Memorandum submitted by the British Chambers
of Commerce
1.1 The British Chambers of Commerce (BCC)
is the national body for a powerful and influential network of
Accredited Chambers of Commerce across the UK; a network that
directly serves not only its member businesses but the wider business
community. Representing 100,000 businesses that together employ
five million people, the BCC is the Ultimate Business Network.
1.2 The BCC is delighted to have the opportunity
to submit evidence to the Business and Enterprise Select Committee's
inquiry into the future role and responsibilities of the Regional
Development Agencies (RDAs). Our network of local Chambers of
Commerce uniquely represent the local business voice within our
regions and have a strong interest in ensuring that the right
decisions are made at the regional level to ensure economic growth.
Our response is a coalition of views on RDAs as a whole, but recognises
there are significant differences in the way individual RDAs have
operated in their regions.
SUMMARY OF
THE BCC POSITION
2.1 The BCC sees the value in having strategic,
business-led agencies based in their regions to co-ordinate and
drive strategies for regional economic growth. There is however
a real diversity of views within the chamber network about the
value and effectiveness of each RDA in its respective region.
2.2 A number of Chambers broadly support
the role their RDAs have and are playing in co-ordinating the
approach to economic development in their region. Successful RDA-led
programmes, strategic economic activity on issues which cross
Local Authority boundaries and constructive working relationships
with the business community are all cited. However, others Chambers
point to problems with RDAs acting as arms of central government
in the region, with a lack of focus in terms of activities drifting
into other areas of policy and delivery and a disappointing leadership
of, and engagement with, business. This indicates a real problem
in terms of the accountability arrangements for tackling existing
problems with RDAs and examples of poor performance.
2.3 Going forward, we believe there is significant
value in the Sub-National Review (SNR) proposals to bring together
regional economic strategies that include planning, transport
and housing issues. We are however very concerned that other developments,
such as the processes for sign-off for Local Authority Leaders
Forums and delegation of funding will increase the likelihood
that the changes will not deliver significant economic benefits.
2.4 We believe that the following reforms
would improve the current situation:
— There is significant regional variation
in views as to how RDAs have performed, and a lack of information
available to make solid, evidence-based assessments of RDA performance
as a whole. To assess RDA performance accurately, a region by
region analysis of the conduct, activity, business perception
and effectiveness of each individual RDA should be conducted;
— RDAs should have their remit clearly
defined as being to support regional economic development, to
protect them from central government imposing other non-economic
priorities upon them and.to prevent mission creep into other policy
areas;
— There should be much clear lines
of accountability for RDA performance. We believe that RDA board
membership should be determined in the region, with sign-off by
regional ministers, parliamentary scrutiny conducted by the regional
select committee and accountability to the business community;
and,
— As an important principle, the BCC
would like to see procedures in place which would enable regions
to take the decision to replace, restructure or even abolish their
respective RDAs if they are clearly failing (if suitable workable
alternatives can be found).
ANSWERS TO
SPECIFIC QUESTIONS
The need for a level of economic development/
business/ regeneration policy delivery between central and local
government.
3.1 There is real potential value in having
regionally based agencies led by business to drive economic growth
in their regions.
3.2 A key part of this role is the co-ordination
of the development and implementation of an economic vision for
the region through an economic strategy for that locality. By
effectively bringing together agencies (businesses, government,
universities, community and volunteer groups) to develop and implement
a vision of an overall strategy for a region, benefits in terms
of working toward common goals, finding and exploring opportunities
for investment and reducing duplication and waste can be achieved.
This should then result in challenging targets and proposals which,
having been developed within the region, can then be championed
in a coherent fashion by the agency as a source of policy advice
to central government.
3.3 Secondly, a regionally based agency
can helpfully ensure the efficient delivery of policy in specific
areas within a locality in line with the regional strategy. The
effectiveness with which infrastructure and services such as business
support, skills and transport are delivered within a region, is
crucial to how well the economy performs in that locality. By
co-ordinating delivery regionally, there should also be efficiency
savings with any fragmentation or local variation in quality of
services reduced.
3.4 Thirdly business leadership of such
a regional body is an important principle for an agency tasked
with ensuring the co-ordination of a successful economic development
strategy. As the creators of wealth in the region, businesses
have the understanding and expertise in terms of what is needed
to foster business growth in the region.
3.5 We also recognise that in some areas
there is a strong case for devolving delivery to the local or
sub-regional level. Clearly functioning economic areas do not
necessarily reflect artificial regional (or local) boundaries
and are often sub-regional or even cross-regional for different
sectors and issues. A number of Chambers have been involved in
developing recently signed Multi-Area Agreements and we support
this approach. However even in these areas, an element of regional
co-ordination of this delegation to help to co-ordinate the structure
of this delegation of powers and funding may still be needed.
The effectiveness of RDAs and their role in adding
value
4.1 While there is significant regional
variation, Chambers do recognise that RDAs have led successful
programmes and brought a strategic economic focus on issues which
cross-local authority boundaries in some regions. However other
Chambers highlight examples of their RDAs acting too often as
arms of central government in the region with a lack of focus
in terms of drifting into other policy areas that are not about
economic growth. In order to make a solid, evidence-based assessment
of RDA performance, a region by region analysis of the conduct,
performance, business perception and effectiveness of each individual
RDA should be conducted.
4.2 In terms of successful projects, Chambers
have identified examples of RDAs successfully co-ordinating economically
important infrastructure investment eg Advantage West Midlands
funding of the Birmingham New Street Gateway Plus scheme, or brought
a strategic focus eg One North East's most recent Regional Economic
Strategy. Also, instances of effective working relationships with
the business community and examples of RDAs effectively supporting
the delivery of projects by other organisations have also been
highlighted.
4.3 The RDA responsibility for leading the
Business Support Simplification Programme through Business Link
as the primary access point for business support, is a crucial
process for companies. While Chambers of Commerce did previously
co-ordinate Business Link, and we believe that there are merits
in utilising the local knowledge, business membership and private
sector expertise Chambers possess (as in the example of Sussex
Enterprise), there is little doubt of the need for simplification
to take place.
4.4 RDAs are however also seen by some Chambers
and businesses as acting too often as arms of central government
in the region, lacking focus in terms of drifting into policy
areas outside of economic growth and having an overly bureaucratic,
public sector approach in their work. RDAs have not had the autonomy
to resist central government imposing new initiatives and policies
being tasked to them. The full remit of issues is extensive, from
oversight of improving access to finance for start ups and growing
businesses, and innovation support to supporting under-represented
groups as entrepreneurs, attracting inward investment, co-ordinating
skills provision, emergency recovery, regeneration, tackling climate
change and ensuring cohesion.
4.5 The BCC believes that RDAs should have
a clear focus on economic growth and that central government should
refrain from allotting them responsibility for the delivery of
other government policy priorities which are not core to this
objective eg environmental policy, equality and diversity policy
and social inclusion. Central government should also play its
part in allowing RDAs to have the autonomy and funding to deliver
on their economic development plans—the recent decision
to divert long-term funding for RDAs to housing support measures
indicates that this role is still not being taken seriously enough.
On their behalf RDAs should also not take on responsibility for
work that is not part of their core remit eg urban design, sports
or languages. This is not because these issues are not important
aspects of government policy, but just as organisations who deal
with health policy would not be given responsibility for law enforcement
as their core remit, so economic development agencies should not
be tasked with delivering other policy priorities. We therefore
suggest that RDAs should be clearly designated as Regional Economic
Development Agencies with their remit prescribed to prevent mission
creep and clearly protected from central government pressing other
non-economic priorities upon them.
4.6 This issue also relates to the role
of the Government Offices (GO) for the regions. There is not a
great understanding in the business community as to the relative
roles and functions of the GOs and the RDAs in terms of their
respective remits and responsibilities and how they actually differ.
In areas which have been in receipt of EU Objective One funding
such as Cornwall, the influence of the GOs has been strongly felt,
understood and appreciated by the business community. As this
picture changes the RDAs will become more important players in
these areas. There needs to be a much clearer articulation of
the GO's function, and where there are aspects of government policy
which are not fundamentally about economic development, at least
some of this should be picked up by the GOs.
4.7 Some RDAs have also drifted into practising
direct delivery of services which can often be done better by
other, often private sector organisations within the region. There
have also been reported incidents of RDAs establishing, funding
and managing services which directly compete with existing private
sector provision. We believe that direct delivery by the RDA should
only be considered where there is clear market failure or no alternative
means of delivery. We also believe that RDAs should primarily
be commissioning, rather than grant awarding bodies, and where
such activity might need to be conducted to facilitate economic
growth this should be contracted out to other organisations.
4.8 Effective business engagement by RDAs
is also a cause of concern. A number of RDAs have processes in
place to engage with business, including regular board meetings,
day to day contact but this needs to be much more systematic in
bringing the broader business community is brought into the process,
rather than just specific individual business people. A 2007 BCC
survey of Chambers last year found that while 60% of respondents
felt that RDAs had made either a lot or a little difference to
their regions only 40% believed their RDA consulted effectively
with business. While some Chambers have noted a renewed emphasis
on business engagement as a result of the SNR process with some
Chambers have taken on roles as conduits to reach out to the broader
business community in their regions, much more work needs to be
done in terms of RDAs building effective relationships with the
business community.
4.9 Overall, there is not a clear picture
from the information currently publicly available to enable a
clear conclusion as to how much extra value RDAs have added. With
a total budget of £2.3 Billion for 2007-08, RDAs have substantial
resources to deliver on their objective of improving the economic
performance of the English Regions and reducing regional economic
disparities. While there have been improvements in economic performance,
there is little evidence that RDAs have really made a major impact
on reducing regional disparites with clear outcomes being communicated
to the business community. There are however some regions which
are able to operate in a much more cohesive manner due to the
relative strength of their regional identity, economic interests,
geography, issues, problems and solutions etc, which are much
stronger in somewhere like the North East than the South East.
What does seem clear is that Government and national agencies
will inevitably continue to use a regional basis for their activities
as they are much fewer in number than Local Authorities and therefore
easier to deal with for national bodies. The issue will be whether
these continue to be based in their regions or Whitehall.
RDA expertise
5.1 RDAs were rightly set up to be business-led
organisations, reflecting the private sector's wealth creating
role and understanding of what is needed to deliver business growth
and economic development in the locality. We think that the business
leadership of the RDAs is an important principle which must be
retained and built upon with the business community playing a
role in championing greater efficiency savings.
5.2 It is important however that these posts
are filled with really high quality business people who have experience
of running a company. Our members have noticed in the past few
years a tendency for these posts to be filled by people who have
limited private sector experience but are also able to demonstrate
a background in other social, environmental or regeneration issues.
Some regions have indicated a willingness in their RDAs to tackle
this issue but this trend should be reversed in every region.
5.3 In order for RDAs to better fulfil their
economic development role, it is important that their board membership
remains strategic, rather than merely representing different sectoral
interests, and demonstrates links into the wider business community.
We suggest that in order to facilitate stronger business representation
which can articulate and make the case for the region to central
government, RDA board membership should be determined in the region
utilising the new regional accountability processes. There should
be sign-off by regional ministers with parliamentary scrutiny
through the regional select committee, rather than the Department
for Business, Enterprise and Regulatory Reform.
5.4 The expertise of the RDAs clearly goes
beyond their boards however and the experience of business of
RDA staff has been mixed across different agencies in terms of
their private sector expertise and understanding. This would best
be tackled by a clearer definition of their role, which should
not involve direct delivery of services, and greater transparency
in recruitment, project development and consultation procedures.
The extent of, and need for, their overseas activities
6.1 Currently United Kingdom Trade and Industry
(UKTI) co-ordinates our international trade and investment activity
across the world in conjunction with the RDAs. As a global movement
and brand, the Chambers of Commerce are heavily involved in international
trade activities and we find that the United Kingdom's image and
reputation for high quality goods and services is a very effective
platform for trade, which should not be diluted.
6.2 There is a real lack clarity and cohesion
between the RDAs and UKTI in their overseas activities. Even with
some examples of effective RDA activity in terms of attracting
inward investment, the potential for English RDAs, Scotland, Wales
and Northern Ireland to compete against each in terms of their
international representation represents real value for money concerns.
There needs to be much better national coordination of the delivery
of this activity to reduce overlap and duplication.
The consequences of expanding RDA remit to include
new functions, as proposed by the sub national review, including
the delivery of EU funding.
7.1 While some of the SNR's proposals for
expanding the remit of RDAs to include new functions offer potential
improvements to the current system we believe that there remains
a risk that the current proposals will fail to deliver significant
economic benefits.
7.2 We believe that there is significant
potential value in bringing together the two existing regional
strategies into a focused, evidence-based regional strategy covering
economic, housing, planning and transport issues. Planning around
issues like transport infrastructure is of such crucial importance
to regional economies that the separation of them from existing
strategies leaves a significant gap and the existence of two separate
strategies, often agreed at different times, is an obvious recipe
for confusion and inaction. However there is equally a risk that
rather than the IRS working to bring planning rightly within the
context of a broader economic strategy such a change could merely
perpetuate existing disputes about housing targets in Regional
Spatial Strategies at the expense of action on the economy.
7.3 While it is clearly important that Local
Authorities have a say in regional strategies, we are very concerned
about the process for Local Authority Leaders Forums to jointly
sign-off the IRS. The development and sign-off process must be
streamlined to work faster and better than existing arrangements
and we are concerned about the possibility of an objection by
a Local Authority holding up sign-off and resulting in damaging
delays or even deadlock requiring ministerial intervention. This
is particularly worrying as it will be an effective veto for Local
Authorities not only over issues currently included in the Regional
Spatial Strategy, but also issues currently in the Regional Economic
Strategy. We therefore feel that processes, such as a clear majority
vote, should be considered. A high benchmark for business engagement
in the process should also be set, which the Secretary of State
would take into account when signing off regional strategies.
7.4 There also needs to be much greater
clarity about the circumstances under which RDAs will be expected
to delegate resources to Local Authorities, who are being given
a new role in economic development. Many businesses are far from
convinced about current levels of capability and expertise within
their Local Authorities and where this is the case the RDA will
need to help build up the necessary capacity before delegating
funding. There is also a strong case for the RDA to seek proof
of capacity at the local level before funds can be allotted. It
is also crucial that the current business support simplification
function of RDAs is not disrupted in this process.
7.5 The additional RDA responsibility for
spatial strategy also means they will need to broaden their levels
of expertise both at board and executive level so that they can
ensure that the IRSs are not only clear, succinct visions for
the area but actually set out which sectors and places should
be priorities for investment. The model should be the Regional
Economic Strategy process rather than the problematic Regional
Spatial Strategy model. These additional responsibilities should
not however lead to a reduction in the levels of business representation
on RDA boards and should seek out additional private sector expertise.
7.6 With regard to EU funding, this is clearly
an extension of RDA's role which while giving greater resources
to co-ordinate economic development in the regions also runs the
risk of making RDAs larger, grant-making, delivery bodies with
a one-size-fits-all approach rather than the strategic, relationship
building, facilitators of economic growth that they should be.
The accountability of RDAs
8.1 We believe that RDAs should be held
to account for their performance against clear, measurable objectives
in terms of economic development. There is however a risk that
overly-complex accountability arrangements limit effectiveness
and muddle the real issue—a clear view as to how far an
RDA has met its targets. RDAs are currently accountable to a series
of central government departments and Parliament, targets based
on departmental objectives and regional economic strategies, performance
management, corporate plan and Independent Performance Assessments
(including the 2006 National Audit Office assessment). The current
situation seems to be overly complex and not conducive to RDAs
acting with autonomy as the risk-taking business bodies in their
region that they should be to drive economic growth.
8.2 Under the SNR it is proposed that accountability
arrangements are extended to include new Local Authority Leaders
Forums, Regional Select Committees and a role for new Regional
Ministers. How the business community (who are not directly represented
by the democratic process) will be involved in the new scrutiny
and accountability arrangements is by no means clear and is a
serious omission. The business community wants to see RDAs operating
in a way in which it is clear who is actually in charge of decisions
so that they can be held accountable for them. While some accountability
is needed at a national level, the new regional level accountability
arrangements should lead to a reduction in the number of national
level.
8.3 Even if this is not necessary in terms
of any current specific RDA's performance, the BCC would like
to see procedures in place which would enable regions to decide
to replace, restructure or even abolish their respective RDAs
if they are clearly failing. If RDAs are to be the business organisations
we would like them to be, they should be accountable for performance
as companies are to their shareholders. Clearly if abolition is
being considered this would require a wider debate about what
powers and responsibilities would need to be transferred to another
body, what body this would be and how accountable and effective
it would perform as a successor, but in principle, we feel if
something is clearly not working there should be the potential
for it to be changed.
How RDA performance has been measured in the past
and will be measured in future.
9.1 Up until now, RDAs have been tasked
with two potentially contradictory objectives: to improve their
region's competitiveness and reduce the imbalance that exists
within and between regions. While there has been economic growth
across our regions over the last ten years it is difficult to
judge how far this has been as a result of RDA activity. There
has certainly been no dramatic change in terms of changing the
long-standing regional economic disparites across the country.
While RDAs do produce statistics about the numbers of jobs created
and safeguarded in the region, more information about RDA performance
(value for money, internal and administrative costs etc.) should
be made publicly available.
9.2 RDA performance should be measured against
a clear regional economic growth objective, with specific outcomes
agreed and set out in the regional strategy. In the July 2007
SNR document, the Government suggested that each region should
have an overarching growth objective underpinned by five outcome
focused performance indicators (on productivity, employment rate,
skills levels, research and development spending and enterprise).
While there are some potential weaknesses with this approach (and
relevant statistics on international or long-term economic comparisons
and business satisfaction rates would be helpful), on balance,
these would be sensible outcomes to measure growth regionally
as the basis for RDAs being assessed and scrutinised.
19 September 2008
| 
