Memorandum by The British Chamber of Commerce
(BCC) (RG 78)
1. ABOUT THE
BRITISH CHAMBERS
OF COMMERCE
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. CHAMBERS OF
COMMERCE AND
REGIONAL GOVERNMENT
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. EXECUTIVE
SUMMARY
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. INCREASING
THE ACCOUNTABILITY
OF DECISION-MAKING
AT THE
REGIONAL AND
SUB-REGIONAL
LEVEL AND
SIMPLIFYING EXISTING
ARRANGEMENTS
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. THE POTENTIAL
FOR DEVOLUTION
OF POWERS
FROM REGIONAL
TO LOCAL
LEVEL
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. THE EFFECTIVENESS
OF CURRENT
ARRANGEMENTS FOR
MANAGING SERVICES
AT THE
VARIOUS LEVELS,
AND THEIR
INTER-RELATIONSHIPS
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. THE POTENTIAL
FOR NEW
ARRANGEMENTS, PARTICULARLY
THE ESTABLISHMENT
OF CITY
REGIONS
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. THE IMPACT
WHICH NEW
REGIONAL AND
SUB-REGIONAL
ARRANGEMENTS, SUCH
AS CITY
REGIONS, MIGHT
HAVE UPON
PERIPHERAL TOWNS
AND CITIES
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. THE DESIRABILITY
OF CLOSER
INTER-REGIONAL
CO-OPERATION
TO TACKLE
ECONOMIC DISPARITIES
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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