i)  They have been designated under the Regional Development Agencies Act 1998 as the body their RDA must consult during the preparation of the Regional Economic Strategy;

  (ii)  They have been designated under the Planning and Compulsory Purchase Act 2004 as the Regional Planning Body with responsibility body for preparing the Regional Spatial Strategy, including the Regional Housing and Transport strategies on behalf of the relevant Secretary of State; and,

  (iii)  They have a role as the voice of the region and have taken the lead with regional partners in drawing up regional strategies such as the regional sustainable development framework.

  56.  Regional assemblies are inclusive strategic bodies able to draw on the experience and knowledge of representatives from the key sectors across the region, sub-region, major cities and city areas and the rural areas. They also embrace the full range of political opinion in the region. The all embracing nature of the regional assemblies place them in an ideal position to contribute to and ensure consistency across regional strategies.

  57.  The regional assemblies work with key partners in their regions contributing towards the wide range of strategies that exist at the regional and sub-regional level prepared by a variety of regional organisations to different timetables. Assemblies provide a focal point for the region and are able to speak on the region's behalf as they represent the interests of the region both within the region itself and more widely, working with a variety of public, private and voluntary sector partners.

  58.  The make up of regional assemblies reflects the individual circumstances of each region and its sub-regional areas. The Government does not impose a single model on assemblies. However, it is seeking assurances from them that they are continuing to develop their structures and organisations and streamlining their operations to further improve their effectiveness.

  59.  The Government has indicated it will give assemblies additional functions where it considers it appropriate. It has accepted the Barker recommendation that Regional Housing Boards and Regional Planning Bodies be merged and that the regional assemblies should take on this new merged role. Therefore, the assemblies have been invited to submit proposals how they would effect the merger of the Regional Planning/Regional Housing roles, how they can improve strategy alignment of the regional housing strategy with other strategies and provide details of internal operational arrangements such as the executive and policy boards in place to deliver effective decision making.

  60.  Assemblies will be responding around the end of January and subject to these containing suitable arrangements a formal announcement on them taking on the regional housing board role would be made in March.

Regional planning

  61.  Regional planning is essential to address regional or sub-regional issues that often cross county or unitary authority boundaries and take advantage of the range of development options that exist at that level. This would include, for example, major transport decisions of regional importance, the balance within a region between major areas of housing growth, with the supporting infrastructure they require, and where constraint cannot be decided at the local level.

  62.  It means looking at the bigger picture over the medium to long term. In the context of the regional spatial strategy it means setting out policies that are applicable to the whole region or parts of the region across a range of policy areas which set the framework for the policies in local development documents. A regional spatial strategy for example will not include site specific proposals.

  63.  The objective of an RSS is to contribute to the achievement of sustainable development and should provide a broad development strategy for the region for a 15 to 20 year period.

  64.  RSSs should be spatial strategies setting out the strategic policies and proposals, including infrastructure proposals and management policies, governing the future distribution of regionally or sub-regionally significant activities and development within the region.

  65.  The Act also provides for the preparation of sub-regional policies as part of the RSS. The PCPA 2004 aims to promote greater regional ownership of RSS policy. There is a strong role for the local planning authorities and regional stakeholders in preparing the strategy and openness in the process, including the holding of an examination-in-public to consider issues raised in representations on the draft revision.

Regional housing

  66.  The Government believes that housing is another issue which benefits from a strategic regional approach. For example, as part of the Sustainable Communities Plan, the Housing Investment Programme and Approved Development Programme funds were drawn together into a single "Regional Housing Pot".

  67.  Previously, the HIP and ADP funds had been allocated separately, without a common strategic background. In order to make better informed decisions that cut across local boundaries, the Government took the decision to ask for the region's advice about how the resource should be spent. This approach also provides the added benefit of taking into account that housing markets do not neatly align themselves with precise borders.

  68.  Also as part of the Sustainable Communities Plan and to facilitate this approach, Regional Housing Boards (RHBs) were set up in March 2003. They were charged with producing a Regional Housing Strategy, which provided the regionally-agreed background to advice to Ministers on strategic housing investment priorities for their region. Having senior representatives of the regional planning body and the Regional Development Agency sitting on each RHB also ensured that housing policies were better integrated with the planning and economic strategies at a regional level.

  69.  The Government believes that housing advice from a region is likely to be well-informed as regional bodies are better placed to understand the impacts of decisions within their region. The priorities in the advice are also more likely to have support as the mechanisms for producing the RHSs bring together, for the first time, all key bodies with a strategic interest in delivering new and better housing in a region.

  70.  The RHBs work within a broad national framework. Within that framework, there is a strong presumption in favour of Ministers taking the advice offered. Only on relatively few occasions has the RHBs' advice been amended and, even then, generally to take account of a new priority emerging during the decision-making process.

  71.  In practice, RHBs also act as a catalyst and "honest broker" for activities across local authority boundaries. This is particularly important for housing given the increased focus on private sector housing and the fact that housing markets rarely obey local authority borders, either at the County or District levels. A regional approach is best able to take this overview of housing markets, whilst retaining local links.

  72.  RHBs enable a better read across between the RHS and other regional strategies, including the Regional Spatial Strategy discussed above. This will be reinforced by the decision to transfer responsibilities to the Regional Assemblies.

  73.  RHBs can also act to ensure the development of robust and consistent evidence bases across the region. We have many examples of where the RHB has acted as the key player using innovative, inclusive approaches to deliver a housing strategy for their region which both supports strategic objectives for the whole region and is well targeted on specific areas of need within the region.

Example of the RHB role
  
In 2004-05 the West Midlands RHB funded regional research to inform the production of a new RHS. The research supported the identification of housing markets in the regions and baseline information on the level of need for differing tenures and types of housing across West Midlands. The RHB was then able to use its status as an "honest broker" to encourage the formation of sub-regional groupings of local authorities in line with housing market areas.
  
Outputs included the identification and agreement on where a rebalancing of regional funding was needed. The research made it clear that the worst stock condition problems existed in the Central and North Housing Markets and the most acute affordability problems were in the South and West Housing Markets. These findings underpinned recommendations on the targeting of funding for affordable housing and to address stock conditions to Ministers. The work sponsored by West Midlands RHB on housing markets has become a benchmark for other regions.


REGIONAL FUNDING ALLOCATIONS

  74.  Regional Funding Allocations (RFAs) aim to deepen the regions' involvement in policy development and to enable them to align their strategic priorities covering key funding streams in housing, transport and economic development, within a realistic funding envelope. This is intended to ensure that full advantage is taken of regions' unique perspective across these funding streams and to assist them in planning for the longer term.

  75.  In July 2005 four departments—ODPM, HM Treasury, DfT and DTI—published details of funding allocations for each region for the period up to 2007-08 for each of key elements of transport, housing and economic development, as follows:




£ million
NW
NE
Y&H
EM
WM
SW
SE
E
Total

2005-06Transport
113
42
83
71
88
84
135
92
708
Housing
250
86
144
116
182
137
367
167
1,449
Economic Development
382
240
295
156
272
153
157
129
1,784
Total
745
368
522
343
542
374
659
388
3,941
2006-07Transport
115
43
85
73
90
86
138
94
724
Housing
249
88
147
125
186
158
384
191
1,528
Economic Development
400
251
310
163
284
159
163
134
1,864
Total
764
382
542
361
560
403
685
419
4,116
2007-08Transport
117
43
87
74
92
88
141
96
738
Housing
249
91
154
143
193
203
421
241
1,695
Economic Development
409
258
316
167
291
164
167
138
1,910
Total
775
392
557
384
576
455
729
475
4,343


  76.  The Departments also published longer term planning assumption figures for each region—by projecting forward the allocations for each funding stream beyond 2007-08 to give regions a sensible basis on which to plan strategically for the future. These are based on an annual increase of 2%, in line with Government's inflation target, and gave indicative figures up to 2015-16.

  77.  Whilst housing and economic development allocations had been published previously, this was the first time that such allocations had been identified for transport.[33]

  78.  The Government has asked each of the regions to provide it with advice identifying the region's priorities for investment both within and across these three inter-related and inter-dependent funding streams. Government has also set four criteria for this advice. The advice should be: evidence-based; agreed within the region; realistic; and, consistent with national policy objectives and local strategies.

  79.  The RFA exercise also gives regions an opportunity to align more closely their strategies on these key areas of activity. The indicative allocations should enable regions to ensure their Regional Economic Strategies and other regional strategies are based on realistic funding assumptions and help develop an effective evidence base underpinning each of the strategies.

  80.  The Government Offices are facilitating the advice which is to be drawn up by the RDAs, Regional Assemblies and other relevant stakeholders and submitted to central Government by the end of January 2006.

THE PRAGMATIC CASE

  81.  There is a practical element also to the development of a regional approach. There are a number of issues where decisions taken in one area have a direct effect on another: for example decisions relating to housing, transport and economic development. Indeed, a number of the examples considered previously could fit equally into this section. A further example of ODPM policy where the regional level makes sense on pragmatic grounds is civil resilience:

Civil resilience

  82.  Increasingly incidents, either accidental or deliberate, require a cross boundary response. To tackle this the Government is putting in place the legislative framework to facilitate that response while balancing and respecting local autonomy. The legislative framework encompasses the Civil Contingencies Act (CCA) and the Fire and Rescue Service Act. Shortly, fire and rescue service (FRS) will be given new duties to respond to major catastrophic incidents, having funded fire authorities with the resources to do so.

  83.  As part of this there is a regional tier for planning and preparation. This works to link national and local stakeholders and co-ordinates preparation for, and response to, wide area high impact events—for example 'flu pandemics and fuel supply issues. This is a practical and necessary element which does not, however, remove the primary focus for planning and response from the local level.

  84.  In the FRS, new equipment and training is being developed on a regional basis, specifically aimed at providing an effective response to catastrophic incidents. This includes equipment for dealing with structural collapse, mass decontamination and major flooding. This work complements the wider work on FRS modernisation.

  85.  At the same time, FiReControl will deliver a modern, cost effective and resilient command and control network to ensure the efficient and effective deployment of FRS capabilities. Regional Control Centres will be run by Local Authority owned companies and will be accountable to locally elected members of fire and rescue authorities.

LONDON
  
  The governance arrangements in London are the most advanced example of devolution to a strategic regional tier in England and provide a compelling case for regional government.
  
  The GLA is made up of the directly elected Mayor of London and the separately elected 25-member London Assembly. The first London Mayor and Assembly took office following elections on 4 May 2000.
  
  The GLA is a focused, strategic authority providing vision and a voice for London. It has three principal purposes in relation to Greater London:
  
  —  to promote economic development and wealth creation;
  
  —  to promote social development; and
  
  —  to promote the improvement of the environment.
  
  The Mayor is the executive arm of the Authority, influencing London's strategic direction through his strategies and plans and proposing a budget (some £9 billion) for the Assembly to consider and agree. The Assembly is the scrutiny arm of the GLA, holding the Mayor to account for his policies, decisions and actions, and can amend the Mayor's budget by a two-thirds majority.
  
GLA Review
  
  The Government is currently reviewing the powers and responsibilities of the GLA, with a view to devolving more power from Whitehall to London. The review is informed by three key principles:
  
  —  that the GLA is widely seen as a success, and should remain a focused and strategic body as originally conceived;
  
  —  there should be an appropriate balance in London between national government, the regional tier and local authorities; and
  
  —  the review should focus on the powers and functions of the GLA rather than on London governance structures as a whole.
  
  In November 2005, Ministers published a consultation paper setting out proposals and options for additional powers for the Mayor in four key areas—housing, skills, planning and waste management/waste planning—and in health, culture, energy and appointments to the Boards of the functional bodies.
  
  Most of the additional powers subject to consultation would be devolved from central Government, but in specific cases, such as waste management, Ministers are also exploring the case for the Mayor assuming control of some borough functions where it may be more sensible to deliver them at the regional level. The consultation paper also includes proposals for enhanced powers for the Assembly to balance those of the Mayor.
  
  The consultation period ends on 22 February. Ministers aim to agree a final package of proposals in the spring, and will implement the outcomes of the Review at the earliest opportunity.



GOVERNMENT OFFICE NETWORK

  86.  The Government Office Network is central government in the regions and provides an excellent example of activity being decentralised from traditional Whitehall departments and where a regional approach can add real value.

  87.  Government Offices (GOs) were set up in 1994. They have first-rate knowledge of their respective regions and this, combined with their ability to join-up the work of individual departments, is what makes the GOs so important in delivering Government priorities.[34]

  88.  The Government has considerably strengthened the role of Government Offices. There are now 10 government departments represented within the GOs and they are involved in the delivery of over 40 national Public Service Agreements, including seven ODPM PSA Targets. The breadth of this work may continue to increase as departments continue to implement their response to the relocation and efficiency reviews.

  89.  The key importance of GOs is in their ability to join up programmes and policies and ensure better alignment and integration of regional strategies and investment decisions. Their activities can be split into the following main categories:

    —  Leading—for central Government in negotiating local area agreements, including setting stretching targets for achievement by local authorities and their partners.

    —  Delivering—many of the activities link to Departmental PSAs, with a clearly identified GO role in ensuring delivery of national priorities through agreements with individual departments.

    —  Influencing—regional partners in preparing regional strategies, from transport to sustainable development.

    —  Improving—through working with poor and weak local authorities to assessing performance of local strategic partnerships.

    —  Planning—for emergencies. GOs have taken a leading role in responding to crises such as the fuel protest, foot and mouth, flooding and bombings.

    —  Administering—a continuing, though diminishing, role in the sound administration of programme expenditure.

  90.  The nature of GOs is that they are cross-cutting bodies, and much of the work they do for ODPM directly impacts on the work they do for other departments. Their work for ODPM is set out at Annex A and includes neighbourhood renewal, regional economic performance and local government.

The Developing GO Role

  91.  Following the 2004 Spending Review, the Regional Co-ordination Unit, (a Directorate of ODPM) and the Treasury have been conducting a review of the GO Network to identify ways of improving its efficiency and effectiveness. The Review has engaged a wide range of stakeholders from Whitehall, local government, GOs, and other regional institutions, and found broad support for a more strategic role for the GOs. This is consistent with the way in which GO work has evolved over recent years, from process-orientated work such as grant administration, towards more strategic, place-based policy work such as the negotiation of Local Area Agreement (LAAs are discussed in more detail under the "Local Government" section below).

  92.  The Chancellor's Budget 2005 statement announced the Review's emerging conclusions, which include:

    —  a more focused role for the GOs in working with local authorities and other local partners on performance, and on the oversight of regional strategies, while looking over time to transfer grant administration functions to other agencies;

    —  new freedoms and flexibilities for the GOs to enable them to join up their activities more effectively across departmental boundaries;

    —  a transformed and more strategic network, including a higher proportion of staff with professional skills and delivery experience;

    —  a challenge to departments to decentralise activity from Whitehall to the regions and to integrate this activity into the GOs where this can improve delivery;

    —  stronger links between GO Regional Directors and departments on policy development, with a particular emphasis on policy implementation;

    —  a strong performance management framework to underpin these new flexibilities driven by a small corporate centre with a strong focus on improving performance; and

    —  building on the challenging efficiency agenda for the GO network set in the 2004 Spending Review, a smaller, more focused network in the years to come.

  93.  The final report on the GO Review is currently being worked up with a view to publication early in 2006.

REGIONAL RELATIONSHIP WITH OTHER LEVELS

Local Government: Clarifying roles and responsibilities

  94.  ODPM is leading the development of a Government-wide strategy for the future of local government. Under the banner of local:vision, a debate with other government departments, local government and other stakeholders began in July 2004 as to what the future role and functions of local government should be.

  95.  Through the local:vision debate, the Government seeks to:

    —  Understand what the strategic role and function of local government should be in the future, given prevailing trends in government policy and changes in society (eg expectations, demography and technology).

    —  Build consensus for that new role across local, regional and central government, and other partners working to govern and deliver in local areas.

  96.  ODPM has always recognised that the relationship between local government and its partners with regional and central government is an integral part of the debate on the future of local government. This was set down in the discussion document "Securing Better Outcomes: Developing a New Performance Framework" published in March 2005 that ODPM would be looking to develop:

    —  A clearer understanding of the relative roles and responsibilities of bodies involved in securing particular outcomes at national, regional, local and neighbourhood level.

    —  For each tier of government, the importance of a coherent framework across all services which is understandable and capable of effective implementation—but allows for appropriate variation to respond to different issues and challenges.

    —  The unique role of local authorities within this structure—as the body below national government with direct democratic accountability to represent all citizens and interests within an area.

  97.  The local:vision debate will be drawn together in the summer of 2006 in the form of a White Paper and Government is continuing to engage with stakeholders on the issues the debate has raised and welcome any further contributions to it from interested parties.

Local Government: Local Area Agreements led by Government Office

  98.  Local Area Agreements (LAAs) are a new way of striking a deal between central Government, local authorities and major local delivery partners in an area. LAAs simplify funding streams, allowing greater discretion with the use of funding, and reduce the bureaucracy attached to multiple funding streams. Areas agree to meet a broad suite of targets, and are given flexibility to achieve them, for example in the form of reduced bureaucracy/reporting requirements, and the ability to merge money from different funding streams.

  99.  Government Offices are at the forefront of managing Government's relationship with local authorities and driving up local authority performance. The role of GOs is critical in the successful development and implementation of LAAs. Government Offices are responding to this challenge by restructuring roles and responsibilities so that a great deal of day-to-day business is managed through the development of the LAA. This is a particular challenge for 2005-06 where half of local areas will be developing or implementing their LAAs and the remainder waiting for the following year. It is hoped that LAAs will become the key mechanism by which government delivers its priorities with local areas.

  100.  Following last year's round of 21 pilot LAAs, work is proceeding in each region to negotiate the next 66 LAAs which are to be in place by end of March 2006. Negotiations will then start in March on LAAs with the remaining 63 local authorities—to be agreed by March 2007. GOs are also responsible for monitoring LAA performance. The pilot LAAs reported progress to GOs at a "six month review" in October.

  101.  A great deal of work has been done by ODPM and other departments to ensure that GOs have adequate guidance and opportunities to share best practice. A network of key GO LAA officials meets regularly, and regional sounding boards are held every couple of months (one each in the north/south/midlands) to bring together departments, local authorities and GOs to discuss progress, problems and good practice.

Sub-regional: Cities

  102.  The relationship between the region and its cities is key to improving regional economic performance and meeting the PSA target (discussed separately above). The competitive performance of cities, and city regions, is crucial for to regional and national success.

  103.  The concept of city-regions was debated at the City Summits with the Core Cites, and some "business cases" which are due to be presented to Government shortly are likely to include proposals for city-region approaches to strategic issues such as transport, skills and planning.

City-regions as economic drivers

  104.  A city's success—economically, culturally and socially—depends heavily on the establishment of a strong inter-dependent relationship with neighbouring towns and cities in its region. That said, there is no standard definition of what constitutes a city-region and the following should be seen in this context.

  105.  Recent evidence strongly suggests that city-regions are the appropriate level to make economies work.[35] This is because city-regions offer an understanding of how the real economy operates through the interaction of important market factors such as labour and housing markets, retail catchment areas, business and investment markets with customers and suppliers, culture and higher education.

  106.  As a result, the city-region may be the appropriate spatial level to plan strategically for the delivery of services that will promote sustainable development such as transport, skills and housing.

  107.  The Northern Way's First Growth Strategy employs a city-region approach, within a regional framework. It recognises that the eight main city-regions are the key to accelerating economic growth in the North as they contain over 80% of the wider region's economic assets and activity.

Core Cities

  108.  David Miliband and other Government Ministers recently held City Summits in the eight Core Cities—Bristol, Birmingham, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield.

  109.  The Summits were intended to allow Cities to discuss their vision for the next 10 years, and the economic and social changes needed to achieve it.

  110.  Following the Summits, each city was invited to prepare a "business case" for the changes they see as central to realising their full potential in the future. The "business cases" will be presented to David Miliband shortly for consideration.

The next round of summits for smaller cities and towns

  111.  The objective of these Summits is to understand better the assets, barriers and enablers of cities and towns which are not Core Cities.

  112.  From this we aim to develop a package of options, from which individual cities and towns could choose those approaches which they felt would help develop their locality. The Summits will take place from February to May 2006.

Sub-regional: Growth Areas

  113. The newer Growth Areas (Milton Keynes and South Midlands, Ashford and London-Stansted-Cambridge) were identified alongside the already established Thames Gateway in Regional Planning Guidance 9 (March, 2001), based on the proposals by regional and local partners. Following further studies and assessments into the scope and viability of sustainable growth in these areas, the Government identified the Growth Areas programme as part of the Communities Plan (February, 2003). The London-Stansted-Cambridge Growth Area has since been expanded to incorporate the Peterborough sub-region.

  114.  Growth Areas were designated on the basis of focussing on locations where significant levels of sustainable growth could be achieved.

  115.  Geographical boundaries of the Growth Areas do not correspond with those of the regions, which requires flexibility from the regional tier to fully integrate the Growth Areas approach into the strategies of more than one region. For example, the London-Stansted-Cambridge-Peterborough area covers parts of London and the East of England region, the Thames Gateway is spread over parts of London, the South East and the East of England, while the Milton Keynes and South Midlands boundary covers parts of the East, South East and East Midlands. The exception is Ashford, which is contained within the South East region.

  116.  This geographical spread means that strong cross regional working is essential to successfully take forward the Growth Areas agenda.

  117.  Good progress has been made so far. For example, the Milton Keynes and South Midlands Growth Area is benefiting from the close joint working of those involved in the proposal for the area. Three Regional Planning Boards are working efficiently together, as are the respective Government Offices who have established a joint office in Milton Keynes to help facilitate a joined-up approach. This has resulted in the publication of the area's Sub-Regional Strategy (March, 2005), which provides alterations to the Regional Spatial Strategies covering the East of England, East Midlands and South East of England and sets the strategic framework for the Local Development Documents in the Sub-Region. An Inter-regional Board has also been established in this Sub-Region to bring together key regional and local partners to facilitate close working arrangements and to help co-ordinate investment throughout the Growth Area.

  118.  In the Thames Gateway, an Inter-regional Planning Statement was published in August 2004 to provide a co-ordinated approach between the three Regional Planning Bodies (East of England, London and the South East) covering the Gateway area. While it is a non-statutory document, it provides the regional partners with an agreed strategy and assessment of potential development capacity.

OTHER WHITEHALL DEVELOPMENTS

  119.  In addition to the policy developments outlines above one of ODPM's roles is to promote the regional agenda within Whitehall to influence the organisation of bodies who could benefit from co-terminosity with existing regional boundaries. Below are three examples, at various stages and related to various Departments, which explore the developing regional terrain:

Strategic Health Authorities

  120.  In July 2005, the Department of Health (DH) published "Commissioning a Patient Led NHS", which focused on how the Department would develop commissioning throughout the whole NHS system, with some changes in function for Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs).

  121.  One of the key proposals from Commissioning a Patient Led NHS was to reconfigure SHA boundaries with Government Office boundaries.[36] By realigning SHA boundaries in this way, DH believes that SHAs would be more fit-for-purpose organisations, with strengthened relationships and better co-ordination.

  122.  The Government also proposed to improve coordination on social services through greater congruence of PCT and Local Authority boundaries. Currently, 44% of PCTs are consistent with Local Government boundaries and DH expects this will rise to a minimum of 77% as a result of the proposed changes in PCT boundaries.

  123.  However, Commissioning a Patient Led NHS also identified seven other criteria which must be met when considering PCT reconfiguration. This may mean that coterminosity with local authorities may not be the optimum configuration in all cases, and a range of options will be considered.

  124.  Taken together DH believes that these proposals will deliver more effective health and social services. At the same time, the Government will maximise efficiency gains, achieving a £250 million saving in management and administration costs for re-investment in services in 2008-09.

  125.  In October 2005, SHAs submitted their proposals for the reconfiguration of SHAs and PCTs. These proposals have now been assessed by an independent external panel and Ministers, who agreed that proposals for reconfiguration of SHAs and PCTs were fit to go forward for local consultation. Consultations began on 14 December 2005, and will run for 14 weeks until 22 March 2006.

Regional Skills Partnerships

  126. The creation of Regional Skills Partnerships (RSPs) was announced in the 2003 Skills Strategy White Paper—21st Century Skills recognised that there was an important regional dimension to the country's skills needs and put a strong emphasis on establishing robust partnerships to drive forward the skills agenda at regional level and ensuring that skills development was effectively integrated with employment and business support.

  127.  RSPs have been in place in all the English regions since April 2005. They bring together Regional Development Agencies, the Learning and Skills Council, Jobcentre Plus, the Skills for Business network, the Small Business Service and others, including the higher education sector, the TUC, employers and local authority representatives.

  128.  The role of RSPs is to ensure that the supply of skills, training, business support and labour market services is planned and delivered in a more coherent way which supports the priorities set out in the Regional Economic Strategy and which connects better with the needs of employers and individuals. Key objectives for RSPs include:

    —  Raising the ambition and demand for skills.

    —  Ensuring that regional priorities take account of sector priorities as set out in Sector Skills Agreements.

    —  Ensuring that colleges and training providers become more responsive to the needs of the demand side.

    —  Improving the alignment the planning cycles and targets of partners in order to ensure more joined delivery.

  129.  Regional Skills Partnerships are already having an impact, for example in the North East region the RSP has:

  Developed:

    —  an integrated planning process to align partner funding against shared priorities—in 2004, the LSC in the North East aligned its funding and activity to objectives and priorities outlined by the RSP and did not produce a separate statement of LSC priorities.

  Identified:

    —  a skills need in the construction sector which led to a significant enhancement of construction related education and activity; and

    —  the need to improve regional capacity to deliver skills for life provision which resulted in more effective use of LSC resources to support important quality improvement measures

  130.  RSPs across the country have the potential to complement and support cross-Departmental work to address regional economic disparities. The most recent White Paper gave them important new roles and responsibilities and they are now an established feature in the policy landscape.

Police forces

  131. In September 2005, Her Majesty's Inspectorate of Constabularies (HMIC) published the "Closing the Gap" report which reviewed the ability of the existing structure of policing in England and Wales to meet current and future policing needs. It recommended:

    —  effective and sustainable regional protective services;

    —  local neighbourhood policing; and

    —  better value policing services.

  132.  To meet the challenges of modern policing the Home Office has signalled its intent to move to larger, strategic police forces in line with the existing regional boundaries and is taking this forward.

  133.  ODPM is working with the Home Office to maintain close links between the regional level and key organisations, including local authorities and fire and rescue services. Departments are working together to ensure the most effective fit between the benefits of greater strategic policing, quality neighbourhood policing and local accountability. In addition, the Departments are ensuring that existing co-operation with the fire and rescue service on road traffic accidents, arson investigation and responding to terrorist incidents and natural disasters will be maintained.



25   Namely, the Department of Trade and Industry, Department for Transport, Department for Education and Skills and Department of Health and the Office for National Statistics. HM Treasury have notified the Committee that they are content for the lead Department to respond. Back

26   The London Development Agency is part of the GLA family and is accountable to the Mayor. Back

27   See the Sustainable Communities Plan Progress Report Making it Happen: The Northern Way, Back

28   Published September 2004 and available on the Northern Way website at http://www.thenorthernway.co.uk/report-sept04.html. Back

29   The eight Northern Way City Regions are: Central Lancashire; Liverpool; Manchester; Sheffield; Leeds; Hull and the Humber Ports; Tees Valley and Tyne and Wear. Back

30   Published June 2005 and available on the Northern Way website at http://www.thenorthernway.co.uk/docs/2005/NWBP.pdf Back

31   Smart Growth: The Midlands Way, published February 2004 and available on the Advantage West Midlands website at http://www.advantagewm.co.uk/smart-growth---the-midlands-way--1569-18-k-.pdf. Back

32   The Way Ahead: Delivering Sustainable Communities in the South West, published February 2004 and available on South West Regional Development Agency website at http://download.southwestrda.org.uk/file.asp?File=/regeneration/general/SOUTHWEST_lr2.pdf. Back

33   Note, the actual transport funding is subject to final decisions by the Secretary of State on specific schemes. Back

34   Note, the context in which the Government Office for London operates is different to the other regions as a result of the unique set of London arrangements. Back

35   Such as "The State of The Cities Report" and the ODPM-commissioned "city-regions" study both due to be published in Spring 2006, and the Urban Task Force Report published in November 2005. Back

36   The exceptions are the South East and the South West where, in addition to the option for direct co-terminosity with Government Offices, both propose to consult on an option for two SHAs in each region. Back


 
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