Not every region will need an RDA

Date: 09/12/2008

A new report from the Centre for Cities is calling for radical reform of regional development agencies (RDAs) after the next general election. The next Government should consider merging some RDAs and closing others - to focus more on where economic development and investment is most needed - like Northern and Midlands cities.

RDAs are not delivering on their two-part government target to 1) reduce the gap in economic growth rates between England's regions, and 2) promote growth in all regions:

• During the first seven years of the RDAs existence (1999 to 2006), the Greater South East economy grew by nearly 18%^[1], whereas the rest of England's economy grew by just 15% - and the growth gap looks set to continue over the next decade.

• Across the Greater South East, the economy generated £22,657 per head, in 2006 - over £6,000 more than the rest of England.

The main purpose of RDAs should be to help boost growth in lagging areas. This report suggests a number of options for the next Government to consider, including:

• A Northern Development Agency, from 2011, to replace the current three Northern RDAs. Cities like Liverpool and Sunderland would benefit from being part of a unified "Northern" brand, rather than three separate RDAs.

  A Northern Development Agency would be more strategic. It would build better links between the two biggest Northern city-regions, Greater Manchester and Leeds City Region - and create more space for them to take on more powers and deliver housing, transport and jobs.

  Radical reshaping of RDAs in the Greater South East. If the purpose of RDAs is to boost growth in lagging areas, it is not clear that three are needed in the Greater South East. They could be streamlined, or abolished altogether - with the new Homes & Communities Agency taking the lead in areas like the Thames Gateway.

• Replace the Government's confusing regional economic performance target with a clearer focus on boosting growth rates and promoting job creation in the Midlands and the North - rather than trying to close the gap with the Greater South East.

Dermot Finch, Director of the Centre for Cities, said: 

"There is great uncertainty about the future of RDAs. The Government says they are all crucial, but the Tories say they are terrible. The truth is somewhere in between: RDAs are needed more up North, less in the Greater South East.

"We will not need an RDA in every English region, for the next ten years. RDAs should be streamlined, and focused on boosting growth in lagging areas. After the next general election, a single development agency for the North of England would be a good way forward."

For more information, please contact:

Rosamund Taylor, Acting External Affairs Manager, Centre for Cities
r.taylor@centreforcities.org / 020 7803 4316 / 07876 175 426

Notes to Editors

The Future of RDAs by Dr Adam Marshall is available upon request or to download at www.centreforcities.org/rdas

The Government's current proposed reforms will not be enough to deliver real change to England's regional architecture and do not fully address the five major criticisms levelled at RDAS - and Government:

Accountability: RDAs are widely perceived to be unaccountable quangos. They have struggled with the inherent tension between their ‘business led' remit and calls for greater democratic accountability. ‘Business-led' boards are just a fig-leaf for what RDAs really are: public-sector delivery agencies, responsible directly to BERR and to Parliament. The new Regional Select Committees and Local Authority Leaders' Boards will do little to solve these accountability tensions, nor raise low levels of public understanding of what RDAs do.

Expectations: RDAs have been subjected to an unclear tasking framework from the start. Since 2004, the Government has progressively increased their responsibilities so that they now ‘coordinate' investment, business support, EU funding, and strategic spatial planning. RDAs have been subjected to byzantine Whitehall oversight, constantly shifting performance management and unrealistic delivery expectations.  While the revised RDA tasking framework is a substantial improvement, the changes promised by the SNR do not go far enough to further reduce the complex pressures and expectations placed on RDAs.

Targets: BERR has principal responsibility for delivering the Government's Regional Economic Performance PSA target. The divergent aims of the PSA target have created confusion and tension between its two objectives - distracting policy-makers from the critical task of increasing productivity and jobs, especially in regional growth centres like Greater Manchester, Bristol and Leeds. The politics surrounding the target have made it difficult to RDAs to tap and nurture sources of absolute growth.

Spatial scale: regions are often too large to deliver economic development programmes effectively - as they do not match up with real economies, which are sub-regional. The South East region, which includes deprived towns like Hastings, the prosperous Thames Valley, and part of the fast-growing Milton Keynes sub-region, is a case in point. What's more, RDAs' original remit did not take enough account of cities.Regional boundaries can inhibit collaboration between cities like Manchester and Leeds, which look to separate RDAs rather than to each other to drive growth across the North.

Efficiency: Over the years, RDAs have been heavily criticised for staff size, bureaucracy, and cost. Some of this critique is unfair, as RDAs have similar overall administration costs to other non-departmental public bodies. However, RDA administration and salaries are projected to have cost £260m in 2007/08 alone. The SNR has set out plans for RDAs to become ‘more strategic' and streamlined, but it is unclear whether this process will deliver substantive efficiency gains. And as the Government searches for ways to pay for its £20bn fiscal stimulus package, RDAs will come under renewed pressure to deliver greater administrative and programme savings.

(an extract from The Future of Regional Development Agencies, by Adam Marshall)