---

The Earl of Arran: I wish to speak to Amendment No. 27 which stands in my name. As I said earlier, the business community in Devon and Cornwall broadly welcomes the Bill. However, there needs to be greater emphasis in the Bill on the development of businesses, especially small businesses, in improving the competitiveness and increasing the wealth-creating base of the English regions. The present proposals provide only a partial solution to the needs of business. The Government should include Business Links and the training and enterprise councils within the RDAs as soon as possible if the RDAs are to meet the requirements for sustainable business development.

I note that under Clause 6 the Bill allows for Business Links and TECs to be included in the RDAs at a later date without recourse to primary legislation. In its reply of 18th February to a letter to the Deputy Prime Minister from the chairman of the south-west inter-regional committee of the Federation of Small Businesses, the Department of the Environment, Transport and the Regions said that the RDAs,

"will be able to provide regional objectives as part of TEC planning ... The RDAs' regional strategies will address the needs of small business in the regions and Business Links will wish to draw upon the priorities identified in these strategies as they develop their detailed services".

Strategic oversight of TECs and Business Links will not be sufficient. Business development is at the heart of wealth creation. Without it, issues such as regional competitiveness, community regeneration and social exclusion cannot be properly addressed. The RDAs will need to be operationally as well as strategically involved in the activities of TECs and Business Links as soon as this can possibly be achieved.

An examination of international best practice has shown that sustainable economic and community development requires the development of the indigenous business community alongside the other four functions of regional development. Regeneration, inward investment and rural development, which will be part of the RDAs from their formation next April, must be

7 Oct 1998 : Column 511

co-ordinated with the development of small and medium enterprises and their investment in the community. There is evidence that more jobs and more sustainable businesses are created through the development of the region's indigenous businesses than through inward investment. There is more to regional development than addressing the problems of economic blackspots. The most competitive businesses have continually to strive to maintain their lead.

Small and medium-sized enterprises--SMEs--currently account for nearly 50 per cent. of employment outside the public sector and for around 38 per cent. of the UK's gross national product. SMEs are expected to be the main source of future economic growth throughout the country. From a business perspective, the TECs and Business Links should be part of the RDAs from the outset. Indeed, this issue is touched on in the prospectus for the south-west RDA, which I have already mentioned.

I am calling for nothing which the Government have not already accepted other than the timing of the inclusion of TECs and Business Links within the RDAs. The purpose of my amendment is simply to strengthen the Bill by making explicit the need to incorporate within the RDAs, and as soon as possible, the functions associated with the development of the businesses in an RDA's area. Business is the engine of sustainable economic development and business development needs to be put at the heart of the RDAs.

8.15 p.m.

Lord Newby: I wish to support the noble Earl, Lord Arran, in respect of Amendment No. 27. Clearly, it makes sense for oversight of the TECs and Business Links to go to the RDAs. The training and development of the population of a region and the whole question of matching skills to business and economic development needs are crucial if the RDAs are to achieve their purpose.

At present, the situation within any region in respect of TECs and Business Links is unsatisfactory. The remit of these bodies is limited to the geographic area in which they operate, which is, by definition, part of a region. Secondly, they are under tremendous pressure to achieve outputs in terms of the number of people achieving qualifications--almost any qualifications, it seems, in some places. In the north-east there is a standing joke that there are more trained hairdressers per "head" of the population than anywhere else in the world. That is because there has been such a concentration of hairdressing courses in the TECs in the north-east. There is great frustration because that is not an activity on which one would wish strategic emphasis to be placed.

Lord Graham of Edmonton: Would a trained hairdresser's job be classified as permanent?

Lord Newby: The hairdresser's job would be permanent. Whether all politicians would need

7 Oct 1998 : Column 512

permanently the services of a hairdresser is a point one might put to the Leader of the Opposition in another place.

The arguments for RDAs taking control of TECs and Business Links are self-evident and in the long term no one would seriously argue against them. Therefore, as the noble Earl, Lord Arran, said, we are talking about timing. What have the Government said about this? In their recent consultation document on TECs, they said:

"We do not want to burden RDAs from the outset with a substantial management task while they are still finding their feet. RDAs must be able to concentrate on developing a strategic vision for their regions and to build the necessary relationships with a wide range of organisations".

That is wonderful Civil Service-speak for doing nothing for the maximum possible time.

Yet, if we look at the actors in the regions, we find that there is considerable enthusiasm for the transfer of the functions of the TECs and Business Links to the RDAs from the outset. We have heard that that is the case in the south-west. I know from the discussions I have had that it is the case in regions further north where there is a great desire to start work from the outset with the TECs under the aegis of the RDAs.

Equally, what do the TECs themselves want? In the TEC National Council's recommendations to the Government in response to the consultation document, we see that they want to be at the heart of the RDAs. The London TECs have said explicitly that they want funding to go through the London Development Agency from the outset--not at some far distant point at which Whitehall has decided that the RDAs have found their feet.

In urging support for the amendment, I would ask the Minister whether he can deny a report in yesterday's Financial Times that it is unlikely that the Government would reconsider the issue of whether the RDAs were sufficiently empowered and sufficiently well developed to take on the oversight of TECs and Business Links until after the next election. Is that indeed the Government's current view? If so, I should be extremely grateful to hear from the Minister the arguments that could be advanced in that direction. It seems to us that the RDAs need from the start all the functional powers that they can get in order to deliver the quite significant expectations of them that have been built up in the regions.

There is a great danger, it seems to me, that unless the RDAs can have some relatively quick wins there will be severe credibility questions posed, and their ability to have quick wins requires them from the outset to have the necessary powers. In our view, powers relevant to TECs and Business Links from the outset should be within their remit. Therefore I should be most grateful if the Minister could tell us why it is that the Government appear so reluctant to transfer to the RDAs powers which virtually all those from without who have looked at the question think should be with them from the start.

Lord Whitty: Clause 6 provides for any government Minister to delegate functions to the RDAs. However, delegated functions must be appropriate--and I will

7 Oct 1998 : Column 513

return to that in a moment--and they must not consist of the power to make regulations or set fees and charges. The consent of the agency is required unless the delegation is made to all RDAs. That seems to be a fairly straightforward technical and administrative provision, and we are making a rather lot of it on this occasion.

Amendment No. 24 would have the result of ensuring that a delegation would permit an agency to carry out a function but that the responsibility for the function would rest elsewhere. I presume, but I was not clear from what the noble Baroness said, that the intention behind the amendment is to allow the Secretary of State either to control the nature and extent of the delegation or to restrict it in some way in future. However, I am advised that this amendment does not achieve that, and indeed it does not change the actual substance of the clause, which already gives the Secretary of State the power to delegate functions as he sees fit. This includes the power to withdraw the delegation if he does not like the way in which it is exercised. However, if it would permit the agency to exercise the function that is carried out by somebody else other than the Secretary of State, then I do not quite understand the point of Amendment No. 24: it would appear to be confusing.

Amendment No. 25 would specify on the face of the Bill that delegation may only take place when it is considered that this would further the RDA's purposes. Again, if I understand the intention aright, this is unnecessary. Clause 5(1) of the Bill already provides that the RDAs may act only in accordance with the purposes set out in Clause 4. The delegation provided for under Clause 6 does not in any sense override that and therefore I think that in this context I can also reassure the noble Lord, Lord Bowness, that the Secretary of State can delegate only those functions which correspond to the RDA's purpose. It is certainly true that my right honourable friend the Deputy Prime Minister has very wide powers in his current capacity over civil aviation and merchant shipping among other things: a very wide range. However, he is not going to delegate that under this clause to the RDA because he can only delegate those aspects which relate to the RDA's purposes, as set out in Clause 4. Otherwise the agency would itself be in a situation that it would carry out delegated functions that it could not, legally speaking, carry out. I believe that may be the reassurance that the noble Lord was looking for.

---