Memorandum by HM Treasury (RG 106)
1. Why does HM Treasury consider the decentralisation
of transport, economic development, housing and planning budgets
and decision-making to be important?
HM Treasury, alongside DfT, DTI and DCLG believes
it is important that decisions on transport, housing, planning
and economic development should benefit from local and regional
expertise and support priorities identified in regional and local
strategies. Decisions on economic development, transport and housing
are inter-related and inter-department and decisions taken in
one of these areas have an impact on the others. Housing, transport
and economic development often entail investment for a number
of years and require sensible planning to allow effort to be better
focused, and allow more realistic and deliverable strategies to
be developed.
For these reasons, the Government invited each
region to provide advice on economic development, regeneration
and transport priorities within long-term indicative funding allocations
in July 2005, (Regional funding allocations: Guidance on preparing
advice, HM Treasury, DTI, DfT and ODPM, July 2005).
2. What were the conclusions from HM Treasury's
2005 consultation on decentralisation?
HM Treasury with DfT, DTI and the then ODPM
launched a consultation on proposals for regional funding allocations
in December 2004, (Devolving decision making: A consultation
on regional funding allocations, HM Treasury, DfT, ODPM and
DTI, December 2004). The consultation received 107 written responses
and concluded in March 2005.
Most respondents supported the proposals in
the consultation paper. In particular, there was enthusiasm for
better co-ordination of service planning at the regional level,
and for changes which would provide a longer term forward view
of resource allocations. A large majority of respondents favoured
some form of devolution of decision making in principle, with
some arguing that the proposals did not go far enough in transferring
power to the regions. A full analysis of the consultation responses
was published in July 2005 (Devolving decision making: A consultation
on regional funding allocations—Analysis of consultation
responses, In House Policy Consultancy, July 2005).
3. Could the principle of decentralisation
be extended to other policy areas?
The Government is considering the potential
for extending the principle of decentralisation to other policy
areas as part of its review of sub-national economic development
and regeneration, announced in Budget 2006. This will explore
the opportunities for further releasing the economic potential
of English regions, cities and localities, and to more effectively
respond to the ongoing challenge of tackling pockets of deprivation.
The review is ongoing and has not made any recommendations
yet, but will report in advance of next year's Comprehensive Spending
Review.
For further information, the review's full terms
of reference are available on the Treasury website at http://www.hm-treasury.gov.uk/spending_review/spend_csr07/reviews/spend_csr07_reviewsindex.cfm
4. What steps would need to be taken to ensure
full accountability of devolved decision-making given that the
Government has abandoned, for the time being, its policy of seeking
fully-elected regional assemblies?
The Government is considering local and regional
governance structures and accountability as part of its review
of sub-national economic development and regeneration.
5. What progress has been made in presenting
an accurate picture of departmental investment in the regions
via "regional accounts"? What further improvement does
HM Treasury wish to see?
The Government made significant improvements
in its analysis of public expenditure by country and region in
2004. This was set out in Public Expenditure Statistical Analyses
2004, HM Treasury, 2004. Since then, HM Treasury has continued
to work with spending departments to look further at the allocation
methods applied to different areas of expenditure, to improve
the quality of the data and to ensure the methods are robust,
accurate and consistent with guidance issued jointly by HM Treasury
and the Office of National Statistics. The latest regional spending
data is published in the 2006 version of Public Expenditure
Statistical Analyses.
6. What lessons have been drawn from the
last round of "Regional Emphasis Document" preparation
about the capacity and willingness of regional agencies to handle
tough decisions on priorities?
The Government commissioned "Regional Emphasis
Documents," which allowed each region to advise on all areas
of public expenditure, in preparation for the 2004 Spending Review.
Regions succeeded in providing evidence-based advice on their
priorities for investment.
HM Treasury, along with other Government departments,
is keen to strengthen the regional input into major policy decisions.
The key lesson drawn from the "Regional Emphasis Document"
exercise was that regions' capacity and willingness to prioritise
is better facilitated if advice is focused on particular policies
of relevance to regional growth and set within realistic levels
of public expenditure. In developing advice on regional funding
allocations, each region demonstrated its capacity to identify
a clear list of transport priorities within indicative allocations,
demonstrate widespread agreement within each region on strategic
priorities, and strengthen alignment between Regional Economic
and Spatial Strategies.
Building on this success, the Financial Secretary
to the Treasury has invited the Regional Development Agency (RDA)
and Regional Assembly in each region to submit advice for the
2007 Comprehensive Spending Review. The Financial Secretary's
invitation seeks to increase further the impact of regions' advice
and enable each region to enhance further their ability to make
tough decisions on priorities by refining the parameters of regional
advice to the Government. In particular, regions have been asked
to:
— concentrate on public spending areas
of relevance to the Government's regional growth and regeneration
objectives, in order to maximise the focus and effectiveness of
the advice;
— advise on how we better utilise existing
levels of public expenditure;
— use and build upon evidence developed
through Regional Economic Strategies, Regional Spatial Strategies,
advice on Regional Funding Allocations and information supplied
by Regional Observatories; and
— demonstrate a wide level of consensus
from regional and local partners.
7. Equally, is HM Treasury satisfied that
key spending departments are proving effective at taking regional
views on board?
Key spending departments have demonstrated their
willingness to take regional views on board, including in response
to "Regional Emphasis Documents" and to advice on regional
funding allocations.
2004 Spending Review: Meeting Regional Priorities,
Response to the Regional Emphasis Documents (July 2004) set
out the Government's full response to the "Regional Emphasis
Documents," confirmed the commitment of HM Treasury, DTI
and the then ODPM to achieving the regional economic performance
target, and established the commitment of DfES, DWP and DfT to
playing their part in achieving the Government's objectives for
regional growth.
With regard to regional funding allocations,
the Secretary of State for Transport and Ministers from HM Treasury,
DfT, DTI and DCLG wrote to each region in July 2006 setting out
how the Government has taken on board advice from the regions.
8. A report by the LTE Consortium noted that
the RED preparation process highlighted shortcomings in the availability
of "robust, up-to-date, regional monitoring data," together
with a lack of evaluative evidence on policy initiatives and a
paucity of "robust, functionally disaggregated data on public
sector investment in the regions." What action is the Government
taking to address these shortcomings?
The Government agrees that improving the quality
of regional data is critical to improving the regional policy
framework, enabling regions to provide effective advice and delivering
the regional economic performance target.
That is why the Government has introduced a
number of initiatives to improve the regional evidence base. The
Government committed in the 2004 Spending Review to implementing
Christopher Allsopp's recommendations on improving statistics
for regional economic policy (as set out in Review of Statistics
for Economic Policymaking, Christopher Allsopp, March 2004).
Towards fulfilling this commitment, the RDAs have agreed to work
in partnership with the ONS to deliver a full regional statistical
presence by March 2007.
The Government has also taken steps to enhance
the quality of regional economic indicators. Following a consultation
in 2004, (Productivity in the UK 5: Benchmarking UK Productivity
Performance, HM Treasury and DTI, 2004), the Government has
established a set of regional productivity indicators which it
regularly reports progress against. Latest outturn data on these
productivity indicators can be found on DCLG's website at: http://62.73.191.157/regind/default.asp.
Moreover, the Government has taken steps to
improve the quality of regional spending data, in response to
the McLean study of the Government's spending statistics (Identifying
the flow of Domestic and European expenditure into the English
regions, Nuffield College and ODPM, 2003). Building upon the
recommendations of the McLean study and the Allsopp review, the
Government continues to enhance the availability and quality of
regional spending data each year in its Public Expenditure
Statistical Analyses publications (the latest edition of which
is Public Expenditure Statistical Analyses 2006, HM Treasury,
2006).
9. What improvements would HM Treasury like
to see in respect of the "joining up" of regional policies,
and a greater role for regional inputs into the public expenditure
process? How might such improvements be put into practice?
The Government is keen to improve further the
"joining up" of policy interventions at the regional
level, though building on exercises such as the regional funding
allocations process.
A recent example of the Government's intent
to "join-up" policies at the regional level was set
out in DTI's consultation on a draft National Strategic Reference
Framework for the 2007-12 programme of EU Structural Funds. This
signalled the Government's intention to align European programmes
with domestic regional funding streams and priorities established
in Regional Economic Strategies.
The review of sub-national economic development
and regeneration, announced in Budget 2006, is exploring options
for improving further alignment at the regional and local levels.
10. The regional economic performance PSA
target has two parts: a short term priority to help all regions
reach their full potential, and a longer-term one to reduce disparities
between London and the South East, and other regions. Which of
these parts, in HM Teasury's view, is more important?
The Government is committed to improving the
economic performance of all English regions and reducing the persistent
gap in growth rates between the regions. Achieving both parts
of this target are equally important. Delivering the regional
economic performance target will: contribute to economic efficiency
by ensuring that the economy benefits from each region's assets
and potential; and enhance equity by distributing economic opportunities
across the UK. The target is consistent with HM Treasury's departmental
aim to "raise the rate of sustainable growth and achieve
rising prosperity and a better quality of life, with economic
and employment opportunities for all."
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