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


Initial SNR proposals

165. The Government wanted local authorities to have a greater role in the delivery of economic development and regeneration policies and for policy decisions and delivery to be delegated to the most appropriate spatial level. Accordingly, the SNR proposed the delegation of decision making to local authorities or sub-regions from RDAs wherever possible, unless there were clear reasons for not doing so.[149]

166. The SNR also asserted that local authorities would be able to provide more effective economic development and regeneration policies if they had greater certainty over their funding received from other bodies, such as RDAs, European Regional Development Funding (ERDF) and proposed new Homes Agency. It suggested that "these reforms will allow local authorities to plan further ahead and get them in a better position to make the long-term investments necessary to improve performance in their localities".[150]

167. It argued that this applied "in particular for sub-regions which represent functional economic areas and which have the capacity to manage large projects, provided decision-making structures are in place which allow effective prioritisation of investments".[151] It also went on to emphasise that RDAs should seek to focus more strongly on providing capacity support for local authorities to facilitate this.

Revised SNR proposals

168. As part of its revised proposals, the Government stated that it had not amended this proposal and that legislation was not required to implement it. RDAs will continue to deliver interventions themselves only where it is appropriate for them to do so, otherwise they will commission programmes and projects from other bodies (e.g., local authorities, universities, sub-regional partnerships).[152] The Government states that this proposal will allow considerable scope for partners to plan the commissioned programmes and projects but will retain strong accountability with the RDAs.

169. Investment planning will allow local authorities and sub-regional partners to have a determining role in planning and delivering interventions, although formal approval and accountability will remain with RDAs.

170. The discussions at Committee stage of the Bill in the House of Lords, however, suggest that the Government has, in fact, changed its position relating to the devolution of decision making to local authorities. During the debate on 24 February 2009, Baroness Andrews stated that: "Our position is a change of emphasis, not policy. The RDA, as part of its joint responsibility for delivery of regional strategy, needs to be able to ensure that the programmes and projects that it funds are consistent with the strategy so that there is coherence and fairness across the are, so that lessons learned from evaluation work of programmes in different areas about what is working effectively and value for money are adopted. It is also vital, especially at this time, to preserve the flexibility of RDA budgets so that they can, if necessary, be flexed to address economic imperatives."[153]

171. The Committee notes that some local authorities already undertake some degree of economic development agenda through Sustainable Communities Strategies, Local and Multi Area Agreements.

Issues raised in evidence on both the initial and revised SNR proposals


172. Witnesses were concerned by the lack of detail on how decision making responsibilities would be passed to local authorities. In particular, there was widespread fear that RDAs would delegate, rather than devolve, funding. In its submission, Barnsley Metropolitan Borough Council made the following distinction between powers being 'delegated' and 'devolved':

173. The LGA told the Committee that it had legal advice that existing legislation already enabled RDAs to devolve funding to local authorities but that it had perceived an increasing reluctance to do this in advance of SNR legislation. The LGA was concerned that this suggested that RDAs might not be easily persuaded to devolve these powers and functions.[155] Lancashire County Council also told us that it had experienced RDA reluctance to devolve funding.[156]

174. In its supplementary submission, Essex County Council returned to this concern, stating that "the extent to which local authorities are delegated RDA funding is still dependent upon their (RDAs') understanding of the 'spirit' and devolutionary intent of SNR. … Government will need to monitor the extent to which RDAs, in practice, delegate to these agencies and move towards a more strategic role".[157]

175. In its supplementary submission on behalf of all RDAs, One NorthEast sought to provide clarification and reassurance on this point:

    RDAs, as agreed with the LGA, consider there to be three broad approaches to the delivery of economic development activities:

    (i)  Regional direct delivery by the RDA, for example responding to economic shocks, inward investment, and innovation

    (ii)  Regional or sub regional delivery through contractual partnerships and extended enterprises for example through Business Link

    (iii)  Sub-regional and local delivery supported by increased delegation to local authorities and other local delivery bodies (e.g. Economic Development Companies, Urban Regeneration Companies and other forms of Special Purpose Vehicles).[158]


176. There were also concerns that local authorities might not have the skills they needed to undertake these tasks. Local authorities, on the other hand, argued that some authorities had sufficient expertise and were already active on economic development issues through existing powers. Essex County Council stated that, as a starting point, it wanted a presumption that local authorities were competent to undertake this spending function[159] whilst the LGA maintained that, if a local authority was not felt to have sufficient skills and expertise, it could face the ultimate punishment at the ballot box.[160]

177. A number of submissions questioned how a RDA might measure the readiness of local authorities to take on additional responsibilities. Many argued that funding should not be devolved until local authorities have proved that they have sufficient skills and experience to do so and that some sort of proof of capacity should be sought as a measure of local authorities' competence. Essex County Council raised the point that assessing capacity would be even more of a challenge for those RDAs with a high number of local authorities in their regions.[161]

178. In oral evidence, RDAs themselves told the Committee that they believed local authorities had the skills to deliver these programmes. EMDA cited the £50 million, about 43% of its budget, which it already delegates to local authorities in the East Midlands.[162] EMDA set out its own procedure for measuring the ability of local authorities to deliver economic development programmes:

    We do have our own internal auditors, so if we are going to work with a body like a local authority, a sub-regional partnership, we do a due diligence and then we have an understanding and agreement, a round of understanding, heads of agreement, whatever, that they will deliver X, Y and Z. We follow it up very closely, we monitor it and they have to give monthly reports. Every six months I meet with the chair and chief executive of every sub-regional partnership to assess where we are and what we are doing.[163]

The Committee's conclusions and recommendations

179. The Committee agrees that RDAs will be better able to focus on strategic economic and spatial planning matters if as much as is reasonable of the delivery of the strategy is undertaken by local authorities and other sub-regional partners.

180. The Committee welcomes the assurances provided to it, through One NorthEast, that RDAs are preparing to delegate responsibility to local authorities. It notes, however, that the very different terms 'delegation' and 'devolution' of responsibility are used interchangeably in the SNR documents and finds this unhelpful and confusing. Moreover, the Committee notes the comments made by Baroness Andrews that the Government appears to have changed its position over the extent to which RDAs will be requested to delegate or devolve decision-making. This must be clarified as a matter of urgency.

181. The Committee notes the comments made in evidence regarding the process by which RDAs will be able to accurately measure the readiness and skills of local authorities to deliver these responsibilities. The Committee seeks further information from the Government on how RDAs will measure local authorities' readiness and ability. The Committee foresees that difficulties might arise if a local authority has a different opinion of its capability than that of its RDA. The Government should be able to get tell whether a RDA is generally willing to devolve funding to local authorities by considering the degree to which it devolves funding to other local authorities or in other policy areas. The Committee calls on it to clarify whether it intends to do this and what steps it would take if RDAs are found to be unwilling to devolve decision making to local authorities appropriately.

149  SNR1, para. 6.48 Back

150   ibid, para. 6.48 Back

151   ibid, para. 6.71 Back

152   SNR3, paras. 2.51 - 55 Back

153   HL Deb, 24 February 2009, c84 Back

154   Barnsley Metropolitan Borough Council submission to Government SNR consultation Back

155   Ev 286 Back

156   Ev 278 Back

157   Ev 247 Back

158   Ev 340 Back

159   Q111 Back

160   Q101 Back

161   Q111 Back

162   Q221 Back

163  Q226 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 13 March 2009