Memorandum submitted by Hertfordshire
Prosperity
INTRODUCTION
On 30 June the Business and Enterprise Select
Committee announced it was beginning an inquiry into the future
role and responsibilities of Regional Development Agencies.
THE INQUIRY'S
SCOPE
The inquiry is a response to the changing role
and responsibilities of RDAs as a result of the detail in the
consultation document following the Sub-National Review of Economic
Development and Regeneration (SNR).
The inquiry focuses on the following areas:
— The need for a level of economic
development/ business/ regeneration policy delivery between central
and local government;
— The effectiveness of RDAs and their
role in adding value;
— The extent of, and need for, their
overseas activities;
— The consequences of expanding the
RDA remit to include new functions, as proposed by SNR, including
the delivery of EU funding;
— The accountability of RDAs;
— and, how RDA performance has been
measured in the past and will be measured in future;
HERTFORDSHIRE PROSPERITY
Hertfordshire Prosperity Ltd (HP) is the sub-regional
economic partnership for Hertfordshire—the economic development
umbrella group for the county with membership drawn from organisations
with a stake in the county's future.
It was originally formed to respond to the demise
of the defence and aerospace industries and the recession of the
early 1990s, and to ameliorate the impact of this rundown on the
local economy.
HP's vision is to create a strong vibrant economy,
responsive to economic and social change, ready to grasp opportunities.
HP's role is to: provide representation and
leadership to encourage growth of the Hertfordshire economy; encourage
cohesion between partners; lobby on regional and sub-regional
issues; develop and ensure delivery of the Hertfordshire's economic
development strategy; develop new programmes; manage the delivery
of existing programmes.
In 2006 HP became incorporated as Hertfordshire
Prosperity Ltd, a company limited by guarantee. Certificate holders
of HP are: the University of Hertfordshire, Hertfordshire County
Council, Hertfordshire Chamber of Commerce and Industry and Exemplas
(Business Link). HP's wider steering group includes the LSC, Job
Centre Plus, Careers Service, Connexions, the FE Colleges and
representatives of the district councils and the voluntary &
community sector.
HP welcomes the Select Committee inquiry which
is timely given that Hertfordshire is in the process of reviewing
its economic development partnership arrangements in the light
of SNR, the East of England Plan, the new Regional Economic Strategy,
and the recent economic intelligence that shows the Herts Economy
is showing some signs of slowdown and decline (this was before
recent global events). The County is looking to develop a fresh
model to deliver economic development in the future.
The need for a level of economic development/
business/ regeneration policy delivery between central and local
government
Central and local government have a key role
to play in assisting in providing the foundations of stable local
economies.
We believe that it is vital that Government
policy is translated into high level regional policies that reflect
the needs and economic make-up of that region. Equally, we feel
it is critical that local policy-makers and delivery agents have
sufficient flexibility to use regional policy as a broad framework
for economic development, but that is delivered in a way that
meets local requirements.
For instance, EEDA has just published its new
Regional Economic Strategy (RES), which has been developed in
consultation with local and regional partners. In the main we
like and support the strategy, although there are some aspects
of it which we think may be over-ambitious (especially in terms
of jobs growth). It is very likely that we will use the RES as
the framework for our new local (county) economic development
strategy, over a similar 20+ year timeframe, but we will look
to translate the high level policies of the RES into local Hertfordshire
policies that have a local application and a local meaning in
the county. These local policies will then form the basis of local
projects and activities—aimed at delivering economic development
through local public, private and third sector partners. This
way, we can demonstrate a linkage between high level Government
policy and local projects benefitting local people. We would struggle
to make that linkage without RDA policy direction acting as the
interface between the two.
In order to reflect the new RES, the likely
questions that we will go through in developing our new sub-regional
strategy will be:
— Are RES priorities the right priorities
for Hertfordshire?
— Are some best delivered at a regional
level?
— Should Hertfordshire have different/additional
priorities?
— Since we cannot do them all:
— Which ones can we influence?
— Which ones should we ignore?
— Which ones should we concentrate
on?
— How and who delivers them?
— How do we ensure accountability for
their delivery (and how do we monitor)?
Although interpretation of the SNR varies, it
appears to mark a major shift of the power to deliver away from
RDAs towards sub-regional agencies (especially upper tier local
authorities). On balance we welcome this shift provided that sub-regional
agencies have the capacity and the skill set to deliver, and that
RDAs are willing to embrace SNR by actually "letting go"
of delivery, and funding, in favour of local partners.
The effectiveness of RDAs and their role in adding
value
EEDA is the lowest funded RDA in England, Scotland,
Wales and Northern Ireland, despite being one of only three regions
that make a net contribution to the public purse. Apart from this
being inequitable, we feel that it is very short-sighted of successive
Governments. It is our view that the UK should "invest in
success" ie be prepared to invest in the successful areas
of the UK economy, as well as supporting less successful areas,
in order to maintain and grow their competitiveness. Without this
investment our region could well see the gradual erosion in its
capability to deliver prosperity to pay for the public services
we all desire.
This is further exacerbated by the Government's
recent decision to "raid" RDA budgets in order to pay
for the reduction in the stamp duty threshold. While there is
some doubt that this measure will have any positive effect on
the housing market, we are extremely concerned that it will remove
much-needed investment in prosperity-generating projects and activities
in each region, and risks undermining the credibility of RDAs
(and ultimately the Government) in adopting a long term forward-planning
approach to investment.
We are aware that the National Audit Office
is currently looking at the impact and effectiveness of RDAs,
and we believe that Price Waterhouse Coopers have been asked to
examine the outcomes and outputs of RDAs. We have little to add
to their detailed evaluations except to mention that RDAs are
still relatively new organisations—less than a decade old.
Their impact on regions has already been noticeable and beneficial
in terms of developing a common regional approach (through regional
strategies and regional interventions), rather than the fragmented
approach that they inherited. Moreover, SNR marks a logical and
sensible step in consolidating economic and spatial regional planning
into (eventually) one common single regional strategy.
Where some RDAs have been wrong has been to
endeavour to develop a common regional identity. With a few exceptions,
counties have a 1,200 year head start on creating a clear identity
and it is, in our view, pointless and potentially undermining
to encourage a reluctant population to adopt a common regional
identity. Most people relate to their city/town/village and to
their county. To ask them to relate to a relatively new administrative
region is fruitless and diverting, particularly in a region such
as the East of England which has no history of commonality.
RDA expertise
RDAs are essentially executive agencies, with
staff equipped to focus on delivering interventions on the ground
currently to reflect the RES priorities. It is our experience
that EEDA is particularly good at analysing regional economic
data and putting strategies in place to address the issues. As
a consequence, they have built up a team of people with a broad
and deep knowledge of the regional economy, and the issues faced
by it. This is complemented by staff at a sub-regional level,
working in partner organisations that have a sound local knowledge.
For instance Hertfordshire County Council has a highly experienced
research team who, we understand, work closely with the RDA and
other regional bodies (eg the East of England Observatory). This
enables the state of the regional economy to be monitored regularly
and effectively, and new policies and interventions developed
to address or exploit the issues.
Equally, EEDA has grown a range of sector specialists
with a detailed knowledge of their field which would probably
not be economically feasible to maintain at a sub-regional level,
and would be too detached and distant at a national level.
The extent of, and need for, their overseas activities
EEDA supports East of England International
(EEI), the inward investment agency for the region. EEI is the
organisation in the East of England with the responsibility both
for attracting inward investment to the region and for encouraging
international trade aspirations of local businesses. To our knowledge
EEDA is the only RDA where the inward investment agency is set
up as a separate organisation rather than as a division of the
RDA. Although this probably increases costs a little, we feel
that the brand identity and independence of this arrangement has
been successful in encouraging high calibre inward investment
into the region.
We consider that inward investment is best handled
at a regional level, with appropriate support at a sub-regional/local
level. EEI employs a number of sector specialists and is highly
experienced at handling enquiries and acting as the interface
between national organisations (such as UK Trade & Investment)
and local partners.
For instance, typically EEI will be approached
by a foreign-owned company who wish to consider moving their UK
operation to south-west Hertfordshire. The enquiry will be co-ordinated
by EEI who will pull together a local team drawn from various
local business support agencies, HE sector, local FE college,
local authority, and often local companies from the same sector,
so that all aspects of the enquiry are covered (property requirements,
training needs, schools, planning, local employee facilities,
etc). We believe that this arrangement works extremely well, and
would be very hard to replicate at a national level, which would
be too distant, and at a local level which would be very hard
to justify given the relatively small number of major enquiries.
We understand that EEDA supports the East of
England Brussels office, managed by EERA and supported by local
authorities, which provides intelligence and lobbies on behalf
of the East of England.
EEDA also maintain regular liaison with adjoining
RDAs, and recently commissioned jointly a report with SEEDA and
GLA examining the economic impact of the three regions together.
We support very much joint inter-regional approaches leading to
better use of resources and the avoidance of duplication.
The consequences of expanding the RDA remit to
include new functions, as proposed by SNR, including the delivery
of EU funding
In July 2007 the Government published its review
of sub-national economic development and regeneration (SNR) to
provide the framework for major changes to the role of regional,
sub-regional (and to a lesser extent) local agencies involved
in the strategy and delivery of economic development.
In March 2008 The Government published its more
detailed consultation paper Prosperous Places: Taking Forward
the Review of Sub National Economic Development and Regeneration.
Prosperous Places seeks views on:
— Streamlining the regional tier, integrating
regional strategies and giving the RDAs lead responsibility for
regional planning
— Strengthening the local authority
role in economic development, including a new statutory duty to
assess local economic conditions
— Supporting collaboration by local
authorities across economic areas
We note that SNR is part of a wider programme
of reform including the Local Government White Paper, the Planning
White Paper and the Business Support Simplification Programme.
SNR raises a number of issues and potential
concerns for us. These are set out below:
Democratic Deficit—Under SNR RDAs
will have the executive responsibility for developing regional
strategies such as the Single Regional Strategy (SRS), with all
local authorities in the region invited to engage in the decision
making process through a Leaders' Forum, which would be asked
to sign off the SRS. The structure for the Leaders' Forum will
be decided by local authorities. While on balance we support the
concept of a single regional strategy that pulls together economic
and spatial planning, we have some concerns that the proposed
Leaders' Forum will not have the same level of democratic accountability
that regional assemblies and the previous sub-regional strategic
planning arrangements had.
Sustainable Development—We feel
that there is an inherent tension, and a potential conflict of
interest, between RDAs leading on the SRS, with a priority of
economic growth, while at the same time endeavouring to ensure
sustainable development. While that tension can probably be resolved,
it does not sit comfortably with the democratic deficit outlined
above.
Delivery—We recognise that RDAs
will only delegate activities and funding to local authorities
where the appropriate capacity to deliver exists. Hertfordshire
is in a strong position to accommodate this given its strong track
record of delivery of economic development and regeneration programmes.
However, there remain concerns over the willingness by RDAs to
relinquish controls of funding programmes to local authorities.
Even when funding is delegated, there may be a temptation by some
RDAs to attach onerous bureaucratic arrangements. To date RDAs
do not seem to be falling over themselves to delegate resources
to sub-regions.
Skills Shortages at the RDAs—We
understand that a number of RDAs are affected by skills shortages,
particularly in planning, housing and transport. While this is
a short-term issue, it will inevitably have an impact on the speed
with which RDAs are able to take forward SNR.
Resource Issues—We raise a concern
that RDAs need to be adequately resourced to support the new roles
set out in SNR. This resourcing needs to be in terms of total
budget and, critically, in terms of the right skills of their
staff. If SNR is asking RDAs to shift to being more strategically
focused, with delivery delegated to sub-regional and local level,
this needs to be reflected in staff with a more strategic skills,
and fewer delivery/contract management skills. It may take some
time for RDAs to make this adjustment.
Potential Confusion—We feel that
there still remains some confusion between the roles of BERR and
CLG in driving the SNR agenda.
The accountability of RDAs
We have some real concerns that, under SNR,
the proposed scrutiny arrangements lack teeth. Although RDAs will
remain accountable to Parliament, this will happen long after
problems or issues have arisen. Moreover, the scrutiny remit is
focused on financial management, overall management performance
and evaluation. We believe that there is no substitute to more
immediate, regional and local accountability that relates to a
specific regional issue or project. SNR appears vague about how
this role will be performed effectively by the new local authority
regional body: "local authorities should develop new arrangements
for exercising their scrutiny powers at regional level through
the Leaders' Forum". The calibre of RDAs will be determined
very largely by the calibre of leaders' forums, and the powers
those forums have to scrutinise.
How RDA performance has been measured in the past
and will be measured in future
We welcomed the recent introduction by the Government
of the New Performance Framework, the "basket" of 198
key performance indicators, since this represents a major step
forward in simplifying and clarifying performance across a wide
field of activities. That said, under their new role, RDAs will
need to have a stronger focus on outcomes, especially over the
longer term, and be less driven by short term outputs.
19 September 2008
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