Regional Development Agencies What can we learn? Glenn Athey Athey Consulting 11 October 2011 Athey Consulting www.athey

1. Regional Development AgenciesWhat can we learn?Glenn AtheyAthey Consulting11 October 2011Athey Consultingwww.atheyconsulting.co.uktel. 07799880137

2. About this presentation and speaker England's Regional Development Agencies were the government's primary vehicle for subnational economic policy Expenditure – equivalent of 0.5-1% of total public expenditure To be abolished in March 2012 What are the lessons we can take? Glenn Athey – has worked in 2 of England's RDAs, Scottish Enterprise, think tanks, private consultancy

3. I might have said one or two things as a “naïve” PhD student about development agencies in the late 1990s... “form should follow function” “Political salience of economic development activities in the UK is way beyond the levels of expenditure incurred.” “Development agencies face a multitude of objectives, which do not all concur!...” Any institution undertaking economic development activity is pulled between opportunity, need, compensation, equity, equality, and political will but to name a few.

4. How did we get to RDAs? Since 1930s – there have always been regional economic policies - Special Areas, Barlow Commission (1939), Statutory Industrial Relocation Policies (1945-1964), DEA (1964), Development and Assisted Areas (1970s).... 1979-1997 – spatial targeting – Enterprise Zones, UDCs; new institutions – TECs, Business Links Wales, Scotland and NI – since 1970s (and continuing today) – economic development agencies, training agencies, investment agencies By mid-1990s – government offices for the regions handling significant amount of business development grants, initiatives; european funding; and regeneration programmes But all this regional activity – disjointed, functional silos, no formal role for engaging businesses and communities; no formal local tailoring of policies and delivery

5. About Regional Development Agencies“The aim will be to improve regional competitiveness and, over time, to bring the performance of the English regions up to the standard of the best in Europe.” John Prescott"unnecessary and expensive layer of bureaucracy that stifle genuine private enterprise." The Taxpayers Alliance“wasteful and bureaucratic.” David Cameron“abolition of regional development agencies by the coalition was a little Maoist and chaotic.” Vince Cable

6. What are RDAs? 1998 RDA Act set out 5 purposes to further the economic development and the regeneration of its area, to promote business efficiency, investment and competitiveness in its area, to promote employment in its area, to enhance the development and application of skills relevant to employment in its area, and to contribute to the achievement of sustainable development in the United Kingdom where it is relevant to its area to do so. RDAs - Regional Economic Performance Public Service Agreement (REP PSA): improve the economic performance of all English regions and reduce the gap in economic growth rates between regions. About £15bn spent 1999-2010

7. In reality...

8. 5+4 reasons why regionalism unravelled Failed NE England regional assembly referendum (2004) 2007 spending review, budgets hit by £320m Budget cuts in-year during credit crunch and recession (£990m) 2009 legislation to transfer regional planning to RDAs Emergence of city regions and core cities as focus for policy debate Lack of complementary national economic policies to RDAs Localism is the new emperor with no clothes (2008) Constant fight against “centralisation” of initiatives He who pays the piper... (yes, Whitehall again)

9. And here's some brownfield housing to take care of... “What we have got now is quite far from the original model. They have acquired a whole range of what you might call non-economic responsibilities to deliver government policy because they happen to be something that can deliver a policy objective below national level and that is the tool the government alights on. That has been one of their problems because it has diluted their focus away from economic issues.” British Chambers of Commerce submission to Regional development agencies and the Local Democracy, Economic Development and Construction Bill enquiry - Business and Enterprise Committee

10. Tensions in RDA work (National Audit Office, 2008) Economic Social Focus Breadth Strategy Delivery Regional National Action Reaction Long term Short term

11. (In)coherence of UK policies for the economy? Stressed need for regional economic convergence and industrial diversification But many of projects, capital funds used for 'regeneration' schemes – housing, consumer services sectors Lack of any fundamental industrial policy or strategy RDA funding represents less than 1% of total identified public expenditure in England by central and local government (2002/3 – 2006/7) Yet RDAs still “central plank” of former government's economic policy...?!

12. OK what did RDAs really do..??? Strategic priorities – via central govt directives and regional economic strategies Strategic funders – broad range of economic development activities Cofinancer – European funding, private sector leverage, partner funding Land and property owner and redeveloper – typically strategic brownfield sites Functions - Innovation, enterprise, property development, higher education access, employability/worklessness, economic intelligence services (regional observatories)

13. They did some GOOD RDAs operated internal strategies and priorities Good at juggling different requirements – got some autonomy for governments target framework Mostly motivated, high quality staff (43% business background) They could engage with big policy agendas on the ground Good impacts and cost benefit ratios: PWC evaluation 4.5, estimated rising to £6.40 when future returns are included. Compared to the Eddington Review of Transport - return of £5 for £1 invested was at the upper end of the investment return spectrum Work led by Pete Tyler et al - Cost-benefit returns of 2.3 on most cautious assessment, 3.2 on 'central valuation' Effective bureaucracies: 2010 NAO performance assessment; HMT found RDAs amongst top 25% most efficient govt depts

14. The goals of regional policy were not met Didn't make much difference to regional disparities in long run Jobs generation in north – too many public sector jobs Questionable whether RDAs solely to blame(!) Whitehall accountability and control over budgets

15. RDAs not perfect Marketing/branding presence of RDAs – some felt to be over the top Lack of local accountability – but no evidence of connection between accountability and effectiveness Lack of flexibility – government frameworks and programmes; green book appraisal and state aid issues Lack of responsiveness to individuals – staff headcounts and efficiency savings – meant that the model was to package up things into programmes Limited budgets – some lost out, no doubt

16. Now in a period of significant uncertainty Government changed priorities, targets, conditions for spending – yearly – sometimes in-year Lets be clear RDAs are not being replaced. At best 1/3 of funding maintained for some activities Abolition – has been chaotic (in the words of Vince Cable himself)

17. Concluding thoughts(Are Development Agencies still a useful concept and vehicle for change?)

18. Let's refresh what development agencies should be there for... (Stuart Gulliver) – economic development agencies are about rowing, steering and cheering: Rowing: on the ground delivery and practical actions where have the direct remit and resources Steering: helping provide shape, connections to government or other private sector actors, small amounts of cash to help steer activities of others Cheering: advocacy, encouragement and championing of other's efforts or initiatives

19. (in my Ph.D) I thought that economic Development Agencies should aspire to be... learning organisations values of openness, passion, commitment, learning practicality, action, entrepreneurial, impact, market relevance, market oriented approach best people from public and private backgrounds who wanted to achieve results ability to own assets, retain and recycle surpluses some specialisation on core functions great private sector relationships and good customer relations systems good at keeping paymasters happy

20. Redacting to a set of 'Golden rules'... hey let's call them “Athey's rules”(!).... Local, urban, and regional development initiatives can make a difference (CBRs) form should follow function entrepreneurial, innovating, learning organisations attract good staff, who want to deliver results and will work around government rules and private sector intransigence to do so accept operating context that political environment is overly harsh and expectations unrealistically high

21. What I really think... #1 Complete lack of evidence that RDAs were wasteful and bureaucratic – probably the opposite RDAs offered a more coherent local and regional face to economy-related government policies and spend But RDAs were not the dynamic, thrusting, entrepreneurial agencies that some intended them to be Need for effective bureaucracies? £1.5bn regional growth fund – after 16 months, and award letters - being held up by due diligence, state aid and green book issues

22. What I really think... #2 Policy horizons and institutions – too short term Overall lack of coherent policy or strategy for the UK economy Over-dependence on institutional arrangements and structures rather than proper critical analysis of desired outcomes and options Preferable to devolve to local authorities (with funding) in my view Next time! – use “Athey's rules” (!)

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