Discontent prompts calls for radical RDA reform

Have you ever wondered what your local regional development agency is for? Well, you are not alone. Confusion and dissatisfaction about the agencies is rife, according to a CBI investigation, and many businesses report that they are unsure of the RDAs’ role and powers.

These findings, from the first major independent investigation into RDAs, are a pity for the organisations on which so many hopes have been pinned, and a severe setback for regional development. It would be premature to say the nine English RDAs have failed, but their shortcomings are becoming increasingly clear.

In many ways it is inevitable that there should be some dissatisfaction. The RDAs have tall ambitions but virtually no powers and very little money. They are also part of myriad organisations that have some role in regional development. The CBI counted 43 different groups that work with – and many would argue also against – RDAs to try to improve regional economies and further regeneration.

The regional development agencies are intended to help economic development; encourage regeneration; boost business efficiency, investment and competitiveness; to promote employment; develop skills; and to help sustainable development.

But they have no say over planning or transport issues; they are limited in the funding they can make to business because most of that money is channelled through the Small Business Service; and they do not directly fund projects designed to improve the business environment. They are a classic case of responsibility without power.

And to add to their challenges, RDAs can also be stymied by the local councils, who will publicly praise them but really think they should keep their tanks off local authority lawns. Turf wars in the mesh of economic support should not be underestimated.

What then is the answer?

The CBI wants RDAs to boost their influence by earning respect for rigorous economic analysis, and to pool their resources by working more closely with businesses. It wants more business people on RDA boards and the government to keep its involvement to a minimum.

However, the TUC fears that too close a liaison with business could lead to companies buying influence, exacerbating imbalances in local economies rather than combating them. It wants RDAs to be given £1bn more, and to have a clear national strategy.The Conservatives are alone in wanting to scrap RDAs and pass the role of trying to encourage and coordinate development to local government offices.

Since the inception of the RDAs four years ago, the government has shifted their emphasis from regeneration to the economy. After the election, responsibility for the organisations moved from the old Department of the Environment, Transport and the Regions to the Department of Trade and Industry. Two government initiatives may help shape the next stage for RDAs: the DTI’s review of the way in which business aid is distributed, and a white paper on the regions, which is due later this year.

Much is at stake in making the RDAs work more effectively. There are big divides between and within the regions, and most of the UK’s local economies compare poorly with counterparts on mainland Europe. But unless there is willingness to give the RDAs more firepower and very clear functions, the organisations seem doomed to the role of cheerleader – for a team that doesn’t care if they are there or not.

Editor’s note: The UK’s prime manufacturing region is set to lose 40,000 jobs, according to a survey by consultants PricewaterhouseCoopers.

Brian Woods-Scawen, PwC chairman in the West Midlands, said a 2% fall in manufacturing output during the second quarter of this year could become a 5% drop in the year to March 2002.

He warned this could result in 10% of the manufacturing workforce being laid off, starting in the autumn when companies begin their next budgeting round.

The fall would cut the West Midlands GDP by 1%, estimated at £70bn. PwC has called on government to improve the plight of exporters by pressing other EU countries to implement single market legislation and remove old barriers to trade.