Regions do it for themselves

Depending on who you believe, on 1 April the English regions will take their first step towards full political devolution or will be turned into entrepreneurial powerhouses. Why? Because this is the date on which eight Regional Development Agencies (RDAs) will be created. No-one knows exactly what RDAs will become, though most people think there […]

Depending on who you believe, on 1 April the English regions will take their first step towards full political devolution or will be turned into entrepreneurial powerhouses. Why? Because this is the date on which eight Regional Development Agencies (RDAs) will be created.

No-one knows exactly what RDAs will become, though most people think there is work for them to do. But there is also concern that the agencies could conflict with each other or with existing bodies charged with economic development.

Labour’s 1997 manifesto offered devolution for Scotland and Wales and an elected authority and mayor for London. The eight RDAs have been set up for the rest of England to ensure decisions are made as close as possible to the people affected by them. Their members have been appointed by John Prescott, as secretary of state for the regions.

The Government emphasises that RDAs will be ‘business-led’ all the chairmen (and they are all men), and about half the board members, have business backgrounds. The rest represent local authorities, trade unions and rural interests.

Most organisations with an interest in economic development, from the Trades Union Congress to the Institute of Directors (IoD), have welcomed the RDAs.

The UK is unusual in Europe in having no level of authority between central and local government. IoD director-general Tim Melville-Ross says: ‘Overseas experience suggests that regions with a population of around 6 million provide a sound basis for good strategic and economic development.’

The total budget for all RDAs will be around £1bn a year not much compared to local authority spending. The Government is keen they be seen as leading and encouraging development, rather than subsidising ailing industries. But some RDAs are understood to be looking at investing in local firms, in competition with venture capital companies.

Most RDA funding will come from the Department of Environment, Transport & the Regions, the Department of Trade and Industry, and the Department for Education and Employment. This could cause problems, says Ian Fletcher, principal economic adviser for the British Chambers of Commerce: ‘The RDAs will receive pots of money earmarked by different government departments. That means they won’t have much discretion in how it is spent. We would prefer to see a more independent structure.’

The agencies will be able to charge for some services. ‘The only thing they can’t do is borrow without the secretary of state’s consent,’ says Mark Coulshed, head of the DETR’s RDA team.

Each new agency will have to devise a regional economic strategy. The White Paper on the agencies says: ‘Each RDA will develop a strategy encompassing physical and social regeneration in urban and rural areas, working closely with regional partners. It will analyse the economic strengths and weaknesses of the region, and in particular the competitiveness of its firms.’

A big part of the RDAs’ success in improving competitiveness will depend on their relationship with companies, educational institutions and local business support networks Business Links and Training and Enterprise Councils (Tecs).

The White Paper also says each RDA will have to develop a ‘regional skills agenda’, which will involve Tecs. The Government is reviewing how much control RDAs should have over Tecs and Business Links.

Another responsibility which seems to fit well with the RDA portfolio is land use planning. CBIpolicy adviser Andrew Hunt says: ‘Through writing their strategies we hope the RDAs will balance economic needs with planning guidance.’

The RDAs will have a say in local planning rather than control over it, says Coulshed. ‘When the RDAs draw up their strategies, these will have taken note of the local authorities’ plans.’ The idea, ministers say, is for a system which ‘provides certainty’ to planning applicants.

Regional selective assistance will still come from central Government because, the DETR says, it is given on a project-by-project basis.

The requirement to attract inward investment has led to warnings that ‘bidding wars’ could break out, with companies playing regions off against each other for a better deal.

Dennis Mendoros, managing director of aerospace company Euravia Engineering and a member of the North West RDA, says: ‘There should be no competition between regions if it would mean the national interest is penalised, and no detriment to existing industries. This issue has yet to be addressed.’

The DETR does not see a problem. Coulshed says: ‘The RDAs have made it pretty clear that they want to work together and will not get into destructive competition. If things got serious, ministers could step in.’

The fact that three regions the North West, North East and Yorkshire and the Humber have formed a pact to attract business to the north of England can be taken as supporting either side of the argument.

Attracting outside investors is less important than boosting domestic growth, says Tony Rich of the Local Government Association: ‘You have to look at indigenous growth. The Competitiveness White Paper has given RDAs funds to boost indigenous high growth businesses.’

Established industries may benefit from regional networking. Euravia Engineering’s Mendoros says: ‘I would like to see a programme for all manufacturing companies to share technology and best practices.’ The CBI, through its Fit for the Future initiative, plans to work closely with the RDAs on this aim.

The Competitiveness White Paper sees RDAs as encouraging clusters local concentrations of companies in similar industries. These are essential, says Alastair Balls, former head of the Tyne & Wear Development Corporation: ‘If you’re going to attract new industries you need a clustering effect. Success is to do with having the right sites, support industries and so on.’

RDAs will not be alone in trying to develop the regional economy and competition could arise within as well as between regions. Tom Muir, professor of urban design at the University of Central England, warns of possible conflict. ‘They are going to find it very hard to dissuade urban authorities from competing on their own regeneration programmes. If Birmingham appoints a mayor like London, who will be interested in talking to the RDA?

‘If their role is to be like those other organisations then I can see absolute chaos. There is a role for a conductor, though.’

Some ‘subregions’ are already jostling for position. On Teesside, the Tec, Business Link and local authority business departments are lobbying to merge to compete with the regional capital, Newcastle.

‘You can have too many strategies,’ says Rich. ‘RDAs should be the lead bodies.’ But the fact that they will have Government appointees could be a problem. He warns: ‘They will rely on persuading people to work with them. Local accountability, for example being part of an elected body, would give more credibility.’

The lack of direct local control does not matter, says the CBI’s Hunt. ‘If they are successful then accountability will not be an issue.’

Ultimately, some RDAs could come under the control of putative regional assemblies. ‘If people want elected assemblies, then RDAs could become agencies of regional government,’ says Coulshed.

How RDAs are governed in future will depend on how they perform. Professor Kumar Bhattacharyya, West Midlands board member and Warwick Manufacturing Group director, sums up: ‘We want to be innovative, improve competitiveness, improve the skills base and attract inward investment. If we can do all that, then we will be doing very well.’