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

Memorandum by The British Chamber of Commerce (BCC) (RG 78)


  1.1  The British Chambers of Commerce (BCC) is the national voice of local business; a national network of quality-accredited Chambers of Commerce, uniquely positioned at the heart of every business community in the UK. The BCC represents 100,000 businesses of all sizes across all sectors of the economy who together employ over five million people.


  2.1  Chambers of Commerce are rooted in their local community, representing local businesses and also having close links to local government and public sector agencies. Most recently, a number of Chambers in England have been involved in drawing up bid proposals for the Local Enterprise Growth Initiative (LEGI) and many are playing a leading role in their Local Strategic Partnerships (LSPs), particularly concentrated around economic development.

  2.2  As regional government has become a growing force in governance and economic development across England, Chambers of Commerce have adapted to work to best effect within this structure whilst still retaining their strong local presence. Since the late 1990s groupings of Chambers in the regions have been established through a process of mergers of smaller Chambers or the setting up of federal structures. These enable the Chamber network to build links between the business community and regional government, principally RDAs, in a coherent and accessible manner across the region.


  3.1  The BCC is not against regionalism per se and does believe it has a future as an intermediate level of authorisation between local areas and central government. However, we do have a number of concerns about the current state of regional government, with RDAs being given an ever-increasing role in delivery above and beyond their initial strategic role. RDAs should be using their strategic role to strip out proliferation and duplication of services, not compound the current situation. There is a need to consolidate funding streams to the regions and, if necessary, streamline regional bodies. There are real concerns about layering and the delays in decision-making that result.

  3.2  Since the failure of the North East Regional Assembly referendum in November 2004, there has been a lack of clarity about the direction of the regional agenda. Though there now seems to be greater direction coming from central government, the emphasis appears to be on an enhanced role for local government and alternative arrangements such as city-regions or inter-regional alliances.

  3.3  In putting forward proposals for alternative, or additional, structures, the Government must provide a coherent explanation as to how these will relate to existing regional, sub-regional and local structures. Whilst the BCC does have concerns about the expanding role of RDAs and a lack of democratic accountability, we do not want to see additional structures introduced to address these problems that then only constitute a further tier of governance, bringing with it bureaucracy, increased costs and, potentially, a confused remit. Any changes to structures at regional, sub-regional and local level should be based on a coherent, integrated re-organisation and must not result in overlap, duplication or confused responsibilities.

  3.4  Devolving some powers away from the centre can benefit business, with decisions being taken closer to those who are affected by them. The business community needs an effective political framework and this framework must always be measured against criteria of accountability, efficiency and cost-effectiveness.


  4.1  With the failure of elected Regional Assemblies there is now undoubtedly a democratic deficit and therefore the regions must have robust governance structures to underpin the regional decision-making process. Much of the existing structure is closely bound into central government, especially in the case of the Government Offices (GOs) and RDAs. All of the various regional bodies—RDAs, Regional Assemblies and GOs—need to be far more accountable and transparent.

  4.2  RDAs are said to be business-led organisations but many are in fact public sector bodies with levels of business involvement and consultation varying between regions. RDAs do not always have defined processes for consulting business, as a result of which there is often little substantive engagement of business about matters that have far-reaching impact, for example the current re-organisation of Business Link. Businesses also lack representation in the GOs and they do not have a vote with respect to local authorities, with the result that regional structures' accountability to the business community is very weak.

  4.3  The unelected Regional Assemblies, in contrast to RDAs and GOs, are independent bodies. Furthermore, they have crucial functions, including scrutinizing the RDAs and setting the Regional Spatial Strategies. They should be as representative as possible, with as broad a membership as possible. Their independence, as compared to RDAs and GOs, is a means of widening participation and representation at the regional level.

  4.4  Regional Assemblies should not necessarily expand their membership, but should widen out the constituencies represented by members. Currently, a number of Assemblies are dominated by local government representatives. In many, there are only one or two business representatives. Regional Assemblies, as the partnership responsible for determining the region's priorities, should be representative of as wide a range of stakeholders as possible and take account of the needs of the region's economy and businesses, using the expertise of members drawn directly from the business community. Developing and implementing successful transport, housing and economic development plans that improve a region's competitiveness depends upon the business community being engaged. There is therefore a strong case for statutory business representation in Regional Assemblies.

  4.5  Regional Assemblies should be far more transparent in their decision-making, and ensure there is greater awareness in the region of what their role is and the decisions being taken. Since their inception, Regional Assemblies have grown, with some employing around 80 staff, but there continues to be a real lack of awareness of who is involved in Regional Assemblies and what their role is. This must be redressed and there must be far greater clarity about exactly who is monitoring Regional Assemblies and to whom they are accountable. Regional Assemblies need to maintain their independence, rigorously scrutinize RDAs and ensure that they use their position to ensure that decisions made in the region meet the best interests and priorities of the region. They should not be so closely aligned with central government that they lose this independence.


  5.1  In the uncertainty following the failure of the North East Regional Assembly referendum, there has been an increasing drive towards greater localism. Local authorities are now charged with promoting economic development and the extended Lyons Inquiry is prompting discussion around the strategic role of local government and its revenue raising powers. As a new funding stream going direct to the local level, LEGI indicates an increasing emphasis on local government, rather than regional government, in economic development.

  5.2  There has been much discussion of neighbourhoods and a number of policy initiatives, such as the Neighbourhood Renewal Fund, are targeted at ward level. As with the regional agenda, clarity is needed on the exact nature of devolution to local level—whether this is to local authorities, or neighbourhoods and wards. Decisions on reform of the two tier structure of local government should also be made in conjunction with further devolution to the local level, so that additional powers are not given to local authorities only to then be followed by a radical reform of the local government structure.

  5.3  The ODPM's 10-year vision for local government and its local vision debate, point to a welcome drive to improve local government and equip it to take a stronger role in communities and neighbourhoods through better leadership, citizen engagement, service delivery and the performance framework. Coupled with the extended Lyons Inquiry, it would appear that central government is open to devolving greater powers to the local level and many of those powers mooted in discussions are ones currently vested at the regional level.

  5.4  Much of the local government structure has legitimacy, even if it needs improvement, as it is based on communities with which people have a genuine affinity, unlike many of the regions. The position of local authorities at the heart of their local communities can make them better able to judge the needs of those communities, where they work in close partnership with other public sector agencies and the private sector. The challenge is for local government to ensure that it does engage with all sectors of the community, not least business, so that it knows what the needs of the area are and utilizes existing expertise, for example businesses' knowledge of economic development and business support.

  5.5  As local government is given greater power and responsibility for delivery by central government, the issue of finance becomes pressing. The British Chambers of Commerce is firmly against the re-localisation of business rates as it is liable to lead to increases in business rates which would impose an additional burden on business and serve to discourage, rather than foster, enterprise. A return to local authority control of business rates could tempt local authorities to raise additional revenue through this vehicle, rather than endure the political pain associated with increases in council tax. The national system provides accountability and ensures national scrutiny of non-domestic rates. Business is not opposed to fair business rates, but believes that Business Improvement Districts (BIDS) and the Local Authority Business Growth Incentives Scheme (LABGI) offer scope for some changes in local government funding whilst building in accountability. With any sort of hypothecation along these lines, a statutory role for the business community needs to be built in.


  6.1  For the business community, economic development, transport and skills are the three principal areas of concern. RDAs have responsibility for all of these, with some responsibility being shared with local authorities and central government. In the case of transport, Regional Assemblies are the regional planning body, although central government ultimately holds the purse strings. Likewise for skills, multiple agencies are involved and this can result in overlap and confusion whilst not necessarily adequately addressing the skills needs of business.

  6.2  Economic development comes under RDAs' remit through their responsibilities for economic inclusion, enterprise and innovation. Equally, local authorities are charged with developing their local economies and this responsibility is built into Local Area Agreements, LEGI and Neighbourhood Renewal Fund schemes through the "fourth block". They also have compulsory purchase powers.

  6.3  The complex relationships between different layers of governance risk undermining regional government, both by further devolution to the local level and the creation of a situation where no one takes overall responsibility or provides leadership and direction.


  7.1  The principle of city regions has been gathering momentum in recent months. As a concept, city regions would appear to have strong backing from ODPM and a compelling economic argument, particularly when the turnaround in fortunes of cities like Manchester and its benefit on the wider region is borne in mind.

  7.2  Within the business communities in the Core Cities, there is some enthusiasm for city regions as a means of providing clear civic leadership and improving accountability at the local level. City regions could reduce the current fragmentation between local government, democracy and the economy.

  7.3  If city regions are to go ahead, they must be to address a deficit in governance and be self-selecting, not imposed from central government as a solution appropriate to all larger cities. This is critical as they should not complicate governance or add a new layer of bureaucracy. They must have a strong business case setting out the benefits to the city region's economy and be based on the voluntary co-operation of the local authorities involved, with well-defined, substantial involvement for business in the civic leadership of the city region and in reviewing the performance and structure of any new arrangements.

  7.4  The weight being put behind city regions from a number of quarters should not mean that other options are ruled out at this early stage, particularly before the Lyons Inquiry reports and the role and performance of RDAs and Regional Assemblies are looked at more closely.

  7.5  New arrangements are liable to be costly and should not be introduced without a clear breakdown of the costs associated with them, both to set up and to run, and of those incurred by the current arrangements. It may be more cost effective to reform and improve existing structures and this option should not be ruled out.


  8.1  City regions would be self-selecting and therefore immediately raise the issue of governance arrangements for neighbouring towns and cities, indeed for all other areas, not least rural communities. If substantial powers over transport, skills and economic development were transferred to city regions, it would have a huge impact on the existing RDAs and Regional Assemblies.

  8.2  Removing certain geographic areas from much of the RDAs' remit could weaken them and undermine their effectiveness elsewhere in the region. Equally it could focus RDAs' and Assemblies' efforts on those areas remaining within its remit. However, this could give rise to confusion and further complicate the picture we see at the moment. All regions, sub-regions and local areas need to be clear of exactly how city regions will sit with other governance structures and have real assurance that they will not become a "second division" in terms of governance, economic development and funding. It could be that regional government offices remain as the sole regional-level structure, providing funding and administrative links to central government for city regions and their equivalent in non-metropolitan areas.

  8.3  In terms of alternative regional and sub-regional arrangements should city regions be set up, the New Local Government Network, in its report Seeing the Light? Next Steps for City Regions (2005), proposed that other forms of supra-regional arrangements might be appropriate in other areas. The report suggests "county regions" where large urban centres are lacking. Again, this structure calls into question the continued role of RDAs and RAs and though it could result in a less fragmented situation at the sub-regional and local levels, could well render irrelevant the current regional structure. If city regions are accompanied by the setting up of equivalent sub-regions at county level in non-metropolitan areas, they should be replacing an existing layer of governance and creating an improved situation. They should not simply add an extra layer of government and additional bureaucracy, potentially delaying and complicating decision-making yet further.

  8.4  In rural areas, sub-regions are extremely important and often more appropriate than supra-regional arrangements. Sub-regions bring together rural areas and towns to ensure coherent economic development plans across the sub-region but also allow for the very different characteristics and needs of these areas in comparison to larger cities.

  8.5  Notwithstanding the potential of city regions and the importance of sub-regions, there still needs to be some structure that can, for example, oversee transport across regions, with all the associated implications for economic development and productivity. Cross-regional and inter-regional co-operation is therefore essential, as is some sort of formal structure and responsibility for this.


  9.1  BCC is in favour of inter-regional co-operation such as the Northern Way, provided that it does indeed improve governance, achieve real economic results and address the major problems faced by business, including poor transport infrastructure, skills gaps and areas of market failure.

  9.2  Inter-regional co-operation is recognition of the fact that economic development, transport, skills and regeneration often cannot be most appropriately addressed within the regional confines. It is vital that other structures at different levels, be they local, city-regional or sub-regional, likewise have the flexibility to co-operate with other areas where something cannot be addressed by that area alone. Although government structures need to be accountable to a clearly defined area, this should not result in organizations not co-operating beyond their area where an issue such as economic development cuts across these political boundaries.

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