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


Memorandum submitted by the Chief Economic Development Officers Society & the CSS

INTRODUCTION

  1.  The Chief Economic Development Officers Society [CEDOS] provides a forum for Heads of Economic Development in upper tier local authorities throughout England. Membership includes county, city and unitary Councils in non-metropolitan areas, which together represent over 47% of the population of England and provide services across over 84% of its land area. The Society carries out research, develops and disseminates best practice, and publishes reports on key issues for economic development policy and practice. Through its collective expertise, it seeks to play its full part in helping to inform and shape national and regional policies and initiatives.

  2.  The CSS represents local authority Strategic Directors who manage some of the most pressing issues facing the UK today. The expertise of CSS members and their vision is fundamental in the handling of issues that affect all our lives. Operating at the strategic tier of local government they are responsible for crucial transport, waste management, environment, planning, energy and economic development issues. CSS membership is drawn from all four corners of the United Kingdom,

  3.  CEDOS and CSS welcome the opportunity to submit evidence to the Business and Enterprise Committee's Inquiry into the role of regional development agencies (RDAs) and the implications the Government's review of sub national economic development and regeneration may have on that role. In framing our evidence, which addresses the specific areas on which the Committee's Inquiry is focusing, we have consulted directly with our members throughout the country.

  4.  Our overall position is that whilst we recognise the need for some key issues to be dealt with at a broad regional level, we are seriously concerned about the current and proposed roles of the RDAs not only as a result of the lack of demonstrable added value but also, and fundamentally, as a result of the growing democratic deficit arising from the decision-making powers of appointed RDA Boards—something that is likely to increase as a result of the additional executive responsibilities being proposed.

  5.  Nevertheless, we have to recognise that the Government's proposals for taking forward the Sub National Review [SNR] involve retaining RDAs and extending their responsibilities. Accordingly, our response to some of the key issues covered in the Committee's Inquiry has been framed on the assumption that this will be the case. In doing so, we must emphasise the importance of there being a substantial reduction in the bureaucracy associated with regional initiatives and a significant delegation of budgets and programmes to the local authorities and the partnerships they lead.

THE NEED FOR A LEVEL OF ECONOMIC DEVELOPMENT/BUSINESS/REGENERATION POLICY DELIVERY BETWEEN CENTRAL AND LOCAL GOVERNMENT

CEDOS/CSS views

  6.  There is a need for some key economic development and regeneration issues to be addressed at the broad regional level—issues that are not appropriate for being dealt with at the national level but which require decisions and action at a larger than local or sub-regional scale. Equally, there is a need to co-ordinate economic development activity with other policy areas such as housing, environment and transportation and to maximise the beneficial impact of major investments.

  7.  The need for a regional level of economic development policy and action does not imply, of necessity, a requirement for separate regional organisations, with their inevitable bureaucratic procedures, to be inserted between central government and local government and its local and sub-regional partners. In our democracy, we believe the focus of public policy-making and delivery should rest with the elected levels of Government—with central government and local government.

  8.  There is a strong case for arguing that regional economic development strategies and policies could be put in place most effectively through a partnership of central and local government. With the development of local and multi area agreements, local government is increasingly well placed to take a lead role in this partnership—something that will be facilitated further with the establishment of the local authority leaders forums proposed by the Sub National Review. Where regional policy and action is required, this could be achieved potentially by strategic county and unitary authorities putting in place the regional equivalent of multi-area agreements with the national interest being looked after by the Government Offices for the Regions.

  9.  We seriously question whether the current regional arrangements provide a sound basis for strategic policy-making and action. Whilst the Regional Development Agencies are making a contribution, major concerns are their lack of political and democratic accountability and the barriers to the effective delivery of economic development that are too often imposed by their bureaucratic procedures.[124] These concerns are accentuated by the extensions to RDA powers and responsibilities proposed in the Government's plans for taking forward the sub national review of economic development and regeneration.

  10.  Whatever regional arrangements are made, it is important to distinguish between policy-making and delivery. For most economic development activity including business support and regeneration, delivery is most appropriately undertaken at the sub-regional and local level led by local authorities and local/sub-regional partnerships.

  11.  The Sub National Review proposes that Regional Development Agencies will continue but with a more strategic approach & the expectation that they will delegate responsibility for spending to local authorities or sub-regions "unless there is a clear case for retaining spending at the regional level". We are, however, concerned that the Government's proposals for taking forward the SNR lack clarity on the actual extent to which RDA funding will be devolved to local authorities or sub-regions. We believe that if the Sub National Review is to truly facilitate the place-shaping role of democratically elected local authorities, there must be a substantial reduction in the bureaucracy associated with regional initiatives and a significant delegation of budgets and programmes to the local authorities and the partnerships they lead. The Government should make a clear statement that it expects there to be a presumption that RDAs will delegate responsibility for the delivery of programmes and the accompanying resources to the local or sub-regional level unless there is substantial evidence for not doing so.

THE EFFECTIVENESS OF RDAS AND THEIR ROLE IN ADDING VALUE

CEDOS/CSS views

  12.  Overall, the assessment of RDA effectiveness is one of mixed performance with, perhaps inevitably, variations across the country as a consequence of the range of economic challenges being faced. Undoubtedly, there have been some significant achievements. Examples cited by our members include the major regeneration project at Osprey Quay at Portland, Dorset and actions related to specific issues where a truly regional approach is needed, for example in the West Midlands with the Rover Task Force and the response to the 2007 flooding.

  13.  In other areas of activity, there is much less evidence of effectiveness. An example is rural development where it is very difficult to identify any real added value from a regional body that despite delegating funding to local partnerships, still imposes its own layer of bureaucracy and administrative processes.

  14.  Demonstrating real overall added value is difficult. It is notable that in the assessments of RDA performance carried out so far by the National Audit Office, only in the case of one RDA is there a reference to added value in relation to performance. In any objective assessment of added value, the question needs to be asked—what would have happened if there had been no RDAs and their resources had been made available to local and sub-regional partners, principally the local authorities? If this had been the case, it may well be that more could have been achieved as a result of directly relying on bodies with a greater local knowledge of the relevant areas and issues and at the same time reducing the management and administration costs associated with the additional RDA tier.

RDA EXPERTISE

CEDOS/CSS views

  15.  Our members report a varying picture across the country. Whilst some RDAs have developed a significant level of technical expertise on some particular issues affecting their regions, there is concern at a lack of sufficient expertise on wider economic matters. Moreover, where specialist RDA expertise exists, it is not always easy for local areas to tap into and benefit from it. It may be that for some issues it is appropriate for expertise to be provided at the regional level but the cost-effectiveness of doing so needs to be properly assessed and demonstrated.

  16.  Of course, RDA technical expertise has been developed in relation to their current range of activities and with the proposed extension of their activities under the Sub National Review of Economic Development and Regeneration [SNR] it is clear that "the RDAs will need to undergo significant change in both what they do and how they operate".[125]

  17.  In relation to SNR, much is being made about the need for RDAs to satisfy themselves that sufficient capacity exists at local authority or sub-regional partnership level to take on delegated activities. The RDAs will need to show how the capacity issues related to their changed role are being addressed and they should be subject to the same assessment processes as local authorities.

  18.  In the light of the findings of a recent report by the CLG Select Committee, there must be serious question marks over the ability of RDAs to acquire the necessary technical skills, at least in the short term. The Select Committee report refers to a drastic shortage of planners and of skills gaps within existing planning staff and, as the Committee acknowledged, quoting CEDOS/CSS evidence, this is something that also affects a wide range of other professions including economic development and transport planning.

  19.  It is not only a question of technical expertise. Particularly with the proposal to give RDAs executive responsibility for preparing integrated regional strategies and designate them as Regional Planning Bodies, expertise is a crucial issue for the RDA Boards. The Government's proposals for taking forward the SNR state that the skills and experience of those appointed to RDA Boards will reflect their new responsibilities in regional planning, along with their existing responsibilities. Nevertheless, we feel there must be a real question mark over RDA Boards having the necessary depth and breadth of spatial planning experience.

THE EXTENT OF, AND NEED FOR, THEIR OVERSEAS ACTIVITIES

CEDOS/CSS views

  20.  All the UK regions, sub-regions and local areas operate within a global economy and need to respond to global challenges. In this context, it is appropriate for RDAs to pursue relevant overseas activities in terms of inward investment, exporting and global competitiveness. However, on the information currently being made available, it is often difficult to judge the extent of RDA overseas activities, how much is spent on it, the outcomes that are resulting and the extent to which they can be attributed to intervention by the RDAs. As one of our members in the South East says "Without much greater level of reporting/audit detail on this area of RDA activity, no one can judge if they spend too much on this area as we cannot discern what they actually do spend, and on what, and therefore what the tax payers actually get for their money".

  21.  There is clearly a need for greater transparency in reporting the extent and results of RDA overseas activity to enable a proper understanding of costs and benefits. There is also a need for better coordination with local and sub-regional partners to make best use of resources, minimise duplication and to ensure that overseas activities benefit all areas of the UK and the regions.

THE CONSEQUENCES OF EXPANDING RDA REMIT TO INCLUDE NEW FUNCTIONS, AS PROPOSED BY THE SUB NATIONAL REVIEW, INCLUDING THE DELIVERY OF EU FUNDING

CEDOS/CSS views

  22.  We have some serious concerns about the consequences of the current proposals to expand the RDA remit to include new functions, in particular responsibility for integrated regional strategies, regional spatial planning and EU funding. We support the idea of integrated regional strategies to bring together the regional economic strategy, the regional spatial strategy and other regional strategies into a single long-term strategy. However, if they are to be workable and effective, they must be prepared in an inclusive way, be co-owned by the RDAs and elected local government, be actionable, and be underpinned by proper and transparent accountability and scrutiny arrangements. In this context, we are seriously concerned at the proposal that an RDA will be able to submit a strategy to the Secretary of State without the agreement of the local authority leaders should they deem it necessary.

  23.  Whilst it makes sense to bring planning, economic development and transportation policy at the regional level more closely together, we have particularly serious concerns about the proposal for RDAs to become Regional Planning Bodies. We are not convinced of the ability of business-led RDAs to deal impartially with the tensions between economic, social and environmental issues that will inevitably arise, something, which in our view requires, at the very least, a strong democratic input. The fact is that moving regional planning responsibilities to RDAs will mean less involvement of elected Councillors in decision-making at the regional level. As Regional Planning Bodies, Regional Assemblies had to have at least 60% of their membership made up of elected councillors—and in practice it is often around 70%. There is no such minimum figure for RDA Boards, where elected Councillors are in a minority—currently across the country, it is between 20-25%.

  24.  As far as EU funding is concerned, responsibility for some funding streams has already passed to the RDAs, in particular those associated with the Rural Development Programme for England [RDPE]. We are aware of concerns in a number of areas where local partners are not impressed with RDA handling of these funding streams, for example in East Sussex where "since the Leader programme passed to the RDA as managing authority for the relevant RDPE Axes, the very principles of "Leader" have been completely undermined: The Local Action Groups no longer appear to have the responsibility for agreeing which projects are to be funded, with every project having to go to the RDA for final agreement. The local autonomy that the Commission has acknowledged as the key to the success of Leader has been unilaterally removed".

  25.  It has yet to be clarified whether all ERDF money, including Cohesion funding, Competitiveness funding and Interreg 4a as well as Axes 1 and 3 of RDPE, is to be passed to the RDAs. ERDF, which can cover both capital and revenue spend, is a particularly important source of non-domestic funding for economic development activity. Whilst there are potential benefits in bringing major funding sources together and thus avoiding parallel applications and appraisals, there is concern about the use of ERDF by RDAs to replace and not be additional to, core funding. As a result, there could be reduced funding opportunities for local/sub regional partners, limiting their ability to respond to local needs and achieve real added value impact.

THE ACCOUNTABILITY OF RDAS

CEDOS/CSS views

  26.  The Sub National Review states that "democratic accountability for the regional tier needs to be based on a combination of central and local government" and that "in particular, there needs to be clearer and stronger accountability of the RDAs, both to local and central government as, currently, RDAs do not have a clear democratic mandate". We agree with this but we consider that the Government's proposals for taking forward the Sub National Review do not address sufficiently the increased democratic deficit that will occur as a result of the growing powers of RDAs, including the transfer of regional planning responsibilities. There is a lack of clarity as to how accountability to local government will be achieved and on what scrutiny powers will be vested in the proposed local authority leaders forums.

  27.  Unless there is full and proper democratic accountability, the whole process set in train by the Sub National Review could become unworkable. We believe that the Government's proposals for taking forward the Sub National Review must to be strengthened significantly. To achieve effective and proper regional accountability and scrutiny, there needs to be:

    —  a clear statement that local authorities will be actively involved in the preparation of integrated regional strategies;

    —  increased local authority representation on RDA Boards;

    —  a requirement for each integrated regional strategy to be jointly signed off and submitted by the RDA and the Leaders Forum;

    —  provision for full consultation by Government on any proposed changes it wishes to make to submitted regional strategies.

  28.  At national level, RDAs should be accountable to Parliament jointly through the Secretary of State for Business, Enterprise and Regulatory Reform and the Secretary of State for Communities and Local Government. Further parliamentary scrutiny can be achieved by establishing Regional Select Committees, which as well as comprising MPs from the regions should also include elected members from the regions who can bring their first hand knowledge and experience to bear.

HOW RDA PERFORMANCE HAS BEEN MEASURED IN THE PAST AND WILL BE MEASURED IN FUTURE

CEDOS/CSS views

  29.  Hitherto, most of the assessment of RDA performance has been undertaken internally by their Boards and through quarterly reporting to BERR. In the 2005 Budget, this was added to by the introduction of performance assessment by the National Audit Office, although so far there has only been one assessment of each RDA during 2006 and 2007. Whilst this represents a somewhat improved process, it falls well short of what is needed, particularly if RDA remits are to be expanded.

  30.  So far, the RDA performance monitoring framework has been dominated by Central Government targets and lacks sufficient relevance to partners within the region. Generally RDA performance measurement has lacked sufficient rigour with a lack of detail on how RDA spend and activity is reported. With the move to Comprehensive Area Assessment, there is an ideal opportunity to align RDA performance measurement with that of local authorities. Local authorities, through the new Comprehensive Area Assessment, will be judged on performance with much of the performance being delivered through the framework of Local Area Agreements. It will be appropriate for RDAs to be assessed on how much they have done to support local authorities and their partners in improving the performance of localities and sub-regions using the same set of performance indicators.

18 September 2008








124   For more on this see, for example, Barriers to the Effective Delivery of Economic Development & Regeneration CEDOS October 2006 Back

125   Prosperous Places: Taking Forward the Sub National Review of Economic Development & Regeneration BERR/CLG March 2008. Back


 
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