What happened to AWM's Assets?
When the government decided to abolish the RDAs back in 2010, they said that a fifth of the RDA's land and property assets, including business parks, development sites and other bits and pieces of infrastructure they had built up, would be sold off - on the open market - with the rest transferred to the Housing and Communities Agency (or HCA) - an unaccountable quango.
Remember that the justification, in so far as there was one at all, for abolishing the RDAs was that they were, well, unaccountable quangos. At the time it wasn't really clear what was going to happen to the remaining assets, and the HCA had to quickly draw up plans with DCLG to take over those RDA assets not sold off and then to hold them on behalf of councils.
The idea, supposedly, was to avoid a 'fire sale' of RDA assets at a low point in the market. But assets were indeed sold off, as an excellent BBC Inside Out West Midlands investigation reveals tomorrow (in the West Midlands' case over £40m worth). How much they were sold for isn't necessarily clear, however, raising some important questions about accountability and transparency, and whether a good deal was really done for taxpayers.
After undertaking freedom of information requests, the BBC Inside Out programme found that AWM had £106.6m worth of assets at the time of closure, of which £64.6m was transferred to the HCA. In other words, £42m worth of assets were sold off - and not necessarily at the best time in terms of property prices and maximising returns for taxpayers.
The whole process also left open the question as to why LEPs and local authorities couldn't be handed the assets to steward themselves rather than them being transferred back to London.
Clearly the implication was that the cash stream resulting from any asset sales would go back to Whitehall to pare down the deficit, rather than it staying local and giving the LEPs some assets that could provide them with financial clout (something they have since been sadly missing - as the recent Heseltine Review implicitly recognised with his call for much greater resources for LEPs).
It was, I suggest, a critical missed opportunity to empower LEPs by giving them some resources (in the case of the West Midlands' case over £100m worth of assets could have been handed as a dowry to LEPs in the region).
Of course, the situation was rather different in London, where the Mayor of London, Boris Johnson, was 'gifted' the London Development Agency's assets as well as having £388 million salvaged from the LDA budget. It's one rule for London, clearly, and something else quite different for other English regions.
Basically, in the rest of England, an RDA 'asset grab' unfolded, with the Whitehall departments of DCLG and BIS keen to get their paws on the RDAs' old assets, much to the chagrin of local councils and LEPs.
Business secretary Vince Cable had made it clear that there wouldn't be any "free lunch" for local authorities, and rejected requests by several RDAs to be allowed to pass on assets under 'deferred payment' schemes, which could have allowed local authorities to wait until property prices pick up before disposing of the assets. That could then have been a way of allowing LEPs to raise much needed funds.
Cable's department, BIS, did state that RDAs must take into account local economic development in disposing of assets, but at the same time stressed that they have to realise the best possible price when disposing of the assets. But whether that was actually achieved or not is unclear, given that many assets were sold off pretty quickly in depresses market conditions.
Actually what we also need to note is that many of these assets were bought for regeneration by RDAs for the long-term, and often needed considerable remedial work to get them into shape before the private sector would take them on (think of the quite considerable efforts that AWM put into remediating the i54 site before finding a buyer in the form of JLR, negotiating a deal and getting approval from BIS - much of AWM's important role here seems to have been quietly airbrushed from history).
But this long-term local economic development strategy was effectively overruled by short term national political objectives (i.e. sell assets off or transfer them back to London to then sell them off). It was another missed opportunity for economic development outside of London. The Treasury's agenda for reducing the deficit effectively trumped the local economic development and growth agenda.
What makes things worse is that some councils then did deals to buy some of the former RDAs' assets. Here in the West Midlands a site at Bilston (the former GKN site) which was under AWM ownership was transferred to the HCA, with one part of it, site A, acquired by the local council at a cost to local taxpayers.
But hadn't local taxpayers already paid for these assets? After all it local taxpayers' money that AWM and other RDAs used to buy the assets in the first place. Asking taxpayers to pay twice to get them back seems pretty unfair.
What the whole affair really highlights is that:
1. The coalition government didn't want to be involved in owning and developing many of these sites as it didn't see this as a legitimate role for the state in economic development;
2. There was a recentralisation of not just powers - as I've stressed in many blogs on this topic - but also assets and resources back to Whitehall and not down to the new LEPs;
3. Some taxpayers effectively had to pay twice to get assets back under local control - once when acquired by the RDA and then again by the local council.
4. There was a lack of transparency and accountability over what happened to sites sold off (e.g. how much were they sold for?)
BBC Inside Out West Midlands will be broadcast at 7.30pm tomorrow evening (Monday 26th November); for details see here)
Professor David Bailey works at Coventry University Business School