House of Commons - Regional development agencies and the Local Democracy, Economic Development and Construction Bill

Regional development agencies and the Local Democracy, Economic Development and Construction Bill - Business and Enterprise Committee Contents

4 SINGLE INTEGRATED REGIONAL STRATEGY AND ASSOCIATED REGIONAL GOVERNANCE STRUCTURES

Initial SNR proposals

68. The SNR proposed that there should be a single integrated regional strategy setting out the economic, social and environmental objectives for each region except London. This would replace the current Regional Economic Strategy (produced by RDAs) and the Regional Spatial Strategy (produced by regional assemblies). It expected the strategy would "act as a focus for economic development within the region, with national agencies, regional bodies, sub-regional tiers and local authorities all working together to achieve the agreed outcomes" and would include commentary on the overall vision for the strategy, evidence base, strategic priorities, policy and spatial priorities, delivery strategy, spending information and a consultation schedule.[53] Thus, "the new arrangements for the regional strategy place a premium on effective stakeholder engagement and management, on which the RDAs will lead".[54]

69. RDAs would be given executive responsibility for developing the integrated strategies in consultation with relevant regional and sub-regional stakeholders, regional assemblies would be abolished and local authorities would be responsible for agreeing the integrated regional strategies.[55] Each strategy would be jointly signed off by the Secretaries of State for BERR and CLG.[56]

70. The Government undertook to ensure that local authority leaders and all sub-regions were represented in a way which enabled "strategic decision making and prioritisation of decisions across each region, possibly involving a regional forum of leaders".[57] The subsequent consultation document proposed that a forum of local authority leaders, representing all the local authorities in the region, would sign off the draft strategy and help to hold the RDA and its regional delivery partners to account.[58] If regional partners failed to agree the draft regional strategy, the RDA would submit the draft, with a note setting out the areas of disagreement, to Ministers. Ministers would consider this, and any independent advice, before deciding on a course of action.[59]

71. The original SNR document did not refer to the expected timescales for the process but the consultation document stated that a full regional strategy review could, potentially, be achieved within 24 months: this included 12 months for scoping and preparatory work; three months for the RDA to draft and agree the strategy; six months consultation; two months for consequential revision and a further two months for its agreement by the Secretaries of State.[60] It stated that it would be for the regions themselves to decide how frequently the strategy should be renewed, but suggested five yearly reviews would be appropriate.[61]

72. Given RDAs' enhanced role and responsibility , the SNR recognised the need to address their "lack of a clear democratic mandate".[62] It proposed that the Local Authority Leaders' Forums should also be responsible for scrutinising RDA performance[63] and stated the Government's intention to develop clear mechanisms for enhanced Parliamentary scrutiny of regional institutions as "there is not currently a structured, systematic role for MPs to play in holding regional institutions to account".[64] RDAs would continue to be managed by a single Whitehall department, BERR, which would also have responsibility for the REP PSA (see paragraph 14).[65]

73. The SNR also proposed reform of the RDAs' objectives, replacing the existing 12 PSAs and ten output targets with one regional economic growth objective. This new objective would be aimed at increasing regional Gross Value Added (GVA) per head, in line with the REP PSA, and would provide a framework for all RDA activity and the integrated regional strategy. All RDAs would be responsible for achieving this growth target, working with other stakeholders, and delegating funding and delivery to regional and sub-regional partners, as agreed.[66]

74. Although the SNR proposed this extended remit for RDAs, it made it clear that they would remain business led and focussed.[67]

Issues raised in evidence to initial SNR proposals

SINGLE INTEGRATED REGIONAL STRATEGY

75. The majority of submissions received by the Committee supported the idea of a single integrated regional strategy. RDAs argued that:

We said right at the start what we wanted was a bringing together of the spatial strategy and the economic strategy because it made no sense to be doing them at different times, quite honestly, because there is confusion, there is duplication and there is opportunity to get it wrong.[

76. Representations from the business community also supported the proposal. The CBI argued that it made no sense to have the regional and spatial planning strategies as separate documents administered and delivered by separate organisations.[69]

77. Although there was agreement that economic and spatial planning should be combined into a single strategy, however, there was disagreement about the appropriate balance between the two. The private sector argued that RDAs should be careful not to lose their economic focus or attention to businesses' needs. In contrast, local authorities were keen that the focus of the integrated regional strategy should include wider community issues, rather than being solely economic. Essex County Council considered the challenge facing RDAs would be "to make that translation from being focused around development of a regional economic strategy … to actually trying to deal with the compromises and complexities of spatial planning around communities and the way communities develop—because it is about people; it is much more about people than it is about just the economy".[70]

ACCOUNTABILITY FOR SPATIAL PLANNING DECISIONS

78. Local authorities were concerned that the initial proposals weakened their role in relation to spatial planning decisions, and thus their link with communities and their electorate. They argued that the importance of spatial planning issues for communities warranted the involvement of elected representatives and that transferring planning responsibilities to RDAs would create a democratic deficit. Ashford Borough Council stated that "the decision incorporated in the SNR to abolish regional assemblies and place regional planning decisions in the hands of unelected quangos represents an unacceptable diminution in the role and influence of local government on decisions which will have profound effects on their communities".[71]

79. RDAs countered this argument by referring to their "very, very detailed accountability": from their internal procedures and boards (made up of business, local authority and other representatives), to Parliament, Government, regional assemblies and the National Audit Office.[72] As EMDA stated:

AGREEMENT OF THE INTEGRATED REGIONAL STRATEGY

80. Many witnesses were concerned about the proposals relating to the agreement of the single integrated regional strategy and the role of the Local Authority Leaders' Forum. Local authorities sought clarification over what would happen if they could not agree the draft regional strategy with the RDA, fearing they would be powerless to prevent the RDAs referring it to the Secretaries of State for a decision. They called for their role in the process to be strengthened to prevent this happening.

81. Business representatives also called for greater detail on how the process would work in practice. The CBI stated:

There is quite a lot of work still to do to refine the proposals to make sure that they are workable and that the RDAs are going to deliver something that is better than the current system that we have. Otherwise, what is the point? This is essentially a re-organising of regional structures and if that is to be meaningful to business then it has to deliver something that is better. We are not yet convinced that the detail behind that proposal has been worked out sufficiently to give us the confidence to say we are there.[

82. The business community was further concerned that local authorities and local representatives had limited experience of economic development and business issues. They argued that the proposals would result in the economic aspects of the strategy depending on the agreement of these councillors. The BCC went on to suggest that, if the forum of local authority leaders could not agree a strategy because of spatial planning issues, it would delay both the spatial planning and the economic planning aspects of the strategy.[75] Other submissions were concerned that the inclusion of local authorities could potentially expose the process to party political divisions. In written evidence, the CBI argued that "by essentially giving local authorities a veto, the Government runs the risk that regional strategies will follow the 'course of least political resistance' instead of identifying and focusing upon the key areas of development and regeneration."[76] In oral evidence, the CBI went on to state that the process might place "quite a burden on those local authorities (with a dissenting minority) for ensuring that they can reach agreement on what, after all, might be some quite politically difficult decisions that have to be made".[77]

83. A number of business submissions suggested ways to prevent this situation occurring. The CBI argued that the forum should be opened up to all core stakeholders who would be collectively responsible for directing the development of the integrated regional strategy and become a focal point for engagement and consultation. The RDAs argued, however, that this would simply be reinventing the regional assemblies.[78] The EEF argued that the forum should have the power to make recommendations to change the strategy, but should not have a veto.[79]

84. RDAs themselves also seemed unclear about what would happen if local authorities disagreed with the draft strategy. EMDA stated "at the moment, we do not know and that is one of the things that CLG are looking at".[80] Advantage West Midlands (AWM), however, argued that it would be unlikely for the process to reach this stalemate and pointed to the experiences of the nine RDAs in drafting and agreeing the regional strategies (every three years) to date, with only one strategy disputed at the agreement stage.[81]

THE WORKABILITY OF THE PROPOSED LEADERS' FORUMS

85. A number of witnesses also expressed concern about the lack of clarity over how the leaders' forums would operate internally. It was suggested that the sheer number of local authorities in some regions would mean the local authority leaders' forums were too large to agree of the strategy speedily. The Institution of Economic Development (IED) suggested that some regions have six times as many councils as others,[82] the BCC referred to the proposal as a "recipe for paralysis of the process"[83] and Ashford Borough Council referred to the difficulties of

86. At the Committee's meeting on 7 October 2008, Essex and Lancashire County Councils both suggested that each region should be given sufficient flexibility and discretion to devise a forum which best suited its size and local authority climate, perhaps with a main forum delegating responsibility for some issues to committees.[85]

TIMETABLE FOR THE DRAFTING AND AGREEMENT OF THE INTEGRATED REGIONAL STRATEGY

87. Comments were also made about the short timetable for agreeing the integrated regional strategy. Barnsley Metropolitan Borough Council highlighted that the timescale proposed was shorter than for the existing regional spatial strategies, yet the integrated regional strategy would have a broader range of content.[86] In contrast, the FSB argued that the timescales for developing strategy were too slow and would restrict RDAs' flexibility and adaptability to changing economic circumstances.[87]

CONFLICT OF INTERESTS FOR LOCAL AUTHORITIES?

88. A number of submissions expressed concern that the dual role of the Leaders' Forum, in both delivering policies with RDA funding (see chapter 7) and scrutinising RDA performance, would result in a conflict of interests. The CBI stated that "setting the strategy, delivering it and then holding the other people to account is quite a big function for a local authority to have"[88] although the business representatives agreed that mechanisms could be placed within the funding processes to avoid such a situation. The LGA also argued that the executive and scrutiny functions of the proposed forum should be separated.[89]

RDAS' SKILLS AND EXPERTISE

89. Many witnesses raised the lack of RDAs' skills in relation to spatial planning. RDAs stated that they were already addressing this shortage and would both inherit some staff from regional assemblies and recruit new staff. Moreover, they suggested that acquiring the skills needed for their spatial planning role would not be an overwhelming challenge as RDAs would be "talking at the strategic level", leaving the detailed planning to continue as it currently does.[90]

CONSULTATION AND ENGAGEMENT WITH STAKEHOLDERS

90. The proposed consultation process for the new integrated regional strategy also raised a number of concerns. Representatives of business felt that the proposals would squeeze business interests, arguing that they did not require sufficient consultation with the private sector. The FSB argued that consultation with recognised business organisations should be a statutory requirement.[91] Other submissions argued that RDAs would need to develop new skills of consultation and engagement in order to ensure this relationship was productive. Essex County Council argued, for example, that

91. When giving oral evidence, however, RDAs highlighted the significant emphasis on consultation in the SNR proposals, arguing that:

Revised SNR proposals and Part 5 of the Bill

92. Following its consultation, the Government considered that there was broad support for a single integrated regional strategy and confirmed its proposals to merge the existing regional economic and spatial planning strategies and abolish regional assemblies. Clause 65, Regional strategy, of the Bill provides that "there is to be a regional strategy for each region other than London". The existing economic and spatial planning strategies will become the integrated regional strategy for each region on the commencement of the clause, to the extent specified by the Secretary of State.

ROLE OF LOCAL AUTHORITIES

93. The proposals relating to the role of local authorities within the process, however, have been significantly revised in two ways. First, it is now proposed that planning responsibilities will fall jointly to RDAs and a Local Authority Leaders' Board (LALB). Clause 68, Review and revision by responsible regional authorities, provides that RDAs and LALBs (the 'responsible regional authorities') must review and revise regional strategies. The Government anticipates that this solution will "form the basis for a stronger partnership at the heart of each region" and enable RDAs to retain their economic expertise and focus, with LALBs bringing democratic accountability to the process.[94]

94. The revised SNR proposals state that each LALB will be:

Streamlined, manageable, strategic and able to take the long term view;
Representative of their region, including key sub-regions, different levels of authorities and the political balance; and
Made up of local authority leaders, able to act on behalf of their authorities.[95]

95. Clause 66, Leaders' boards, provides that they will be drawn from 'participating authorities' whose area falls wholly or partly within the region and that these authorities include district councils, county councils, National Park authorities and the Broads Authority.

96. The proposals and Bill are silent on how RDAs and LALBs will work together in undertaking their joint responsibility, although Clause 74(1)(a), Revision: supplementary states that the Secretary of State may make regulations regarding the procedure the responsible regional authorities should follow in revising the strategy.

97. The Bill gives the Secretary of State powers to intervene if it is felt that the LALB is not operating effectively. Clause 66(8), Leaders' boards, gives the Secretary of State power to withdraw approval for a Local Authority Leaders' Board that is not operating effectively and clause 67, Responsible regional authorities, provides that, if there is no Leaders' Board for a region, the RDA becomes the responsible regional authority solely responsible for drawing up the strategy. These provisions complement the existing powers available to the Secretary of State to give guidance or directions to RDAs in relation to the exercise of their functions through s27(1) Regional Development Agencies Act 1998.

98. Additional powers are reserved for the Secretary of State to intervene in the revision process. Clause 68(5)(a), Review and revision by responsible regional authorities, provides that the Secretary of State can direct that the strategy be revised and s72(1)(a), Approval of revision by Secretary of State permits the Secretary of State him or herself to revise the strategy if the responsible regional authorities fail to comply with this direction.

99. The revised SNR proposals state that RDAs and LALBs will be given the flexibility to agree the form and content of regional strategies, although a number of issues which they must cover were set out.[96] Clause 71, Matters which must be taken into account on revision, states that regard must be paid to national policies and advice contained in guidance set out by the Secretary of State as well as to a range of other matters such as the availability of resources, and the strategies of adjoining regions or devolved administrations.

100. Clause 69, Community involvement, places a duty on RDAs and LALBs to produce a statement on how they will involve their communities during the drafting process. The revised SNR proposals also state that there must be close dialogue between RDAs and LALBs with government departments to ensure a close alignment of priorities and investment.[97]

101. Clause 70, Examination in public, provides that an Examination in Public panel[98] may be established to report to the RDA and LALB . The consultation response notes this is to "flag issues concerning the evidence base and to identify substantive issues of controversy at an early stage".[99] The RDA and LALB must consider any such panel's recommendations.

102. Clause 75, Implementation, requires RDA and LALBs to produce an implementation plan setting out how the strategy will be delivered. The plan must have 'buy-in' from regional stakeholders and an annual monitoring report will show progress.[100]

103. The revised SNR proposals stated that the Government was still considering whether it would set statutory timetables for the strategy to be produced[101] and the Bill is silent on this matter.

104. The Government provided a policy statement on regional strategies in January 2009. The document sets out information regarding the strategies, including the process to be followed when drafting and agreeing them. Paragraph 3.9 states that local authorities and RDAs must make a scheme for each region setting out how the RDA and LALB will work together to fulfil their duties to jointly produce the draft integrated regional strategy and implementation scheme and what the decision making process will be, including resolving differences.[102]

SCRUTINY OF RDAS

105. The second revision is that LALBs will not have a scrutiny function over RDAs. This responsibility has been transferred to the eight regional select and grand committees for the English regions which were established by the House of Commons on 12 November 2008.

106. Standing Order Rule 152F established eight regional select committees which shall "examine regional strategies and the work of regional bodies for each of the English regions". As the Leader of the House explained:

Concern has been expressed about the scope for overlap between the work of the regional Committees and the work of the departmental Select Committees. In order to minimise that, the motion invites the House to endorse the expectation that regional Select Committees will meet less frequently than departmental Select Committees and provides for only one of the regional Committee Chairs to serve on the Liaison Committee. We propose that each Committee should have up to nine members, nominated by the Committee of Selection in the usual way. As with all Committees of the House, their membership will reflect the composition of the House. That is the long-established practice of the House in relation to Select Committees of all kinds, including the Scottish, Welsh and Northern Ireland Affairs Committees.[

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107. Standing Order rule 117A established a regional grand committee for each of the regions. Their membership will "consist of those members who represent constituencies within the region and up to five other members nominated by the Committee of Selection". As the Leader of the House explained:

While the motions to establish regional Select Committees present the House with an opportunity to provide for detailed investigations into and reporting on agencies and action at regional level, we want to ensure that all Members in a region can be involved in greater regional accountability. We therefore propose that as well as the regional Select Committees, we establish regional Grand Committees to include all Members from the region. The regional Grand Committees will be a forum to consider the "state of the region" and would meet annually, or twice a year if the need arose. As with regional Select Committees, we expect that they will generally meet in the region, taking Parliament out of Westminster and into the regions.

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Issues raised in evidence on the revised SNR proposals

SINGLE INTEGRATED REGIONAL STRATEGY

108. The Minister told the Committee that RDAs' focus on the business community would not be diluted by their new responsibilities, arguing: "by combining the economic strategy with the spatial strategy, I think that is an opportunity for economic gain and not one which will see a dilution in focus. I do not think that business will lose out from this, business has a great deal to gain from it".[105]

ACCOUNTABILITY

109. A number of supplementary submissions raised the issue of RDA accountability. The Campaign to Protect Rural England argued that RDAs should become more transparent and that they should also be accountable to a number of departments, to reflect their wider remit.[106] The West Midlands Regional Assembly expressed a "degree of scepticism that the new parliamentary accountability arrangements will provide effective scrutiny of regional organisations and strategy. This is due to the limited time available for detailed investigations."[107]

110. The Minister, however, considered that the new proposals ensured complete accountability:

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DRAFTING AND AGREEMENT OF THE INTEGRATED REGIONAL STRATEGY

111. Of the small number of submissions received following the revised proposals, stakeholders expressed support for local authorities to be jointly responsible for the integrated regional strategy although continued concerns were expressed about how the relationship between RDAs and local authorities would work in practice. The CBI stated that the more collaborative approach would "ensure democratic legitimacy for the strategy without diluting the focus on economic development" although it also sought clarity on the exact process for formulating and agreeing the single strategy.[109] In its supplementary response on behalf of all the RDAs (except the LDA), One NorthEast told the Committee "it should be acknowledged however, that potentially challenging negotiations to reach clarity on the 'joint responsibility' between the RDAs and Leaders' Board will be required in each region. The ease by which these arrangements are agreed is likely to differ across regions".[110]

112. This was also raised by Dr Paul Benneworth from the Centre for Urban and Regional Development Studies at the University of Newcastle upon Tyne, who argued that greater emphasis should have been placed on the regional arrangements to ensure that local authorities would be able to agree with each other, and with their RDA, over the form and content of their regional strategy. He considered that, if this was not addressed, the exceptional powers for Government intervention will become instead the standard approach to regional planning.[111]

113. In oral evidence, Ms Bernadette Kelly, Director of Planning from CLG, acknowledged that there might be difficulties in securing agreement across all the levels of local authorities and agreed that "there may be tensions obviously in some regions, but what we hope is that there will be an incentive here for local authorities to work together to come up with a sensible proposition".[112]

114. The issue of the membership of the LALBs and their relationship with RDAs was also considered at length by the House of Lords during Committee stage of the Bill on 24 February 2009. The Parliamentary Under-Secretary of State and Government Spokesperson for Communities and Local Government, Baroness Andrews, confirmed that: "as part of the working arrangements for preparing the draft strategy, we expect the RDA and the leaders' board to set out how they will resolve any differences between them, either on the process or content of the strategy. We expect that mechanism to be in place before they start on a revision."[113]

CONSULTATION AND ENGAGEMENT WITH STAKEHOLDERS

115. The Minister stressed the importance of consultation in the proposed SNR process:

You mentioned business and they clearly want to and should be consulted, but they are not the only voice who should. There are environmental partners, social partners who should also be consulted. I think any region worth its salt is going to want to get buy-in to a strategy that is as big and as important for it as this and I believe they will do that and section 69 of the Bill asks them to do that. What we could have done, which we did not do, was produce a whole list of people you are supposed to consult with and ask them to go through a great tick box exercise. I think that would have been mistaken.[

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The Committee's conclusions and recommendations

SINGLE INTEGRATED REGIONAL STRATEGY

116. The Committee recognises the broad support for the integration of the existing regional economic and spatial planning strategies and welcomes the Government's decision to merge the two. The Committee emphasises, however, that it will be essential to balance the economic and the spatial planning aspects of the strategies. It will be difficult for RDAs to remain business led organisations whilst jointly responsible for a strategy which encompasses a range of often very sensitive community issues.

117. The Committee notes the tensions between witnesses about the need to represent business interests and the need to represent community concerns within the integrated regional strategy. The Committee believes that business interests cannot be presumed to take precedence over the democratically expressed wishes of local communities. The process that eventually results from the Bill must allow community concerns raised through the local democratic process to be fully recognised and taken into account.

ACCOUNTABILITY

118. The Committee welcomes the fact that local authorities, through the Local Authority Leaders' Boards (LALBs), will retain their democratic link with spatial planning issues under the revised proposals. As the Committee has already stated, however, it is concerned that RDAs must remain business focused to perform their primary functions and that the Bill does not provide sufficient safeguards to local communities. The Committee urges Members to address these central points during the passage of the Bill through the House of Commons.

119. The Committee welcomes the revised proposals relating to the functions of LALBs and supports the Government's decision to separate the executive and scrutiny functions. We are concerned, however, that over the evolution of the Government's proposals an accountability gap may have been created. The Committee recognises that regional committees are expected to have a key role in the accountability of the integrated regional strategies and regional governance. It is too soon to judge their effectiveness but this Committee does have concerns about whether regional committees will have the time and resources to scrutinise sufficiently regional strategies. Nor is it clear how such scrutiny will fit with existing committees' remits, such as this Committee's scrutiny of BERR and its agencies, including RDAs.

AGREEMENT OF THE INTEGRATED REGIONAL STRATEGY AND WORKABILITY OF THE PROPOSED LEADERS' BOARDS