29 June 2010
The government is pressing ahead with its pledge to radically cull the number of quangos, with regional development agencies among the latest in the line of fire.
Deputy Prime Minister Nick Clegg today set out plans to replace RDAs with ‘local enterprise partnerships’, made up of councillors and businesses. The new bodies will oversee planning and housing, local transport and infrastructure, employment, enterprise and supporting business start-ups.
Other roles currently carried out by RDAs, such as local business support and innovation, will be controlled centrally.
Business Secretary Vince Cable said the new bodies would play a vital role in ‘rebalancing the economy towards the private sector’. LEPs would ‘take on the task of renewing local economies and tackling local barriers to growth’, the Liberal Democrat MP said.
But Katie Schmuecker, senior research fellow at the Institute for Public Policy Research North, told Public Finance that there was ‘an element of giving with one hand and taking away with another’ in the new arrangements. She added that that some of the newly nationalised functions were better carried out at local level.
The Centre for Cities think-tank said RDAs had a ‘disappointing record’ on generating private sector jobs and LEPs would need to do better. ‘This is localism in action, with less money to spend. The ball is now in the court of local councils and businesses,’ said chief executive Dermot Finch.
The Labour Party, which established RDAs in 1998, immediately condemned the government’s decision. ‘RDAs have done a good job for regional economies. They have been independently evaluated and shown to lever in on average £4.50 of benefit for regional economies for every £1 spent,’ said shadow business secretary Pat McFadden.
Clegg also today announced a £1bn fund to support private sector growth in regions heavily dependent on public sector jobs and likely to suffer most from the government’s spending cuts.
‘While we sort out the nation’s finances, we can also help to foster a thriving and more balanced economy so that no region or community gets left behind,’ he said.
Schmuecker said the new fund was a welcome recognition that ‘the private sector does not automatically flourish in the public sector’s place’. But she warned that private sector growth in regions reliant on the public sector would take a long time, risking a ‘timing difficulty if the public sector cuts happen very quickly’.
She also warned that any bidding process must ensure money is targeted at the areas that would benefit most from it and not spread too thinly. ‘It’s not a huge amount of money so it’s important that it’s targeted at areas most in need,’ Schmuecker said.
A white paper will be published later in the summer with further details on the LEPs and the regional growth fund.
It was also announced today that the Commission for Rural Communities, the agency set up to boost economic growth in the countryside, and the new Infrastructure Planning Commission, the quango that approves applications for major infrastructure projects, will be abolished.
