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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 977-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE OFFICE OF THE DEPUTY PRIME MINISTER: HOUSING, PLANNING, LOCAL GOVERNMENT AND THE REGIONS COMMITTEE
IS THERE A FUTURE FOR REGIONAL government?
monday 15 MAy 2006 COUNCILLOR JOHN JOYCE, MR JOHN HAWKINS, MR NEIL SCALES, MR KEITH BARNES, MS MAGGIE MOONEY and MR ROBERT CRAWFORD
MS JANE HENDERSON, MR ALAN CLARKE, MS PAM ALEXANDER, MR DAVID HUGHES and MR DAVID CRAGG Evidence heard in Public Questions 323-403
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee on Monday 15 May 2006 Members present Dr Phyllis Starkey, in the Chair Mr Clive Betts Lyn Brown John Cummings Mr Greg Hands Martin Horwood Mr Bill Olner John Pugh Alison Seabeck ________________ Witnesses: Councillor John Joyce, Chair, North West Regional Assembly, Mr John Hawkins, Head of Policy and Research, Association of Greater Manchester Authorities, Mr Neil Scales, Chief Executive and Director General, Merseytravel, Mr Keith Barnes, Regional Director, Government Office for the North West, Ms Maggie Moon, Town Clerk and Chief Executive, Carlisle City Council, and Mr Robert Crawford, Chief Executive, Mersey Partnership, gave evidence. Q323 Chair: Welcome to this session. There are obviously a large number of you. If your organisation has something different and additional to add to the answer that has been given by other organisations, then please do indicate; but if you agree with what went before, I would rather not have lots of different organisations repeating the point. Would you like to introduce yourselves? Mr Hawkins: I am John Hawkins, and I am Head of Policy Unit for AGMA (Association of Greater Manchester Authorities) for ten local authorities within Greater Manchester. Mr Scales: I am Neil Scales, the Chief Executive of Merseytravel, the passenger transport authority and passenger transport executive for Merseyside. Ms Mooney: I am Maggie Mooney, Chief Executive of Carlisle City Council, which represents the six district councils in Cumbria. Councillor Joyce: Councillor John Joyce, who is the current Chair of the North West Regional Assembly. Mr Barnes: Keith Barnes, Regional Director, Government Office for the North West. Mr Crawford: Robert Crawford, Chief Executive, Mersey Partnership. Q324 Mr Hands: Can I start by looking at the economic performance of the North West. The performance gap between southern English regions and the North West has continued to grow. Can you say how much you think this is a reflection on the performance of the North West regional agencies, or what other factors you think explain the region's relatively sluggish performance, and what would need to be changed in order to change the gap? Councillor Joyce: We know there is a definite gap between the North West and the South-East regions in particular, but we believe that now we have changed some of the organisations around within the North West Regional Assembly and gone into what I call a trinity with the Government North West and also the Regional Development Agency, we are now of the same mind to target those areas where we need to perform better. One of the examples would be in the RES (Regional Economic Strategy) where the RDA set a lower figure than we wanted to achieve. They set it as an average figure, and we believe we need to strive ourselves, working with the agencies and the Government North West, to improve our particular GVA. There will be a number of areas where we can hopefully do that, but it will be in partnership. Q325 Chair: You are suggesting that you need to improve the way you have worked with other agencies. Councillor Joyce: We certainly do. We believe that in some ways it was a scattergun approach and we need to concentrate in those areas where there is deprivation and low economic growth. We cannot do that if we are working in isolation with just one council in our cities or anything like that; it needs over-arching North West Government's management, and also with the RDA we now need to take on board far more collectively a responsibility to deliver, not just to say, "we will put somebody there and somebody there". The Regional Economic Strategy will be the plan that we need to take forward, and that has now been agreed. Q326 Mr Hands: Realistically, how much difference do you think government in general, and most specifically regional government, can make to economic performance in the North West? In London, if we were entering into economic difficulties I would float the suggestion that perhaps the last thing the people of London would look towards would be the Greater London Assembly or the Government Office for London. How much difference do you think it will make? Councillor Joyce: I do believe that, because we have got agreement right across the North West with all the various councils and the council leaders. We have now created an executive committee on the Regional Assembly, which is chaired by Lord Smith and AGMA, but we are also working on a sub-regional basis, so each sub-region's representatives will be working on the executive committee on various aspects. When we start to take the various economic strategies forward for each region, they will discuss them and say what is the best way forward for their particular region. That is then submitted to the Regional Assembly, and the Regional Assembly will have a much broader picture than at the moment, and therefore will adjust and make changes to deliver the economic wellbeing of the various parts of the North West of England. Mr Barnes: In terms of the question about the gap and the rate of progress in terms of GVA, there is a mixed picture in the North West; there is not a standard. Merseyside comparatively over the last few years has done very well, whereas if we talk to Maggie in Cumbria we find that GVA and growth in GVA have been a particular problem. I know that many of you know the North West, but in GVA and population terms it is as large as many European states, so is very big and very complex, and it is not about trying to find one solution that is going to tackle those areas' problems. In terms of addressing the gap, the Regional Development Agency recently launched its RES, which has a really detailed analysis of what is working well and what is not working well in the economy. Some of the biggest gaps are around the age and population profile of the region, compared to London and the South East, as well as looking at factors such as levels of productivity, i.e., the "worklessness" issue, which in the North West is second only to that here in London. In answer to how far regional agencies and institutions can affect the local economy, the RDA has something of the order of £400 million to spend in terms of focusing on the economy. At this moment the Government Office manages on behalf of DCLG European programmes and is committing something of the order of £1.6 billion to address economic issues. We have a lot of cash, but it is about targeting the cash on what works and makes a difference. If this hearing were in Manchester or Liverpool, you would be able to see outside the number of cranes and transformation of those cities. I am not blaming all that on the agencies, but it is a bit about our role in creating leadership, a stable environment, and then investing government monies wisely to effect a transformation. Mr Hawkins: I can see where you are coming from with your supplementary question about the effectiveness of the RDAs, and it is true to say that although we have listed the amount of money the Government has, it is only a small amount of the total amount from the private sector and other investment that goes into the North West. I do not think that does not mean that we need to try and get those regional agencies working as effectively as possible, and we are a fair way down the road in doing that. In terms of the "why?", there are some other things that I think need to be considered. The standard of communications between the North and the West and the South, particularly the M6 and maybe until recently the West Coast Main Line, do not help. There is a continued global economic shift to services like manufacturing, which is not historically our primary economic base, and in the UK we do have the economic pull of the capital. The UK is not the only country that experiences that type of polarity, but it does exist. In your original question you asked what we should try to do to reverse this trend. We have assets in the North West that we need to make the most of: our universities, tourism opportunities, growth areas like Manchester Airport, recognising the opportunities provided by our leading city regions, which have the majority of working population and growth potential. We should recognise that government intervention alone will not help; and I think we all share that view. What could improve is if Government recognised that Tyneside is not the same as Tunbridge Wells; so that when we are taking decisions about things like state-aid maps and eligibility for European funding, we should be getting a variation approach between regions, not a uniform approach across the whole of England. Q327 John Pugh: Councillor Joyce said he did not favour the scattergun approach but favoured concentrating resources on the most deprived areas. I think it would be unfair to say that in the North West people have not concentrated resources on the most deprived areas; it just has not done a great deal so far to reduce the social differences between the North West and other regions. Can therefore that approach not in itself be questioned, and can one argue that that is not a very sensible way of spending money? Mr Hawkins suggested that you should invest where you are going to get a return for the whole region. Is there not a danger that by spending large sums of money in deprived areas again and again and again - UDP, City Challenge and its successor, Neighbourhood Renewal - you reduce inequalities within the North West but you do not get the best effect in terms of growing the North West economy? Councillor Joyce: Can I say, when talking about scattergun approach, that we believe it was too finely spread, and there were pockets of it. We have to develop the major economic drivers, quite rightly, and there are a number of economic drivers in the North West where we can assist. Nevertheless, you still have to go into those areas which have fallen behind and try and help them move ahead. The way forward generally is to encourage the economic drivers to look at areas outside where they are being ----- Q328 John Pugh: I agree, but you would accept that there is a conflict there between raising the whole economic of the North West and specifically polarising resources in ----- Councillor Joyce: I understand that. When I use the term "scattergun approach" I am talking about just throwing it away generally and hoping it is going to be a success. You cannot do that; you have to concentrate and have an end in sight of where you want to make a particular difference. Where we have the economic drivers, you have to continue to make sure that they are striving and moving forward all the time. I am lucky, as the current leader of a council that is in Cheshire, to be at a mid-point between the two major cities: we have a big economic driver. We need to continue to do that. Nevertheless, the North West Regional Assembly is conscious of its duty to improve the areas that have fallen behind. If you do not do that, the opposite happens, does it not? The area starts to go down because you have someone performing so badly. Q329 Mr Olner: Do you think you would achieve more if you had been an elected Assembly? Councillor Joyce: Well, it is not going to happen, is it? Q330 Mr Olner: Your people say not, but ----- Councillor Joyce: Well it is not going to happen probably in the time that I am Chair of the Assembly, and I cannot see it happening for a number of years. The North West Regional Assembly as a whole has realised that, and the Assembly is realistic. They have created an executive committee that will now start to deliver. Instead of having task groups, it will be done by the executive committee. We have also encouraged the inclusion of social partners, which can make a difference. We have increased our numbers on the executive committee from three to six, and within that there are a number of big players, economic players, in private industry and in the educational field. We are trying to attract those people in, and over the last six months it has been surprising that one of the issues I have had, as regional chair, is dealing with a couple of political parties who want to be in and fully involved. We are attracting the people to come in. We think we can make a difference, and it is only the Northern Regional Assembly that will do it. In regard to the issue of whether they are elected, I am not qualified to make that particular statement. From a personal point of view it would probably be "yes", but nevertheless it will not happen in my time. Ms Mooney: I did want to mention Cumbria, and I am glad that Keith has also mentioned it. It is a large sub-region of the North West, with half the land mass, both rural and urban. We are one of the only four European regions that saw absolute decline in GDP from 1993 to 2003; and our GVA grew by the lowest amount in the county, and it continues to decline. There are a lot of reasons for that. We want to see more regional co-operation. Obviously, I am here for Carlisle, and we want to hear maybe less about Manchester, Liverpool and the big cities, but more about the smaller cities. We see that as being about support from Government Office and NWDA, and also through the private sector, and the opportunities we want to take through Carlisle Renaissance, the Nuclear Decommissioning Authority and the University of Cumbria. It is that which will enrich the economy of Cumbria. Q331 Chair: Do you think you are well served by the regional structures? Ms Mooney: We could be better served. I think it is about making Cumbria's voice heard more. It is a lot better now. Speaking for Carlisle, the floods there in 2005 got us on the map, or got us on the regional map. It is not the way to do it. I should add that it was Carlisle Renaissance that did that. Instead of moaning about it - we were not part of the Northern Way, but Cumbria got on with it, and we are continuing to get on with it. We made our voice heard. We often say in Cumbria that we are not one of the big cities and therefore we are not going to be taken up, but we do have to do a lot for ourselves. We do know that we are getting the support from the RA, from the NWDA and of course from Government Office. Q332 John Cummings: You described the existing regional government arrangements as complex and uncertain in your evidence. You also state that the creation of a number of regional bodies has led to confusion. You are asking the Committee to urge the Government to clarify the position so that all parties know their roles and can thereby ensure that the government of the region as a whole is improved. That is a grave indictment of the present arrangements. What have you yourselves done in drawing this situation to the attention of central government, and what responses have you had? Councillor Joyce: David Miliband last year, very early in my tenure - without the evidence coming before you, I had already formed the conclusion that there were too many agencies involved in trying to deliver the Government's agenda, not coming under one heading. Q333 John Cummings Having accepted your criticisms, what would you suggest to Government to improve the situation? Councillor Joyce: As far as I know, we have suggested that a number of agencies that are now taken through the Government North West - and I believe they are taking more on board - we now have a clear indication on transport issues, housing, planning and regional economic strategy. That appears to be a highly quantified way of taking things forward. It is no use doing it in isolation; we are starting to do it together. If NWDA for example, or the governments in the North West are being asked to do something, they include the other partners in their discussions before they formulate a particular policy. Q334 John Cummings: So would you be wishing, after you have said that, for a committee to make the same representations that you have requested us to make to central government? Councillor Joyce: Yes. Q335 John Cummings Or are things improving? Councillor Joyce: I think that things have improved greatly in the last six months, with our dealings with the Government North West and the Regional Development Agency; and we now have a quarterly meeting with one another present; so we each know what part of the agenda they are going to be responsible for, instead of us all trying to do the same thing. Q336 Chair: Is that a general view? Mr Hawkins, Mr Barnes, do you agree with that? Mr Hawkins: Yes. The only thing I was going to add was that when that was written we were in a particular situation, and things have improved greatly in the last six months. Q337 John Cummings What do you see as the role of the regional co-ordination unit, that is the Department for Communities and Local Government, and how effective is it proving to be? Mr Barnes: The regional co-ordinating unit is now part of DCLG and the Local Government and Regions Division, and essentially acts as the HQ for the nine government offices. It brings us together and provides basic services. It is not their role to generate regional policy; that is the role of other parts within DCLG. Q338 Chair: What is their role, in your understanding? Mr Barnes: It is to co-ordinate Government offices, to provide us with basic services, manage budgets, HR support, business planning, and then interface on behalf of the nine with all the departments; so it is about simplifying the relationships between the nine separate Government offices and the various departments that we serve. Q339 Chair: Is it effective? Mr Barnes: It is effective. There is, as ever, scope for improvement - RCU and building relationships with government departments. We are moving positively forward; and, a bit like colleagues are saying on the ground in the North West, having the right tools. LEAs have been very helpful in creating a tool where a Government office and several departments are working much more collaboratively. Q340 John Cummings: If you were requested to submit evidence today, would that evidence be rather different to the evidence you have already submitted? Councillor Joyce: It possibly would be, because we are very, very pleased about the direction we have been taking since 12 months ago, where we thought we were in a bit of a mess. We are far more advanced now, and it is more understood by the partners in the sub-regional context than ever before. Q341 John Pugh: Every region has at least three spanking new strategies - at least three: regional economic strategy, regional spatial strategy, regional transport strategy. It has all been done in a little bit of a hurry. What efforts have been made to make sure that all these strategies fit neatly on top of one another and are mutually consistent? Mr Barnes: Eighteen months ago the three agencies, that is the RDA, the Assembly and the Government Office, got together with that very question in mind: how do we align a whole range of strategies that were in production? First, we recognised that we needed to focus on a handful of key issues, which were the foundations and the bits that linked across. We have worked continually through since that time. Wherever we can, we have used the same evidence base to underpin the development strategies, and earlier last year we even did joint consultation exercises because, as you quite rightly say, going out with separate strategies confuses people. There is the bit about how we put those together and try to weave the story line and ask intelligent questions of very intelligent people in the region so that we could use it. The testimony in terms of success was probably the joint production of the regional funding allocation documents, which had easily flowed from those work streams, and there was not the need to do a separate piece of work, as we had done early with the RES for the Treasury in support of comprehensive spending reviews. Those are the sorts of mechanisms that we have put in place. The one that is approved, which is the RES, manages to address a lot of the transformational economic issues but is much more spatially aware and sensitive than previous RESs. We have now got to work with the process because we are out at consultation with the RSS to achieve exactly the same with the RSS in the weeks and months ahead. Q342 John Pugh: Would it be unfair to suggest that you can incorporate in the future a greater degree of accountability because although, to be fair, there has been consultation, the general impression might be that a lot of these strategies are hatched by the great and the good, or the usual suspects, depending on how you want to talk about them? I have certainly attended consultation meetings that have had very good presentations from very able people, which left about five minutes at the end for feedback. Councillor Joyce: Indeed. Q343 John Pugh: Do you think there is scope for significant improvement in that direction? Councillor Joyce: That is one of the most important points we have been able to pick up on. What is the point in taking a completed plan out of consultation on a Tuesday afternoon this week, having agreed that next week is the main committee? We do it all in councils; I am used to doing that; consultation means I have spoken to somebody and Monday means we have taken the decision. We have to move away from that. The North West Regional Assembly is responsibility for the RSS. It has reflected the Regional Economic Strategy and its priorities, and because we have worked together with people we believe that the strategies are being interrelated, and that is what we need to do. If you have a plan and I have got a plan, we must have the same direction of travel, looking for the same outcomes. As Keith said, the RFA has proved that we have done a job for allowing the strategies. If you want to look at a practical example of that, where we have worked very well together, it is on our transport plans for the North West of England. Q344 John Pugh: If you look at the regional transport strategy, it is to nobody's great surprise that the greatest per capita spend is in and around Manchester. Many cynics would look at the process as being hatched from within Manchester, and would not be altogether surprised by that. Do you think there are significant weaknesses in the way the regional transport strategy has evolved this time? Mr Scales: As far as the Regional Economic Strategy is concerned, we have made sure that the local transport plans are fully embedded in that; they have 10-year visions with 5-year delivery, and we submitted them recently to the Department for Transport through Government North West on 31 March. As far as it being Manchester-centric, John Pugh, we are in a position where there has been a bidding process - not a very clear bidding process because there are no real schemes in a regional transportation strategy because we do not have guidance on that - but we are searching for poly-centric, not uni-centric, and therefore we are spreading our transportation strategy across the region in the right way. We have to be careful about what we say in terms of the Northern Way being too much of a Manchester/Leeds axis because Merseyside is a gateway and not a cul-de-sac; so we have to make sure that we have our project put forward, but still on a transparent basis - so far as we can see so far. Q345 John Pugh: You seem to be stressing the need for something that will fit within a regional strategy; but is there not a problem here? If a scheme is £5 million or more - and an awful lot of sub-regional schemes are - they may not necessarily score as "must do" regional schemes, and therefore exist in a kind of strange limbo almost indefinitely. I am sure that in Carlisle that must be a crucial point. Very few schemes in Cumbria will have massive cross-regional significance but they may have enormous significance for people in Cumbria and equally Merseyside. Councillor Joyce: Can I answer that directly? Q346 Chair: We would quite like Cumbria to answer. Councillor Joyce: Sorry - it is one we have made as a representation as a regional Assembly. Maggie Mooney: Can I say something about Cumbria? As a district council we do not have statutory responsibility for transport for our communities; the county has that - here you go with the tension in two-tier authorities. Therefore we are consulted and we lobby. Now that we have Carlisle Renaissance - and a big element of that is about movement - transport plus walking and cycling, so we are pulling it all together - we want to have more clout in it, so we are developing a movement strategy for Carlisle. We are seven miles away from Scotland. Of course we go across the region, and other communities do - we realise that - and sometimes we feel hemmed in by Cumbria as a county council, although I know that is another issue. But we feel that sometimes we need to do more than be consulted; we need to be there for our community's sake. We have big physical projects for Carlisle. This is what we want for our infrastructure, and I am pleased to hear from John that it is getting much better. Councillor Joyce: Can I just make one response? The North West Regional Assembly recognised that as one of the faults in the transport plan and the process that came forward. Through Keith, I hope we have made representation - and I do believe he will confirm it - to the Department for Transport that the £5 million ceiling was too low because of the very aspects of local plans that could not be incorporated in it. We think the Department for Transport should have raised that figure. Someone has even suggested that it should be £30 million. I would not suggest that, but it should have been much more than £5 million because if anybody is trying to put a road in, £5 million does not go far at all in this day and age. We thought it was a restriction, and we think that many, many plans could have been incorporated in it. We have made representation to the Department for Transport. Mr Scales: I think Government has now changed the criteria and is saying that we have to find 10 per cent through local sources, which is injecting realism into it, because there are only so many schemes you can do at 5 million or above. If we work within the local transport plan process a lot can be done within that as long as the strategies are properly aligned with the regional economic strategy, the spatial strategy and everything else. I think that there is a case, John Pugh, for an expanded PTE area, both for our PTE and for Manchester to use the Transport for London model, which has worked really well. You can see transport for Merseyside and Greater Manchester joining together. Q347 John Pugh: Would you go so far as to say it would have a distinct funding pot for sub-regional transport schemes? Mr Scales: I think that would work; and then you have local decisions, local solutions to local issues by local people. Mr Barnes: In terms of process, the Regional Transport Strategy is out for consultation at the moment because it is part of the RSS process. On behalf of the Department we prioritised some £5 billion worth of schemes that had been built into the pipeline, and as an Assembly and an RDA we agreed a realistic set of schemes that could be funded, and took those to the Department for Transport. In doing that, we learnt an awful lot about the nature of generation of transport schemes in the region and their true priorities, as opposed to small political priorities; and there was a lot of good debate about how, if it were to be repeated - we have talked about the 5 million threshold - what changes would be really helpful. What came through that was a real sense of leadership particularly amongst the new regional executive, in terms of grabbing hold of a difficult issue. I hear what you say about which schemes were in the framework, but that framework was agreed by all the representatives from the sub-regions in the North West, as well as the RDA. Q348 John Pugh: To be fair, Mr Barnes, they had to agree it pretty quickly, did they not? It is a stage between document and people, and had they said to you at that point, "no, we do not like it; go away and do it again", you would be in serious trouble with the Department for Transport. Mr Scales: We could not say! Q349 Mr Betts: How many significant city regions does the North West have, and what makes those city regions significant; and how important are they for the future of the region as a whole? Councillor Joyce: We have recognised three city regions in the North West of England: Preston and central Lancashire, Greater Manchester, and Merseyside; but outside those areas we do think there are some influences that need to take place. We recognise that away from those three major areas there are the Carlisles, the Crewes, and the Chester area and Lancaster. We are recognising that it is not as clear-cut as people are saying about three city regions. We need both, the city regions and the regional assemblies and RDAs and Government North West to deliver many items across the North West of England. Q350 Mr Hands: I am not familiar with all the population figures of the various cities, but what, for example, would define Preston and central Lancashire as having the potential for being a city region, but other similarly sized large towns in Lancashire not being able to be, for example Blackpool? Councillor Joyce: I will work my figures out and somebody can contradict me, but I chair the Regional Fire and Rescue Management Board and my figures are based on the Fire Authority. In Greater Manchester we have a 2.8 million population; in Lancashire it is 1.2 million; in Cheshire it is just below 1 million; in Merseyside it is about 1.4 million, and all over the Cumbria region it is about 600,000. If we take most of the Preston area it is anything between 500,000 and 1 million. Q351 Mr Hands: Is it purely therefore a matter of population numbers? Councillor Joyce: No, it is communications; it is links with industrial background; it is linked with travel to work - all those issues. It is not purely based on a city; it is about the regional aspect and the sub-regionals around it. That is my opinion. Mr Crawford: Keith started the conversation by reminding us that the North West is a hugely diverse area, as are by definition all large geographical entities. Its distinguishing characteristic in terms of gross value-added - and that is increasingly the indicator of wealth creation - is that it is increasingly dominated by Manchester, which has about half of the gross value-added for the entire North West. Mr Hawkins: It depends which indicator you use, but between 40 and 50. Mr Crawford: Behind that Merseyside, and just behind that Lancashire as a whole. But the question goes to the heart of the matter. All economic growth across the world in developing countries - let me rephrase that. Much is increasingly dominated by city regions, and if you align an arc through the North West, the arc would run through Merseyside, especially the City of Liverpool, through the area around Preston and back into Manchester. The key issue is that private sector capital mobilisation is occurring within that arc, and the simple challenge in the North West, and for that matter in all the regions of the United Kingdom is how you mobilise capital at a faster rate, private capital, than we have been able to do for a generation? Although we are catching up, private capital mobilisation is still not fast enough to close the significant gap between London and the South East and the rest; so the public sector is well over 50 per cent of the regional economy in Merseyside - I do not know the figure for Manchester. That is fine, but clearly, by definition, the long-run challenge, which is probably overdue, is how you get more private capital. Private capital typically migrates into city regional areas. Q352 Mr Betts: At the heart of the matter - and we might find a slight difference of view amongst you on this one - is the issue of what we should be trying to do try and remove and reduce disparities within regions. However, if one of their prime objectives is to get the growth rate of the North West up to something like the South East, then presumably it will be the Manchesters and Liverpools that are responsible for achieving that; and maybe in terms of an axis for growth it is a link between Manchester, Liverpool, Newcastle, Leeds and Sheffield that is going to be the primary force for driving up the growth in the north. What happens in Carlisle, for example, is not going to be that relevant in terms of the total growth rate. Mr Barnes: Equally, we are challenged and charged with seeking to make sure that Carlisle and Cumbria realise their full potential. That is why we are saying that a one-size-fits-all policy does not work in a region like the North West that is as diverse as it is. In percentage terms you are quite right, and the RES and everything else we need to do is about how we release the engines of economic growth in the south of the region but also have sufficient time and the right sort of policies to make sure Carlisle, West Cumbria and Barrow fulfil their potential. Councillor Joyce: One area we are missing at the moment that has not been mentioned - and it would only be fair for me to mention it - is the Crewe area, in the southernmost part of the North West Regional Assembly. Most people who are rail travellers know what Crewe is; it is the gateway to the North of England and the North West of England; so we should be conscious that development needs to take place down there - and coming up from the West Midlands. You have got to be involved with those various partners, and you cannot isolate any one area because the growth has to be taken together. Mr Hawkins: I would not want to get into any beauty contest about which city region is the most important; the only thing I would say - and I suppose I would say this, wouldn't I - is that given the strength of the Greater Manchester economy, I do not think we are going to succeed in closing the economic gap if the Manchester City region does not continue to grow; but it is not the only city region in the North West, and city regions are not only what the North West is. If you look at the way we have operated within the regional Assembly, it has got an executive board of three members of each sub-region. When the issue of Cumbria and its declining GVA came up, there was no dissention even from those members in Manchester in saying Cumbria needed specific support. We recognised that we are part of the North West and that different parts of the North West are going to need different solutions. I do not see, and the elected leaders that I am here representing do not see city regions as being UDI from the rest of the North West. Ms Mooney: Carlisle is on the list to develop - a small city region - along with Chester and Lancaster, and we are working with those two cities within the historical city context, to support each other to get there and put proposals together for small city region status. To some extent we believe we are already a small city region. We are the principal city in Cumbria. We would see ourselves, and so would most of Cumbria, and south-west Scotland, as the principal commercial admin, retail and cultural centre for the sub-region. That, together with Carlisle Renaissance - we believe we can start pushing for city region status for Cumbria. Mr Crawford: It is wholly appropriate that colleagues in parts of the North West will propose and defend the interests of their city regions or localities, and that must be right, but there is a lot we do not know about economic development. What we do know is simple, especially in an economy that is dominated by the public sector, as parts of the North West. Unless private sector capital is mobilised quickly, then the gross value-added advances, the creation of high-value jobs, which the RES and other documents speak about, will not occur. Coming back to the question posed earlier by Mr Hands: what is the nature of government intervention; how do you facilitate private sector growth? The evidence is that, given the scarcity of resources, the North West will be the same as the rest of the UK over the next period of time, through the CSR. There will be a limited amount of public capital going into these areas. It should go to those areas where it is more likely to lead to mobilisation of private capital; and that requires a significant degree of specific investment around productivity drivers from the physical in the form of infrastructure, through to skills drivers, through to mobilisation of things like technology centres built around universities and so on. Again coming back to Mr Betts's question, city regions, almost regardless of what government does - but it can happen faster with particular kinds of government intervention - will be core economic drivers for the United Kingdom as they are for every other developing country. The danger is that one ignores that reality by seeking to diversify and spread resources too thinly across wider areas. However laudable and understandable that is, it will not work. Q353 Mr Betts: The Northern Way is an idea to link city regions together. The Assembly has stated, "the development of concrete projects dealing with trans-regional issues in the Northern Way has probably not been optimal." Most people might think you are quite mellow in your comments. Councillor Joyce: I think that is quite right. Before I came a member of the North West Regional Assembly many years ago I was part of the Trans-Pennine Group, which is about the various transport plans all the way through, and we were hitting brick walls everywhere we went, and we still are. We have not been developing that. Therefore, there has to be far greater clarity on what we want to achieve in the Northern Way. How does it fit into the regional assemblies and into the city regions? It seems to me at the moment that it does not know where it wants to be placed and how it will influence decisions. That is my personal opinion. I think there is a lot more work to be done with the Northern Way. Q354 Mr Betts: It might be a good idea, but how can we get that more effective action and strategic thinking? How can we achieve that? Councillor Joyce: This is a personal comment. Mr Barnes: But it does create an opportunity for the debate and the thinking to take place, which was much more difficult before it was there. You are quite right: now the challenge is for the Northern Way to focus on those handful of critical issues that add value in the three regions it is covering; but it comes back to the debate about the importance of the Manchester/Leeds axis. We need to test that through mechanisms like the Northern Way. Q355 Mr Betts: There is not much sign of it, say, feeding through into future transport policy and plans and programmes. There is not much sign that any of that thinking has been reflected through into what government proposes to do. Mr Barnes: I think it is embryonic, but it is there if you actually look at ----- Q356 Mr Betts: Embryonic - you are still thinking about it. Mr Barnes: Strategic thinking is taking place, yes. Q357 Mr Betts: This is a question in two parts to AGMA, the Mersey Partnership and Carlisle City Council: what do you think central government and the regional agencies can do to produce the performance of your city region; and to the Government Office and the RDA: what have you done and what more could be done to improve their performance? Mr Hawkins: There are a couple of things there. The first thing is a recognition, when they are making policy, that city regions are different possibly from other parts of the UK. It is the point I made before about not having a national policy spread evenly across the whole of the UK, but it needs to be directed in different ways, depending on different circumstances. For example, if you have a particular skills priority in your city region, you ought to be able to focus on that, even if it is slightly different from the national policy of the DfES. I am not quite sure if you are allowed to use words like "bending" but it is about bending funding or reviewing funding to focus on sub-regional priorities, parallel to national priorities as well. There is not enough flexibility in the system at the moment, and that is one thing that could happen. The second thing, which was discussed earlier, is to have more devolution of funding to sub-regions, recognising their own priorities. Ms Mooney: In terms of what we need from the Government, things should be more joined up across the Government departments. There should be flexibility on policies, particularly transport and planning, funding for non RS neighbourhood renewal fund areas and the hinterlands, and particularly support for rural areas. We want clarity from the Government on what is happening to rural areas. Are they going to be the passive beneficiaries of support in city regions, or is this about real active involvement and not just about people living there in terms of having very active and energised businesses in rural areas. We are going through that at the moment in Carlisle. It is about getting an idea of what that support might be for city regions, almost in terms of flexibility, that we could identify as getting more support in terms of regional. That has probably been drawn out in earlier discussions. Mr Crawford: I agree with much of what the first speaker had to say. It depends how radical the Treasury feels like being on fiscal policy. There is little doubt that the fastest mechanism for accelerating economic growth is aggressive use of fiscal policy in one form or another - company taxation or income taxation - but I suspect the Treasury will not bite that particular one. We can get very specific, but we do not do inward investment well enough in the North of England in my view. We have to look very carefully at the impact that has on city regions. Liverpool, Merseyside and Manchester particularly have incredibly powerful international brands. The use of those brands for the purpose of capturing foreign investment, which will be a major mobiliser of economic growth, needs to be looked at very seriously. The point was made about an autonomy and recognition of different requirements - for example the Port of Liverpool represents a major potential for bringing in enormous amounts of capital. An issue I was looking at was what would make the Port of Liverpool grow much faster than it would otherwise grow; and what sort of government interventions would accelerate that? That takes you into the area of planning for example, and differential planning regimes can have an enormous effect on the ability to capture and grow investment in regional economies. Q358 Chair: If there were one thing you wanted for Merseyside from the Government, what would it be? Mr Crawford: Personally, I would like the recreation of enterprise zones. Mr Barnes: I think the question was: what has the Government Office done to strengthen the performance of city regions? Looking at the tools we have, I would focus on our use of the RDF and the FS particularly in Liverpool and Manchester City, in terms of supporting some large and transformational schemes, as well as on the ESDF side, making sure that there is labour with the right skills to fill the jobs as they come on-stream. One of the other major areas that the Government Office has played in are the housing markets, both housing market renewal areas in both conurbations and east Lancashire, and in a smaller scale through the provision of NDCs; so there is a huge amount of transformation and shade in terms of residential stock that has been driven through by Government Office and its partners. The third one is probably around the use of NRF, again to make sure that the social sides of the economy are properly funded; and that whilst we are creating jobs in the centre of Manchester, we are making sure that those jobs are available and accessible to people a couple of miles away who are in greatest need. Councillor Joyce: We supplied evidence to you that we support the Northern Way from the North West Regional Assembly, but really we are looking to Government for a couple of things. First, we are looking for it to give the necessary resources through the CSR07, and second to make sure that it is supported by all Government departments. We had a meeting around the corner a fortnight ago, in Parliament Square, where a number of departments came together. We discussed regional funding and allocations and European funding. This is what we are looking for; we are looking for Government departments to work together so that we are delivering a common objective. We believe that there are strands coming out of Government that are not quite joined up. We believe the future is the city and the regions, and the Government so far has been quite helpful. We think that the changes at DCLG will not prevent the pilots happening, and we would look forward to the pilots happening in the North West Regional Assembly. If you say what should happen with the Northern Way, I think we should have greater involvement with the Government offices, the North West Regional Assembly and the North West development agencies, because they seem a bit distant at the moment. They need to come in, to a slight extent, from the cold. They seem to be working just adjacent to us. Mr Scales: On the Northern Way and access to the Port of Liverpool, we are actually making a bid to the Northern Way funds for that in order to improve freight access. We are working very closely with partners and the new owners of Mersey Docks and Alba Company, which are now Peel. It would help the Committee if I could give you a note on that as a concrete example of something that is happening. Chair: That would be very useful. Q359 Mr Hands: In regard to the comparison with London, it is noticeable that in the North West there does not seem to be much enthusiasm for directly elected mayors. Do you think there could be any enthusiasm for a directly elected city region mayor; and if not, why not? Councillor Joyce: From a personal point of view I do not think there is any. There is one in particular, but there was a resolution to try and elect a mayor in Crewe, and that was defeated heavily. It did not get off the ground in Liverpool, so it does not seem that there is that sense that they want to go anywhere on that particular issue. Second, I do not have any particular opinion on it. I do not know whether others have. I am not trying to duck it; I just do not have an opinion on that. If we were to have an opinion for the North West Regional Assembly we would be quite happy at some stage to place that in writing. I will take the question away and elicit information from others. Mr Hawkins: I will try not to duck it either. It is not only in the North West where there does not seem to be much appetite for elected mayors. The experience within Greater Manchester has been that we have had an association AGMA, which has been operating for twenty years, with some degree of success. I would not pretend it is perfect, but the view of the leaders has been that we should build on that structure for two or three reasons. First, if you can develop city regions without having primary legislation, which you would need for a city region mayor, then that ought to have some attraction in Whitehall. Second, the ten local authorities within Greater Manchester are still going to be the statutory bodies with responsibility for delivering and commissioning services in their area; and the view of the leaders within Greater Manchester has been that they do not want to lose that direct link and democratic accountability between what we develop at city regional level and what will still happen at local authority level, and, given some other local government policies at the moment, more development of neighbourhood consultation. Chair: Thank you all very much. If anything requires further augmentation, do submit additional written material. Witnesses: Ms Jane Henderson, Chief Executive, South West RDA, Mr Alan Clarke, Chief Executive, One North East, and Ms Pam Alexander, Lead RDA Chief Executive, English Regional Development Agencies, Mr David Cragg, Regional Director, West Midlands, and Mr David Hughes, Regional Director, London, Learning and Skills Council, gave evidence. Q360 Chair: As previously, can I encourage you to work co-operatively within your organisations so that we do not get multiple presentations from the same organisation. Mr Cragg: I am David Cragg, Regional Director of the Learning and Skills Council in the West Midlands. Mr Hughes: David Hughes, Regional Director, LSC London. Mr Clarke: Alan Clarke, Chief Executive of One North East. Ms Alexander: Pam Alexander, Chief Executive of SEEDA, the South East Regional Development Agency, and currently the Chair of Chief Executives for six months. Ms Henderson: I am Jane Henderson, the very new Chief Executive of the South West Regional Development Agency. Q361 Chair: Can I start off by asking you what role of your particular organisation is in delivering PSA2, a regional economic performance PSA, and how you fit in to the regional government's structures. Mr Cragg: Clearly, we have a PSA regime which transcends the specific economic development focus, but we would clearly believe that the focus on apprenticeship particularly and adult level 2 and basic schools are the core elements, which are hugely relevant to the broader economic context in which we operate, working not least with our partners in the RDAs through the newly-formed regional skills partnerships. Actually now we are in the third year of regional skills partnerships - so I hope well-established regional skills partnerships! Ms Alexander: As you know, we are regional bodies directly accountable through the Secretary of State for Trade and Industry to Parliament, and also accountable through our individual RDA boards, which are business-led, with representatives across a range of organisations, including local government, the voluntary sector and the private sector. We are scrutinised by the regional assemblies. The Regional Economic Strategy, which is the overarching framework of our work, is agreed with partners across the regions, and focuses on both aspects of the PSA2, investing in success for the economic growth of a UK plc and reducing the gaps between regions by lifting under-performance. We do this through a range of different ways set out in the agreements with our partners across the region, and fundamentally supported by the Regional Economic Strategy, including support for business growth, skills and new enterprise, and physical regeneration and leverage of funding into development of brown-field land and the support for physical community development. Mr Clarke: The three Government departments that signed up to that particular agreement, Treasury, DTI and now the Department of Communities and Local Government - we each have lead role responsibilities as well with respect to a different part of government; so one of these has a lead role with respect to communities and local government; the South East, together with East Midlands, with DTI; and Yorkshire, who are not here today, with Treasury - so that is another way that we interface with the three parts of Government that are signed up to this particular PSA target. Q362 Martin Horwood: First, I would like to say "welcome" to Jane Henderson, because you are Chief Executive of my RDA, so I am interested to hear your views, not least because I suppose you still count as a bit of an outsider at the moment! Ms Henderson: I have been made very welcome indeed. Ms Alexander: We are trying to learn from her new approaches. Q363 Martin Horwood: The RDA Act 1998, states: "RDAs must have regard to the Assembly's views when preparing its economic strategy and must account to the Assembly for the exercise of its functions." How do you think that works in practice? Ms Henderson: It is important to realise the RDAs have two kinds of relationships with regional assemblies: one is the scrutiny relationship which you have described under the Act, but also as a strategic partner, taking into account the fact that the regional assemblies are the regional planning bodies that produce the regional spatial strategy, the regional transport strategy and so on. From the point of view of the scrutiny role, the intention of the Act was that regional assemblies were in a position to ensure that RDAs' activities and strategies linked up properly with other things going on in the region locally. That was the thought behind it, and I am sure it is done slightly differently in every region. As you probably already know, in the South West the Assembly has adopted a scrutiny panel process that involves two public scrutinies every year on strategic issues, which are preceded by an evidence-gathering process with partners. If you ask me to describe how that felt, I am told that it is constructive but not too cosy - which is probably about right. The aim is to keep the RDA on its toes, but also at the same time to contribute to regional knowledge and strategy by increase of knowledge from the process. Q364 Martin Horwood: One of the issues that has been raised in evidence to us already is exactly who the relationship is between, and in particular whether you have a relationship that might tend towards the cosy with for instance the officers of the Assembly as opposed to the quasi-elected members. Do you think that is true? Ms Henderson: I have only been in post two weeks, but in week minus one I went along to a meeting of the regional political leaders of the Regional Assembly with my own chairman, and the dialogue there was very directly with the politicians rather than with the officers. I would say that at least annually, I think twice a year, there is a new arrangement, whereby the Executive of the Regional Assembly will jointly meet with our board. We have one such meeting coming up in June. I would not say it was entirely with the officers. In addition of course the Chief Executive appears in front of the Assembly before plenary four times a year and gives a formal presentation on the work at two of those occasions. Q365 Alison Seabeck: The South West are clearly endeavouring to improve the scrutiny process, and that is a fairly recent development. This is not necessarily directed at you, Jane, but is this a practice that is followed in other RDAs - and perhaps Pam could answer this - or is it horses for courses and do different RDAs have different scrutiny mechanisms in terms of their working with the assemblies? Ms Alexander: There are fundamentals that we all share, so we all work closely at officer level to support the strategies that we are working together on, be it the regional housing board or the regional transport board. We all have a responsibility to account to the plenary of the regional assembly through our chairs, as Jane has suggested. In between those two things, I, for example, always go to the executive committee meeting and report on the activity of the region, and we table the activity report that my board takes at each of its meetings. We have set up a liaison committee with a group of the regional assembly, and officer support, to talk about key areas and to plan future scrutinies in the scrutiny programme that they run through the year. Q366 Alison Seabeck: As a matter of course, would the RDA respond to a scrutiny paper delivered to them from the Assembly? Ms Alexander: Yes, absolutely, and we would be scrutinised on our response as well, in a sense, and it would be expected to be followed through. I could give examples of cases where the scrutinies have produced real improvements in how we have done our business. Q367 Chair: It would be quite helpful if you would drop us a note. Ms Alexander: Certainly, we would be happy to do that. Q368 Chair: Positive examples. Ms Alexander: Certainly. Mr Clarke: From the North East, we did have a referendum as well, so therefore the relationships with the Assembly varied at different stages. It would be true to say that in the first year or two of the RDA it was very adversarial, very much carried out by the political members. It was in the press, and quite hostile, is the truth of the matter. How constructive that was in the end, other people will decide. Then we were all preparing for a referendum in the North East, and we had to prepare for either a "yes" vote or a "no" vote; so quite rightly we worked very closely with the Assembly and Government Office to make plans for plan A or plan B. We have now moved into a different phase of scrutiny which does exactly what you say. It looked back at the last two or three areas that have been scrutinised; consultants have been engaged by the assembly to check on whether we have followed up and pursued all of those recommendations, and we have been held to account literally on this report, with 20 recommendations, and how many we have followed through and which ones have still to be dealt with; how circumstances have moved on. It is also true to say that we have a relationship around regional spatial strategy, housing and transport, where we are looking to align what we are doing. In an area like the North East, where we have such an uplift in economic performance to make, there has to be a balance between people, organisations, politicians, to an extent scrutinising each other - which is obviously healthy - and working together for the benefit of the regional economy. The balance is quite important. Q369 Martin Horwood: This is a linked point. When the scrutiny goes as far as making a formal recommendation, it is unclear to us from the national perspective whether this is consistently applied - whether it is consistently possible for regional assemblies to make formal recommendations to the RDAs and the extent to which those have to be followed. What is your view on that? Have you had formal recommendations from an assembly, and have those been acted on? Ms Alexander: As Alan has just said, all scrutinies, in my experience, would end with recommendations. All of them would be considered by us and be reported back to the Assembly on our response. We would not necessarily always follow the recommendations if we felt we had good reasons for not doing so, but I would be very happy to give examples of the many occasions when they have been very helpful indeed. Q370 Martin Horwood: Perhaps you could give examples of both the ones you have followed and the ones you have not followed. Ms Alexander: Certainly. Q371 Martin Horwood: That would be an interesting comparison. Ms Alexander: There is quite a large library so far, so we could pick some interesting ones across the country for you, which might be helpful. Ms Henderson: Technically or formally the RDAs are only required to take account of the Assembly's comments, but obviously we take them very seriously indeed. I will make a slight confession on behalf of my RDA: I understand that the Assembly picked us up on the fact that we did not formally take some of the recommendations through the board on separate papers, rather than through the Chief Executive's report, and that is being corrected. In fact, we have a scrutiny protocol with the Assembly, which is being reviewed externally; and there is to be a discussion about that as part of our joint meeting with the Assembly Executive in June. Q372 Martin Horwood: If these formal mechanisms for scrutiny and accountability vary across the country - which is an odd idea anyway because I can see there is an argument for some things to be regionally variable, but accountability seems to me to be a universal concept - does that mean that some RDAs are less accountable to the public than others? Ms Alexander: I do not think on this issue it varies in principle at all. I think we are all scrutinised with a programme that is agreed ahead, which is taken through our boards, and where the response is given back and followed through. We may have slightly different board procedures, but I do not think it goes beyond that. Q373 Martin Horwood: So you are confident we could not find a regional development agency that ----- Ms Alexander: I am pretty confident you would not find one that had not got scrutiny and took formal responses to; I would be surprised to find that was the case. Ms Henderson: I suppose it is fair to say the regional assemblies all have different approaches as well, so there is going to be some diversity on how that particular objective is secured. Ms Alexander: I would be very happy to look for you and let you know. Mr Clarke: It also varies significantly depending on which subject you are looking at. When the Assembly looked at science and innovation, part of that was an educational process, because I, as the Chief Executive, struggled to keep up with some of the nanotechnology and renewable energy and so on; so if you are spending money on investment in science that is a different scrutiny process to looking at what we are doing in relation to tourism or support for small businesses. There is an element of an understanding of what regional development agencies are doing in certain key technical areas, as well as the areas that would be more easily understood by us as well, to be frank, on occasions. Q374 John Pugh: I want to ask you questions with regard to your mission. Business often complains - the British Chambers of Commerce have told us that you cannot perform effectively as strategic bodies because you are too involved in delivering services like Business Link and so on; and West Midlands complained that there was not sufficient consultation over the formulation of a strategy for the automotive manufacturing industry. Is not part of the problem that the mission of the RDAs is not always as clear as it might be? Mr Clarke: First of all, the extra responsibilities that the regional development agencies have been given by government have been on the basis of end autonomy. They were not there in the beginning, in 1999; they have been added since then, on the basis that there is a view in those key areas that were core business to start with, a reasonable job has been done, and some extra responsibilities can be added. It is important to separate having strategic responsibility for something and actually delivering it; and this is where the chambers of commerce are mixing two things, because in relation to review of business support and business links, in most cases the regional development agencies are procuring a contract for a region and the delivery of a service by others, and on occasions it may well be that the chamber of commerce wishes to bid for such contracts, and is holding a strategic role to make sure that the quality of that business service is better than it was in the past and delivers more businesses than had been created previously, particularly in regions where the business start-up rate is very low. Others areas like tourism, like rural, have all been added as extra responsibilities, and the principle of that is to avoid fragmentation and to give, at a strategic level, greater leverage over the key areas where productivity can be increased; but it does not mean, and nor could it, that the agency can provide and deliver all of those services. I accept the point that because we are involved in a wide range of activities, there is always this balance between focus and prioritisation, and having a balanced approach across a range of areas in order to move an economy forward in quite complicated regions. Q375 John Pugh: On the issue of focus and prioritisation, you can either prioritise doing something about the most deprived areas, or, as business possibly would better support - you could do something about rewarding obvious winners and encouraging them to grow more. How do you deal with a dilemma like that? Mr Clarke: First of all, it is a dilemma, and it is not easy. I would be ducking the issue if I said otherwise. It probably depends which region you are talking about because some regions are obviously far more economically ------ Q376 John Pugh: Some regions are winners already. Mr Clarke: That is an issue. If I can speak from a north-eastern point of view in relation to this question, we need to do something different over the next 10 or 15 years than what we have done over the last twenty or thirty, because despite all of the efforts that have been made by all of the key agencies and the private sector, the gap has increased rather than reduced. Q377 John Pugh: The gap between as well as within the regions. Mr Clarke: In terms of economic performance. Therefore, the emphasis will be slightly more in terms of building on opportunity where investment will lead to greater private sector investment and economic uplift in performance, while not forgetting areas that have needs as well, and trying to link those areas into new areas of growth where jobs are being created and so on, and that is about transport, skills and people on occasions having to travel a bit further to jobs, if that is what is required. Q378 Martin Horwood: Do you not think there might be a fundamental problem with the whole concept of regional development agencies in one sense? The Government has been pouring money into your RDA in order to catch up with Pam's and Jane's, but they have simultaneously been pouring money into Pam's and Jane's in order to maintain the gap! Ms Alexander: I do not think we feel as though we are having money poured into us, but I take the point. I think that is an issue that we will obviously individually address as well. I think the point that I would say has developed very strongly over the last six years is the focus that John Pugh asked about because the regional economic strategies that are developing now - and most of us are involved in reviewing them at the moment - have a much clearer perspective on that, possibly because we do have a more comprehensive toolbox at our disposal. We have developed partnerships across our region which are about investing in opportunity but also about recognising which aspects of those opportunities are going to deliver the most. In the South East we have expressed our view that the South East is the engine of the UK economy and needs supporting too. There are undoubtedly challenges there and the balance between investing in success and investing in areas that are under-performing in the South East, in many cases under-performing the national average as well as the South East average, is part of the focus of our regional economic strategy. Q379 Martin Horwood: But only part of it! RDAs have taken over responsibility for things like tourism, which is the whole region; so would you not regard it as a bit of a failure if the North East caught up with you? Ms Alexander: No, not at all because I have always taken the view that you grow the cake and then everyone can have larger slices of it. That is, to me, what this is about; it is about investing in growing the whole UK economy and making sure that the connections between bits of it, as Alan said, are improved so that where you are creating a good return on investment because in a sense it is part of a low-hanging fruit, that is connected into the areas of deprivation in ways that make links. For example, we won the Diamond Synchrotron for the Harwell Science and Innovation Campus, and we are keen to turn that into a really exciting new science campus, but also to link it back with Daresbury, the competitor in the North West, so that we are creating synergies across the two regions and all of the supply chains that will link to the businesses involved. I do not think it has to be either/or and I do not think it will be successful if it is either/or. Q380 John Pugh: Can we deal with another central dilemma. There is a buzzword going around RDAs now talking about "transformational projects" that are going to be very big and very obvious, things like a big museum and a waterfront and things like that. There is obviously an attraction in an RDA being associated with a transformational project rather than being associated with lots of very, very worthy connections with engineering firms that actually may produce greater jobs. Are you aware of that dilemma, because to some extent you need to prove yourself, do you not; you have to prove you have done something and are associated with something that is transformational - maybe not in a massive economic sense, but in an entirely visual way that is attractive? Mr Clarke: From my perspective, transformational does not need to be one big major physical project in one particular location. Q381 John Pugh: It seems defined that way. Mr Clarke: Well, half of our budget is capital - £1,280 million - and that will be spent on a whole range of in some cases very large physical projects, and in other cases the little bit of gap funding that is required to enable something to happen in a rural area that would be very modest, or to fund in the North East broadband infrastructure in rural areas in order to help rural-based businesses. I think transformational is not always big and is not always physical. A transformational rural market towns initiative could help rural areas across the whole of a region or a number of regions, and the concept could be sold as a big, exciting, transformational project, but it need not be all located in one place. Other things, like big tourist attractions, do tend to be focused in one place. Some of the science investment we are doing tends to be located in that way. But if you turn it the other way round, if we are meant to be helping to transform our regions, if we did go for real fragmentation and lowest common denominator and small amounts of money just spread all over on different areas and on different policy interventions, I doubt whether we would then be making the transformation we would need to make. Q382 John Pugh: If you transformed the skyline but did not transform the economy as a result, that would be not a success. Ms Alexander: Absolutely. For me the test of a transformational budget is if we can contribute something which no other partner can contribute which will generate a critical mass pump-priming that economy. For example, I am involved in the Turner Century Margate, not because I particularly think it is valuable for the agency to be involved in an arts project, but because that may create the critical mass to transform the creative economy of that part of Thanet. Were that to be the case, it would spread out to the rest of east Kent, which is one of the poorest parts of the region. Without CTRL we might as well get up and go home on that one; so transformational projects are about physical infrastructure as well as about buildings. Ms Henderson: Can I add on that, the Combined Universities in Cornwall are all award-winning buildings, but it is about changing aspirations, changing the fortune of young people in Cornwall, changing the perception of the county and helping businesses to grow with the access to intellectual capital that the university provides. That is undoubtedly transformation. It is physical and it is people and it is skills. Q383 John Cummings: These questions are directed at the Learning and Skills Council representative. Can you tell us the reasons behind your decision to restructure and formalise the role of regional boards? Mr Cragg: I would say that it was very, very clear - and we did undertake a major consultation exercise both with the whole of the provider network but also with key stakeholders - that on the one hand we could perform a great deal better locally by being better aligned with local area agreements and with strategic interventions on the ground; but also we could streamline our operations very considerably. We were doing things in my region six times over which could be done once, in terms of support functions. If I look to our colleagues in the RDAs, it would be fair to say there were far too many fragmented individual initiatives vis-à-vis skills and employment which were much better planned and co-ordinated at a regional level. We are already seeing significant benefit from that. I think we will be, on the ground, much more expert, less preoccupied with process and bureaucracy in our relationships with colleges and providers. I think we will be more local, through the creation of our local partnership teams, which are aligned much more with local communities and in particular with local authorities so that we can play our full part in local area agreements. Equally, on skills, you will see critical mass of investment and much, much better alignment with the major economic interventions being planned at a regional level. Q384 John Cummings: Can you tell the Committee what impact the restructuring has had on your work with local authorities, because you have just said it appears now that everything that was not ticketyboo is ticketyboo now! Mr Cragg: I would not say, to use your words, that everything is ticketyboo at all. I would say, however, what you should be able to see is that, for example, on 14 to 19 we have a much closer alignment with all the reforms in that territory. On the block 4 activities, the so-called economic development and regeneration activities, I think you are going to see, again, much, much closer alignment because we will have a flatter, more professional and more expert cadre of people operating at a local level. Let me give you an illustration, if I may. I would draw from my own experience in a very large city, in that I am both the vice-chair of the local strategic partnership and I chair the programme board which oversees the whole of neighbourhood renewal and the whole planning of the local area agreement. We have arrived at that position not through some kind of position we hold as of right, but because of the credibility we have and the contribution we are making to neighbourhood renewal and regeneration within the locality. Q385 John Cummings: How does it match with the "maximising of localness to meet employer needs", which you advocate yourselves in your memorandum? Mr Cragg: I would say that that is entirely consistent. As I say, our planning on skills is moving more and more to a regional level, whereas our delivery on learning and skills is shifting more and more to a sharp local focus, so you get the right balance between strategic co‑ordination across the region, looking at critical sector skills shortages and gaps, but then playing a much more significant role in shifting and changing the mix and balance of provision locally, and I hope increasingly integrating interventions on employment, especially in the most deprived areas, and skills, working in partnership with local authority partners and others on the ground. Q386 John Cummings: Has what you have told this Committee been verified by independent auditors, because obviously you never hear a fishmonger shouting "rotten fish"! Mr Cragg: Well, we are, through all the normal processes and procedures, clearly accountable to government through scrutiny ----- Q387 John Cummings: No, I know whom you are responsible to, but who would verify what you have said this afternoon to this Committee? Is it tabulated anywhere? Is it audited? Has it been signed off? Mr Cragg: The National Audit Office oversees all the work we do and would look at value-for-money issues, at the delivery of critical initiatives; and of course we are, if you extend this - the other aspect of this work which relates to the conversations you were having with our RDA colleagues earlier - our local plans and increasingly our regional plans are, by definition, approved from a statutory point of view by RDAs. Increasingly, that process and the work around regional skills partnerships links us in closely to assemblies at a regional level. Q388 Mr Hands: In a very general sense in your experience, and the LSC experience more widely, how do you see local and regional government working together? What do you see as the pros and cons and what could be improved from your perspective? Mr Hughes: The London perspective is that with 32 boroughs the key thing is to get coherence. We have to serve on the one hand employers and on the other hand learners, and try, and to try and get some coherence across 32 boroughs requires a regional approach as well as a sub-regional approach. Therefore, we are working with our RDA colleagues in London around an integrated employment skills offer to employers that brings together all of the business support under the Business Link brand, with the skills delivery and training in the workplace. We are also embedding that in the local area agreements. A good example of that is in relation to the Croydon local economic growth initiative bid, which is a joint bid between a number of local partners, co-ordinated through the local area agreement, the LSC is in there with Croydon College, thinking about how we deliver to the SMEs in Croydon to make sure their training needs are met, alongside the skills needs of local residents in Croydon. There is an enormous amount of work going on at all levels. Our restructuring allows us uniquely to work at whatever geographical level we need to across the country, whether it be regional or national, whether it be local, whether it be at borough level or below borough level. We are putting senior staff in with real expertise about the locality, about employers and learners and about the partnerships and collaboration you need to meet those needs. Q389 Mr Betts: The Mayor for London said that the Learning Skills Councils for London should be accountable to the GLA. Do you agree with that? Mr Hughes: He has said that, has he not? He has also said there has been an agreement reached which, unfortunately, we cannot talk about because it is not in the public domain at the moment - which is a shame actually! We have always said that the elected Mayor of London has to have a strategic input into the LSC and what we do. He already does have through the London Development Agency. As David said, we pass our plans through regional skills partnerships; they are approved by the RDAs, and we talk with the Mayor and his office on a regular basis; so that strategic input is already there. There is strong agreement about the needs of London that Ken Livingstone goes around telling people. They are about "worklessness" and they are about high-level skills, and you cannot disassociate the two. We have a high-skill economy, but we have some of the worst "worklessness" figures and some of the highest pockets of deprivation in the country. Q390 Mr Betts: The jury is out on that one until somebody makes a decision. Mr Hughes: Our position is very clear. We have always said that an elected Mayor of London needs to have a relationship with the LSC. It needs to be a strategic relationship. Q391 Mr Betts: He has a specific relationship in mind, though, does he not, which perhaps you are not prepared to sign up to at this stage? Mr Hughes: No. The position we are taking is that we do not think taking the LSC in London out of the national body and putting it into the Mayor's family is necessary. Q392 Mr Betts: Moving to city regions, can you give us your views about whether they might be a good thing if they develop? Again, should the functions which are currently performed by the LSC - maybe at regional level, maybe at local level - be subsumed into the government structures of city regions? Mr Cragg: First of all, I would say that we are enormously enthusiastic about the potential for city regions. David has already said that, and I think we have to operate at a whole variety of different levels, and in particular, if I look from my West Midlands experience, a city region approach makes total sense. If you look at the coherence of the conurbation from Wolverhampton through to Coventry, and the flexibility and mobility potentially in the labour market, and the potential employment growth, then for us to be working within narrow and unhelpful boundaries within that conurbation does not work. With total unanimity, we have led the work on skills and employment from day one in the city region proposal. I was very pleased to present the proposals for an integrated employment and skills strategy to David Miliband when we went as a West Midlands delegation. We have arrived also at what we think is a very powerful vehicle for enhanced mutual accountability as well as our accountability being very clearly defined within that through a new executive board, on which the chair of the regional LSC board will sit alongside the leaders of the seven, now to be eight, metropolitan boroughs - because Telford has come into the process. Below that, at executive and sub-board level, I expect to continue to lead that work. I believe that within those arrangements, just as we have got statutory accountabilities through the RDA, we can have a very clear agreement between ourselves and the collective of local authorities to secure exactly the accountability they are securing. Whether that means you transfer the executive function is highly questionable, and I would think the two things become very confused. Q393 Mr Betts: What you are saying is you are quite prepared to become part of an executive board in the West Midlands in that case, along with local authority leaders; but actually, if the decision goes against you in terms of a majority of the board want to do one thing, you still keep your power to behave as an LSC and do exactly as you want. Mr Cragg: It does seem to me from a legal point of view that we have statutory powers and unless somebody removes them, those remain. Q394 Mr Betts: I am asking whether it might be a good idea. I just come back to the Regional Assemblies Bill. Some of us commented on that at the time. While we were looking at a different form of devolution then - city regions on the agenda, and RDAs were on the agenda a couple of years ago - there was not one single power from the LSC or the Department for Education that they were prepared to give to the regional assemblies - not one single power in the whole of that legislation. They were prepared to be consulted about things and discuss things and be involved, but not actually give up anything. Is that not still the same position? Mr Cragg: No, I do not think it is the position. I think that the position we have arrived at in the city region prospectus, for example, is that we would agree joint investment strategies. We have committed in the West Midlands city region an investment programme in the first year alone of £75 million to meet commonly agreed and jointly agreed objectives. Q395 Alison Seabeck: This is partly on the point that Mr Betts made about lack of involvement in the Regional Assemblies Bill, but it also ties in to concerns that have been raised elsewhere about what is a city region. You can see a logic for a city region and how it would develop and support the surrounding area in somewhere like Leeds/Manchester, and you can see the hinterland around that. In the South West where we have Cornwall to one end and Bristol, Exeter, Swindon and perhaps Plymouth - Plymouth is definitely there - I am just not so sure, and would welcome your thoughts on it, as to whether the city region approach is right for an area of the size of the South West, which is so peripheral to other parts of the UK. Do you think that will work? Ms Alexander: I am sure my colleagues will want to come in on this as well. I understand the debate; we are talking about city regions or within regions, not either/or. You are right: Bristol is a core city. It is huge economically in terms of housing markets and its traffic, which is way beyond the city council's boundaries; and one needs to look at transport and special planning in a much broader context. I could argue, very controversially, that Plymouth has a city region as well which stretches into Cornwall, but ----- Q396 Alison Seabeck: Bits of Cornwall. Ms Henderson: As you rightly say, there are then issues about rural issues, about connectivity to other major towns, many of which were covered in our Way Ahead strategy for delivering on urban growth and prosperity within the region, which the city region does not really capture or solve; but that does not mean that it could not be a very useful concept in Bristol and possibly elsewhere. Q397 Alison Seabeck: There are folk out there saying that it does not necessarily have to be built around a conurbation; could you have a city region that was, say, Cornwall - or a region that was Cornwall or a growth area that was Cornwall? I am not sure you can do that, but do you have a view? Ms Henderson: I think we have identified key Cornish towns as equivalent to - not a key city region but certainly a key urban area for development. I suppose the similarity with a conventional city region is that you are looking at the contribution of the different parts of that urban zone. You are looking at where the economy needs developing, where the houses need to go, and the transport interconnectivity; so there is a similarity. It is about choosing an economically sensible place to look at in order to make investment plans and strategic plans for the future. I would broaden the concept. Q398 Martin Horwood: I want to ask about the relative powers of bodies in the future. Incidentally, on the LSC's powers the RDA submission says you want to take over their expenditure, along with - a short list, including English Partnerships, Job Centre Plus and even rail expenditure; so you are clearly looking for more power for the RDAs. You say that the powers of the assemblies ought to be reviewed, so what is the future balance? Ms Alexander: Can I come in on the evidence, because I think what we were talking about was regional funding allocations encompassing those areas of spend, which is not quite the same. We do feel the regional funding allocations have been a very useful step forward, but we do think they could usefully be extended and the decision-making devolved, so I just wanted to correct that perception. Mr Clarke: In relation to the regional assembly, having had a "no" vote in the North East, bearing in mind a lot of these different elements and organisations within regions were established with ultimately the aim of having an elected regional assembly, then it is a natural thing to review the various elements afterwards. With respect to regional assemblies, they have since had a housing responsibility added to them. The emergence of city region working has obviously raised questions about what is appropriate to make decisions around planning and transport and so on, so it is really a natural thing to do. Q399 Martin Horwood: We obviously share that or we would not be holding this review now, but what is your recommendation? Can you give us any direction as to what we should recommend in the future for these bodies? Mr Clarke: I think that now that housing has been added as an extra responsibility, and regional assemblies are beavering away with regional spatial strategies with a transport element - and in the North East we have recently been through an examination in public, which we gave evidence at - and that the spatial strategy is aligned with the regional economic strategy, it would be crazy to derail that now because we have got a series of strategic plans and then through the regional funding allocations some spending - admittedly not big spending but a start - all aligned and moving in one direction. I would have said we should let that take its course. But there will be very different circumstances in different regions. In some regions the regional spatial strategy and the regional economic strategy is not as well aligned and there will be different views. This is an area where you do have to look at each region on its merits and look at the different statutory plans and strategies --- Q400 Martin Horwood: You are saying in the North East ----- Mr Clarke: In the North East it does, and therefore I think we are better off making it work now and getting on with it. We have got more functions at the regional level than we have had previously. Ms Alexander: In our evidence we were referring to ways in which the scrutiny might be extended. For example, we suggested one could link regional ministers into this scrutiny accountability proposals or possibly regional select committees in order to accept the fact that assemblies are not elected, and therefore identify the scrutinies that would be appropriate for the future. I do entirely endorse Alan's view that we have made some really great strides in terms of aligning strategies over the last couple of years, and there is a lot to be lost were those to be departed from. Q401 Chair: You suggested that ministers should have regional portfolios. How do you think that would relate to their existing responsibilities, and what do you see as the specific additional benefits; and how do you think Parliament should strengthen the regional boards? Mr Clarke: The first thing to say is, we suggested this in the evidence really as a basis for discussion, so I would not come here and say we have a ready-made solution. I think it would be rather arrogant of us to suggest to government that this is how it should work. These sorts of ideas have operated in the past. Until fairly recently the Deputy Prime Minister had another responsibility as Minister for the North, which related to the Northern Way, and we have had ministers in the past that have had specific geographical responsibilities as well as their portfolio. At the very least, if they have some feel for the issues within an area outside of their own constituency and can act as an ambassador and spokesperson for some of those issues and both influence thinking within government and play back into the geographical area some high-level thinking that is going on within government, which is different from a constituency MP's role, I think that would be a positive step forward that would raise the profile of the regions within government and vice versa. Q402 Chair: Does the Learning and Skills Council have a view on that? Mr Cragg: We would say first of all that the changes we are making at the moment, which gives much more devolved authority to regional boards, will assist us in aligning much better with our colleagues in RDAs and, for that matter, other agencies. I think it is worth - if I gave you as subjective a view as I possibly could - reflecting on some of the powers which sit in government offices and those which sit within RDAs. If you look at the whole territory and regeneration and then match that across, or look at the mismatch with how neighbourhood renewal funds are managed, you would question whether there is an effective alignment given that frequently, if I look in my region, we have six regeneration zones which are quite consciously targeting the most deprived and disadvantaged neighbourhoods and linking where possible need in those neighbourhoods to opportunity for employment and economic growth. You have then overlaid on that a whole set of other initiatives, in particular through neighbourhood renewal. I am in many senses very enthusiastic about what is possible now in neighbourhood renewal, but in terms of the bureaucracy and the overlap and duplication of bureaucracy, you would ask yourselves questions about that. It is also well worth the Committee reflecting on the overall management arrangements for European structural funds in the new arrangements. This is again from the point of view of Objective 2 in particular, which has worked very, very well in the West Midlands but you do have to ask questions about management arrangements sitting in a government office for this particular funding source and sitting in the RDA for another. Q403 Lyn Brown: At what level do you think neighbourhood renewal funds should be managed at? Mr Cragg: Very Much at a local level, and for that matter, from my experience, where we are really targeting the most disadvantaged communities, right down at the community level. It is the administration of the funds which is the point I am trying to make, because if you view this from the point of view of the voluntary and community sector, and people who are at the receiving end, there is a whole pepper-pot impression: you have new deals for communities over here, you have intervention from neighbourhood renewal over here, you have got a regeneration zone supported by the RDA; and the funding and planning regimes are very, very hard to align. Lyn Brown: It is certainly not my experience, but thank you for that. Chair: Thank you all very much indeed. If there is something you wanted to add which you did not have a chance to add, we would always welcome further written submissions. |