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Regional Development Agencies What can we learn? Glenn Athey Athey Consulting 11 October 2011 Athey Consulting www.atheyconsulting.co.uk tel. 07799880137. About this presentation and speaker.
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Regional Development AgenciesWhat can we learn?Glenn AtheyAthey Consulting11 October 2011Athey Consultingwww.atheyconsulting.co.uktel. 07799880137
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
“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.
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
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
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
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)
“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
Long term Short term
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...?!
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)
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
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
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
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)
(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
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
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
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
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” (!)