House of Commons - Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions

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

Memorandum by the Centre for Urban and Regional Development Studies (CURDS) (RG 53)

INTRODUCTION

1. This memorandum has been prepared by the Centre for Urban and Regional Development Studies (CURDS) at the University of Newcastle upon Tyne. CURDS is a research centre specialising in policy-relevant research, and since its creation in 1977, it has been actively involved in urban and regional governance issues. CURDS staff engaged in debates concerning English elected regional assemblies: our staff contributed in various capacities to three memoranda of evidence in the 2004 ODPM Inquiry the Draft Regional Assemblies Bill[70] and have undertaken a range of research for the Office of the Deputy Prime Minister, among others, on questions of local and regional governance. We welcome this opportunity to reflect in a considered way on the future for regional government in England.

2. As London has effective elected regional government, we limit our comments within this memorandum largely to the English regions outside London. Since the modern tasks of national government were introduced during World War I, governments of all political persuasion—Liberal, Conservative and Labour—have found a regional administrative tier vital for effective service delivery given England's size and diversity[71]. There has been regional government of some form for the last 90 years, and we believe that globalisation, European expansion and increasing human mobility will increase rather than decrease its value in the future.

3. English regionalisation has been greatly hindered since its inception by the continuing centralisation of powers in the British state, and the time is now ripe to directly address that centralisation. Addressing the UK's longstanding productivity gap requires effective and responsive regional economic policies. This logic remains compelling. Delivering the benefits of regionalisation calls for concerted central government action to fulfil its claims about flexibility and decentralisation, before English regional government can evolve from its current complexity and confusion.

INCREASING AND SIMPLIFYING REGIONAL/SUB-REGIONAL ACCOUNTABILITY

4. From 1998 to the North East referendum in 2004, central government activities faced pressures to co-ordinate their activities within common regional boundaries in anticipation of the future creation of ERAs, in line with the White Paper Modernising Government[72]. There will be less pressure for government departments for ensuring any new regional structures are co-terminous with existing regional arrangements. This is likely to have implications for the effective accountability of regional Non-Departmental Public Bodies (NDPBs) and arm's length agencies; they may face less scrutiny of their activities in terms of individual regions' needs. The most effective remedy in this situation is a statement by central government of its vision for particular regions, recognising that different regional situations produce different regional needs from national policies. This will allow local and regional stakeholders to continue to hold national bodies to account.

5. A recurring problem is that similar institutional arrangements ("one-size-fits-all") are used to deal with very different regional issues. Every region has a regional development agency, a regional spatial strategy and an array of regional NDPBs. As Professor Morgan observed in 2003 to a previous Committee Inquiry.

6. The boundaries of the South East region are inadequate for dealing with its regional spatial and economic development issues, too remote to deal with local issues in places as diverse as Thanet, Portsmouth and Buckingham, whilst too fragmented to provide a sound basis for planning transport, housing and environmental protection around the London conurbation[74]. As a result, the recent Sustainable Communities Plan does create a framework for planning these issues at a Greater South East scale. At the same time, the current regional boundaries and economic institutions do indeed have much greater relevance for the economic needs/especially addressing the regional productivity gap/of the northern regions. Serious consideration should be given to having qualitatively different regional institutional arrangements according those regions' primary needs.

7. A final issue we raise is that since 1994, the regional governance arrangements have been in a permanent state of flux. From 1997 to 2004, this was arguably because these arrangements were evolving towards a potential end point (ERAs). Effective regional and sub-regional accountability requires a degree of institutional stability and relationships between governmental tiers. There is a risk that regional challenges are met with institutional simplification and rationalisation (and temporary paralysis) rather than concerted leadership and collaboration. There is a danger that a rush to further ad hoc change and rationalisation will undermine the effectiveness of existing arrangements before any attempts have been made to quantify their value. There is a strong case for the government to clarify its vision for the future of regional government to provide an end-point towards which regional partners can work.

POTENTIAL FOR DEVOLUTION OF POWERS FROM REGIONAL TO LOCAL LEVEL

8. One feature of the post-1997 regional governance system has been that regional bodies have predominantly been granted powers from national bodies best exercised regionally, or which were already previously regionally exercised. These powers are those in which there is a clear national interest but in which different regions have demonstrably different interests and purposes. The creation of elected regional assemblies was premised upon "devolution downwards" rather than "regionalisation upwards" of local authority powers[75]. Transport is one such power—the greater South East region's main transport need is in dealing with commuters into London, whilst the polycentric nature of the north makes their demands much more complex to articulate. Regional bodies allow nuanced differences to be expressed within the competing interests shaping the overall national policy framework.

9. Indeed, this regional differentiation has allowed such bodies in some cases to reflect their local partners' needs more closely than hitherto. Many RDAs use Sub-Regional Partnership arrangements to plan regeneration spending: Single Regeneration Budget decisions previously taken regionally by Government Offices are now taken sub-regionally, closer to affected communities and individuals. Likewise, RDAs' Single Programme Budget arrangements allowed development and funding of their priorities, notably identifying and promoting potential regional excellence. The North West Regional Development Agency's support for a world-class new Manchester University demonstrates how regional flexibility and regional priorities can produce outcomes which strengthen the UK economy as a whole.

10. The question remains which additional powers are currently held centrally which can better be exercised at a regional level, to reflect local diversity within a common national framework. Local partners can lack capacity to articulate local investment needs within a broader strategic case related to this national priority set. We note with interest Treasury proposals to prepare regional financial allocations for transport, housing and economic development[76]. If this proposal is implemented in the spirit of Treasury guidance, these regional allocations will create more capacity to meet local partners' needs than passing those powers directly to local partners[77].

EFFECTIVENESS OF CURRENT MULTI-LEVEL SERVICE MANAGEMENT ARRANGEMENTS

11. We have strong concerns over the capacity that exists within the regions to exercise genuine choice and influence over regional policies and priorities. Regional policy development capacity is largely absent from the English regions outside London. In Scotland and Wales, even prior to political devolution, their respective Ministries worked hard to create effective policy networks involving interest representation with universities, think-tanks and consultancies responding to this demand creating effective territorial policy-making networks[78]. The lack of comparable demand in England for competing views on significant policy decisions has undermined the effort to build up coherent regional policy formulation capacity.

12. The lack of policy capacity in the regions means that there is no clear articulation from regions themselves of how future governance arrangements might develop in England. Too frequently the role of regional decision-makers involves little more than endorsing priorities and strategies of central government, with at best minimal input to their design, in the hope of accessing additional resources. Thus regional concepts and policies are being developed synoptically at the national level without enough consideration of whether the proposed approaches are the most sensible way forward for promoting regional convergence in the light of diverse geographical conditions.

13. There is a discrepancy in the level of accountability for regional NDPBs. Although many of these bodies have delimited territorial areas, they are now formally held to account through their national sponsor Ministries. Only one occasion has the National Audit Office inquiry directly investigated the performance of a regional body, namely the RDAs.[79] This was followed by a Public Accounts Committee Inquiry, but its focus lay on ODPM and DTI rather than whether these regional bodies were delivering for their regions[80]. Parliament should consider carefully its role in delivering regional accountability for nationally-sponsored bodies, and how the Select Committee model might hold territorially-focused national bodies effectively to account.

14. There is very limited regional scrutiny of these bodies: the existing voluntary Regional Assemblies have attempted to develop regional scrutiny programmes but are limited both by funds and policy capacity constraints (cf para 11). It is likely that regional assemblies are likely to find themselves increasingly restricted to their statutory roles (eg in spatial planning), leaving a vacuum in the exercise of the regional public interest in the scrutiny process, which is too often eclipsed by a Whitehall view that systematically overlooks regional differences (cf para 13). This is likely to be a brake on the realisation of the Treasury's ambitions for more effective devolved decision-making[81].

POTENTIAL FOR NEW ARRANGEMENTS AND "CITY REGIONS"

15. The concept of the city region has begun to be discussed as a new system for sub-national governance arrangements. CURDS undertook work for the Core Cities group since the 1990s exploring the contribution of city-regions to economic development. Recently, the concept has generated more commentary rather research, much of which has been characterised by a confusion and misinterpretation and contradictory claims rather than clear analysis: rather than providing a single explanation, this conflates a number of separate issue[82]. For instance, commentary on city-regions is often supported by claims about the city-region governance arrangements in other EU Member States, which on closer inspection prove inaccurate. This field calls out for careful gathering of evidence and analysis.; this notwithstanding, a number of observations can safely be made.

16. Clearly, there is value in analyzing the operation of the city-region as a functional economic area, especially through travel to work areas developed by CURDS; this does not necessarily make city-regions an optimal scale at which to create governance institutions. The Greater London Authority does not cover the full territorial extent of the London city region, which as an economic space covers the South East and East of England, and significant parts of the South West, West Midlands and East Midlands. Conceiving regional governance on such a scale is highly problematic: the London city-region contains 20 million people. There may be value in conceiving city-regions as suitable scale for inter-local co-ordination of services at the urban level, like Belgian "inter-communal service providers". But, there is little evidence, however, that they represent an effective mechanism for taking key national decisions which can rebalance the national economic structure and help address the UK's £30 billion productivity gap between North and South.

17. City-regions sit very uneasily with existing English traditions of sub-national governance. On the one hand, experience has shown that larger bodies such as the Scottish regional authorities and the English metropolitan counties have been criticised for remoteness from their citizens, whilst governments have often been hostile to large (and potentially critical) elected authorities. On the other, effective multi-level governance requires a degree of stability at the different levels, and creating a new city-regional tier could undermine much of this stability. Although city-regions are therefore important economic spaces, the city-region model promoted in some quarters seems to fail to address the key issue in regional governance, namely encouraging central government is to live up to its rhetoric on decentralisation.

IMPACTS OF "CITY REGIONS" ON PERIPHERAL TOWNS AND CITIES?

18. The city region focus has implications for peripheral towns and cities. For instance, the city region rubric used in The Northern Way omits whole swathes of the north, especially Cumbria and the northern uplands, from city regions' spatial coverage[83]. This is unsatisfactory: parts of South West Cumbria have similar kinds of structural problems—and require similar policy approaches—to peripheral areas within city-region zones (such as East Durham or Central Lancashire). Moreover, some peripheral towns and cities will do extremely well out of the proposed core cities arrangements. Chester, Hexham and Harrogate have all fed, to some extent, on the economic success of their nearby cities in the last decade. Indeed, such places can be expected to continue to thrive under whatever governance arrangements emerge.

19. A city-regional approach could tackle the problems of peripheral towns if it was from very outset based on a polycentric model. The early drafts of the City-Region Development Programmes commissioned by the Northern Way suggested each city region was pursuing its individual aspirations, rather than each city-region contributing to a polycentric and complementary whole generally aiming to reduce regional disparities. This could potentially exacerbate disparities between city-regions.

20. The real peripheral places ignored by the city-regions concept are poorer places within the city-region which, for example, completely lack the tools to engage with the knowledge economy. The city-region concept—inasmuch as it has an underlying economic model—appears to be based on a very simple trickledown approach to wealth-generation. There are unanswered questions concerning whether promoting city regions in themselves will deal with the problems of multiple deprivation which afflict communities and local authorities within many regions.

TACKLING ECONOMIC DISPARITIES THROUGH CLOSER INTER-REGIONAL CO-OPERATION

21. There is a clear need for actors across the English regions to work closely together to tackle economic disparities. Effective co-operation through collective action allows large-scale activities to be realised which bring benefits to all the participants. The Northern Way provides a framework for this co-operation amongst the three northern regions, and early business plans suggest that some of their activities are supporting such strategic actions in the field of transport, regional science policy and place marketing[84].

22. However, it is not evident that there is a compelling logic for northern co-operation in fields such as skills gaps, promoting entrepreneurship and addressing worklessness. Whilst there is a role for sharing of best-practise between places, and worklessness is a problem across the northern regions, it is unclear why a trans-regional arrangement is required to develop what are essentially locally delivered training programmes. There is case for reassessing the policy areas which can benefit significantly from a pan-regional governance framework aimed at fewer, strategic priorities.

23. Moreover, inter-regional co-operation is necessary but not sufficient to tackle English regional economic disparities. Recent announcements suggest that the Department for Transport does not view the strategic transport needs of the north as a national priority. In those circumstances, even focused inter-regional effort will only be able to tinker at the margins. The Northern Way for example is spending £12 million on transport investments that "meet the north's requirements", whilst national transport investment is set at £2 billion for the road network alone for the next three years[85]. There is a strong case for ensuring that national priorities in a range of policy fields are more closely aligned with strategic inter-regional needs.

CONCLUSIONS

24. The Government needs to quickly articulate a clear vision for the future of regional governance and government in England, but this should build on the progress that has been made in building a relevant regional tier over the last nine years. At the moment—excepting London—no serious consideration has been given to different arrangements for different places related to their specific needs. Whilst current regional arrangements might be overly complex for the southern regions, it is clear that if the government is serious about tackling complex regional problems in the north and west of England, the regional tier will remain important.

25. The regional tier in England has been created through an evolutionary process in which capacity has been built up, as a precursor for the taking of a next evolutionary step. Currently regional authorities are acquiring strategic powers for transport, housing and planning. Each of the previous steps has helped to build up regional policy capacity to better fit national policy to local requirements, especially in the northern regions where national policies are frequently out of step with these local needs. It is clearly worth waiting until these latest powers have been exercised, and reflecting on what additional regional governance capacity has been built, before definitive decisions are taken on the future direction of English regional governance.

26. There needs to be continued central government support for the regionalisation process. Central government benefits from an effective regional tier which tailors its own policies across an economically, culturally and socially diverse nation. Much more needs to be done at the central level to facilitate regional working. Socio-economic differences between regions are not simply the result of market failures, but reflect deep-seated structural problems. The government needs to match rhetoric on regional and development and governance with a stronger political impetus to create a robust system of local and regional government. Government should recognise that regional differences are not simple matters, not spatial market failures, but reflect a divergent reality which has built up over decades. We believe that this failure by government to progress beyond rhetoric reflects a failure of political will to shape a regional agenda for national government.

27. Parliament, acting as the principal scrutiny body for England, might also consider what it can do to support effective regional governance. There have been no meetings of the Standing Committee of Regional Affairs in this Parliament, while the Public Accounts Committee has undertaken a very limited scrutiny of the regional "quangocracy" in England. MPs could exercise real powers to hold regional bodies to account. Without clear political leadership the future for regional government is likely to comprise an unstructured and piecemeal evolution which fails to provide a rational framework for sensibly addressing England's deep-seated regional economic problems.

70 CURDS staff contributed to (in a range of capacities) to DRAs 12, 26 and 57 in that Inquiry. Back

71 See Tomaney, J (2005) "Anglo-Scottish relations: a borderland perspective" Proceedings of the British Academy, 128, pp 231-248. Back

72 Cabinet Office (1999) Modernising Government. Cm 4310. London: TSO. Back

73 Para 65, Select Committee on Office of the Deputy Prime Minister (2003) "Reducing Regional Disparities in Prosperity" 9th report of the Select Committee, London: The Stationery Office. Back

74 Cochrane, A (2006) "Looking for the South East" in I Hardill et al (eds) The rise of the English regions, London: Routledge. Back

75 Department for Transport, Local Government and the Regions (2002) Your region, your choice, London: TSO. Back

76 HM Treasury, Department of Trade and Industry, Department for Transport, Office for the Deputy Prime Minister, (2005) Regional funding allocations: guidance on preparing advice, London: HMSO. Back

77 HM Treasury (2005) Devolving decision making: 2-Meeting the regional economic challenge: Increasing regional and local flexibility, London: The Stationery Office. Back

78 J Mitchell (2003) Governing Scotland: The Invention of Administrative Devolution, Houndmills, Macmillan. Back

79 National Audit Office (2003) English regions: success in the regions, London: The Stationery Office. Back

80 National Audit Office (2003) English regions: success in the regions, London: The Stationery Office; Public Accounts Committee (2004) Success in the regions, Fifty first report of the Public Accounts Committee 2003/04, London: TSO. Back

81 HM Treasury, Office of the Deputy Prime Minister, Department of Trade and Industry (2004) Devolving decision making 2: Meeting the regional economic challenge: Increasing regional and local flexibility. March. Back