06 June 2008
Regional development agencies have long drawn Conservative fire. But the government's plans to give more powers to city-regions may appear attractive to Tories keen to make inroads into Labour territory. Peter Hetherington reports
For the hard, ideological Right, regional development agencies were seen as a throwback to the interventionist 1960s, when governments aspired to occupy the commanding heights of the economy. Even worse for critics, the agencies were the brainchild of John Prescott, glowing in the optimism of 1997, as he sought to give provincial England a degree of the devolution and clout enjoyed by self-governing Scotland and Wales. The Conservatives, ideologically opposed to a stronger regional dimension and suspicious of the then deputy prime minister, vowed to scrap them.
But after nine years, some of the eight RDAs – a ninth, equivalent agency for London is under Mayor Boris Johnston's wing – have grown in importance and stature, prompting the Tories to have second thoughts.
At the same time, the government is preparing to rationalise Prescott's structures by abolishing non-elected assemblies while handing some of their powers, such as strategic planning, to RDAs.
Changes will be underpinned by legislation in the next parliamentary session, which will also formalise the transfer of RDA functions, particularly over economic development and job creation, to emerging city-regions such as Greater Manchester.
Regionalism has been the issue that dare not speak its name in Whitehall ever since the crushing rejection of plans for an elected North East assembly in 2004. Prescott gave a hint of the tensions four years ago when he told John Humphreys on BBC Radio 4 recently that the referendum defeat marked one of his biggest setbacks as deputy prime minister.
This explains why ministers have been treading delicately while Conservative leader David Cameron has been upping the ante. 'The whole experiment with regional assemblies has been a complete mistake,' he recently told a London conference. 'The halfway house we've now got, where RDAs are being given planning powers, has been a disaster, too.'
But the rhetoric disguises a shift in Tory policy. Employers' groups and the British Chambers of Commerce argue that RDAs promote regional growth. After all, they claim they have created 500,000 jobs, 56,000 businesses and reclaimed more than 5,600 hectares of brownfield land.
So the Tories, in a policy document likely to be published before the summer recess, will argue that some agencies, notably in the South East and East of England, should be scrapped. Others would be retained in some form, although shadow Cabinet sources indicate that the hotly disputed word 'regional' will be consigned to history.
It is a difficult balancing act for David Cameron; his party, after all, created government offices in the eight regions 14 years' ago, thus laying the foundations for the current regional structure. Strengthened in 2000, the offices now represent 11 departments with staff drawn from Whitehall, local government, the private and voluntary sectors.
Under the Tory plan, they are likely to remain in some form, alongside development agencies in the North and the Midlands. But the idea will be to channel an element of the RDAs' collective budget – £2.1bn by the time of the likely next election, in 2010 – to either local councils or time-limited development corporations, similar to a string of urban quangos created by the last Conservative government.
'We are more likely to target specific areas than have a pan-regional approach,' says a shadow Cabinet source. 'The idea is to have a time limit – do the job, get the economy and regeneration efforts moving, then get out. We will encourage local councils to work together and share responsibilities in, say, economic development.'
But the party appears far from united. A Treasury-led review last year into 'sub-national economic development and regeneration' – the spur for new legislation – should have gone some way towards satisfying the Tories. It promised to channel RDA delivery functions to either councils or groups of authorities, and to cut down on bureaucracy. But the contentious proposal to give RDAs strategic planning powers, currently held by the (non-elected) regional assemblies – a much-reviled Prescott creation – created an uproar.
According to shadow local government and communities secretary Eric Pickles: 'This exercise risks creating a regional tyranny of government with no mandate, no legitimacy and no accountability… only Conservatives will dismantle the regional state, restore power to local communities and make government once again accountable to the people.'
The local government minister, John Healey, who led the review when a Treasury minister, claims that the Tories are speaking with two voices. 'There's a lot of confusion, and no common line, with David Cameron saying one thing and Eric Pickles another,' he says. 'There is no coherent policy.'
Healey recognises that reformed RDAs need greater democratic oversight – hence the new legislation. As well as giving councils and groups of authorities a duty to promote economic development (channelled from the RDAs), it will also make the case for a special forum of council leaders in a particular region to scrutinise and oversee the agencies. A system of parliamentary regional select committees will provide another tier of scrutiny. 'There will be a focus of regional policy in Parliament where, up to now, there has been none,' says Healey.
The Tories are bound to mount an attack. Their forthcoming report is underpinned by a review commissioned by the shadow Cabinet from UK-based US entrepreneur Doug Richard. It complained of 'overly regionalised and politicised agencies', which had removed 'both the advantages of local governance and the efficiency and impartiality of central government'.
This approach exposes an ideological divide between government and opposition. While Tories are busy developing a new policy for provincial England – they wince at the term 'regionalism' – the government appears determined to rationalise and strengthen regional institutions wherever possible. At the same time, it wants to channel some power and money from RDAs to emerging city-region partnerships, subject to groups of councils reaching agreements to share services.
The key to formalising these partnerships is a new mechanism – the Multi-Area Agreement – under which councils pool responsibilities in a limited number of areas to meet targets agreed with the government.
Greater Manchester is set to sign the first MAA. By July, it hopes to have a ten-strong executive board in place, comprising leaders of the conurbation's ten councils. Below this level, a series of 'commissions' will oversee areas from transport to the environment, housing, planning – even health – and, crucially, the conurbation-wide economy, with money and power devolved from the North West RDA.
Healey says the legislation will add statutory weight to the new city-regions which, he stresses, will not replicate former metropolitan county councils. 'There will be no new layer of government,' he stresses.
After Greater Manchester, Healey hopes that South Yorkshire and the Tees Valley area will sign MAAs.
Progress elsewhere is slower. Councils in other conurbations, fearful of losing power, often blanch at the prospect of pooling limited functions. This means that a common pattern of limited city-region governance is unlikely to emerge. Ministers insist there will be no compulsion.
And what of the Conservatives? More ambitious Tories favour a radical approach, forcing city-region mayors – similar to the London model – on conurbations. Sir Simon Milton, chair of the Local Government Association, said recently that the government had to drive through reforms, with conurbation-wide mayors assuming powers over health, police, transport, housing, skills and economic development, alongside associated capital and revenue budgets.
It was a bold suggestion. But with Tories making inroads in the North, after local polls and the Crewe and Nantwich by-election, the idea could be appealing to a Cameron leadership keen to unseat Labour from its northern bastions. Whether it would be a devolution step too far for the Cameroonians remains to be seen.
Peter Hetherington writes on community affairs and regeneration
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