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Westminster Hall

Wednesday 7 February 2007

[Frank Cook in the Chair]

Regional Development Agencies

Motion made, and Question proposed, That the sitting be now adjourned.—[Jonathan Shaw.]

9.30 am

Mr. Tobias Ellwood (Bournemouth, East) (Con): It is a delight to be in the Chamber speaking on this subject. I extend my thanks and gratitude to Mr. Speaker for selecting the subject of regional development agencies today.

This is an interesting subject, and as RDAs have been in existence for a number of years, it is timely not only to take stock of their performance, but to offer the Government an opportunity to hear about the changes that might be implemented in the near future.

The regional political landscape has changed significantly in the past eight years. We have seen the evolution of the Government offices for the regions and the RDAs, and the growth of the dreaded regional assemblies. I shall do my best not to wander down that road and talk too much about assemblies, but those bodies are undemocratic, unaccountable and unrepresentative. Unfortunately, when talking about RDAs, it can be difficult to dissociate them from regional assemblies, because they are expected to work so closely together.

In preparing for the debate and in speaking to colleagues in local government and in businesses throughout the south-west, a constituency of which I am honoured to represent, it was interesting to find out how little people know about the role of RDAs. That is not to say that they are necessarily in favour of them or against them, but I was surprised by the level of ignorance. It is surprising, considering that RDAs were based originally on the 1997 White Paper, “Building Partnerships for Prosperity: Sustainable Growth, Competitiveness and Employment in the English Regions”, which was followed by the Regional Development Agencies Act 1998.

Although the debate is entitled “Regional Development Agencies”, I shall focus on concerns in the south-west. Other hon. and right hon. Members will want to pitch in to discuss their corner of the world. RDAs have a common mission statement, no matter where they are:

The south-west has added to the statement that its mission is

It has three simple objectives:

It is useful to take stock of how the regions are faring. Conveniently, the Department of Trade and
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Industry published RDA output results only last week. The data show the progress of RDAs between April and September last year.

Andrew George (St. Ives) (LD): The hon. Gentleman may be surprised to hear that our constituencies are in the same Government zone; I represent west Cornwall and the Isles of Scilly. He keeps referring to regions, but could not he refer to them as Government zones? “Regions” implies internal integrity and a community of interest, and although we all love Bournemouth and Cornwall, I am not sure that Cornwall feels any more association with Bournemouth than it does with Bradford, Basingstoke or anywhere else.

Mr. Ellwood: I am grateful for that intervention. The hon. Gentleman illustrates one drawback of regional government: what happens in one neck of the woods does not necessarily apply to another. Whether the issues in his constituency compare with those in Bournemouth, they are different and perhaps that is one pitfall of regional government; one size does not fit all.

Looking at the core output targets that the DTI has imposed on the RDAs, and looking back at some of their achievements, we see that four RDAs throughout England have achieved less than half their minimum annual employment creation targets. Two RDAs achieved less than half their minimum annual employment support targets, and two RDAs achieved less than half their minimum annual business creation targets. Only one RDA achieved more than half its minimum annual public and private generation infrastructure investment levered target. I do not even know what that target is, but the fact that it is listed as a target and we are debating it shows that it is obviously of concern to someone.

Somebody has produced those targets, but I am not sure how many people in Bournemouth or in Cornwall are aware of the amount of money that has been put into those organisations, or indeed what they are supposed to achieve.

Mr. David Heathcoat-Amory (Wells) (Con): In support of that observation, is my hon. Friend aware that when the South West of England Regional Development Agency bought the Morlands site at Glastonbury, it turned down applications by local businesses to move to the park on the ground that they were not high-tech enough, even though one firm made automotive parts in a very competitive environment? Does not that completely undermine the claim of regional development agencies to support local enterprise and to boost local employment?

Mr. Ellwood: My right hon. Friend makes a valid point and illustrates one pitfall. We should promote certain unique aspects of the south-west, but the problem is that one blueprint, written centrally, has been imposed across the board. Where initiatives are taking place in the south-west, they should be promoted, and I should be curious to know who made the decision not to support my right hon. Friend’s concerns.

Returning to the stock-check of the regions, we see that business employment fell between 1998 and 2005 in the north-east, north-west, west midlands and London,
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despite RDAs spending £5.5 billion in those five regions. In five northern regions, the north-east, north-west, Yorkshire and the Humber, the east midlands and the west midlands—no net change whatever was measured in business employment, again despite £5 billion being spent by the respective RDAs. I could go on illustrating other targets that have not been met.

We could say that, had the money not been put in, the measurements would have been even lower than those I have just illustrated. Astonishing sums of money are being spent, however, and are the Government, local government, businesses, stakeholders and all those interested in how the money is spent able to scrutinise where it goes?

If we consider the range of stakeholders in RDAs, we see that there is a blurring and a dilution of RDA accountability. The Government are a stakeholder, but myriad Departments—not only the DTI, but the Department for Culture, Media and Sport and even the Foreign and Commonwealth Office—give money to various RDAs. Perhaps the Minister will enlighten us as to how they account for the money,

The Government offices for the regions, in my case the Government office for the south-west, are other bodies whose decision-making local government and MPs find difficult to influence. The regional assemblies influence the role of RDAs and I mentioned how unaccountable the assemblies are. I have attended regional assembly meetings and I have found them very unproductive. A number of councillors from throughout a region are brought together under one roof, they often do not know each other, they lack knowledge of the subjects under discussion and decisions often go through on the nod without a full appreciation of their scale.

Mr. Anthony Steen (Totnes) (Con): Is not the truth about regional assemblies that they are a jolly good day out? Councillors enjoy a Thermos and a sandwich all together, they have a chat and they cost the council tax payer £2 million or £3 million a year. Is not that a good idea?

Mr. Ellwood: My hon. Friend makes a very valid point. I did not have such a good day out as he suggests. To me, it seemed like a huge talking shop and I would like such regional bodies to be disbanded and power to be returned to a more local level where decision making is more manageable.

The accountability of RDAs is important and I draw a line between my view of regional assemblies and RDAs. The jury is still out as to the contribution that they can provide to regions. I would like the Minister to explain how they can become more accountable—I really do question that. We had a meeting in the south-west, at which my hon. Friend the Member for Totnes (Mr. Steen) was present, with representatives of the RDA for the south-west and it was very productive, but it was acknowledged that there is little accountability. It was also acknowledged that we are not able to fight the Government and press our case in a unified manner, which is something that we decided to try to rectify. It is very difficult, however, when there
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is no formal structure other than simply saying, “Let’s have a gathering of south-west MPs with members of the RDA.”

Since 2002, all RDAs have received their money from a single budget, but that comes from several sources to which I have alluded: the DTI; the Office of the Deputy Prime Minister, as it formerly was; the Department for Education and Skills; and the Department for Culture, Media and Sport. Once allocated, it is available for the RDAs to spend as they see fit, unless they want to pay for something that costs more than £10 million, in which case they need to get approval from the Government.

I am pleased to say that we live in a unique and beautiful area in the south-west. We are the most popular region in Britain for tourism, with 26 million visitors a year, and we are the largest region, with a population of more than 6 million. Our economy is worth £18 million a year and we have 171,000 businesses. It is the most rural region in England, and 25 per cent. of our businesses are involved in the aerospace sector. Unemployment is well below the national average. That is a unique set of data, but I am afraid that if we look at the objectives, plans and strategies of the RDA, we find that they are far too similar to those of the eight other RDAs in the country. For me, that shows exactly the drawbacks that we face with the whole RDA structure. We are duplicating initiatives and priorities.

How can it be, for example, that eight out of the nine regions labelled biotechnology or health sciences as priority areas? Where does that leave us when we are trying to compete in a global market with the growth of places like India, China and so forth, when eight out of nine of our regions are all putting their hands up and saying, “Choose me”? That is not a unified approach, it is not working together and it is not cohesive. The regional economic strategies are also far too similar with no recognition that certain areas of the country will focus on some subjects and other areas will focus on others. We should be complementing each other, not competing against each other on the scale that we are at the moment.

Speaking to local government, representatives of business and MPs in the south-west, I find that there is a single priority for our region: transport. We have one of the most appalling public transport systems in the country and one of the most appalling road systems. If we had any large-scale sums of funding to invest, the unanimous opinion is that we would invest it in our road structures to help businesses. Of course, there are other initiatives and individual cases that we would like to continue promoting, but in general it is the lack of transport infrastructure that prevents businesses from developing and prospering in the south-west. I have a problem with the regional development agency’s position because it is prevented from spending money, whether it is European or UK funding, to help key hubs, ports or businesses to expand their footprint.

I question the Government’s strategy in the south-west, and I know that the problems I have with it are reflected across the country. In the south-west, targets have been placed on us to build a phenomenal number of houses, which has followed on from the various reports relating to the Barker review. Houses are being built, and there is then an aim to place businesses in the
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area as well, but no consideration is given to infrastructure. I mentioned that unemployment is low. We would like businesses to grow, but the order in which we are doing things and the structure that we are pushing forward makes no sense whatever.

The cost to the south-west is phenomenal. The cost of RDAs in the whole of Britain has increased during the past five years from £81 million to £194 million a year. The average cost of regional government offices has gone up from £95 million to £132 million and the average cost of regional assemblies has risen from £5 million to £17 million. To put it another way, we are spending more than £1 million a day on regional government. That is a huge amount of money considering what we are trying to do or our current achievements.

I question the caveats that are placed on the RDAs. Why do they not have the freedoms to exploit the challenges unique to the individual areas? I mentioned the European funding that comes through, and there are structural programmes. The Isles of Scilly is one of the beneficiaries of that funding; I believe that my hon. Friend the Member for Totnes has some comments to make on it. There is objective 1, 2 and 3 funding, which comprise the various scales of European funding, but it all comes with caveats. Countries such as the Czech Republic are free to spend the money as they like because they do not have to deal with such caveats, but we have them in the UK because the European Union feels that the money should be ring-fenced, and that the UK Government should come forward with money for certain projects.

I worry about the duplication, overlap and confusion among the myriad organisations that exist. Myriad bodies have been created in relation to the RDAs, or were already in existence, such as: Equality South West; an organisation called RISE, which is the voice for south-west social enterprise; Sustainability South West; www.oursouthwest.com, which provides news, information and environmental data; Culture South West; Beacon South West; Business Link; Expert Solutions South West; the Federation of Small Businesses, with which we are all familiar; the Institute of Directors; Dorset Business; the various chambers of commerce and industry; UK Trade and Investment; the Small Business Service; the South West Ventures Fund; Foresight; the Defence Diversification Agency; EUREKA; Gate2Growth; www.innovation.gov.uk; the innovation relay centre; LINK; and “Make Your Mark—start talking ideas”. I have no idea what the last one does, but it is something to do with enterprise and enlightenment.

Myriad operations and organisations receive funding from RDAs in the south-west. I am not going to deny that they probably add value in some way or another, but I put it to the Minister that there is a phenomenal amount of overlap and money wasted. Can we not reconcile some of the organisations and bodies that are designed to support business to provide a more cohesive and cost-effective way of getting our message across and promoting business?

In conclusion, I ask the Minister to take stock of where the regionalisation project is going. The UK has not only internal markets, but external ones. We had a very interesting debate on UK trade and investment in this room only a week ago, when my hon. Friend the
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Member for Cotswold (Mr. Clifton-Brown) made the point that we are falling behind nationally. A glance at the recent table issued by the International Monetary Fund shows that Britain is the only country in Europe where exports have fallen consecutively during the past five years. We have a huge challenge ahead of us and it is now time to take stock of where the regionalisation project is going. I hope that we can simplify the process and simplify government, and in that way we can support our businesses in the south-west, and the country as a whole, much more efficiently.

Several hon. Members rose—

Frank Cook (in the Chair): Order. I have nine right hon. and hon. Members seeking to catch my eye. I remind the Chamber that it is the Chair’s responsibility to call the first of the three winding-up speeches at 30 minutes before termination at 11 am. That leaves us only 40 minutes to get those remaining hon. Members into the debate, so I appeal to all to make their comments pertinent and as brief as possible, to try not to accept too many interventions and not to take too long in answering those interventions that are accepted. I hope that I make myself clear.

9.50 am

Graham Stringer (Manchester, Blackley) (Lab): Thank you, Mr. Cook, I shall curtail my remarks. I offer my congratulations to the hon. Member for Bournemouth, East (Mr. Ellwood) on securing this important debate. I have not had the pleasure of hearing him speak before, but he is clearly a moderate man. As part of the jury on RDAs and unelected regional assemblies, I do not think that the jury should be out; it should be in and say that those bodies are pretty worthless and ought to be finished.

The genesis of those bodies was in two papers that my right hon. Friend the Deputy Prime Minister produced in 1982, while in opposition, when the understanding of the economy was completely different. The ideas behind those papers went through the 1998 White Paper, the Regional Development Agencies Act 1998 and the referendum in the north-east a couple of years ago. At that point, when 80 per cent. of people voted against devolution in the north-east, which was chosen for the referendum as the strongest supporter for regional devolution, the Government should have taken that on board and the whole of the regional agenda should have gone out of the door.

One of the reasons that that has not happened is that the Government have always had an ambiguous attitude to local democracy and local government. Is it part of the solution or part of the problem? I do not accuse my right hon. Friend the Minister of that, because she had a distinguished career as the leader of Islington council, but that runs through the rest of the Government.

We are left with the regional development agencies, which spend a huge amount of money, as the hon. Gentleman said. They are wrong in principle and what they do in practice is often not very helpful. In principle, most of the funding for regional development agencies came from other programmes in local government. That money and those resources
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have been removed from local democratic control, which is a mistake. Regional development agencies meet behind closed doors, and they accrue more and more power.

In principle, the task that regional development agencies have been given is almost impossible to achieve. Not only do RDAs not represent the economy as it is now—they are modelled on bodies such as the Greater London enterprise board and similar bodies that many of the old metropolitan counties put forward—but they are rather arthritic. They do not respond quickly, in the way that the economy responds now. They have been set up to increase regional wealth and to close regional disparities, but we cannot have all the regions trying to do that at the same time. It is intellectually impossible to follow both those aims together. That leads one to conclude that there is an absence of serious thinking on such matters at the centre of Government. One sees those contradictions coming out in the policies.

Those are the general reasons why I am against RDAs, although I cannot resist going through one or two specifics, because it is not just that there are problems in principle. When the RDAs try to come to decisions without a democratic forum, they come to lowest-common-denominator solutions. There is no real understanding of where the engines of the regional economies are and where money needs to be spent because areas are poorer.

The two engines of the economy in the north-west are the centres of Manchester and Liverpool. About 43 per cent. of gross domestic product in the north-west is produced within a small circle around Manchester city centre, and there is a similar process in Liverpool. Between them, the two areas produce about 75 to 80 per cent. of the gross domestic product. However, when it comes to marketing the north-west, the regional development agency suppresses the Liverpool and Manchester brand. It believes that people in north America or Japan will have some understanding of what the north-west is, but they clearly will not—to them it is a point on the compass. Liverpool and Manchester are very well understood as cities that compete internationally, but there is a suppression of that.

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