A reprieve for the regions? by Peter Hetherington

27 May 10
Many Tories have a visceral dislike of all things ‘regional’ – its associations with John Prescott’s long spell as deputy prime minister doesn’t help!

Politicians of the right have never been entirely happy with regional policy in England since the Butskellite consensus of the 50s and early 60s, when governments of red and blue dished out vast sums to deliver new industries to the north and Scotland: car plants to Merseyside, and Clydeside, steel works to South Wales and Lanarkshire, and so on.

When the Tories took power in 1979 Sir Keith Joseph, Margaret Thatcher’s right-hand man, tried in vain to scrap much of the policy, in the form of selective assistance to industry; only the intervention of George Younger, the pragmatic Secretary of State for Scotland, saved the day. 'Over my dead body,' he is rumoured to have threatened.

Similarly today, many Tories have a visceral dislike of all things ‘regional’ – its associations with John Prescott’s long spell as deputy prime minister doesn’t help! – and are determined to cut its ultimate manifestation down to size: Regional Development Agencies, or RDAs. Created in 1999 in the eight English regions – Greater London subsequently followed -  to drive business growth and economic development, they have grown into substantial quangoes with collective budgets of around £2 billions annually.

The problem, according to critics, is that the case against RDAs across England was always flawed: surely, they argued, the south east, south west, and eastern regions, relatively well-favoured, didn’t need the kind of support deemed essential to raise the fortunes of, say, the north east? Why give them  a public service agreement target to ... 'reduce the gap in economic growth rates between regions' when the south east would simply power ahead further, leaving the north east trailing in its wake? Until recently, in the UK ‘wealth league’, the south east was 11 per cent above the average while the north east was 23 per cent below.

Rightly Vince Cable, the new Business Secretary, recognises that something has to go. Never, apparently, entirely convinced by the overall RDA objective, he now apparently thinks that RDAs in the north and the midlands should get a reprieve, while the case for retaining those in the south and the east is extremely weak. Whaever happens, around £270m will be cut from RDA budgets this year as part of the coalition’s instant economy package, in which the Business Department has to slash £836m overall.

Will that please Tories, particularly restless backbenchers? Probably not. Rumblings of disquiet are being heard away from Westminster. Professor Henry Overman, of the Centre for Economic Performance at the LSE, argued in a recent paper that no compelling evidence exists showing whether RDAs are a good or bad thing. But one thing is clear: scrapping the northern agencies would send out all the wrong political signals, giving coalition critics valuable ammunition that this centre-right government is bent on further undermining fragile regional economies which have already borne a disproportionate share of post-credit crunch pain.

Peter Hetherington writes on community affairs and regeneration

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