Select Committee on Communities and Local Government Committee Fourth Report

3  The existing machinery of regional governance

The Government Offices for the Regions

20. The Government Offices (GOs) were established as the offices of central government operating in the regions. Much of their work was originally connected to the administration of grants and European funding programmes. As the Government's programme of devolving decision-making has evolved they have become increasingly involved in the delivery of the Government's Public Service Agreements (PSAs). They have also played a key role in the negotiation of local area agreements with local authorities. Their annual administration budget in 2004-05 was £141 million, while in 2003-04 they influenced regional investment of approximately £9 billion.[30]

21. There are ten government departments represented in the GOs. Most GOs operate through directorates based on policy themes. Senior management in each office consists of six to eight directors with responsibility for specific areas of policy (such as competitiveness), who report directly to the Regional Director.

22. The Government told us that it placed a strong degree of importance upon the contribution of the GOs. It stated:

"They have first-rate knowledge of their respective regions and this, combined with their ability to join-up the work of individual departments, is what makes the GOs so important in delivering Government priorities.

[…] Their activities can be split into the following main categories:

• Leading - for central Government in negotiating local area agreements, including setting stretching targets for achievement by local authorities and their partners;
• Delivering - many of the activities link to Departmental PSAs, with a clearly identified GO role in ensuring delivery of national priorities through agreements with individual departments;
• Influencing - regional partners in preparing regional strategies, from transport to sustainable development;
• Improving - through working with poor and weak local authorities to assessing performance of local strategic partnerships;
• Planning - for emergencies. GOs have taken a leading role in responding to crises such as the fuel protest, foot and mouth, flooding and bombings;
• Administering - a continuing, though diminishing, role in the sound administration of programme expenditure."[31]

23. Officials presented a positive picture of the work carried out by the GOs: they were considered to be effective, and developing well both in their interaction with Whitehall departments and in their new role as negotiators of local area agreements. Stephen Speed of the DTI told us that he had been "struck […] forcefully" by the way Government Office staff "do not feel they belong to a particular silo […] [but] really zip it up and present government as a united front in the regions to an extent that quite surprised me".[32] Graham Pearce and Sarah Ayers of Aston Business School wrote that in spite of limitations imposed upon them by central government, the Government Offices had "made progress in addressing cross-cutting agendas" and had become "active regional partners".[33] The County Councils Network confirmed "generally good, positive and productive working relationships" between County Councils and GOs, although some variance of performance both within and between Government Offices was detected. On the whole, the County Councils Network believed that the Government Offices "added value".[34]

INFLUENCE

24. Other participants in our inquiry, while on the whole sympathetic to the staff of the Government Offices, were rather more critical of their role and performance. The main point of contention appeared to be the extent to which the Government Offices for the Regions were required by the Government simply to ensure that national policy was implemented, and how far they were enabled to adapt national policy to regional needs or to influence the development of national policy. These tensions were most readily apparent in the evidence we took in the South West, where Councillor Jill Shortland of the South West Regional Assembly told us:

"In this region we have worked very well with the other partners. What is necessarily difficult for us is working with the Government Office because the Government Office is constrained by the fact they look to Government rather than necessarily looking to the region".[35]

Christopher Irwin of TravelWatch South West stated:

"I look to a Government Office that not only challenges what is done regionally but champions what is done regionally back to the centre. In a way, psychologically we feel very isolated".[36]

Ms Jenny Kartupelis, a voluntary sector representative from the East of England region, indicated that these problems were not only felt in the South West:

"[the GO] are having to interpret to us the central government policy rather than adapt it in any way to the needs of our particular region. If there is a new initiative then they are reflecting that initiative and we are having to adapt to it […] The structure I think can be frustrating to everyone […] the people in the bodies of governance as well, insofar as they may not have the manoeuvrability and flexibility they might feel that they need […] regional government stands a fair chance of giving us continuity, if they were allowed by central government to have some flexibility in interpreting […] policy such that it was appropriate to the region".[37]

25. The fact that stakeholders look to the Government Offices as friends, with understanding of the region and the potential to influence policy, is an indicator of the generally positive impact which the Government Offices and their staff have had. That these hopes are being frustrated, however, is an indication of the difficulty for the Government Offices in managing their dual mandate as an arm of central government and, simultaneously, as a critical friend of both central government and the region. The balance is a difficult one: it should not be surprising if at times there is a mismatch of expectations between what the Government Offices think they should do, and what others want them to do.

26. This dilemma was illustrated by an argument over the campaign for improved transport links between London and the South West. Stakeholders in Bristol believed that the Government Office in the South West should have done more to support the campaigners' case. Ms Bronwyn Hill, the chief executive of Government Office South West (GOSW), responded:

"[…] there is almost inevitably a tension between national Government policy on the one hand and the views of regional and, indeed, local authorities […] on the other. Part of our role as Government Office is to mediate between the two, to facilitate dialogue. We cannot devolve every single problem […] We raised this issue with [the permanent secretary at the Department for Transport] about the perception […] that DfT railways does not engage as fully as partners would like, and he agreed to take that away and think about it […] we do act and influence. I would draw the line at joining in lobbying campaigns against the Government for which I happen to work".[38]

27. Early in our inquiry we had the opportunity to consider stakeholder surveys which had been carried out to assess public perceptions of regional government. One of the main concerns which was apparent from this survey was the perception that central government was the strongest influence upon regional policy and governance; the public in the region had little or no influence at all.[39] Significantly, the list of GO activities provided for us by ODPM/DCLG at paragraph 22 above omits any suggestion that the Government Offices might act as a channel for communications from the regions to central government about the local impacts of policy. In oral evidence, however, officials confirmed that the provision of "advice back to Government" was indeed part of the GO role.[40]

28. We were further assured that the Government wished to strengthen the transmission of ideas from the GOs to Whitehall. One official stated that "There is a lot of traffic, but that tends to be behind the scenes, government to government, rather than more visible lobbying".[41] Public accountability, and confidence in the Government Offices, would be increased if more of the communications between Government Offices and central government upon the direction of policy could be placed in the public domain and thus open to scrutiny. We urge the Government and the GOs to consider how progress in this direction might be achieved, with a view to implementing changes by December 2007.

The development of city regions. Example 2: The Birmingham, Coventry and the Black Country City-Region

The Birmingham, Coventry and the Black Country city-region includes the metropolitan councils of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. It has a population of 2.6 million. The partnership hopes to transform the former industrialised economy of the Black Country into a knowledge-driven economy.

The city-region includes a number of major facilities including the National Exhibition Centre and the National Indoor Arena, the International Convention Centre and Wolverhampton Science Park. It has six universities including two first-class research universities. It has significant strategic transport links to the rest of the UK and to Europe, including major rail termini, road infrastructure and Birmingham International Airport.

Work on the city-region began in 2003 and has a focus on global competitiveness and economic/population growth. A City-Region Development Plan is in development. The rationale for the city-region "is simple. Global investors and decision makers do not recognise local authority boundaries. Their interest is in understanding the local economy as a whole - a cluster of mutually interdependent areas linked economically and socially by travel to work patterns, by housing, retail and leisure markets and by population needs and skills. […] We recognise that we are part of the same local economy and that the prosperity of our individual communities is dependent upon the global competitiveness of our area as a whole."

The partnership recognises the importance of accountability and effective political leadership. It has proposed the establishment of an Executive Board (currently operating as the shadow Growth and Prosperity Board) on which the political leaders of the partner authorities would take on cabinet-style portfolios with responsibilities for city-region strategies on transport, spatial planning, economic development, skills, housing, cultural development and major facilities. The West Midlands Regional Assembly, the Regional Development Agency, the Learning and Skills Council and the West Midlands Business Council are also represented on the Board; delivery will continue to be through the existing local authority structures and the functions of the regional assembly, RDA and Learning and Skills Council.

The city-region leaders are seeking capital investment which will enable the provision of new infrastructure. It is proposed that existing funding streams should be channelled through a City-Region Development Fund. The partnership argues that public investment should give greater weight to the stimulation of economic growth and influencing the location of future demand: devolution of resources to the city-region would increase accountability and give political leaders greater influence over public investment.

The city-region is looking for collaboration with neighbouring urban areas to help drive regional economic development and has begun a dialogue with Milton Keynes and the Three Cities Partnership of Nottingham/Derby/Leicester. The city-region is also seeking to enter into a partnership arrangement with the French city-region of Grand Lyon/St Etienne in order to learn from the experience of collaborative work there.

Source: Ev 71, HC 977-II, Session 2005-06; Ev 172, HC 352-II, Session 2006-07

THE GOVERNMENT'S PLANS FOR REFORM

29. During the course of our inquiry the Government published a Review of the Government Offices which indicated that it had already taken on board many of the suggestions and criticisms which we were hearing.[42]

30. In the Review, the Government makes clear its desire to give the Government Offices a more strategic focus, so that they may:

• be more effective negotiators and managers of local area agreements and other forms of devolved decision-making, at local authority level and "beyond the town hall";
• be more effective advisers to central Government, providing feedback on the implementation of PSAs and the effectiveness of operational delivery; and
• take an analytical role "supporting and challenging" regional strategies developed by the RDAs and Regional Assemblies.[43]

The Review also seeks much greater external, cross-boundary engagement at senior level, and a structure which affords greater importance to place within the region, rather than policy themes: it is proposed that the proportion of staff engaged in place-based teams should be increased from the current average of five per cent of the workforce to about forty per cent. The Review requires the GOs to maintain an outward focus, concentrating on local issues and maintaining strong outward connections with local and regional partners as well as Whitehall.

31. The proposals in the Review amount to a fairly radical shift from administration to policy development and analysis, which the Government is seeking to implement within three years. As part of this transformation the Government is also seeking to reduce overall staff numbers in the Government Offices by at least 33 per cent, primarily through natural wastage.[44] It is planned that existing administrative posts will be replaced by a smaller number of higher-grade policy and operational specialists.

32. The extent and timing of these changes will clearly place the Government Offices under a degree of pressure. The effect of these changes is already being felt: we were told by Mr Cogan, a voluntary sector representative from the East of England, that following the publication of the Review it had become "very hard to talk to people when they are worried about whether they will have a job next month, next year, and the rest of it".[45] Operations were being hampered by high staff turnover as "people were moving on and moving on and moving on".[46] Ms Bronwyn Hill, chief executive of the Government Office for the South West expressed doubt about the Office's capacity to "make the transformation overnight that the GO review envisaged".[47]

The centre and the regions

33. While, in theory, the Government Offices work on policies across departmental boundaries, it is clear that the various Whitehall departments represented in them remain only partially integrated. It is intended that in future a greater degree of integration will be achieved: however, a significant obstacle to integration is likely to be the continuing failure of central Government to achieve the necessary cultural shift in its approach to the Government Offices. Although the GOs themselves are expected to work across boundaries, departments within Whitehall have proved very reluctant to work in a similarly joined-up manner.

34. Our attention was first drawn to the problem by the voluntary sector representatives from the East of England, who told us that their Government Office was being "blown around by a welter of government initiatives".[48] Others spoke similarly of problems arising in Whitehall: Maggie Mooney of Carlisle City Council called for Government departments to be "more joined up" while Forum for the Future described the regional organisations as "being pulled in several directions from different departments with diverse messages".[49] The North West Regional Assembly warned that central Government's approach to the regions was developing in a "potentially unco-ordinated" way.[50]

35. We found supporting evidence also in a peer review conducted by the Government Office for the South West in 2004. This concluded that the expectations and requirements of different central government departments with regard to the Government Offices varied enormously, as did the requirements upon them arising from individual departmental PSAs. Fundamentally, the peer review described a lack of clear direction from central Government.[51]

36. When we explored central Government's attitude with officials, their endorsement was scarcely enthusiastic. Neil Kinghan, head of the then ODPM's local government directorate, commented:

"If you are asking me to say: Do all government departments treat the regions with equal seriousness then obviously there are going to be judgements about that".[52]

We asked Bronwyn Hill of the Government Office for the South West whether all the Government departments were ready to embrace the new role for the GOs set out in the 2006 review. She replied:

"I think all of them have signed up to it is the proper answer. The devil will be in the detail".[53]

We also asked the Government Office for the South West to confirm how many PSAs central Government was requiring it to implement at present. The answer was forty-six: far more than any individual Whitehall department, with its substantially greater resources, is currently attempting.[54]

37. Relations between central Government and the regions are formally the responsibility of DCLG. In earlier reports, however, we have pointed out the difficulty which ODPM faced, and which DCLG inherits, in tackling closed ways of thinking which are deeply ingrained in Whitehall.[55] The extent of the problem is revealed in the 2006 Treasury Review, which heralds the future for the Government Offices with the words:

"Departmental expectations of Government Offices are also changing. For example, the Department for Education and Skills (DfES) is implementing a change programme, requiring new functions and skills of GOs. The Department of Trade and Industry (DTI) has developed a new, more focused role for GOs. The Department of Health (DoH) is currently reviewing how it can strengthen its regional presence […] "[56]

While Yvette Cooper MP, the Minister for Housing and Planning, told us that "what …we should not do, however, is expect the Government Offices to do everything",[57] there would seem to be a real danger that Whitehall collectively is doing precisely that. Each department, it seems, cannot help seeking to re-invent the Government Offices in its own image.

38. The Review of the Government Offices acknowledges concerns about the relationship between the centre and the regions but places the onus on the Government Offices themselves to address the issue, envisaging them "managing and challenging departmental expectations [and] ensuring a single co-ordinated approach that avoids duplication and promotes simplicity". We are sceptical about the ability of the Government Offices to manage departmental expectations effectively: we suspect that delegating the responsibility is central Government's way of shuffling off a problem which has proved intractable.

39. We welcome the main conclusions of the Government's Review of the Government Offices, and we believe that a stronger focus on strategy and analysis—reflected in a revised staffing complement—will enable the Government Offices to work more effectively alongside other regional and local partners. However, there is an urgent need for central Government to take responsibility for streamlining and co-ordinating its own requirements of the Government Offices. It is neither sensible nor reasonable for each Government department to continue to press its own agenda on the Government Offices without regard to the requirements of others, and without consideration of the GOs' own strategic agenda. We look to DCLG's Ministerial team to provide the necessary leadership in Whitehall to ensure a more coherent, joined-up approach to the mandates of the Government Offices. The range of PSA-related targets being implemented by the Government Offices should also be reviewed in order to ensure that resources are being directed effectively to deliver the most important outcomes.

THE ROLE OF THE REGIONAL CO-ORDINATION UNIT (RCU)

40. Responsibility within DCLG for managing relations with the Government Offices rests with the regional co-ordination unit.The main part of the RCU's functions is to provide centralised financial and human resources services to the nine Government Offices; it also manages performance in the Government Offices and acts as an interface between the Government Offices and central Government. We were told that there was "scope for improvement" in the RCU's work with government departments although things were "moving positively forward":[58] officials referred to the recent establishment of 'lead relationships' between individual regional directors and Government departments as an RCU initiative which had improved dialogue between Whitehall and the regions.[59]

41. While matters may be improving, we take the view that there remains considerable room for further improvement. If individuals in the regions are describing central government as unclear, pulling in different directions and unco-ordinated (see paragraph 34 above), then co-ordination is not proving effective.

42. The Government's Review of the Government Offices envisaged that, as the Regional Directors take on greater responsibilities for policy, the need for a strong regional co-ordination unit will be reduced: it therefore recommended that the RCU should be reduced in size and scope.[60] We are unconvinced by this recommendation. There needs to be a central unit taking a strategic overview of the plans and programmes being set out by individual Departments for the Government Offices, in order to ensure that Whitehall's requirements are clear, integrated and in keeping with the overall strategy for the Government Offices and the regions. In this respect there may indeed be a need for greater powers than the RCU has at present.

43. There is a clear lack of strategic oversight of the requirements and messages issuing from Whitehall in respect of the Government Offices. The regional co-ordination unit should, through Ministers, have the authority to initiate review of Departmental requirements where they are in conflict with, or diverge from, the framework set out for the Government Offices in the recent review.

LOCATION OF THE RCU

44. The regional co-ordination unit is currently located with the Government Office for London in Riverwalk House, at the north end of Vauxhall Bridge, and is thus physically removed from Whitehall and the remainder of the DCLG estate. We understand that this location was chosen following a recommendation of the Performance and Innovation Unit in 2000, in order to support the development of effective relationships between the RCU and the Government Offices.[61] It appears to us now, however, that it is relationships within Whitehall which need to be made more effective: the RCU's remoteness cannot help with the challenge of managing Government's approach to the regions, both in DCLG and beyond. When possible, therefore, the regional co-ordination unit should be integrated into the main DCLG estate.

LEAD RELATIONSHIPS

45. We referred, in paragraph 40 above, to the establishment of 'lead relationships' between regional directors and Whitehall departments. This has involved pairing the head of each Government Office with a specific department in order to increase understanding of the regions in Whitehall, and to develop the policy expertise of the regional directors. While we welcome this initiative, we are concerned that the arrangement could result, in Whitehall, in the substitution of some vague concept of 'regional' issues for a genuine understanding of the unique circumstances and needs of each region.

46. This risk has been recognised to the extent that each regional director is shadowed by a director from another region, in order to present a more balanced perspective: for example, we were told that the lead relationship with the Department for Transport is held by the Government Office for the Eastern region, but is shadowed by Yorkshire and the Humber.[62] Even this arrangement, however, is no real substitute for a proper understanding in each department of each region's main priorities and issues.

The Regional Development Agencies

47. The eight Regional Development Agencies (RDAs) outside London were established under the 1998 RDA Act. They are non-departmental public bodies and have five statutory purposes:

• To further economic development and regeneration;
• To promote business efficiency, investment and competitiveness;
• To promote employment;
• To enhance the development and application of skills relevant to employment; and
• To contribute to sustainable development.

Ms Moore-Bick of the British Chambers of Commerce told us that these five statutory purposes were "the right five, from the business point of view".[63] The ODPM indicated that the RDAs' primary role is to drive regional economic development, but they also aim to "enable regions to improve their relative competitiveness and reduce the imbalance that exists within and between regions".[64]

48. The RDAs have a budget of approximately £2.2 billion, which will increase to £2.3 billion by 2007-08. Although more than half of this funding is provided by DCLG, the RDAs are formally accountable to the Secretary of State for Trade and Industry.[65] The role of the regional assembly in scrutinising the RDA is to inform and review progress on the delivery of policy, but "not about detailed performance management".[66]

49. Like the Government Offices, the RDAs have a dual mandate to implement Government policy, and to develop an economic strategy appropriate to the region. This strategy must be formally approved by the Regional Assembly. The "difficult balancing act" the RDA must carry out in securing an economic strategy acceptable both to the region and to Government mirrors the tensions we have described in the role of the Government Offices for the Regions.[67]

PERFORMANCE OF THE RDAS

50. The RDAs are considered by Government to be a success story. Officials stated that they have created or protected 270,000 jobs and started 17,500 new businesses.[68] In recent years their remit has been extended considerably: for example, they have taken on responsibilities for rural areas (previously held by the Countryside Agency), tourism and transport, Business Link and the Small Business Service. The RDAs themselves told us that this increase in roles was a reflection of the "reasonable job" that had been done in respect of the RDAs' five statutory tasks.[69]

51. Some witnesses welcomed the expansion of the RDAs' role. The Institution of Economic Development suggested that it simplified the existing structures and thus "enhance[d] the opportunity for improved joint working".[70] Durham County Council stated that the development of the RDA in the North East (One NorthEast) had been a "trigger for improved regionally focused development of structures and guidance on activities and priorities".[71] CURDS welcomed the RDAs' use of sub-regional partnerships, which enabled decisions about regeneration to be taken "closer to affected communities and individuals".[72] The British Chambers of Commerce however were concerned that the rapid expansion of RDA roles was impacting upon the Agencies' performance. Sally Low, Director of Policy and External Affairs at the British Chambers of Commerce, told us that:

"the information we receive from our Chamber network is that [performance] is patchy, and part of that is because the RDAs are being asked to do too much. Particularly with regard to the new responsibilities for business support, we are seeing an uneven delivery and an uneven response to that further role and responsibilities."[73]

The RDAs' performance was defended by Alan Clarke, Chief Executive of One NorthEast, who claimed that the RDAs' role in respect of many of its new responsibilities was strategic, rather than the actual delivery of services.[74] The Rt Hon Margaret Hodge, MP, Minister of State at the Department of Trade and Industry, equally defended the increase in RDA powers, saying "if it is the purpose of an RDA to get regional economic growth and to tackle the regional disparities, it is sensible to give them the tools so that they can implement and meet the purpose we set them".[75]

52. The most recent Parliamentary inquiry into the RDAs was carried out by the Committee of Public Accounts in 2003-04. Its report, Success in the regions, found that applicants had difficulty accessing funding provided by the RDAs because the money was held by the RDAs in over 40 different funding streams, each with separate monitoring and evaluation criteria. This was described by the PAC as "bureaucratic" and "highly wasteful".[76] While the Government sees Local Area Agreements as a means to streamline funding arrangements,[77] it was suggested to us that the problems of multiple funding streams had still not been entirely overcome. The British Chambers of Commerce believed that funding arrangements continued to present "a very confused picture"; the Chief Economic Development Officers' Society complained about "having to 'jump through too many different hoops' to gain access to different funding streams";[78] and Councillor Bert Biscoe, Chairman of the Cornwall and Isles of Scilly Rural Partnership, noted that the process of persuading the RDA to release funds was "very bureaucratic" and took a long time.[79]

ACCOUNTABILITY OF THE RDAS

53. Alongside this continuing concern over lack of clarity in the Agencies' procedures came a concern over the opacity of their decision-making and operations. Charlotte Moore-Bick of the British Chambers of Commerce told us that it remained difficult to find out how much money was available to the RDAs, and how they were spending it; the Institution of Economic Development similarly referred to "concern at the lack of democratic accountability" in the RDAs' management of funds.[80] Given the increasingly significant powers and budgets of the RDAs, it was widely felt that there should be much greater clarity about the decisions they made and the ways in which their money was spent.

54. The British Chambers of Commerce, in particular, had reservations about the ways in which the RDAs carried out their functions. It claimed:

"RDAs are said to be business-led organisations but many are in fact public sector bodies with levels of business involvement and consultation varying between regions. RDAs do not always have defined processes for consulting business, as a result of which there is often little substantive engagement of business about matters that have far-reaching impact".[81]

In oral evidence, its representatives cited as an example the development of the West Midlands manufacturing strategy, which they claimed "was developed without any consultation with businesses": they said that Rover, for one, would have liked to have been involved.[82] Nor were businesses the only sector to express concern about RDAs' failures to consult: the Chief Economic Development Officers' Society described the RDAs as "remote"[83] and Durham County Council noted "concerns about the voice of stakeholders".[84] The District of Easington considered that its RDA's approach was too "top down directional" and argued that greater delegation of decision making was needed to allow local ownership of the process of change.[85] As with the Government Offices, there was a sense that the balance to be struck between implementing the "policy 'musts'" of central Government and empowering the regions to develop their own objectives and priorities was not always falling in the right place.[86]

55. The Regional Development Agencies are formally accountable, although in different ways, both to the regions—through the scrutiny of the Regional Assemblies—and to central Government. The issues relating to scrutiny are discussed in greater detail at paragraphs 82-96 below. The Government should take account of strong local concerns about the poor transparency and accountability of the Regional Development Agencies and should take steps to improve both. Accountability would be greatly assisted if the Government clarified that the Regional Assemblies had the right to scrutinise fully the expenditure budgets of the RDAs.

SUSTAINABLE DEVELOPMENT

56. Witnesses from the environment sector expressed particular concerns about sustainable development policy, and its management at the regional level. Ms Stephanie Hilborne of the Wildlife Trusts noted that the regional strand of governance was potentially useful for stewardship of the environment, in particular for tackling and responding to the challenge of climate change, and related concerns about flooding and ecological adaptation.[87] Responsibility for sustainable development, however, was currently "dispersed" across the three pillars of regional governance.[88] Implementation of the overarching UK Sustainable Development Strategy for issues like waste, water and biodiversity was, in consequence, "coming unstuck".[89]

57. We asked the RSPB and the Wildlife Trusts to identify why, in their view, implementation of sustainable development objectives was not more successful. They told us that the primary problems were, firstly, the three pillar structure and, secondly, the heavy emphasis which the Government's regional policy placed on economic development:

" […] the environment loses out because of the plethora of targets for economic and social roles, frankly. At any local authority or regional authority the same thing is the case, that whenever even a local authority is trying to promote something which is far more forward-looking and long term and about adapting to climate change or something like that, it struggles with finance because there are not targets attached to positive, environmental long-term outcomes".[90]

Forum for the Future also pointed out that, while the RDAs are required to contribute to sustainable development in their work, there are no regional targets attached to this requirement, in contrast to the targets attached to its duties on (for example) economic development. This made the sustainable development requirement less effective and the performance of the RDAs in this regard impossible to measure.[91]

58. The environmental groups suggested that sustainable development could be given more parity in regional governance by:

• More clearly defining the responsibilities of the three pillars (the Regional Assemblies, the RDAs and the Government Offices) for sustainable development;
• Making sustainable development the primary purpose of the Regional Assemblies and Government Offices;
• Setting targets to "help […] focus the mind" of the three organisations;[92]
• Developing regional sustainable development indicators which aligned with national sustainable development strategy; and
• Monitoring and reporting performance against these indicators.[93]

59. We put these suggestions to the Environment Agency and English Nature as key regional players in this field of policy.[94] Both agencies believed that the integration of the environment into existing strategies and policies was a priority. It was necessary to ensure that the three pillars were giving proper consideration to the UK Sustainable Development Strategy in the development of regional strategy; the Environment Agency said that it would "welcome the opportunity to participate in all significant and relevant regional strategies and policies from their inception"; [95] English Nature indicated that its successor, Natural England, "will expect to have a greater degree of involvement both as a statutory consultee and through a range of other mechanisms".[96]

60. The agencies differed in their approach to the question of targets for positive environmental outcomes. While the Environment Agency considered that targets would help regional organisations to "look at sustainable development in the round and not just to focus on economic growth and social inclusion",[97] English Nature were concerned that they could "lead to action being narrowly focused on the achievement of the specific target to the exclusion of wider environmental outcomes."[98]

61. Both agencies drew to our attention a report published by the Department for Environment, Food and Rural Affairs (Defra) in April 2006, shortly after the environmental stakeholders presented their case to us. This document, Securing the regions' futures, set out the Government's response to a 2005 report on sustainable development in the regions by the Sustainable Development Commission.[99]

62. In Securing the regions' futures the Government emphasises the importance of sustainable development as a consideration of regional policy. It lists a series of "essential ingredients" for sustainable development in high-level regional strategies which include:

• An evidence base of robust social, economic and environmental data including regional data for both national and regional sustainable development indicators;
• Stakeholder involvement;
• Aims and objectives which link across regional social, economic and environmental issues and identify opportunities for sub-regions, city-regions and local area agreements to contribute to sustainable development;
• Indicators, actions and targets, with "owners and timescales identified" for completion of actions; and
• Completion of a sustainability appraisal for each high-level strategy.

The report stated that the Government would invite each region to report by September 2006 on how it would take account of these 'essential ingredients', and each region would be expected to have updated its strategies accordingly by December 2007.[100]

63. The Government's revised guidance to the Regional Development Agencies (2005) requires them to base their Regional Economic Strategies on the UK Sustainable Development Strategy.[101] The Government, however, stops short of making sustainable development the "primary purpose" of both the Regional Assemblies and the Government Offices, as the Sustainable Development Commission wished[102] and the Government's commitment to "mainstreaming" sustainable development—oft-repeated in its report— may be undermined by the lack of a unified approach from central Government to the regions (as discussed in paragraphs 33-39 above): the Government Offices will have performance measures reflecting ten separate central Government Sustainable Development Action Plans.[103]

64. The greater emphasis which Securing the regions' futures places upon sustainable development as a key factor in regional policy together with the requirement for targets as an 'essential ingredient' of high level strategy is welcome. Yet it is no more than a starting point. The options which the Government adopts in Securing the regions' futures for example, requiring Government Offices to ensure "sustainable development, as a principle, more tightly underpins GO performance management, GO training and business planning systems", and encouragement of the use of regional sustainable development indicators are important symbols of Government intent.[104] Since sustainable development has not been made a primary purpose for any of the three pillars, this objective may carry less weight with policy makers than the statutory responsibilities which the RDAs, in particular, have for economic development. The ways in which the regional bodies respond to the 'essential ingredients' identified by the Government (data, targets, 'owned' actions linked to local and sub-regional plans, and sustainability appraisal) will be key to the success of this 'softly-softly' approach.

65. Environmental sustainability is critical and without it economic and social progress will be impossible. It is too soon to tell if the Government's approach to regional action on sustainable development will lead to positive, measurable outcomes. As a starting point, the Government should ensure that the requirements it has set for the regional institutions in Securing the regions' futures (which we have summarised in paragraph 62) are fully met. It should also take further steps to encourage and disseminate best practice in sustainability appraisal, and to ensure that lines of accountability for performance against sustainable development targets and actions are clear.

REGIONAL FUNDING ALLOCATIONS

66. In 2005-06 four Government departments—the ODPM, the Treasury, the Department for Transport (DfT) and the Department of Trade and Industry—published funding allocations for housing, transport and economic development in each of the regions outside London. While housing and economic development figures had been published previously, the publication of regional transport allocations was new. The figures were provided in detail for the two years to 2007-08 and were then projected forward to 2015-16, by assuming an annual increase of two per cent on each funding stream, in accordance with inflation targets.

67. Each region was then asked to identify its own priorities for investment under these "inter-related and inter-dependent funding streams", in order to provide advice to Government on how these allocations should be spent. The Government's requirements for the advice from the regions, to be co-ordinated by the Government Offices, were that it should be: evidence based; agreed within the regions; realistic; and consistent with national policy and local strategy.[105] The regions were also encouraged to consider how their priorities would be affected if the long-term funding ultimately turned out to be either 10 per cent higher or lower than the indicative allocations suggested.[106]

68. Criticism has been levelled at Departments for only providing funding in a series of short-term grants. Merseytravel, in particular, criticised DfT for funding small transport projects on an annual basis and for taking three years to determine applications on "major" infrastructure proposals: the need for repeated bids can be costly for local authorities, and the lack of certainty about income from year to year hinders strategic planning.[107] The purpose of the Regional Funding Allocations exercise was to address these difficulties and, by providing realistic forecasts of long-term financial trends, to enable the regions more effectively to integrate the different elements—spatial, economic—of strategy. The Government also intended that the process should "help develop an effective evidence base underpinning each of the strategies".[108] The regions' advice to Government arising from the exercise was submitted in January 2006 in order to inform the 2007 Comprehensive Spending Review. The extent to which the Government has followed this advice will become clearer when the results of the Comprehensive Spending Review are announced.

69. Christopher Irwin, chairman of TravelWatch South West, told us that the process of completing the Regional Funding Allocations exercise in the South West had been challenging. It had revealed the different strengths and ambitions of the various local authorities across the extensive South West region; he believed that there was the potential for individual personalities involved in the internal bidding process both to "drive" it and to distort it. The exercise had nevertheless ultimately been successful as the region, "pulling together as a whole", had established its priorities and produced advice which is "much more coherent [and] much more related to the Regional Spatial Strategy".[109] This must be the outcome for which the Government had hoped.

70. Although the final outcome of the exercise, in the form of the Government's response to the regions' advice, is not yet known, key witnesses called for the exercise to be repeated and expanded. The RDAs "were strongly of the view that the scope of the strategies and spending areas covered should be extended to include Learning and Skills Council expenditure, English Partnerships, Job Centre Plus and rail expenditure, which is critical to ensure effective integration for achieving the Regional Economic Performance PSA target and the Government's wider economic, social and environmental objectives".[110] The East of England and North East Assemblies also made the case for incorporating Learning and Skills Council expenditure—which, it was noted, was "some 6 times that of the RDA"—into the exercise, and for rail.[111]

71. We welcome the Government's initiative in developing the Regional Funding Allocations exercise. Although the success of the exercise in influencing Government expenditure has yet to be proved, we note that the trial was widely supported and support the calls both for the exercise to be repeated, and for the second trial to include allocations for skills and for rail expenditure. Once the relevant allocations have been agreed the Government should publish its decisions together with the advice submitted by the regions, so that the effectiveness of the process can be properly assessed.

The Regional Assemblies

72. The eight Regional Assemblies outside London were established in 1998-99. While, technically, they are voluntary bodies, since their inception they have taken on a number of statutory and other significant functions:

• They have been designated under the RDA Act 1998 as a statutory regional consultee on the Regional Economic Strategy. In this role, they scrutinise all the work of the RDA, which must have regard to their views.[112]
• They have been designated under the Planning and Compulsory Purchase Act 2004 as the Regional Planning Body, and undertake preparation of the draft Regional Spatial Strategy.[113] This strategic plan sets out a broad development strategy for the region for a 15-20 year period and covers issues such as transport, housing, infrastructure, and the distribution of regionally or sub-regionally significant activities.
• In 2006, the Assemblies assumed the role of Regional Housing Boards. In this guise the Assemblies provide advice to Ministers on strategic housing investment priorities for the region. There is reported to be a "strong presumption" that Ministers will take the advice offered. The merger of housing and planning roles, linked to scrutiny of the economic strategy, is intended to provide for better integrated regional strategies.
• Assemblies contribute to the advice to Ministers provided through the regional funding allocations exercise [see paragraphs 66-71 above].
• Assemblies "have a role as the voice of the region and have taken the lead with regional partners in drawing up regional strategies such as the Regional Sustainable Development Framework".[114]

FORM AND FUNCTION

73. The Government requires that at least sixty per cent of the membership of Regional Assemblies be drawn from local government, and at least thirty per cent from the region's economic, social and environment sectors (the latter are sometimes referred to as 'social, economic and environmental partners', or SEEPs). The purpose of this framework is to provide both for local government to advocate the views of those living in the region and for other specialist interests - such as business, nature conservation, trades unions and faith groups - to have a voice in the development of overarching regional strategies.[115]

74. The Assemblies were not originally intended to be composed in this way. At the time the first 'shadow bodies' were established, the Government's vision was for the Assemblies to be endorsed by the public, and become fully and directly elected. It is because of the 'No' vote in the North-East referendum that Assemblies have not been directly elected, and are not likely to be so established in the short to medium term. The significant roles allocated to the Assemblies were predicated upon an assumption of direct democratic accountability, and one of the key reasons cited for continuing mistrust of the Government's regional agenda is that, even after the 'No' vote, the Assemblies have continued in existence and have acquired even further responsibilities.

75. The New Local Government Network's report on regional policy notes that it is possible to derive and develop legitimacy in different ways:

"Some establish legitimacy through the democratic process, be that at the national or local level, while others derive legitimacy from building a track record of delivery and getting things done. 'Big bang' devolution such as the London or Welsh settlement delivers democratic legitimacy overnight. However, increasing popular legitimacy and support for these devolution settlements is developing from a more functional legitimacy, as the Administrations […] prove themselves able and fit for purpose".[116]

It would appear that, in the absence of 'big bang' devolution, the Government is indeed hoping that popular legitimacy will follow functional legitimacy. The difficulty may be that continuing unease about the democratic deficit (which led one councillor to describe his Assembly as sitting "in the middle of a fully democratic set of structures as a cuckoo in the nest") will in itself be a bar to the Assemblies proving themselves to be able and fit for purpose.[117]

76. Regional Assembly members had mixed views about the current composition of the Assemblies with their prescribed proportions of indirectly elected 'political' and nominated 'non-political' members. Unsurprisingly, perhaps, one SEEP from the North East region detected "a general sense that the economic and social partners add a degree of breadth and depth to the Assembly [and] add some sense of legitimacy" while another from the East of England told us that

"political members of the Assembly find the community stakeholders grouping … to be very valuable, for a number of reasons. One is that they ameliorate […] some of the fighting that can occur between political parties and bring to bear on it an experience that is somewhat different and they bring an apolitical viewpoint".[118]

The South West Public Transport Users' Forum went so far as to suggest that in some situations the lack of direct accountability was even advantageous: "The relative insulation […] from immediate electoral pressures […] enabled the Assembly to show leadership on 'tough' policy issues [where] in more exposed electoral conditions the temptation might have been to kick such decisions into touch".[119] Councillors, however, took a rather different view, expressing concern that economic and social partners were not subject to any form of democratic accountability yet might—individually or collectively—exercise a casting vote in key decisions on issues such as housing allocations.[120] We asked them whether there was any evidence to date of partners voting together in this way, but they were unable to provide any.[121]

Capacity

77. Councillors and other assembly members raised concerns about the capacity of the Assemblies to carry out their work. These concerns focused on two main areas: first, resources, and secondly, demands upon members' time. Both the West Midlands and the East of England Regional Assemblies noted resource constraints which impacted upon their ability to carry out their roles fully effectively.[122] The CPRE noted that the Assemblies' financial resources were small, and their staffing levels minimal, when compared to those of the RDAs which they were required to scrutinise.[123] Transport 2000's South-West Network expressed concern that inadequate staffing meant basic office support was not available to community groups working in the Assembly: this was detrimental to stakeholder engagement.[124]

78. The pressure on resources also affected Councillors. Councillor Thornber, chairman of the County Councils Network, indicated that assembly capacity was in fact being provided by county councils.[125] Councillor Campbell told us that councillors found it difficult to devote sufficient time to the work of the Assemblies on top of their immediate duties. The problem was exacerbated by the distance which representatives had to travel to attend regional meetings: in the case of the South West, "from Gloucester […] from Christchurch […] from the end of Cornwall" to the regional centre in Exeter. Turnout at meetings was consequently lower than would be desirable. He was also concerned that the "small number of officers" responsible for producing papers on behalf of the Assembly were denied ready access to assembly members who would be able to provide them with guidance and oversight.[126] In the absence of such day-to-day relationships, Dorset County Council feared that assembly officers might be unduly influenced by the Government Offices and RDAs, with whom they also worked closely.[127]

79. Graham Pearce and Sarah Ayers commented that the Government

"has been active in augmenting the Assemblies' functions, especially by encouraging them to become a focus for partnership working, which has raised the Assemblies' profiles. It can be reproached, however, for a lack of strategic thinking about what tasks Assemblies should perform, and why, and the funding required for delivery."[128]

As the Assemblies assume further roles—such as that of Regional Housing Bodies— questions of coherence and capacity become more pressing.

Assembly structures

80. As voluntary bodies, the Assemblies have a degree of flexibility in the way they structure themselves. The East of England Regional Assembly and the South West Regional Assembly told us that they both sought to achieve reductions in bureaucracy and cost by also serving as the Regional Local Government Association.[129] The North East and North West Regional Assemblies have recently restructured to enable core work to be taken forward by an Executive Board, on which both the local authorities, and the economic and social partners, are represented.[130] The East of England Regional Assembly has adopted a system of thematic panels of twenty to thirty members, and an Executive Committee of forty members.[131] The Government has sought assurances from each of the Assemblies about the efficiency of their systems and structures, and officials indicated that the variance between the different models had not been found to be a problem.[132]

Public engagement

81. The plethora of roles which the Assemblies have assumed is confusing for the public. In view of the existing credibility problems which the Assemblies have, public engagement is vital. Here, too, different Assemblies have adopted different strategies for outreach: the West Midlands Regional Assembly has developed e-mail groups and networks linked to its website;[133] while the North East Assembly worked closely with local media to increase public understanding of the importance of the Regional Spatial Strategy. They noted that their website received 150,000 hits during consultation on the RSS, and the strategy itself was downloaded six thousand times—including ninety downloads on Christmas Day.[134] The East of England Regional Assembly reported that it was taking steps to improve engagement with district councils and to provide them with support.[135]

ASSEMBLY SCRUTINY

82. Under the RDA Act 1998, the Regional Assembly is a statutory consultee for the Regional Development Agency. Through this statutory provision the Regional Assembly is enabled to scrutinise all the work and expenditure of the Regional Development Agency, but in particular has input into the development of the Regional Economic Strategy.[136]

83. The nature of the Assembly scrutiny role is different from scrutiny conducted at other levels of government. At central government level, the scrutiny function of holding Government to account for the efficiency and effectiveness of its administration, expenditure and implementation of policy is conducted by the legislature (Parliament): it is set apart from the process of policy formation by the executive in Whitehall. The Regional Assemblies, however, both scrutinise the work of the RDAs and contribute to the formation of policy through their production of the Regional Spatial Strategy, and advice to Government on housing and regional funding allocations.

84. For the Assemblies, therefore, scrutiny and policy work are linked. The RDAs told us that, of the two actions, policy was paramount in the Government's design: "the intention of the [RDA] Act [in assigning a scrutiny responsibility] was that regional assemblies were in a position to ensure that RDAs' activities and strategies linked up properly with other things going on".[137] In other words, the purpose of Assembly scrutiny was to secure integration of the different regional strategies, rather than calling the RDA formally to account for its operations. A subsequent memorandum further stated:

"The [RDA] Act only requires RDAs to "have regard to" the views of the Assembly and does not necessarily require them to agree with or act upon these views. The Department of Trade and Industry as the sponsor department of RDAs recently stated that scrutiny by Assemblies should not be confused with the issue of democratic accountability of the RDA as this is to Parliament via Ministers."[138]

85. It should also be noted that the way in which Assemblies approach their scrutiny role is strongly coloured by the very limited nature of their formal scrutiny powers. While the RDAs are, as noted above, required to "have regard to" the Assemblies' views, there is no formal requirement on them to respond to, or act upon those views in any way. The Assemblies themselves have not been provided with any formal powers of sanction—such as the powers held by Parliamentary committees to compel the production of papers and the attendance of witnesses, and the powers of local authority scrutiny committees to require the attendance of members of the Executive, or officials of the local authority—in case co-operation with the RDA breaks down.[139]

86. Without formal powers of scrutiny, the Assemblies have had no choice but to enter into relationships with the RDAs based on the extent of their willingness to co-operate. The Assemblies indicated to us that they had found the collaborative approach beneficial, and believed that their work had had "a positive impact" on development of RDA policy: for example, the North East Assembly described an exercise in which unsuccessful small businesses were encouraged to speak about how the business support system had failed them; this had "influenced quite heavily" the design of an RDA business brokerage model.[140] The West Midlands Regional Assembly noted that the scrutiny process enabled Assembly partners to influence other regional organisations; they described themselves as a "critical friend" to Advantage West Midlands, the West Midlands RDA.[141] The RDAs saw the relationship as "constructive but not too cosy"—which, in their words, was "probably about right".[142]

Effectiveness of Assembly scrutiny

87. When considering the success of Assembly scrutiny to date it is important to remember that the institutions involved are still relatively young. The relationship between RDA and Regional Assembly in each region is different and continuing to develop. Thus, the experience of any one Assembly, as reported to us, may not be representative of the Assemblies as a whole.

88. Detailed research carried out into the subject on behalf of the Office of the Deputy Prime Minister in 2005 concluded that the effectiveness of Assembly scrutiny was improving, and made the following points:

• Most Regional Assemblies had adopted a 'critical friend' approach to RDA scrutiny, mixing formal scrutiny exercises and informal scrutiny (through liaison with the RDA);
• Formal scrutiny exercises had the benefit of transparency and supporting public engagement, but their impact had been limited by a failure, in some cases, to focus recommendations clearly and to follow up progress in their recommendations' implementation. This failure was attributed to models of scrutiny where ad hoc committees disbanded at the end of an inquiry, and to a lack of in-house expertise in policy and scrutiny, and
• Informal scrutiny 'behind the scenes' at the RDA lacked transparency but was often more timely and enabled Assemblies to influence emerging policy.[143]

The evidence we received indicated that the Assemblies have begun to develop responses to the points made in this research: for example, Alan Clarke of One North East (the North East RDA) told us that the North East Assembly had engaged consultants to check on the RDA's progress in implementing the recommendations of its three most recent reports.[144] It remains the case, however, that the Assemblies are constrained in their ability to look beyond the RDAs' implementation of policy to the detail of their expenditure and financial management.

SCRUTINY AND ACCOUNTABILITY

89. While regional scrutiny may have been judged by the Government to be increasingly effective as a collaborative exercise, we observed some unease about the relationship between the Assemblies and the RDAs. Although the 'critical friend' approach works well for the purpose of collaboration and integration of strategy, some witnesses believed that the arrangements were less suitable when it came to holding the RDA formally to account in the public interest. For example, Mr James Paton wrote that "exceptionally light touch scrutiny of the RDA by the Assembly means the RDA does very much as it likes."[145] Graham Pearce and Sarah Ayers noted that the effectiveness of the scrutiny process in calling the RDA to account was hindered by the fact that "both sets of bodies are dependent on one another to achieve collective goals".[146] CURDS noted that the capacity of the Assemblies to carry out scrutiny was limited, and predicted that resource constraints would "leav[e] a vacuum in the exercise of the regional public interest".[147]

90. These comments are supported by the Interim Review's conclusions. The Review found that the Assemblies were least successful at formal scrutiny and far more influential when working informally. If the Assemblies are proving most effective when working 'behind the scenes' it is arguable that the system is, from the point of view of securing accountability, failing.

INCREASING ACCOUNTABILITY

91. The Assembly scrutiny system, as a means of securing accountability, would appear to be flawed in the following ways:

• It was not designed primarily for the purpose of holding the RDA formally to account; and
• The Assemblies lack formal powers to support the process of holding the RDAs to account.

CPRE regretted that Assemblies had not been given stronger, and better resourced, scrutiny powers and felt that making the RDAs "properly accountable" to the Assemblies would lead to greater public confidence in both bodies.[148] The Assemblies themselves take their role as scrutineers very seriously, as demonstrated by the production in 2004 of a Regional Scrutiny Handbook designed to inform both officers and members of the Regional Assemblies about methods of scrutiny and best practice. This handbook acknowledges that, in spite of the unique policy-related design of Assembly scrutiny,

"it is important to emphasise the crucial relationship between scrutiny and accountability. At their heart all scrutiny systems are concerned with accountability; ensuring that organisations are publicly held to account."[149]

The West Midlands Regional Assembly has drawn attention to the absence of formal powers in its recent report on Regeneration Zones.[150]

92. The reasons why the Regional Assemblies were not given formal scrutiny powers remain unclear. It may be that, in view of the intended collaboration between the Assembly and the RDA, such powers were considered inappropriate; it may be in part that there was some sensitivity over granting such powers to bodies which are themselves only indirectly accountable. Certainly, it is unlikely that the Government will transfer full 'democratic' accountability for the RDAs to the Regional Assemblies until such time as the Assemblies are directly elected. Nonetheless, in the absence of a directly elected model there is scope for the Government to enhance the effectiveness of the Assemblies in serving the regional public interest through their scrutiny work, while also increasing public understanding of, and confidence in, the existing system.

93. While the Assemblies have successfully secured effective collaborative relationships with the RDAs we are concerned that the lack of formal scrutiny powers available to the Assemblies could be a barrier to their work if these constructive relationships break down. Our own experience suggests that the possession of powers to send for persons, papers and records need not be a bar to the formation of "critical friend" relationships with others; very rarely, the existence of such powers is helpful and indeed necessary to ensure public accountability is maintained. Although it has proved very valuable for the Assembly/RDA relationships to have been established through consensus and co-operation, we believe that the subsequent addition of formal powers would give the Assemblies a firmer foundation for their work. The fact that such powers have been provided for the Greater London Assembly, together with the current Government proposal to give local authority scrutiny committees powers to require information from the Regional Development Agencies, adds strength to this argument.[151]

94. We recommend that the Regional Assemblies be given equivalent scrutiny powers to those held by local authority scrutiny panels, to compel the appearance of witnesses and the production of papers. We look to the Government to consult on the provision of such powers within the next twelve months.

95. In our view public understanding of Assembly scrutiny operations is also hampered, to a degree, by the variance in the scrutiny models and protocols operating on a region by region basis. This adds to the complexity of the system. While a continuing focus on best practice may lead, over time, to close alignment of the different models, we believe that it would be advantageous for the Assemblies and RDAs to agree and publish a joint statement setting out the basic principles of regional assembly scrutiny and common elements of procedure, such as the agreement between each Assembly and RDA on the timing of a formal response to recommendations.

96. There were wider frustrations about the constraints on public scrutiny in the regions. These arose from the continuing awareness that there has not been democratic endorsement of the current arrangements, and that it remains difficult for those outside the system to understand why it is there, how it works, and how its efficiency and effectiveness is ensured. Not only are the inter-relationships of the main bodies complex, but the lines of accountability are different in each case and may be described briefly as follows:

• The Government Offices are an offshoot of central Government and accountable, through Ministers, to Parliament—although they are rarely directly scrutinised by Parliament. They are not directly accountable to the Regions themselves;
• The RDAs are partially accountable to the Regional Assemblies for the development of integrated and appropriate regional strategies, but for democratic purposes are accountable through Ministers to Parliament. Potentially (as noted at paragraph 93 above) they will be partially accountable to local authority scrutiny committees, and they are also now subject to performance assessment by the National Audit Office;[152]
• The Regional Assemblies are voluntary, representative bodies of the regions but, in the absence of direct elections, are only indirectly accountable to the regions themselves, and
• There are a number of other public bodies operating and spending Government money in the regions which are accountable only to Ministers and not to the regions (see also paragraphs 97-100 below).

ACCOUNTABILITY OF AGENCIES WITHIN THE REGIONS

97. There was a clear sense of urgency in a number of submissions about the need to improve the accountability of non-departmental public bodies and other institutions active within the regions. The concern arose partly as a matter of principle, with individuals arguing that regional bodies should be directly accountable to the regions, and partly from a sense that the current accountability arrangements were so "complex and often opaque" as to be largely ineffective.[153] Councillor Jill Shortland of the South West Assembly expressed particular concern about the lack of accountability of organisations beyond the 'three pillars', noting that

"At the moment there does not appear to be anybody other than a single Government minister who has the power to [hold organisations accountable] but I do not think they are doing that scrutiny work. Certainly they are not challenging those bodies to say how they are aligning their delivery to the Regional Spatial Strategy or the Regional Economic Strategy".[154]

98. The accountability of these organisations is complicated by their sheer quantity. While it is difficult to establish precisely how many agencies are operational in "the regional quango state"[155] we received varying estimates from different regions: 174 bodies in the North-East, of which over 100 were said to be non-departmental public bodies (NDPBs) accountable to Government;[156] 130 in the East of England;[157] 169 in the South West.[158] DCLG told us that 83 Government agencies were operational across the whole of the UK, while the official number of NDPBs across the UK was 506, excluding NHS bodies.[159] Inevitably, with such high numbers of organisations involved it is difficult to track the activity of each body, increasing the likelihood of duplicated initiatives, and consequent inefficiency: for example, Bolton Council raised concerns about "overlapping work" by housing agencies in the North West region.[160]

99. The major importance of making these organisations accountable rests in their spending power: while some of these organisations may be small, others have significant budgets. For example, in the East of England, the Regional Learning and Skills Council has a budget six times that of the RDA.[161] Stephen Speed of DTI noted that the RDA budget "represents only a fraction of total public sector expenditure on economic development and regeneration in each region"; [162] yet this fraction is the only portion of public sector expenditure which is currently scrutinised in any way by the region, through the Regional Assembly. When we met representatives of the West of England Partnership informally at Bristol, they impressed upon us the importance of clarifying the budgets and expenditure plans of the wider group of agencies. It was claimed that a significant amount of local authority time and resources was spent lobbying for funding and 'fighting through layers of bureaucracy' in pursuit of funds where expenditure plans had not been made clear.[163]

100. The Government's recent action in merging certain organisations, and pooling multiple budgets through initiatives such as the Regional Skills Partnerships indicates that it recognises the value in simplifying current structures.[164] A reduction in the number of agencies should of itself help to increase the simplicity of the system; however, the formal issue of accountability also remains a concern. Graham Pearce and Sarah Ayers noted a need to "secure a degree of alignment between the activities" of NDPBs which currently "work to separate parent departments, different timetables, funding regimes and geographical boundaries".[165] The English Regions Network similarly believed that increasing accountability within the regions would lead to "more effective and more aligned strategies".[166]

101. A number of witnesses argued that the way to increase agency accountability was to enhance and extend the scrutiny powers of the Assemblies. The Local Government Association concluded that "local authorities acting individually have little prospect of effective scrutiny", but working collectively through the Regional Assembly a difference could be made.[167] Chris Foote-Wood, a councillor and Assembly member from the North East, told us that the effectiveness of regional strategy development could be significantly enhanced if the Assembly were given the power to approve the budgets and business plans of all quangos in the region: with that level of oversight, the Assembly would be much better placed to identify "major developments with a regional impact" upon strategy.[168]

102. A certain level of increased transparency can be achieved without alteration to existing structures: the East of England Regional Assembly noted that it had successfully extended its scrutiny role, on a voluntary basis, to include other regionally significant bodies such as the Environment Agency and the Regional Cultural Consortium.[169] If it should be decided, however, that there is value in strengthening the scrutiny capacity of the Regional Assemblies, there might equally be advantages in bringing certain key regional agencies—for example, the Regional Learning and Skills Council—formally within their remit.

Scrutiny at Westminster

103. One of the reasons for the 'no' vote in the North East referendum was said to be the public perception that there already existed sufficient elected representatives—MPs, MEPs and councillors—to give the region a voice.[170] Correspondingly, some witnesses have argued that Members of Parliament should be doing more to secure the accountability of regional government institutions. Chris Leslie, former MP and Minister and now Director of the New Local Government Network, argued that "regional activity" should be held to account at both local and national level because

"[…] parliamentarians can add value because you have a constituency base, because within your own home regions you will know the priorities that your constituents want, and I would like that accountability to inform the decisions taken at a regional level. I think that would add value".[171]

104. The Campaign for the English Regions noted that the regions are "poorly represented" at Westminster in comparison with the scrutiny offered to Northern Ireland, Scotland and Wales. There exist 'Grand Committees' for Northern Ireland, Scotland and Wales in which all constituency members for the respective region who have taken the Oath are included. While the Grand Committees do not have direct control of their agenda (matters for debate are referred to them by a motion in the House), they are empowered to meet in the regions they represent, and have the opportunity to debate issues of concern, including legislation, and to question Ministers. They normally meet several times a year.

105. The nearest modern-day equivalent for the English regions is the Regional Affairs Committee.[172] This, like the Grand Committees, is empowered to meet to consider matters referred to it by the House but, unlike the Grand Committees, has a formal membership of only thirteen members to represent the whole of England—less than 1.5 Members for each Government Office region. Other Members may attend its meetings but may not vote or count towards its quorum.[173] Since its creation in 2000, this Committee has met only four times, the last occasion being on 15 June 2004. In the last full Parliamentary session, 2005-06, its membership was not even appointed. It is effectively dormant.

106. When we asked Ministers about the operation of the Regional Affairs Committee we were told that this was properly a question for the House of Commons to answer rather than the Government. The Minister for Local Government, who had previously worked in the office of the Leader of the House of Commons, noted that a survey of Members about regional affairs had had only a low response rate suggesting little enthusiasm for regional scrutiny among English members.[174]

107. Technically Ministers were correct to say that the operation of the Regional Affairs Committee is a matter for the House. However, it is disingenuous of the Government to claim it has no role: it is, after all, a Government motion which normally triggers meetings of both the Grand Committees and the Regional Affairs Committee.[175] Members of the governing party are also represented on the Committee of Selection, the body responsible for nominating the Regional Affairs Committee's membership for consideration by the House. The Government could therefore have encouraged, and communicated the desirability of establishing, the Regional Affairs Committee had it so chosen.

108. Nor do we believe that it is true that Members have no enthusiasm for regional issues; there may, however, be little enthusiasm for a scrutiny mechanism—the Regional Affairs Committee—which, by virtue of its very limited membership and powers and its lack of focus on specific regions, seems unfit for purpose.

109. Various witnesses had practical suggestions for how Westminster might be better involved in the regional scrutiny process. Mr Peter Martin Kaye and New Northern Future suggested regional select committees, which might meet in the regions "perhaps half a dozen times a year".[176] The Campaign for the English Regions and Forum for the Future wanted regional powers vested in the reformed House of Lords.[177] Yorkshire Forward suggested regional Question Times, perhaps using the existing mechanism for 'cross-cutting questions' (attended by Ministers from multiple departments) which take place in the Commons' second chamber, Westminster Hall.[178] An alternative to the latter suggestion would be to give Ministers regional as well as subject portfolios, on which they might be questioned: we were reminded of the precedents for regional Ministers, including the appointment of the Deputy Prime Minister as Minister for the Northern Way.[179]

110. The most detailed suggestions for improvements to Westminster scrutiny came from the New Local Government Network in its recent report, Devolution and Evolution in England. This proposed the following options:

• Regional select committees which would be able (as existing select committees do) to set their own agenda and take evidence from both Government departments and key regional bodies;
• Extending the remit of our own committee (the Communities and Local Government Committee) to include scrutiny of the regional bodies;
• A new 'quadripartite' committee—analogous to the Commons Committees on Strategic Export Controls—drawn from the membership of the existing Trade and Industry, Communities and Local Government, Education and Skills and Treasury select committees with a remit to examine the operation of the regional agencies and their sponsoring departments;
• Amendments to the rules of the House to enable select committees to hold joint meetings with Regional Assembly scrutiny panels, as the Welsh Affairs Committee is empowered to meet in conjunction with the Welsh Assembly.

The NLGN additionally perceived a role for regular regional debates and question times, and like other witnesses pointed to the opportunity provided by House of Lords reform for strengthening a regional presence at Westminster. It noted that these proposals would have the extra virtues of minimum cost, making best use of existing structures, and providing a strong media platform for increasing awareness of, and debate about, regional concerns.[180]

111. Of the options presented, we do not believe that effective scrutiny would be achieved by simply extending the remit of our own or other departmental select committees: realistically, we could not hope to achieve consistent and rigorous scrutiny of each of the eighteen Government Offices/RDAs on a regular basis in addition to our existing responsibilities. Nor do we think that the appointment of regional Ministers is a guarantee of improved accountability: as the NLGN points out, such appointments in past decades have tended to lead to "more regional press releases but little effective scrutiny or accountability, let alone decentralisation or devolution".[181]

112. However, we accept the argument that, given the existence and increasing importance of regional governance structures in determining policy, there should be more thorough and consistent scrutiny of the regions at Westminster. We are pleased that Ministers also expressed their willingness for such scrutiny to take place.[182] We should stress that we do not see this as a substitute for the scrutiny carried out by the Regional Assemblies, but as an adjunct to it, making use of the different powers which Westminster committees hold for examining central government activity and linking it to the realisation of policy at the regional level.

113. We believe that the most effective way of securing such scrutiny would be to appoint a select committee for each region, which might meet a limited number of times each year (perhaps in conjunction with the relevant Assembly) in order to examine the work of key regional bodies and to call Ministers to account for their performance. We can also see merit in the suggestion of additional regional debates or question times in Westminster Hall. Such options might be instituted on an experimental basis, with their effectiveness reviewed after one or two Parliamentary sessions.

114. Consideration of changes in the way the House of Commons operates is formally a matter for the select committees on Procedure and Modernisation of the House of Commons; and, ultimately, for the House itself. We shall write to these Committees upon publication of this Report, asking them if they will examine the effectiveness of the current Regional Affairs Committee and the detailed implications of improved Parliamentary scrutiny for the regions. We hope that Ministers will continue to support any proposals for scrutiny reform at Westminster which might arise as a consequence of such inquiries.

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30   DCLG, Annual Report 2006, Cm 6816 July 2006, p100; Ev 243, HC 977-II. Regional Co-ordination Unit and Government Office Network Corporate Plan 2004-05 p5 Back

31   Ev 85, HC 977-II Back

32   Q99 Back

33   Ev 49, HC 977-II Back

34   Ev 196-197, HC 977-II Back

35   Q411 Back

36   Q418 Back

37   QQ259, 261, 263 Back

38   Q422-3 Back

39   Harding A., Jeffrey, C. and Tomaney, J, Regional Governance in 2004 (London: ODPM, 2006) Back

40   Q96 Back

41   Q12 Back

42   HMT/ODPM Review of Government Offices, March 2006  Back

43   As above, paragraphs 3.21-23 Back

44   HMT/ODPM Review of Government Offices, March 2006, paragraph 4.15 Back

45   Q255 Back

46   Q255-6 Back

47   Q442 Back

48   Ev 129, HC 352-II Back

49   Q357; Ev 126-7, HC 977-II Back

50   Ev 237, HC 977-II Back

51   http://www.gosw.gov.uk/gosw/aboutus/futuregosw/goswpeerreview/ Back

52   Q96 Back

53   Q443 Back

54   Ev 172, HC 352-II Back

55   ODPM: Housing, Planning, Local Government and the Regions Committee, First Report of Session 2005-06, ODPM Annual Report and Accounts 2005, HC 559  Back

56   HMT/ODPM, Review of Government Offices, March 2006, paragraph 1.4 Back

57   Q636 Back

58   Q339 Back

59   Q13 Back

60   HMT/ODPM, Review of the Government Offices, March 2006, paragraph 4.33 Back

61   Cabinet Office Performance and Innovation Unit, Reaching out: the role of central government at regional and local level, 2000  Back

62   Q15 Back

63   Q277 Back

64   Ev 79, HC 977-II Back

65   Ev 79; 49, HC 977-II Back

66   South West Regional Assembly/South West Regional Development Agency Scrutiny Protocol and Programme 2006-09 Back

67   Q188 Back

68   Q10 Back

69   Q374 Back

70   Ev 39, HC 977-II  Back

71   Ev 135, HC 977-II Back

72   Ev 150, HC 977-II Back

73   Q278 Back

74   Q374 Back

75   Q640 Back

76   Public Accounts Committee, Fifty-first Report of Session 2003-04, Success in the regions, HC 592 p5 Back

77   DCLG, Annual Report 2006, Cm 6816 July 2006, p123 Back

78   Ev 55, HC 977-II Back

79   Q416 Back

80   Q274; Ev 39, HC 977-II Back

81   Ev 215, HC 977-II Back

82   Q277 Back

83   Ev 54, HC 977-II Back

84   Ev 135, HC 977-II Back

85   Ev 95, HC977-II Back

86   Ev 95, HC 977-II Back

87   Q236 Back

88   Q218 Back

89   Q224 Back

90   Q235 Back

91   Ev 127, HC 977-II Back

92   Q229 Back

93   Q232; Ev 102, HC 977-II Back

94   English Nature became Natural England in October 2006 Back

95   Ev 145, HC 352-II Back

96   Ev 147, HC 352-II Back

97   Ev 145, HC 352-II Back

98   Ev 147, HC 352-II Back

99   Defra/ODPM/DTI, Securing the regions' futures: strengthening delivery of sustainable development in the English regions, April 2006 Back

100   Defra/ODPM/DTI, Securing the regions' futures: strengthening delivery of sustainable development in the English regions, April 2006 p17 Back

101   As above, p38 Back

102   As above, p56 Back

103   As above, p28 Back

104   As above, p57 and p61 Back

105   Ev 82-83, HC 977-II Back

106   Q78 Back

107   Ev 147, HC 977-II Back

108   Ev 83, HC 977-II Back

109   Q406 Back

110   Ev 117, HC 977-II Back

111   Ev 194-5, 243, HC 977-II Back

112   Regional Development Agencies Act 1998, s8(2)(a) Back

113   Planning and Compulsory Purchase Act 2004 ss1-4 Back

114   Ev 81-82, HC 977-II Back

115   Ev 81, HC 977-II Back

116   Ed Balls MP, John Healey MP and Chris Leslie, Devolution and Evolution in England, (NLGN London July 2006) p28 Back

117   Q438 ; see also Ev 24, 223, 227, HC 977-II Back

118   QQ180, 247 Back

119   Ev 23-4, HC 977-II Back

120   QQ131, 142 Back

121   Ev 164, HC 352-II Back

122   Ev 141,192, HC 977-II Back

123   Ev 189, HC 977-II Back

124   Ev 138, HC 977-II Back

125   Q128 Back

126   Q142 Back

127   Ev 222, HC 977-II Back

128   Ev 49, HC 977-II Back

129   Ev 192; Q432, HC 977-II Back

130   Ev 236; Ev 244, HC 977-II Back

131   Ev 192, HC 977-II Back

132   Q36 Back

133   Ev 139, HC 977-II Back

134   Q175 Back

135   Ev 192, HC 977-II Back

136   Ev 138, HC 352-II Back

137   Q363 Back

138   Ev 156, HC 352-II Back

139   Local authority scrutiny committees currently have powers to require the attendance of members or officials of the local authority, under s21(13) of the Local Government Act 2000. The Greater London Assembly, which was established under a separate Act as part of the unique governance arrangements for London is the exception in this case: it has powers to subpoena London Development Agency papers and personnel. Ev 156, HC 352-II Back

140   Q177 Back

141   Ev 141, 144, HC 977-II Back

142   Q363 Back

143   ODPM, Interim Report - Evaluation of the role and impact of the Regional Assemblies, London 2005 Back

144   Q368 Back

145   Ev 7, HC 977-II Back

146   Ev 51, HC 977-II Back

147   Ev 151, HC 977-II Back

148   Ev 190, HC 977-II Back

149   English Regions Network, Regional Scrutiny Handbook (2004) p12 Back

150   West Midlands Regional Assembly, Regeneration Zones Revisited: Scrutiny Review 2006 at www.wmra.gov.uk, para 5.1 Back

151   The proposed powers are contained in part 5 of the Local Government and Public Involvement in Health Bill, which was presented in the House of Commons on 12 December 2006; see also DCLG press release 2006/0173, Legal Duty to co-operate at heart of Local Government Bill 13 December 2006. Back

152   QQ24-26 Back

153   Ev 144, HC 977-II Back

154   Q421 Back

155   Ev 98, HC 977-II Back

156   Ev 44, HC 977-II Back

157   Ev 49, HC 977-II Back

158   Ev 164, HC 352-II. It should be noted that this list contains both Governmental and voluntary sector organisations/initiatives Back

159   Ev 180, HC 352-II Back

160   Ev 227, HC 977-II Back

161   Ev 195, HC 977-II Back

162   Ev 138, HC 352-II Back

163   Annex 3 Back

164   Ev 131, HC 977-II Back

165   Ev 49, HC 977-II Back

166   Ev 211, HC 977-II Back

167   Ev 98, HC 977-II Back

168   Ev 45, HC977-II Back

169   Ev 192, HC 977-II Back

170   Ev 121, HC 977-II Back

171   QQ620, 624 Back

172   Until November 2006 this Committee was called the "Standing Committee on Regional Affairs", and is accordingly described in our oral and written evidence. Back

173   The quorum is the minimum number of appointed Members who must attend a meeting of the Committee in order for it to proceed. Back

174   Q659 Back

175   Q658 Back

176   Ev 1; see also Ev 250, HC 977-II Back

177   Ev 67; Ev 125, HC 977-II Back

178   Ev 161, HC 977-II Back

179   Q401 Back

180   Ed Balls MP, John Healey MP and Chris Leslie, Evolution and Devolution in England, (NLGN, London July 2006) pp40-42 Back

181   Ed Balls MP, John Healey MP and Chris Leslie, Evolution and Devolution in England, (NLGN, London July 2006) p40 Back

182   QQ659-660 Back

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Prepared 14 March 2007