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

Memorandum submitted by Centre for Cities


  1.  The Centre for Cities ("The Centre") welcomes the opportunity to respond to the Business and Enterprise Committee's review of the future role and responsibilities of the Regional Development Agencies (RDAs).

  2.  The Centre is a non-partisan research and policy institute, helping cities improve their economic performance. We work with cities, employers and central government to develop practical policy solutions which help urban economies to grow. Our work focuses on three major themes, of crucial relevance to city economies: business and enterprise; housing and labour markets; and city infrastructure.

  3.  The Centre is actively considering the future of RDAs as part of its own policy work. We are not convinced that there is a strong case to maintain RDAs in every region in their current form. We will be setting out our thoughts on the future shape, role and functions of RDAs later this autumn. Given the strong political interest in this issue in Westminster, we will keep the Committee informed as we progress this work.

  4.  This short response touches on a number of the issues highlighted by the Committee. It sets out the Centre's existing thinking—drawing on our experience of working with RDAs, cities and business organisations through our research.


  5.  There is a need for a level of governance between Whitehall departments and local authorities in order to deliver economic development, transport, regeneration, training and regeneration.

  6.  However, the city-regional (or sub-regional) level is the most appropriate level at which to co-ordinate, plan, and deliver key economic development functions—as this level most closely matches the "real economies" of England's cities and towns.[74] Existing local authorities are too small to capture the "economic footprint" of places, and the English regions are too big.

  7.  Accordingly, we support the consolidation of the regional tier—and the shift of delivery functions toward city-regions—outlined by the Sub-National Review (SNR). As recognised by the SNR, economic development, business support and regeneration policies need to be delivered at the level that matches real economic areas, that of the city-region or sub-region.

  8.  RDAs need to be more strategic, and devolve programme funding (as opposed to project funding) downward to city-regions and sub-regions. Currently, RDAs are too tactical and interventionist—and spend considerable time and resource managing individual projects. They are also trying to achieve too many priorities at once. In future, RDAs should focus on (1) setting a high-level investment plan for the region as a whole via Integrated Regional Strategies, (2) prioritising funds on and between city-regions, (3) support inter-regional collaboration (eg Milton Keynes growth area, Sheffield City Region), and (4) supporting a small number of business clusters where the region has established strengths.

  9.  But the commitments outlined by the Government in the SNR are vague and high-level. Over a year after the publication of the SNR, there is still an urgent need to set out the detail of how RDAs will devolve power downward to city-regions and to local authorities.


  10.  From our work with cities, RDAs and business leaders across England, the performance of RDAs has been mixed. For example, the Northwest Development Agency has taken a proactive approach to developing city-regions—eg in Greater Manchester—as evidenced by its joint work with the Centre in 2006.[75] Yorkshire Forward has been commended for its prioritisation of investment, notably in transport. And One NorthEast's willingness to submit the region's economy to a full-scale OECD territorial review was commendably transparent.[76]

  11.  However, RDAs are also often seen as inflexible and unaccountable—and their performance is often criticised. An example would be in the West Midlands, where Birmingham City Council and Advantage West Midlands have maintained a tense relationship over the years—with some projects, such as New Street Station, slowed as a result. In major cities, RDAs are sometimes viewed as a barrier to more effective sub-regional working, rather than an asset.

  12.  The Government bears some responsibility for RDAs' mixed performance. First, RDAs have confused lines of political accountability (more below). Second, they have had to answer to a number of departments—such as CLG and DfT—in addition to their sponsors in DTI/BERR. And third, the RDA tasking frameworks have been complex and confusing—especially after the failure of elected Regional Assemblies. Confused steers have made it difficult for RDAs to focus their efforts on a small set of strategic interventions that promote economic growth. A simpler RDA performance framework, with a smaller number of priorities, is to be welcomed.


  13.  In our recent report on UK Cities in the Global Economy, we argued that individual English regions do not need overseas offices. These are inefficient, and compete against each other—potentially to the detriment of the UK as a whole. Instead, city-regions should work through the existing UK Trade and Investment framework to build up city-regional "brands" and to attract Foreign Direct Investment targeted on cities' particular business assets.[77] We therefore do not support the continued operation of RDA inward investment offices.

  14.  We have attached a copy of the above report for the Committee's consideration.


  15.  Given their expanded control over regional economic development funding and strategy, it seems sensible for RDAs to take over the strategic management of remaining EU Structural Funds. This would enable better match-funding and gap-funding of key regeneration projects at a time when public expenditure is tight. However, as argued in previous work, this funding should be focused on city-regions—and devolved to them on a programme—rather than a project-by-project—basis.[78]


  16.  Despite the Government's commitment to greater accountability in the Sub-National Review, RDAs still have serious accountability problems. The creation of Regional Ministers and the proposed establishment of Regional Select Committees may open RDAs up to greater Westminster scrutiny, but do little to improve joint working between RDAs and cities and towns. They also do not help make RDAs better understood within the regions.

  17.  As evidenced by the Modernisation Committee's recent inquiry, RDAs have multiple lines of accountability in Westminster and Whitehall—including ministers, government departments, and other NDPBs.[79] RDA Boards and Chief Executives are torn between their statutory obligations at the national level and a desire to be responsive to regional businesses and residents.

  18.  RDAs' principal role requires clarification—as they are poorly understood by many local and regional stakeholders. Ministers need to decide, once and for all, whether RDAs are (1) agents to deliver central government policy in the regions—like Government Offices, or (2) independent regional actors, tasked with working with the local authorities. They should also drop the pretence that RDAs are "business-led"—and acknowledge that they are public-sector agencies charged with promoting and investing in regional economic development.

  19.  The best way to deal with RDAs' local accountability problem is for them to devolve power and funding downward to city-regions. Leaders' Forums, the proposed replacements for Regional Assemblies, will offer some scrutiny of RDA actions—but not true accountability. Giving city-regions programme budgets for economic development, transport and housing would be a better solution—as elected local councillors would then bear direct responsibility for delivery.

  20.  The Centre would be happy to offer oral evidence to the Inquiry, if that would be helpful.

19 September 2008

74   Marshall, A and Finch, D (2006) City Leadership: Giving city-regions the power to grow London: Centre for Cities. Back

75   NWDA and Centre for Cities (2006) Cities Northwest Warrington: NWDA. Back

76   Seex, P and Marshall, A (2007) OECD Review of Newcastle and the North East: One year on Newcastle: Newcastle City Council. Back

77   Brown, H (2008) UK Cities and the Global Economy, London : Centre for Cities. Back

78   Marshall, A and Adams, J (2006) Last orders! What the new EU budget means for Britain's cities London: Centre for Cities. Back

79   HoC Modernisation Committee (2008) "Regional Accountability". London : The Stationery Office Limited, Third Report, HC 282. Back

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