Public Service Agreement 2
115. The thrust of the Government's current regional
policy is expressed by Public Service Agreement 2 (Regional Economic
Performance). This target, which is shared by DCLG, the Department
of Trade and Industry and HM Treasury, requires the Government
to "make sustainable improvements in the economic performance
of all English regions by 2008 and over the long term reduce the
persistent gap in growth rates between the regions, demonstrating
progress by 2006".
116. In other words, the Government is committed
to:
- Ensure that the economic performance
of every region improves, sustainably and in its own terms, by
2008, and
- At the same time, 'level the playing field' by
ensuring that the North, the Midlands and the South West perform
better relative to the Greater South East.[183]
117. There is an unavoidable tension between the
two parts of the PSA: if London and the South East are to be encouraged
to grow further, will it ever be possible for the remaining regions
to catch up? Yvette Cooper MP, the Minister for Housing and Planning;
argued that it was both possible and important to achieve the
twin aspirations set out in the PSA:
"The reason that the PSA target was set up like
that was exactly in order to prevent taking the easy way out of
trying to do one rather than the other […] we want all the
regions to grow, but it is not enough to simply have economic
growth in every region; we actually want to narrow the gap as
well. It was deliberately done to put the two elements of the
target in. If we had thought one was more important than the other
we could have just picked one".[184]
118. There are also difficulties with the target
as expressed by the PSA. Public Service Agreements are meant
to "articulate and drive forward the Government's highest
priorities and ambitions for delivery" and to provide a means
by which progress can be measured.[185]
Yet the measurement of regional economic performance has proved
very difficult, both in terms of accuracy and timeliness. A review
by Professor Christopher Allsopp concluded in 2004 that the primary
data used to measure progress—termed regional gross value
added data (GVA)—"are not of sufficient quality to
support analysis of the Government's objectives"; further,
there is a twelve- to eighteen-month time lag in the publication
of regional GVA. This means that the Government is constantly
in difficulty when seeking to determine whether policy is proving
effective, and whether it is making sufficient progress to achieve
its goal.
119. Ultimately, we were told, it will not be possible
to assess whether the Government has met its objective until the
end of the current economic cycle. When we pressed officials to
explain to us when this would be, we were told that "there
is not always a simple answer. The Treasury indeed themselves
have had to revise not only the endpoints of economic cycles but
the start points" as well.[186]
It was conceded that current plans were to review performance
over the period 2003 - 2012. However, when allowance is made for
the current 18-month time lag in reporting data, it will not be
possible to conclude finally whether the Government has achieved
the aspirations in the Public Service Agreement until 2014. The
Department's PSA technical note, which sets out how the target
will be measured, goes so far as to state that the annual reports
of GVA data should be viewed "with extreme caution".
120. If it is not possible to assess performance
against a target until two years after a programme's completion,
it must be questionable whether the target is actually useful.
We pursued the questions of data quality and timeliness with officials
during our inquiry into the Departmental Annual Report 2006. The
Department's Permanent Secretary, Mr Peter Housden, conceded that
the data had "limitations" and "may not be helpful"
within the lifetime of the PSA.[187]
However, he confirmed that steps were being taken to improve the
measurement of Regional Economic Performance "through improved
analysis and other sorts of data", so that in the second
half of the target period there would be "more immediate,
closer to real-time indications" of the Government's progress.[188]
We welcome the Government's
commitment to strengthen the evidence base for measurement of
regional economic performance.
