Memorandum submitted by The Institution
of Economic Development
In this response we have addressed the specific
topics identified in the invitation to submit evidence. We would,
however, also refer the Committee to our representation on the
Review of Sub-National Economic Development and Regeneration (SNR),
which can be found as an appendix. In particular, the IED identifies
that SNR requires all major agencies, including local authorities
and RDAs to considerably raise their capacity and adapt their
roles.
1. THE NEED
FOR A
LEVEL OF
POLICY DELIVERY
BETWEEN CENTRAL
AND LOCAL
GOVERNMENT
There is a broad agreement among economic development
professionals that some key issues must be addressed at a regional
and sub-regional level. IED is strongly committed to the guiding
principle of subsidiarity. As set out in the SNR consultation,
devolution promises to be an iterative process, but will benefit
from greater clarity as the agenda develops.
IED has members in RDAs as well as local authorities
and we therefore recognise there is a danger of them being forced
to face two ways at once. There should be a clear distinction
in the national and regional local accountabilities—the
former should be in relation to audit, organisational propriety
and performance, the latter should be about policy, equity and
delivery of outputs and outcomes in relation to the Integrated
Regional Strategy (IRS).
2. THE EFFECTIVENESS
OF RDAS
AND THEIR
ROLE IN
ADDING VALUE
The experience of the RDAs' impact varies from
region to region. While it's understandable that inconsistencies
can be frustrating for agencies within regions, differentiation
is an inevitable by-product of decentralisation. If the RDAs are
to genuinely address the needs of the regional economy then all
nine will necessarily set different priorities that are delivered
through varied methods.
Assessing the effectiveness of the RDAs since
the 1998 Act is complicated by their remit, which has evolved
frequently and significantly. Both remit and funding has increased
steadily even before the SNR. Problems are compounded by RDA involvement
in initiatives such as Single Regeneration Budget (SRB), where
they operated to a specific, time limited Government remit.
Generating a counterfactual scenario where RDAs
never existed is impossible, so any estimate of their added value
will, to some extent, be speculative. The volume and variety of
performance data available for the period 1999-2006 makes analysing
exactly what RDAs have achieved tricky. Gross Value Added (GVA)
and economic activity rates—which are the preferred future
performance indicators—are useful headline indicators but,
as far as RDAs are concerned, it is difficult to disentangle potential
and actual impacts in the regions. It has been suggested that
those areas with a greater need for regeneration are those in
which there has been a clearer role for RDAs. There is also no
simple relationship between the locally perceived worth of RDAs
and their performance.
The substantial financial resource that RDAs
have at their disposal brings with it benefits and disbenefits.
Had the Government consistently allocated only moderate funding
to the RDAs they would have been accused of not following through
on their commitment to regional development. It is, therefore,
to their credit that they have delivered financial support commensurate
with the scale of the challenge. However, within the regions themselves,
the RDAs have found that their relative riches generate envy from
other organisations. Their financial omnipresence can perhaps
be overbearing, with direct undesirable consequences. First, independent
organisations carrying out work for an RDA might lean towards
sycophancy because they are unwilling to risk a lucrative funding
stream. Second, the RDAs themselves might find it difficult to
establish productive working relationships with partner organisations
if they are forever seen primarily as a wealthy benefactor.
The IED conclusion is that RDAs have certainly
had a positive effect, but it is a complex exercise to quantify
this within a regional or UK context, within the terms they were
expected to be evaluated.
3. RDA EXPERTISE
We have already acknowledged that RDAs' expertise
will have to change to take on board new areas of activity—such
as planning, housing and community empowerment—that are
perhaps more technically meticulous. Lack of consistency/continuity
of role can have a detrimental impact on building such expertise.
IED members in most local authorities would also acknowledge a
value in having RDAs with the ability to offer peripatetic expertise
or help with one off challenges such as major development programmes
or redundancies.
Professional membership bodies should be important
to all professional organisations and the RDAs are no different.
Professional membership organisations offer training opportunities
and monitor members' continuous professional development, initiatives
that are welcomed by the RDAs. Although the IED has a number of
members in some RDAs, our overall impression is that this is lower
than it should be. A failure to embrace professional membership
could lead to RDAs experiencing specific weakness when attempting
to meet new challenges.
4. THE EXTENT
OF, AND
NEED FOR,
THEIR OVERSEAS
ACTIVITIES
Whilst the IED acknowledges the charge that
RDAs' overseas office are alleged to be competing with one an
another in an attempt to attract Foreign Direct Investment (FDI),
we have seen no specific evidence of deadweight competition. On
this basis the IED has no reason to believe that there are any
detrimental effects arising from these activities, but equally
would support attempts to achieve greater transparency in terms
of their actual benefit/impact.
5. THE CONSEQUENCES
OF EXPANDING
RDA REMIT TO
INCLUDE NEW
FUNCTIONS, AS
PROPOSED BY
THE SUB
NATIONAL REVIEW,
INCLUDING THE
DELIVERY OF
EU FUNDING
We have addressed the need to build greater
capacity within the SNR consultation response in the Appendix.
Here we would add that it takes time to build new expertise and
new networks, and importance of a continuity of role in this respect.
6. THE ACCOUNTABILITY
OF RDAS
IED recognises that there is clearly a "democratic
deficit" at the regional level. The relationships between
local authorities and RDAs are critical. Some regions have six
times as many councils as others which increase the potential
problems. A key principle that needs to be adhered to is transparency
in dealings between RDAs and local government. This will particularly
need to be applied to the designation of appropriate areas for
functional devolution of responsibility and capacity assessment.
In parts of the country where local authorities and RDAs work
less well together, this should form the basis of partnership
working to increase their collective capacity to deliver.
The relationship between local authorities and
RDAs will alter as a result of the SNR. One of the more controversial
aspects of the SNR instructs that RDAs adjudicate over local authorities'
capabilities to deliver economic development programmes. RDAs
will also be required to devolve greater financial resources to
local authorities to deliver these programmes. However, a local
authority leaders' forum will be instituted in each region and
it is they who will eventually be required to approve the IRS.
This arrangement, while gallantly attempting to address this democratic
deficit, could lead to excessive bureaucratic brinksmanship. It
is important that this achieves greater accountability without
leading to systemic paralysis.
Tackling the issues will be an Iterative process
and IED does not believe a one size fits all solution should be
imposed from the centre. The structure through which RDAs respond
to central government may also benefit from review. It seems slightly
peculiar that RDAs should remain accountable to the Department
for Business, Enterprise and Regulatory Reform (BERR) when the
majority of their funding continues to come from the Communities
and Local Government (CLG) department.
7. HOW RDA PERFORMANCE
HAS BEEN
MEASURED IN
THE PAST
AND WILL
BE MEASURED
IN FUTURE
Currently, RDA targets are set and agreed with
their Board. They are also subject to periodic reviews carried
out by the National Audit Office. The corporate plans that are
signed off by the Board might leave the RDAs open to accusations
that they enjoy a rather cosy arrangement. It would be interesting
to know if an RDA has failed to achieve a target agreed in-house
and what corrective action was taken by the Board.
We would reiterate the comments made in section
2 above. The creation of a single economic growth objective and
the development of the IRS may help, but it might also lead to
simplistic conclusions. There are also clearly major difficulties
in looking just at GVA, especially taken together with the relatively
poor performance on this and economic activity in the North.
The IED is happy for this submission to be made
publicly available.
19 September 2008
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