CEM OCCASIONAL PAPER SERIES THE FUTURE OF RDAs An information paper by Gethin Edwards - The College of Estate Management IP 3/10 June 2010 THE FUTURE OF RDAs An information paper by Gethin Edwards - The College of Estate Management Introduction The future of England’s Regional Development Based on the analysis of a questionnaire sent Agencies (RDAs) was a hot topic of debate in the to approximately 2,000 of the College of Estate year leading up to the 2010 general election. In Management’s (CEM) current and former students, 1999 and 2000, nine RDAs were set up by the this paper presents the property sector’s view then Labour government, charged with driving on the future of regional governance in England. economic development in their regions. In 2009, The next section provides a background to the the PricewaterhouseCoopers evaluation of the establishment and responsibilities of RDAs, and organisations reported that every £1 that they charts the political debate surrounding their future had spent had added £4.50 to regional gross in the lead-up to, and since, the May 2010 general value added. Several business groups have also election. Section 3 then summarises the results recently expressed their support for the agencies. of the CEM Research questionnaire, identifying a However, in the lead up to the election, the Labour strong preference for an assessment of RDAs on a party remained the only major party committed to region-by-region basis. the RDAs’ continued existence. Both the Liberal Democrats and the Conservatives proposed to at least consider the option of abolishing some, if not all, RDAs, on grounds of local democratic accountability and potential financial savings; and since being elected to government have stated their intention to replace many, if not all, RDAs 1. with joint local authority–business partnerships. 3. England’s regional development agencies 2. 1. One North East 5. 2. Northwest Regional Development Agency 4. 3. Yorkshire Forward 9. 4. Advantage West Midlands 5. East Midlands Development Agency 8. 6. South West RDA 7. 7. South East England Development Agency 6. 8. London Development Agency 9. East of England Development Agency 3 IP 3/10 The future of RDAs The rise and fall of the RDAs England’s RDAs, as non-departmental public have representation from the voluntary sector, bodies (or quangos), were first launched in education and local government. 1999, with the London Development Agency The organisations are funded through a pool (LDA) following in July 2000 along with the of money from a number of government Greater London Authority. These business-led departments, namely the Department for organisations were set up with a brief to foster Communities and Local Government, the sustainable economic growth, inward investment Department for Business, Innovation and Skills, and competitiveness, employment and skills the Department for Energy and Climate Change, to redress regional imbalances. They were the Department for Culture, Media and Sport, promoted as a way of making regional policy more the Department for Environment Food and Rural responsive to each locale (Thornley 2003). Affairs, and UK Trade & Investment. Between Under the Regional Development Agencies Act 1999/2000 and 2006/07, the RDAs collectively 1998, each agency has five statutory purposes, spent around £15 billion, and their total which are: annual expenditure in 2006/07 was £2.3 billion (Pricewaterhouse Coopers 2009). In addition, • to further economic development and the RDAs manage the European Regional regeneration Development Fund and the Rural Development • to promote business efficiency, investment Programme for England, which together amount and competitiveness to approximately £9 billion. One of the main duties of RDAs is to draw up • to promote employment and review a 5- to 10-year Regional Economy Strategy, which provides an analysis of the to enhance development and application of • region’s economy and sets out the plans for each skills relevant to employment RDA. This has to be developed in partnership with regional stakeholders in the public, private and • to contribute to sustainable development. civil society sectors, but must also be coherent RDAs are accountable through their chairs to with national economic development policy. the Secretary of State and through their chief Opposition to the RDAs largely concerns their lack executives to Parliament (through the Department of democratic accountability and value for money for Business, Innovation and Skills). They are (see, for example, Local Government Association also accountable through a number of other 2009). Several commentators also cite the RDAs’ mechanisms, including regional select and lack of flexibility to respond to local aspirations grand committees, the National Audit Office’s and needs, given the strong central government Independent Performance Assessment and control over their operation (see, for example, Independent Supplementary review processes Jones 2001). Goodwin (2004) suggests that, in and the publication of corporate plans and setting up the RDAs, little thought was given to annual reports and accounts. The LDA is also the potentially problematic relationship between accountable to the Mayor of London and the the unelected organisations and city councils London Assembly. (which may have different investment priorities, The government appoints the RDAs’ boards of for example), or at least the government did not 12 to 15 members, except in London where they believe it to be a problem (see also Syrett and are appointed by the Mayor of London (who also Baldock 2001). It is also argued that the regions sets the LDA’s targets). Members are principally are not coherent areas, and that the organisations drawn from the business community, but also duplicate the functions of county councils. 4 IP 3/10 June 2010 However, in March 2009, Pricewaterhouse Business leaders and the regeneration sector Coopers, which was appointed by the Department have also spoken in support of the RDAs, for Business Enterprise and Regulatory Reform with the CBI, and the British Chambers of and the RDAs to provide an independent Commerce arguing that any attempts to abolish assessment of the impact of the spending by the organisations could be harmful to business each of the RDAs and assess their achievements, (Hayman 2009; Wilner 2009). Carpenter (2009) reported that all RDAs have generated regional also reported a ‘very good relationship’ between economic benefits which exceed their costs if the European Commission and the RDAs, and allowances are made for the expected long-term concern among Brussels officials that any move impacts, with every £1 spent by the agencies to scrap the agencies would cause disruption and adding £4.50 to regional gross value added. Their a loss of expertise. report concluded that: Despite this, in the lead-up to the May 2010 ‘… there is credible evidence that all RDAs general election the Labour party remained the have generated regional economic benefits only major party committed to the RDAs. The which exceed their costs. This is especially so Liberal Democrats called for the work of all RDAs if account is taken of the potential persistence with local support for them to be refocused on of the benefits and of future potential benefits, enterprise support and economic development, although there are inherent uncertainties in and the others to be scrapped, with Vince Cable, these estimates.’ (Pricewaterhouse Coopers now Business Secretary, describing them as 2009: x). of ‘questionable relevance’ (Finch 2009). The Conservative party proposed to review each More recently, the National Audit Office also RDA, and to only retain those that command the praised the work of the RDAs: support of local councils and businesses. In an ‘For every pound of RDA spending, an open letter to their Conservative colleagues in estimated additional £2.80 is secured from March 2010, Caroline Spelman MP and the Rt other bodies of which £1.51 is from the Hon. Ken Clarke MP said: private sector. While some of this spending ‘The Regional Development Agencies (RDAs) may have occurred without the RDAs’ are the remains of John Prescott’s failed involvement, their engagement can ensure experiment of regional government. Since that regionally important projects proceed they were formed in 1999 they have spent with more speed and confidence than they £17 billion, yet the gap between the greater otherwise might. The added value of the south east and the rest of the English regions RDAs’ strategic role and support to partners has widened. So, whilst we recognise the in delivering physical regeneration projects RDAs have had some local successes, we is an important benefit to the regions, but it believe that the current arrangements can be is difficult to measure.’ (National Audit Office improved.’ (Spelman and Clarke 2010) 2010: 5) Since being elected to power, the new UK The report did, however, highlight ‘… a government has already said that the RDAs will considerable range in the success of individual have to save £270 million in the current financial projects both within individual agencies and year. The coalition has also strongly indicated that between types of intervention’ (p. 6). The report some RDAs may be allowed to continue, although also stated that ‘… we are unable to conclude that in a different form. According to the coalition the regional wealth benefits actually generated agreement: were as much as they could and should have been, and are therefore value for money’ (p. 7). 5 IP 3/10 The future of RDAs ‘We will support the creation of Local the government to allow employers a real voice Enterprise Partnerships – joint local authority- in discussions over the RDAs’ successors (Turner business bodies brought forward by local 2010). authorities themselves to promote local Currently, there is no detail on what funding economic development – to replace Regional streams the LEPs will be given, or what areas of Development Agencies (RDAs). These may activity they will take on from the RDAs.