Regional Development Agencies

What can we learn?

Glenn AtheyAthey Consulting11 October 2011

Athey Consultingwww.atheyconsulting.co.uktel. 07799880137

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

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.

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

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

What are RDAs?

1998 RDA Act set out 5 purposes1) to further the economic development and the regeneration of its area,

2) to promote business efficiency, investment and competitiveness in its area,

3) to promote employment in its area,

4) to enhance the development and application of skills relevant to employment in its area, and

5) 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

In reality...

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)

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

Tensions in RDA work (National Audit Office, 2008)

Economic SocialFocus BreadthStrategy DeliveryRegional NationalAction ReactionLong term Short term

(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...?!

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)

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

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

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

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)

Concluding thoughts

(Are Development Agencies still a useful concept and vehicle for change?)

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

(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

Redacting to a set of 'Golden rules'... hey let's call them “Athey's rules”(!)....

1. Local, urban, and regional development initiatives can make a difference (CBRs)

2. form should follow function

3. entrepreneurial, innovating, learning organisations

4. attract good staff, who want to deliver results and will work around government rules and private sector intransigence to do so

5. accept operating context that political environment is overly harsh and expectations unrealistically high

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

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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