What exactly is Tory policy on RDAs? Part One.
Last week Lord Bhattacharyya suggested that the Tories may keep RDAs after all. The well-connected peer said that the Conservative Party has not yet decided on the fate of RDAs (including Advantage West Midlands) should they win the next General Election.
He suggested that despite the Tories making it clear that they are not convinced by RDAs, their abolition under a Conservative government is not a done deal; "that's not what they are telling me," he said.
"There might be change, but this is a party that wants a small central government so the regions will have more power. I have not heard them articulate that will get rid of the RDAs".
If that's the case then there have been some pretty mixed messages coming out of Tory HQ. Last year David Cameron identified the RDAs as prime targets for funding cuts, and Ken Clarke laid in by arguing that regional agencies 'may not be the best way forward... we are certainly going to rationalise them and to take away some of their functions".
And last October, Tory shadow minister Geoffrey Clifton-Brown was quite explicit at an event in Birmingham when he said the Tories would most likely scrap all RDAs outside London; "by and large they are going to be abolished... it is quite unnecessary to have an RDA structure. It is a tier of government which is not needed."
RDAs having offices around the world competing for inward investment (which isn't actually true anyway) was a "hugely wasteful" system he said; this role would be upscaled and handed to UK Trade & Investment, the government agency responsible for promoting international trade, while the planning role of RDAs would be transferred to local councils.
He said that Conservative plans meant some small teams would be left in the regions as a first point of contact for inward investors and exporters, but that would be it, except for London which would keep its RDA.
Similar statements have been made by a number of Tories in the media and at meetings I've been to; the line 'most of them will be scrapped' was pretty consistent last summer. But at an event in Parliament in November, a Tory spokesperson said that they wouldn't remove RDAs and not replace them with anything.
Interestingly, the man leading the Tories RDA review, Mark Prisk, spoke at a Regional Studies Association event at Coventry University just before Christmas. Prisk is an intelligent and thoughtful politician and he seemed to row back from Clifton-Brown's more outspoken comments and said merely that a review was underway and that the Tories favoured more local responses.
All of this leaves me scratching my head wondering what exactly the Tory agenda now is. I was recently asked by another Tory front-bencher (whom I rate highly) what I thought of Tory policy on RDAs and I replied that I wasn't sure what their policy was. "Neither do I" came the reply.
The Regional Imperative
Whilst reforming RDAs and making them more accountable is one thing - and an approach I'd support - scrapping RDAs could well lead to both an overlapping mish-mash of policies locally as fragmented local authorities (there are nearly 40 in the West Midlands for example) fail to join things up, along with a recentralisation of policy making and delivery in London as government looks to cut costs. It isn't clear to me how any of this would actually help the West Midlands economy.
What seems to be overlooked in Tory thinking is that a lot of what the RDAs do will have to be done somewhere in the system. Indeed when the English RDAs were set up in 2000, they brought together activities from various bodies which were anyway already doing inward investment promotion, business support and much more.
Joining these activities up in a single Regional Economic Strategy, and in a body which can at key times bang heads together to make things happen, has brought genuine benefits.
In the five years up to the collapse of Rover, for example, RDA Advantage West Midlands worked with suppliers to diversify firms away from Rover, helping them to supply other car firms and to move into new growth sectors such as medical technologies. I reckon that around 10 - 12,000 jobs and critical engineering skills were saved in the process before Rover went bust.
The response after the collapse was also a major effort that minimised job losses. This was a genuine 'success' for policy.
More recently the West Midlands Regional Task Force set up under AWM auspices is doing much - with limited resources - to ameliorate the impact of the recession on business.
So, even if the Tories decide in some way to replace RDAs, experience suggests the need for regional-level bodies of some sort to:
Ã¢ÂÂ¢ Take a strategic view of the economic needs of the region alongside the various regional public bodies who impact economically, and the business community;
Ã¢ÂÂ¢ Initiate economic development activities appropriate to that strategy, in cooperation with and catalysing partners (such as innovation and cluster development with universities and business);
Ã¢ÂÂ¢ Argue the case to central government on behalf of the region to tackle areas of specific need (e.g. manufacturing for West Midlands);
Ã¢ÂÂ¢ Bring together a range of parties to respond to specific crisis situations (e.g. floods or a major closure);
Ã¢ÂÂ¢ Coordinate differing European and national Government departmental policies (sometimes conflicting) on the ground;
Ã¢ÂÂ¢ Provide demand-related services close to the customer, customising and interpreting an essentially supply-related and top-down direction from Whitehall (e.g. the well regarded Manufacturing Advisory Service);
Ã¢ÂÂ¢ Catalyse and initiate action throughout the region to improve the business environment and infrastructure (e.g. venture capital funds).
Why it should not (always) be done Centrally
Of course, even if you accept this list of economic needs, there is still the issue of whether this should be done at the regional level. There have been mutterings by some Tories of the possibility of doing things nationally to save on resources.
Yet before committing to this, Tory thinkers need to consider the fact that there are a number of arguments for the regional tier, which can be summarised as follows:
Ã¢ÂÂ¢ Central government is about policy. Delivery needs different skills, relations to customers and mindset;
Ã¢ÂÂ¢ Central government is departmentally driven in policy, budget, costs and results terms, not about total economic effect;
Ã¢ÂÂ¢ The macro and long-term economics of central government, which inevitably looks for 'one size fits all' approach, needs translation into shorter and more specific, micro economic policy closer to the ground;
Ã¢ÂÂ¢ The Civil service in practice tends towards planned economy and bureaucratic view of business support rather than a market demand approach (SME vouchers for example were initiated in the regions);
Ã¢ÂÂ¢ There is a London centric bias as a result of knowledge, personal interest and accident. This is compounded by a trading- rather than investment- view of the world, driven in part by the capture of London policy making by the City;
Ã¢ÂÂ¢ The relative impact of business problems and opportunities are different throughout the country and need an appropriate weighting of measures;
Ã¢ÂÂ¢ Economic development requires working together with different businesses and key delivery agents and partners such as Universities on the ground;
Ã¢ÂÂ¢ A free market principle is actually to make the decisions as close to the consumer needs as possible;
Ã¢ÂÂ¢ Some of the fastest growing economies in the developed world have been about the size of the English regions (think Singapore). We have traditionally been a very centralised country.
And why it should not (always) be done locally...
Ahh, you say but what about the local level? Why can't local government do the job?
Ã¢ÂÂ¢ Well, their emphasis and legitimacy is on the problems and services of individuals and often not business;
Ã¢ÂÂ¢ And appropriate knowledge and skill is not available in the employees, officers or the structures of local government;
Ã¢ÂÂ¢ Generally they do not have resources or scale to take significant economic initiatives either independently or with major partners (although admittedly that may not be the case with the bigger cities like Birmingham);
Ã¢ÂÂ¢ The time scale of (local) elections is too short to take major economic initiatives;
Ã¢ÂÂ¢ The wide and strategic approach required is not where the local authorities have normally operated, and does not fit their expertise. For example, there are around 40 local authorities in the West Midlands - strategic join-up without a regional body was very difficult before the RDAs;
Ã¢ÂÂ¢ They are often also bureaucratic
The current situation is the transition over 20 years of experience, experiment and change, many initiated originally by Michael Heseltine. It would seem a bit perverse and short-sighted to just discard all that knowledge and infrastructure without very serious examination.
What we need to focus on is how to improve the current set up rather than ripping it up and starting again.
More on that next.
Professor David Bailey works at Coventry University Business School