Report (1st Day) (Continued)
16: Schedule 1, page 16, line 12, leave out “Regional development agency for the East Midlands.”
My Lords, I am still surprised as to why the Government are seeking to move forward with local enterprise partnerships, leaving nothing at all at the regional level. I have been hoping for some time that there would be a measure of movement on the part of the Government, and I hope to hear about that from the noble Lord, Lord Taylor of Holbeach.
The East Midlands Development Agency, better known as EMDA, was formed in 1999 and for the past 12 years has done a good job providing help and support to the economy of the East Midlands. It works regionally and sub-regionally where that is appropriate, so it is disappointing that the Government are seeking to abolish this RDA. I am not against reform per se, but it seems a bit over the top and creates a system that is unable to meet the needs of businesses and meet the regional challenges to create jobs and support the regional economy.
Noble Lords will be aware that the East Midlands is made up of six counties. It is the third largest and third most rural region in England, and has a population of 4.3 million people. There are well over a quarter of a million businesses in the region, and it is where I worked for many years. It is made up of largely rural counties with principal town and cities. I should say that I have great affection for the East Midlands. Compared with other parts of the United Kingdom, it is a region of relatively low wages and needs a measure of co-ordination and intervention at this level to protect jobs, boost job creation and enable businesses to flourish with the right sort of support. I am aware that other noble Lords who wish to speak in the debate will refer to the RDAs in their own areas, but I think that a recurring theme will be that at the regional level, this is a big mistake. Local enterprise partnerships on their own will not fill the gap. I beg to move.
My Lords, I shall speak to Amendment 16A tabled in my name and in the names of several of my noble friends. Like my noble friend Lord Kennedy, I am not against reform—I welcome it—but I am against the abolition of the RDAs in a wholesale way. I raised a number of questions on the abolition of the RDAs in our debate at the Committee stage and the Minister was kind enough to write to me with a detailed response. I have to say at the outset that I still have very deep concerns about the abolition of the RDAs, both in terms of the impact on economic growth and the process itself.
I turn first to the Government’s response to the report of the Public Administration Select Committee entitled Smaller Government: Shrinking the Quango State. The response is brimful of bravado, which I would say is misplaced in this context, but I digress. I refer to paragraph 6 of the response, which deals with the £2.6 billion that will flow from savings on public bodies over the spending review period and the estimate of a reduction of at least £11 billion per year by 2014-15. It has been estimated in some quarters that it could cost as much as £1.4 billion to wind down the RDAs and complete existing programmes. Yet in his letter, the Minister tells me that it is not possible at this stage to quantify the costs of RDA closure. I am sure he is correct, but if so, how can the Government state categorically that total savings as a result of this legislation will be at least £2.6 billion during the spending review period? It would be helpful to have a more detailed breakdown of the savings, especially after the extraordinary hyperbole we heard at the beginning of the process—not, I hasten to add, from the Minister.
I turn now to the issue of consultation, which I raised in Committee. I welcome the increased consultation that is now a part of the Bill thus far, although my noble friend Lord Hunt will move further amendments on consultation in due course. But in relation to RDAs, the Minister told me in his letter that:
“We have not so far undertaken a formal consultation on the abolition of the RDAs”.
I hope that as a consequence of this Bill consultation will in future take place at the appropriate time—before announcements are made and legislation is introduced. I note from the Minister’s letter that the Government are obliged to consult before laying any order to abolish the RDAs, assuming that they remain part of the Bill, and that they will meet this requirement. Personally, I think that such a consultation is far too late in the process. I also asked in Committee about the role of government offices. The Minister told me that BIS is working to put in place a new economic development delivery landscape and that this is the role that the network of small BIS local teams will be designed to fulfil. This is reinventing the wheel. In the main, the government offices do an excellent job at the moment. They may well need reforming but reform should not mean abolition; it should mean just some readjustment of the process which we have had thus far.
In relation to assets, I have one further question for the Minister. In his letter he said that the reasons for getting rid of RDA assets include,
“maximising value for money from these assets, ensuring liabilities follow assets, and passing control down to the local level where possible”.
But what happens to the money if the assets are sold? The noble Lord told me what is going to happen vis-à-vis inward investment and UK Trade and Investment, which intends to procure a single national contract to co-ordinate and manage foreign investment propositions on behalf of the UK. That may be very good; I am not in a position to say. But the role that the RDAs played in inward investment as one-stop shops was truly invaluable and I should like reassurance from the Minister that there will be that sort of one-stop-shop process in any new system. That was instrumental in bringing industry and jobs to regions such as the north-west, the West Midlands and many others. The regions must be the motors for economic growth in our country. I am sure that the Minister will remind me that the policy of the Government is to have local economic partnerships, and indeed his right honourable friend the Chancellor of the Exchequer announced 11 new LEPs today. But I am still concerned that great swathes of the country will still not be covered, that not enough money will be available to support the LEPs, and that not enough attention will be given to strategic growth.
I refer again to the letter from the Minister. He said:
“We appreciate the work they”—
“have done, but these are difficult times and we need to be clear that our limited resources have to be used in the most efficient manner. This requires a total reform of the current system”.
We all recognise that not all RDAs are as effective as they might be but that should not require the demolition of the whole system. On all sides of the Chamber there is clear recognition, for example, that the RDA in the north-east does a splendid job and has made a huge contribution to the economy and, consequently, to the fabric of society in the north-east. So why get rid of it? Like my noble friends, I continue to oppose the abolition of RDAs. I believe that innovation, employment, inward investment, new business, training and economic growth will all suffer, notwithstanding the creation of the LEPs and the additional LEPs which were announced today. Our economy and our society will suffer as a result.
My Lords, in Committee I dealt with the historical debate in the Labour movement and the very significant contribution made by my noble friend Lord Prescott and by Bruce Millan as a European Commissioner. I want to concentrate today on the future. I declare an interest in that my daughter-in-law works for Yorkshire First. However, my thoughts and comments are based on conversations with people in the north-west region and within the Northwest Regional Development Agency, which covered my former constituency following the creation of the agency in 1997.
My only interest in this issue is whether the new structures can deliver. I say that in the context of having spent almost 40 years of my life living in a region, or a sub-region, of the United Kingdom where historically there has been heavy unemployment. Delivery has been of primary concern to the Institute of Directors, which supports change but in its recent briefings has questioned whether LEPs have the resources, the focus and expertise to be able to deliver. In one of its most recent briefings, it states on resources that,
“concerns remain that without any central government funding at all, LEPs may quickly become ineffective talking shops. Government will need to allow a small amount of funding as catalysing capital for private sector investment as well as setting out how LEPs will be able to fund the small economic secretariats that will be needed to serve the bodies and their directors … some provision of funds will have to be considered in order to provide: (a) basic administration and secretariat functions … and; (b) economic advice resources, such as economists and infrastructure expertise”.
In other words, it says that, starved of resources, the LEPs will be in difficulty.
On expertise and the ability of the LEPs to focus, the IoD states that,
“there remain notable concerns that the proposals submitted to government by many bidding local authorities already suggest a wide array of duties, from business support and inward investment to skills development and social regeneration. In many cases, the bids submitted resemble mini-RDA submissions, with all the potential for additional cost, loss of focus … Many of the plans submitted to government in the form of LEP proposals looked and felt like wholesale plagiarism of RDA regional plans and activities”.
We need a far narrower focus. How can an organisation in the form of an LEP, with minimal resources, possibly cover a wide-ranging brief which includes transport, planning, infrastructure, housing delivery, development of growth hubs, local business regulation, skills in conjunction with Jobcentre Plus, leverage of funding from the private sector, development of financial entities for renewable energy projects and digital infrastructural projects? Some LEPs are talking in terms of inward investment initiatives, joint exhibition stands overseas and the organisation of European funding. In my view, they simply cannot do all that work with the resources that they have available and without the necessary expertise. They need far greater focus.
What I find really worrying is that the close relationship between larger regional employers and the regional structures is now in jeopardy, yet it is those links which more often than not have been the source of inward investment leads. Experience among agencies in the north shows that most of the foreign investment projects that came to the regions came through regional-partner contacts and not through the centre; that is, Whitehall. Many global players will simply not play ball with some of the more inexperienced LEPs, which they believe will lack the muscle to open the doors necessary to facilitate inward investment.
I accept that some LEPs will seek to be dynamic and ambitious, but a lot will not. Cash-starved LEPs will simply not attract the staff. In some areas of the country, regional policy and strategy will simply wither on the vine. I find it difficult to accept that a few BIS reps, genuinely committed to the regions as they may well be, along with the proposed UKTI-nominated single national contractor, will be able to maintain the contacts that the RDAs have so painstakingly built up over the years. The task requires more than a few well motivated and talented individuals from the centre, subject to Civil Service rotation, if regional strategies are to work, particularly in periods of recession.
The idea that local authority-driven LEPs can provide the levels of service required is questionable. Furthermore, it is my experience that large employers often steer clear of local authorities as they are often seen as too politicised and unprofessional. We learn from history in places such as Cumbria, where I have spent most of my life, that LEPs—and, I suppose, the West Cumbria Development Agency, which had all the characteristics of an embryo LEP—can work and be successful. However, it had the nuclear industry in the background. The problem is that only too often you end up with overlapping provision, inter-authority conflict and jealousies. It is a recipe for turning off the big players in a big way, and we will suffer potentially unless we can sort out that problem.
I find it extraordinary that we are all turning our back on the experience of regions throughout the European Union, which are doing precisely the reverse by developing and maintaining their regional structures as they compete for intra-Community infrastructural funds and inward investment. They will obviously place far more emphasis on regional GDP figures than will be the case in the United Kingdom. Our Government will no doubt concentrate on pushing national GDP as the measure of success so as to appease domestic concerns, thereby avoiding a more realistic focus on possible declines in regional GDP, which is what really matters. This is important because the RDAs have made a considerable contribution to the increase in regional GDP over all these years.
I find myself asking simple questions. Will efforts to secure regional funding from the European Union’s various regional and sectional assistance pots be as vigorously pursued when they may become more dependent on Whitehall initiatives? We again cannot be sure. I note the assurances in the letter of the noble Lord, Lord Taylor of Holbeach, but will the centre be as effective in driving the innovation agenda and the links with the universities? What about the handling of green and environmental infrastructural projects such as barrages, environmental parks and large-scale environmental clean-ups? These are often driven at a local level, but it is only with regional intervention that they seem to take off.
For example, in my former constituency there is a beautiful site for a potential large regional project—the RNAD dump at Broughton Moor. There had been some pollution on the site from munitions in storage after the Second World War. I managed to negotiate with Lewis Moonie—now the noble Lord, Lord Moonie—who was then a Defence Minister, for the local authority to take over that site for the sum of £1, which would compensate for the considerable funds that would have to be invested in environmental clean-up. Eleven years later almost nothing has happened.
There have been lots of false starts, and even today proposals for the site are still under consideration. What went wrong? The councils own the site. The Northwest Regional Development Agency had offered millions for its development as long as the councils could firmly establish the future development of the site for housing, leisure or something substantial. The council simply did not have the drive to pull the project together. In my view, if the Northwest Regional Development Agency had owned that site and had been responsible for its development, things would have been very different. With its funding, experience, contacts and drive, we would have been well on the way to a visionary use of one of Cumbria’s most important potential development sites. With the wind-up of the RDAs the writing is on the wall for these types of projects, and that worries me.
What about the future of RDA work in the film and creative industries? I cannot see the LEPs getting their heads around project work in those sectors. Do we have confidence in the arrangements for business advice to SMEs? Do we believe that a national website, along with back-up from cash-starved, local authority-funded LEPs, can deliver business support services on the scale required in a downturn?
On the treatment of assets and liabilities, we were told in Committee that there would not be a fire sale—but will there? In his letter, the noble Lord, Lord Taylor of Holbeach, said:
“RDA asset disposal plans have been developed taking account of the principles set out at high level in the Local Growth White Paper. These include maximising value for money from these assets, ensuring liabilities follow assets, and passing control down to the local level where possible”.
“Maximising value for money” means selling off before assets fall further in value in the market that we are in at the moment. “Passing control down to the local level” means selling off to local authorities where they can afford to purchase. That is what I understand is going on at the moment. Plans are being laid for those purchases where possible.
If we want the measure of the real-world value of assets, we need do no more than look at what is happening in property auctions throughout the United Kingdom and in the property market more generally. What do we find? There are empty shops and offices all over the country. Commercial property is collapsing in value. Commercial rents in much of the country are falling. A lot of property companies are collapsing. A lot of factory leases are being sold off. The buy-to-let market is in difficulty. Repossessions in parts of the country are increasing. Large tracks of land—agricultural, agricultural with hope value, and residential land—are all coming on to the market. Just look in the auction catalogues. We can see what is happening. People are off-loading in a market that is going down. House prices are falling as the market seizes up—a market where we have very low interest rates. What happens when interest rates rise? That is the market in which asset sales are taking place. That should surely worry the Treasury.
We are talking about major assets—buildings, land, head leases, clawback assets, business and technology-related assets and the rest. I can only presume that the assets and liabilities working groups must have had a hell of a time sorting out the complicated business of sharing out assets and liabilities, although I know that the working groups have had great difficulty preparing the databases, identifying the extent of RDA overall assets and liabilities in both tangible and non-tangible form. In the case of the Northwest Regional Development Agency, I understand that it has joint venture projects with partnerships, termination and poor-performance payments based on final portfolio valuations. These must be extremely hard to value. It also has rights to income from the sale of land acquired under grant. These sites are often complicated by title rights, rights to the reclaim of grant clawback. The lawyers are going to have a field day on those issues. There are some Northwest Regional Development Agency-owned sites where the agency funds the revenue costs. What happens if the LEPs, councils or successor bodies simply want rid of the liabilities against the wishes of the local communities?
Then there are the liabilities that arise in respect of CPO activities by the agency, such as the Ancoats development in Manchester and Kingsway in Rochdale. I am not altogether clear on the position, but these could carry substantial liabilities. We need to know how they are going to be sorted out. What about lease liabilities on properties currently leased to the Northwest Regional Development Agency for its own operational activities? Many of these properties do not include break clauses. Perhaps these problems have been sorted out. Again, I do not know what the final position is. What I do know is that the universal view across the north is that everyone wants to keep the assets in the region available for the use of the region. They do not want the ownership partnerships breaking up. They do not want a fire sale of assets in a collapsed market. They do not want the private sector to move in and take vast profits out of assets built up at the taxpayers’ expense. This could easily happen on the back of hope-value assets. They want some form of successor body to be established, if necessary, for the handling of those assets, which for all sorts of reasons in the public interest should not be distributed at an early stage. They want to be assured—this is very important—that the survival of the Welsh and the Scottish development agencies will not place them at an advantage over the regional and national residual arrangements in the English regions for the attraction of inward investment, otherwise we will be placed at a disadvantage. That was the complaint of the English Forum of Regional Development Organisations in the mid-1990s. It cited marketing material in evidence for its accusations.
I keep asking myself, “Why destroy all this structure, which has been so painstakingly created?”. I have learnt over my lifetime that it is very hard to build from scratch, anew. Think of the work that goes into the design of the product and the establishment of the brand name, the quality of the service and the development of a pool of expertise capable of delivering a viable service, in all senses of the phrase. Yet it is so easy to destroy it overnight—to destroy the product and end the service, breaking up the pool of talent and expertise, to put the padlocks and chain on the gate and close it all down and walk away. That is so simple; it is much easier than actually creating an organisation. I hope that that is not what is going to happen here.
Finally, it might be helpful if I remind the House what happened 30 years ago. History will repeat itself on occasions. After the election of the Conservative Government in 1979, the Conservatives went in with calls from their supporters for the closure of the Welsh and Scottish development agencies. Then what happened? The Government took stock and stood back to consider the implications of such vandalism; they consulted and finally relented, and both the WDA and the SDA survived. Rational thought took over from blind prejudice. They realised that the agencies had a real role to play. Let us hope that events over the coming months give the Government, even at this very late stage, cause for thought and that in some way history may repeat itself.
My Lords, I very much endorse what my noble friend Lord Campbell-Savours said. I remind him that Marx stated that history repeats itself the first time as tragedy and the second time as farce. I am not sure whether if it repeats itself in this Bill it will be tragedy or farce. It certainly poses considerable threat to the regions of this country.
On the day that the Chancellor of the Exchequer announces what he describes as a Budget for growth, it is paradoxical that we should be debating the abolition of business-led regional development agencies that have played a significant part in both safeguarding and creating jobs. It is true, as my noble friend Lady Royall reminded us, that in reflecting different regional economies and needs their performance has necessarily been somewhat variable. However, as the BIS Committee pointed out, there was strong support for RDAs and regional structures from the private sector, and especially, and significantly, the Engineering Employers’ Federation, particularly in the West Midlands and the north.
There are significant worries, expressed by the committee, about the loss of local knowledge and the risks of a “disorderly competitive scramble” within regions, as well as serious questions about the disposal of RDA assets which, in its view, are,
“potentially of massive importance to the success or failure of Local Enterprise Partnerships”—
the LEPs, which the Government apparently see as successor bodies to RDAs. Yet these LEPs will have neither power nor resources, nor a role in inward investment, innovation or access to finance, nor the European funds, including in particular the ERDF.
These are arguments of general application, like those over the severely truncated funding reflected in the Regional Growth Fund, just about one-third of which was invested annually via RDAs. However, I want particularly to concentrate on the north-east, the very region singled out by Vince Cable last year, before his halo slipped a little, as the one with the strongest case for retaining a regional agency.
One North East has invested £2.7 billion across the region, from the Tweed to the Tees, over the past 11 years, attracting or helping to create 19,000 companies and creating or saving 160,000 jobs. It has led the way in developing the green economy, from support for Nissan and its electric vehicles, to wind turbine production and offshore wind power and, in the past year, a £60 million investment in a low-carbon initiative in the Tees Valley, and much else besides. It has promoted engineering apprenticeships; established a £125 million fund, Finance for Business North East; and attracted £100 million from the European Investment Bank and £300 million from the ERDF for the period 2007-13. In the past year alone, it attracted 55 foreign and five UK companies to the region, creating 2,000 new jobs and safeguarding 5,000 more. Its record on tourism has been remarkable. Tourism is worth about £4 billion to the regional economy, and the north-east has had the biggest growth in tourism of anywhere in the country outside London. Yet all this is now at risk due to an unusual and unhealthy combination of fragmentation of the agencies and centralisation of some of the functions.
Today the Government have announced the creation of more enterprise zones, despite the doubts expressed about the previous round of such zones by, among others, the Work Foundation; Centre for Cities; again, and significantly, the Engineering Employers’ Federation; and, despite the less-than-glowing experience within the north-east region itself, Middlesbrough and Hartlepool. Too often, as at Canary Wharf, the Metro Centre in Gateshead and other out-of-town developments, zones created in the 1980s produced retail and office developments with little in the way of the manufacturing industry now recognised on all sides as essential to the future prosperity of the nation.
What, one might ask, will be different this time, especially in the absence of strong, strategic bodies with the skill and resources to secure the kind of development and workforce skills so desperately needed? It is interesting to note, too, that today the Chancellor announced the welcome investment of £100 million in four new science facilities—at Cambridge, Norwich, Harwell and Daresbury—but I contrast that with a cut of £8 million which should have gone to the Newcastle Science City development, started by the previous Government, which the RDA had pledged but which it is not now able to provide.
This brings me to the question of assets, which I raised in Committee and which my noble friends Lady Royall and Lord Campbell-Savours referred to. I received no satisfactory answer to those questions—perhaps, in fairness to the Minister, because, as so often proves to be the case, decisions are made these days long before any consideration is given to, let alone any conclusions reached about, their financial consequences. I understand that the North East Economic Partnership—an unofficial grouping, as yet, of local authorities and business leaders in the region—has submitted a bid in relation to the retention of the RDA’s assets for the benefit of the region. However, it seems that there is little likelihood of this bid succeeding, so the assets will not be transferred, thus denying the region a much needed resource.
This week the Newcastle Journal—a newspaper not, in the wonderful phrase of the Secretary of State for Communities and Local Government, a “town hall Pravda”—writes:
“The Journal has been told the message coming out of Government is that the assets will not be passed on. Vince Cable’s Department for Business is currently considering the future of the assets. If they are handed to the Partnership”—
that is, the North East Economic Partnership—
“it will fund their work in trying to bring in major new firms and lobby on behalf of the region in Whitehall. Also up for grabs is £62.5m worth of loan repayments handed out in public funding over the last decade. The North East Economic Partnership has told the Government it is vital this money is kept in the region, so as to be used for further job creation”.
That is the united voice of business and local government of all political colours in the north-east.
I ask the Minister to tell us the current position. What meetings have Ministers held with north-east councils and business leaders about the issue of assets? What criteria will be applied in coming to a decision, and when will such a decision be made? Will he give an assurance that there will not be, in the phrase that has been much used tonight, a fire sale of assets in what is, after all, a languishing market, to be applied to national deficit reduction?
Finally, I turn to the question of the actual decision about abolition. Most of us have taken it as read that since the Government announced the abolition of RDAs last year and included them in the Bill, this was settled government policy. I was therefore surprised to read in the letter to my noble friend Lady Royall—which has already been referred to; and signed, of course, by the Minister—that not only have the Government,
“not so far undertaken a formal consultation on the abolition of the RDAs”,
but that they would,
“consult before laying any order”.
Will he therefore assure the House that such a consultation will take place in every region and, most importantly, on the basis that the Government will be open to persuasion by business, local government and their social partners strictly on the merits of each individual case, such that they will not be in the position of either abolishing all RDAs or none?
We on this side recognise, as I am sure other noble Lords will, that that there are relatively stronger and relatively weaker cases for retention. Will the Minister give us an assurance that each will be considered on its merits on a case-by-case basis, assuming, as I fervently hope to be the case, that the amendment moved by my noble friend is not lost?
My Lords, I support the amendment that my noble friend Lord Beecham has tabled and to which I have put my name. I strongly agreed with the noble Lord, Lord Campbell-Savours, who showed why many of us have doubts that LEPs would be capable of carrying out the many tasks that regional development agencies have carried out until now. Indeed, if they were able to carry out those tasks then the two would effectively be duplicating each other and causing the picture to be much more confused than it has been.
With regard to the north-east, the Government have said that they have a localism agenda. The simple message therefore has to be: if local people want this, why can they not have it? My noble friend Lady Armstrong of Hill Top described in an earlier debate how the original impetus for the north-east regional development agency had come from within the north-east itself. I pay tribute to a former Member of this House, Lord Burlison, who, along with industry in the region, brought trade unions and industry together in a cohesive way in order to create a development agency before one was officially sanctioned by the Government. That was an important experience which showed what the attitude was in the north-east.
During the course of these debates, various Members have said, “Well, the north-east isn’t so cohesive”. I remember the noble Viscount, Lord Eccles, who is in his place, saying that Northumberland was very different from parts of Durham, and I think that the Minister concurred somewhat with that point of view. I was born and brought up in Northumberland; I live there now and have lived in different parts of that county. The history of Northumberland, particularly if you look at places like Blyth, Ashington, Broomhill, Widdrington and so on, is very much akin to areas of Durham. When you look at the north-east, you can see that there is industrial concentration around the rivers and where the population tends to concentrate, and then around the whole of that area in a continuous belt of spectacular countryside you have the Northumberland national park, the Durham dales, Teesdale and the North York moors. The region is very cohesive.
It is true, as others have pointed out, that the north-east did not vote for a regional assembly but, having campaigned in that election, I know that there was certainly no controversy over the regional development agency at that time. Generally there has been wide acceptance of the need for a regional development authority in the north-east. It helps manufacturing vocations in the north-east—its exporting vocation, which the noble Lord, Lord Bates, mentioned in an earlier debate—in such sectors as engineering, the offshore sector and energy, as well as the way in which universities in the north-east have collaborated with industry.
The region is very cohesive economically. My final word to the Government is therefore: be flexible, be generous, consult more widely and be prepared to change course.
I shall speak to Amendment 17A in the absence of my noble friend Lord Liddle. In doing so I declare my interest in the region, having served on the sub-regional body Cheshire and Warrington Economic Alliance, one of five sub-regional bodies under the Northwest Regional Development Agency.
In the run-up to the most recent election, early versions of the Conservative-led Government’s regional policy seemed to suggest that both the north-western and north-eastern development boards would be retained, as there was general recognition of the benefits that each had brought to their regions. That recognition was reinforced by an independent evaluation undertaken by PwC, drawing attention to the strategic coherence brought and the GVA delivered.
It was therefore something of a disappointment when it was announced that all RDAs were to be disbanded. As a public-private partnership, the new Cheshire LEP is taking the coherency of the sub-region forward, but without any resources. It is undertaking some very worthwhile projects, such as with Liverpool University to explore the value of the equine sector in Cheshire West, and in rural housing, through a joint commission set up by rural regeneration and housing teams. That is all very worth while, but it is without the wider coherency of reciprocal support provided from the NWDA, following agreement on priorities across the whole region. The concern is that, without the wider regional strategy brought by the NWDA, policies will fracture into parochialism, with so-called local areas failing to see the bigger picture, to share best practice or to co-ordinate. I refer in this respect to the leadership shown on climate change policies and guidance that is so necessary if we are to meet our future obligations.
I will not repeat the debate in Committee, as my noble friend Lord Campbell-Savours has spoken tonight very powerfully. At the moment, there is confusion over the process of change. The decision to abolish the RDAs so quickly has created major challenges for existing destination organisations and, accordingly, rather than focusing on opportunities such as provided by the 2012 Olympics, they have been forced to reorganise. This has lost time and momentum, especially with there being no strategic transition plan in place to guide the move from RDAs to LEPs.
To continue with the 2012 theme, there is a great risk that this opportunity cannot be grasped. For the visitor economy, there is a need to provide the national organisation, visitEngland, with support to fill the current gap, while existing visitor businesses need to engage with new organisations that will emerge, albeit that they will be much reduced in terms of both human and financial resources. Another disappointing consequence of the plan to disband the NWDA concerns the future provision of the EU funding provided through the economic rural development funds. This highlights the vacuum in the present Government’s policy on regions. Instead of providing access to these much-needed rural development funds under Pillar 2 local arrangements at local level, the Conservative-led coalition seems to favour implementing these centrally, in direct contradiction to its localism agenda. The rural economy deserves better.
Finally, there seems to be no thought on what will happen on asset ownership, both physical and intellectual, and how the area can derive maximum benefit from their previous investments. There is still time to reconsider. I support my noble friend’s amendment.
My Lords, I shall speak to Amendment 18. Like my noble friend Lord Kennedy, I find it quite extraordinary that the Government have decided to abolish RDAs on a day when the growth forecast has been reduced yet again. It is a quite bizarre decision.
I speak from the particular context of the West Midlands, looking at the performance of Advantage West Midlands. The West Midlands is a great place to live, but recently our economy faces many formidable challenges. Advantage West Midlands has done a very good job in the past few years, drawing people together and identifying real projects to invest in. As a result, we can see the regeneration of Longbridge, after the collapse of the manufacturing industry there. We have seen the regeneration of Fort Dunlop, with 140,000 jobs safeguarded, 28,000 helped back into work and 160,000 people helped to get better skills. Over 100,000 businesses were helped to improve their performance. As Sir Roy McNulty, the chair of Advantage West Midlands said at its last AGM, it is clear that its abolition has been based on political reasons rather than on its actual track record.
The CBI said that,
“in the rush to abolish Regional Development Agencies … and elicit bids for Local Enterprise Partnerships … there is a risk of throwing out the baby with the bathwater”.
Again, the CBI has singled out transport as a critical issue for improving economic growth. It concluded that LEPs need to find a way to replicate the ability of RDAs at their best to cut across local authority boundaries and to promote a regional level transport agenda. How are LEPs going to do it, given that they cover much smaller areas? For instance, in the West Midlands, is it really sensible to split Birmingham from the Black Country? It is a complete nonsense.
Let us talk about the resources needed for the development of major infrastructure. The number one priority for us is the extension of the runway at Birmingham International Airport. However, the Government’s last-minute decision to change the rules and go only for short-term, quick-win projects for the first £250 million that was available meant that bidding for Birmingham airport expansion was stopped in its tracks. No wonder the Birmingham Post said in a leader on 27 January that the launch of LEPs has been,
“an unmitigated and embarrassing disaster”.
Instead of a region working together, what will we see? We will see arguments and splits between LEPs that are side by side in the same region, when they should be working together.
The Government’s admission that their policy is a nonsense relates to BIS’s decision to recreate regional offices. What better indication could you have that the business department knows that the abolition of RDAs was a very silly decision which anyone concerned for economic development in this country could only oppose? The Government are making a big mistake in abolishing RDAs. Will the Minister respond to my noble friend Lady Quin, who asked why on earth those regions where there was a clear and strong consensus to retain RDAs, are not allowed to keep them going? Why should we be forced to downgrade, disrupt and undermine regional growth simply because there is some kind of doctrinaire political approach that says we cannot live with RDAs?
My Lords, I had the opportunity to make some remarks on this issue at Second Reading. I do not believe that anybody in this House is not in favour of growth or strong regional policy; that is common ground. The point I tried to make at Second Reading was: is the present structure fit for current-day purpose?
I regret that I did not hear the beginning of the remarks of the noble Lord, Lord Campbell-Savours, but I heard several of them in what was a very passionate speech. In referring to one case, he commented that councils did not necessarily have drive. However, leadership in any organisation, whether it is an RDA, a council or anything else, will vary from body to body, just as leadership in a school will vary from body to body. I have to say that there are examples of local authorities doing very difficult things. In my own case, I was a member of a local authority that redeveloped the most polluted site in Ireland—a former gas works. It is now a thriving economic area. We developed the waterfront and brownfield sites. Where the right leadership is in place, you can do a lot of things. We were able to tap into ERDF and even ESF to train the local people who will, we hope, get some benefit from the redevelopment, instead of looking through the railings at the parked BMWs. We can do that if the leadership is in place.
I wanted to say one thing to the noble Lord. He said that it was more difficult to create a structure or organisation than to close one down. I have to take the very opposite view. I had the opportunity to create an organisation like an RDA. I had the opportunity to merge bodies together and the opportunity to close them. The easiest thing to do was to create them. It was more difficult to merge them, and the most difficult thing was to close them. That is why we have so many—not only RDAs but public bodies in general. Departments liked to put a body out there that could take the flak and the front fire to protect the department from taking the blame for things. The existence of a body, whatever it might be, and the ability to say, “These people have autonomy to deal with this”, protects the Civil Service from its responsibilities. It is good to be able to put these bodies out there as a sort of barrage to protect the centre from local criticism, because there is always someone else to blame. That is why there are so many of these bodies.
Many of them have done excellent work. As has already been said, some of these RDAs have been good and some have been not so good; that is human nature. It is the human condition. That relates to the leadership they give, their policies and the opportunities that have been taken. However, we have to be mature about the whole issue of public bodies. Everyone admits that we have too many of them. No matter which one you touch, it is inevitable that a group of people will support it.
In many cases, some of the reasons that noble Lords have put forward have been perfectly plausible. However, the real issue, as I pointed out at Second Reading, is the change in Europe, where the resources that used to be available to this country will no longer be available post-2013, because the money is flowing east, as we all know. The economic profile of our economy has changed. We brought to bear solutions through these large battleship bodies with budgets of hundreds of millions of pounds. Those bodies were right at the time, just as the Agricultural Wages Board was right at the time. However, times have moved on. Europe’s policy has changed. We now have to manage within our own resources.
I am not as pessimistic about the role that local authorities can play and what happens regarding the local enterprise partnerships remains to be seen. However, as always, a lot of this will come down to leadership on the ground. It is the same for the military, a company, a school or a business—and it is the same for a local authority or an RDA. We must look at an alternative model, because circumstances have moved on, and in trying to deal with the plethora of public bodies, you could almost come to a complete standstill if you did not make some attempt to bring about change.
There is no doubt that the biggest challenge we face is on growing our economy. We all complain about the lack of warships and aircraft carriers. Where is the money coming from to pay for them, if it is not coming from economic growth and wealth creation? Those are our only sources, other than borrowing—and we know where that got us. There is little alternative but to try an alternative. I take the points made by noble Lords about assets—that is an important issue—but creating bodies is easiest; amalgamating them is the next most difficult; and closing them is the most difficult. That is my experience and this debate proves the point. Every body that you consider has a lobby in support of it. While I acknowledge the great work that a number of these organisations have done—it would be churlish not to say that—the fact is that the mechanisms we have to adopt to improve our economic growth have moved on and different structures and models must be adopted.
My Lords, I crave the indulgence of the House in intervening in a debate in which I have not previously taken part. Just in case it is felt that the argument has been entirely one-sided, I remind your Lordships that in my part of the world on the Barrow-in-Furness peninsula, where I declare an interest in running a small business, the economy is driven by companies such as these, which employ some 100 or 200 people. I do not want to be unkind to the people in these agencies who have done their best, but in my part of the world it would be fair to say that there is no consensus that we want to keep them. Businesses of my size do not feel that the agencies are approachable or are the answer. We want government to get off our backs and leave us alone. I am reminded of my father, who told me: “My boy, if the Government offer you a grant, it is probably not worth taking”.
That might be the view of the noble Lord, but I am afraid that he is not living in the real world. How can he be when he has made a statement like that? Let him look at what has been created by RDAs. I will not speak for very long, because my noble friend Lord Campbell-Savours made a very powerful case. However, I believe that we are talking to people who will not listen to the arguments that we are putting. I am pleased that the noble Lord intervened from that side, because he is the first to do so: it has been only us speaking.
The RDAs have done a wonderful job. I have a copy of a letter that was addressed to my noble friend Lady Royall. I was critical when the Minister was winding up last time and said that he was not answering the debate. He has now taken the trouble to try to answer the debate and I thank him for that. It is not always done. Having said that, I do not agree with most of the answers he gave; he will not be surprised about that.
I could go through every paragraph of the letter, but it is too late in the evening. I will refer to one paragraph that deals with the independent evaluation by PricewaterhouseCoopers that demonstrated that every pound spent by RDAs added approximately £4.50 to regional economies. In the case of the north-west, the figure was greater: £5.20. However, no answer is given in the paragraph. It simply states:
“We appreciate the work they have done”.
The issue is not whether we appreciate the work they have done, but who is going to pick up the mantle and do the work in future. There is no answer to the question of where we will get replacement agencies that will secure that kind of growth. As has been said often tonight, we are going back to localism instead of looking at regions as a whole.
The regions did benefit. The noble Lord, Lord Cavendish, said that he had an interest in Barrow-in-Furness. When the floods hit Cumbria, the RDA brought help to local businesses in need within four days. That was not matched by any other body, and it will not be matched by any new bureaucracy that is going to be established.
I will repeat what has been done for the north-west by the Northwest Regional Development Agency: 220,000 jobs have been preserved, 23,000 new businesses have been created and £3.2 billion of private investment has been brought in. These are huge sums. The agency has looked at the region as a whole. If we split it up, we will not get that sort of aid.
I will not go on. I thank the Minister for replying, but ask him to reply also to the debate tonight, because too much is at stake in the regions: too many jobs and too much inward investment. Why should the RDAs be destroyed because of a political decision that I believe is wrong? Not only do I believe that it is wrong, but many other Members of the House believe that, too. More importantly, people and businesses in the regions believe that it is wrong. If the Minister is saying that we can do the job with other organisations, can he tell me what funding will be given to the new bodies? As I understand it, there is no funding, and if there is no funding they will not be able to do the job. Will the Minister reassure me that adequate funds will be made available?
My Lords, I support the case made by my noble friends through their various amendments. In doing so, having spent many years in public life, I reflect that there are certain constant difficulties and challenges. In our previous debate on this issue, I remember the case being made for the establishment of the northern development agency, including the northern part of the north-west and the north-east of England. The one overarching pressure on the NDA was how to challenge what was clearly going to be a devolved nation in Scotland. That was a very powerful problem. Unless you live in a frontier-type economy, you do not really appreciate the rather different problems that might be experienced compared with the rest of the country.
I remember how the development agencies in Scotland in the early 1980s constantly tried to offer inducements to companies in the north of England to relocate in Scotland with grants, which the local authorities—because there was no development agency then—could match. That was one of the prime reasons for the almost universal support for the agency in the north of the country—a point made by my noble friends Lady Quin and Lord Beecham. That problem will still exist. It is eight miles from Carlisle to the border and it is easy to relocate if you get financial inducements. We have to face up to that challenge. Therefore, I park with the Minister the thought that that problem will not go away.
Perhaps I may raise two specific issues. My noble friend Lord Beecham pointed out how important tourism was becoming to the north-east of England. It is just as important in the north-west, especially in Cumbria. Work was initially carried out on how to create more jobs and attract more visitors to Cumbria, and I mention Cumbria and not just the Lake District. As an aside, perhaps I may say how pleased I was that the Government decided to shortlist the Lake District as a possible World Heritage Site—I declare an interest as chairman of the bid—and how important that will be in creating jobs and stimulating the economy. I remind the Minister that Cumbria has more than 40 million visitors a year and that 32,860 full-time jobs are dependent on tourism. It adds £2 billion to the economy.
In order to succeed, you need leadership, and sometimes that involves investment. Of course, since the North-West Development Agency has gone, the funds have dried up for Cumbria Tourism. It has already had to reduce its staff from 45 to 19, so there is a serious problem there. However, it is not only a problem of attracting tourism; it is also a question of trying to compete against the equally attractive tourist resorts just over the border in Scotland. That takes me back to the problem of living in a border economy—things are different compared with other parts of the country.
I conclude by raising the issue of the assets and contractual commitments of the development agency. In a letter to me dated 1 March, Robert Hough, the chair of the Northwest Regional Development Agency, said that he believes:
“Any ongoing contractual commitments beyond March 2012 are likely to be transferred to BIS, other Government Departments or possibly a national residual body”.
I raise a specific point with the Minister that disturbs me greatly. It is why, in a sense, I am opposed to this move that the Government are proposing this evening. One of the problems of the north-west of England is the amount of derelict land. I believe that it has more derelict land than any other region in the country—all the disused coal spoil heaps and the industrial bases. The Northwest Regional Development Agency’s economic appraisal came up with the conclusion—surprise, surprise—that the way forward was to green these areas, to enhance their environment, to make them more attractive to inward investment, and to improve the health and the lives of the people who live there.
As a result, the Northwest Regional Development Agency entered into partnerships with the Forestry Commission, the Wildlife Trusts and local authorities. As a result, there has been a huge greening in the north-west of England in the old industrial areas. I repeat what I said before, but it just gives me so much pleasure to say it. Over recent years we have planted over a million trees in Wigan, over a million trees in Moseley, over a million trees in Ellesmere Port, 2 million trees in Vale Royal, and 2 million trees in Warrington. This is a mammoth undertaking that has revolutionised the environment and will do so increasingly in that part of Lancashire. It will also make it more attractive potentially for inward investment.
This was done through partnership, commitment and investment by the Forestry Commission, and through long-term leases with various charities and local authorities. As a result, the Northwest Regional Development Agency has an ongoing commitment to the year 2029 of roughly £6.6 million. Who will pay that money? Who will accept the liability? How will the funds be paid to the main recipient, the Forestry Commission? I seek assurances from the Minister on that issue because it is very important as we go forward, and it exemplifies my point that this proposal has not been thought through, the ends have not been tied up, and, certainly, I cannot support the Government tonight.
My Lords, I welcome this opportunity to talk about the RDAs; I played some part in their creation a number of years ago. I must apologise to the Committee because I am not as briefed as perhaps I should have been. I was in the Council of Europe today and I realised that the debate was on this afternoon. We need to understand what was inherited when the Regional Development Agencies were created. People have so easily forgotten. We were talking about 3 million unemployed, about massive disinvestment in public services, and about a growing disparity and growing inequalities between the north and south in jobs, education and investment. If anything was to be done about this, we felt that we had to do more than simply leave it to the market. What was the solution? The noble Lord, Lord Lawson of Blaby, was the Chancellor in charge of a great deal of the economy at that time and the results that we were left with were quite disastrous, frankly. I will not repeat them, or go into detail, but it was totally unacceptable to us. We came to power doing something about employment.
The employment was not just in the north and south, although the disparities had grown. I recall, when I produced my alternative regional strategy, going to the northern region and saying that we were going to have a regional development agency for every part of the UK. It was suggested to me that as a northern politician I should just think of the north and not the south. It was a very complicated meeting, but I pointed out that with a million unemployed in the south, we could not be indifferent to that, whatever the growth rates and differentials between each of the regions. We needed to develop the expertise, the partnership and the public and private sector, and set a body up that could take a regional analysis to do something about it. This was welcomed by business. In fact, business today still has very warm words to say about the RDAs, particularly when compared with the organisations that the Government now propose to set up if they abolish the RDAs—and they are on the way to doing so.
It was important that business chaired every one of the RDAs. We thought that it was very important to have business chairmen who got the co-operation of the local authorities and the various bodies and developed, as their first priority, a regional strategy for the assets of a region to see how they could best develop them to the advantage of the region, and not to compete, as was often the case in regional policy before. Governments, including Labour Governments, went round offering bags of gold to industry to move the motor car industry from A to B. That was basically the strategy. In some cases, that brought jobs, but it did not deal with the most important thing: to develop the assets of the region and the economy.
If you look at the record, the judgment of the Audit Commission, parliamentary groups and businesses themselves looking impartially at each of the regions has been that the RDAs did a good job. They helped to reduce unemployment. A lot of the 2 million jobs that we produced at the time were public sector jobs, let us be honest. I do not think that a public sector job is wrong. When so many thousand jobs went in the north-east, it was stated that they were state jobs, as if something was wrong with someone who was employed as a public servant, whether they were in a hospital, a school, another public service or even just emptying bins, for God's sake. They were in a job and were an essential part of economic development. Yes, a lot of them were in public service, but that began to have its effect in the economy. It lifted demand. It had a consumer effect. It gave more confidence. The development agencies over that period were a success. You can always ask how much that cost. You might ask yourself how much it saved when mass unemployment gives you a heck of a cost, never mind what you might feel the excessive administrative cost is of what is called a quango. They were bodies that did their job. That was important.
What worries me now is what the strategy is. A noble Lord said that we should look at what happened in Scotland and Wales. I remember arguing about this in the other place. They said, “We are going to abolish the Scottish and Welsh development agencies”, and they did not. As soon as they came to power they realised their success and the demand from the local and regional area to keep their RDAs. Admittedly, the Government recognised that at the time and refused to abolish them. Why did they not abolish them? Because they were doing a good job. Why did we think the RDAs were needed in the English regions? Because they had done a good job in Scotland and in Wales. They had improved their economies while ours had gone down and down, and it seemed that a significant feature of that was the regional development agencies, so we wanted them in all our regions. Even if the growth in the south-east was always higher than in the north-east, there was still a need to develop the regional assets. Regional development bodies can do that, and they did.
The only time there was any move to make some change was after the Toxteth riots in 1981. The noble Lord, Lord Heseltine, was sent up with a busload of bankers to look at what they could do in Liverpool. One result was that they developed these garden centres—I cannot remember their name.
Garden centres, garden festivals, you can pick the word you want. I think that the one in Liverpool collapsed after its show and still nothing has been built on that ground. We have to develop in a more effective way, although to be fair to the noble Lord, Lord Heseltine, I agreed with him that the development at Canary Wharf was significant. Transforming the docks into new industrial developments and commercial centres has been a success. That was intervention.
I recall, when we came to power in 1997, meeting Mr Walker—I am not sure whether he was a Lord or not—who was in charge of English Partnerships. He said, “We are not a body of intervention”. I said, “Well, we are on different tracks then”. He said, “I am telling you that we won’t do that”. I had to say to him, “Obviously you have not read the papers. We are now the Government. It is going to be a body of intervention”. English Partnerships did an excellent job, including in the coalfield communities that had been destroyed by the previous Government. It set up an active intervention partnership, public and private, in the coalfield communities. The Audit Commission reports show that it did an excellent job. More people are now employed in coalfield areas than when there were the previous jobs.
By the way, most coalfield areas are rural areas. Enterprise centres are now being talked about. That was all done before. I notice from the list here that very few of them are in rural areas; they are in the cities. Fine, but there is a lot of high unemployment in rural areas as well, and those enterprise zones are designed to help urban development. You do not get a balanced development. You might help the cities in a marginal way, but what you want from regional development agencies is balanced development. Only the RDAs can do that. They are also important for bringing in money from Europe. Before the RDAs in Britain, most of Europe did not bother. The recognition was of the county authorities. The county authorities were not big enough to deal with the actual decisions that had to be taken. You needed a body that was recognised at the regional level, because we were the only country in Europe that did not have a regional body. You needed to co-ordinate those resources, to bring the strengths together and to make it important.
Now it is basically proposed to abolish them. Frankly, I agree with our amendment. I am not against reform. RDAs came out of reform; we did not like what was there, we changed it, and that has been effective. Apparently, being successful is now a real problem; we abolish you. What worries me most of all is that they are being replaced with the old structures that we had before and that failed before. The Government seem to believe that it is just the market. I heard the Chancellor today talking about “growth, growth, growth”. The trouble is that he is not achieving it. We are creating the same kinds of problems that we had before. We do not maximise growth, but unemployment. That is what will come out of this.
A number of noble Lords have said in these debates that, looking at what will happen to some of these areas with RDAs, we are already beginning to witness confusion coming about due to the setting up of local enterprise partnerships. I have got them in my area. I notice the enterprise zones in these areas, and now there is talk about partnerships. Problems are already beginning to develop.
I finish on this point, because I have already seen it in Hull. Hull is an area of high unemployment. That reduced under Labour, but it is still an area of high unemployment. We now have a problem that was brought to my attention about a week ago, with a company in my former constituency that produces modular bathrooms. It has been highly successful. It is manufacturing. It employs hundreds of people. It wants to expand on an existing, empty, two-acre industrial estate where the road has been half done but not completed. The company said, “We could take on a hundred more people manufacturing in Hull, helping growth, if someone would let us expand and buy or lease that empty land and build the road to make the connection”. Well, that seems obvious. They gave me a ring, I spoke to them, and the local MP is of course involved in this. When I inquired of the regional development agency that owns the land, “Why aren’t you helping this company to expand?”, it said, “Sorry, all our assets are now being transferred to BIS”. Then they said that the local authorities cannot agree between themselves whether there should be one local body, which might be a trust, representing the north or one representing the south. Businessmen are disagreeing with what the council is coming up with. It causes delay. This company is being held up because of the problems in organised infrastructure that we are now inheriting.
I hope that the Minister will look at this. I am sure that he wants to see jobs. Certainly, the Chancellor says that he wants to see growth. Well, he could make a decision tomorrow that will bring that about, not all that waffle we have heard in the Commons today. I am sure that there are many other examples from around the country, but I would not have to come to Parliament for that. RDAs did that all the time. They made those decisions, created the jobs and co-ordinated the public and private investment. That is what the RDAs did. We had 10 years of them showing their success. Now the Government are coming along with these silly ideas to abolish them. The result will not be that waffle, it will be more on the dole and less growth. We will be back in the circumstances that we inherited many years ago, which led us to set up the RDAs.
My Lords, there might be a change of tone with my contribution to this debate. This is a serious matter and I approach the topic with humility, but with a determination to demonstrate the reasons for the Government’s decision. It is a political decision; we make no apology for that. It is a political response to the economic situation in which this country finds itself. I hope that noble Lords will give me the opportunity to explain the origins of that decision and what the Government intend to do to maintain a programme of growth announced by the Chancellor of the Exchequer in circumstances in which the vast sums of money that were available to sustain the regional development agency structure are no longer available.
I am not at all surprised at the passion that has been vented this evening. I am a provincial myself. I come from the east Midlands and I am very proud of my background. I have to say that I rather share the experience of my noble friend Lord Cavendish when it comes to the impact of the regional development agency for the east Midlands in my part of the world, but perhaps that is because I live in a relatively remote rural area and our problems are not at the top of the agenda. We have learnt to rely on our own resources probably a good deal more than other communities can afford to do.
I agree with noble Lords that the RDAs did some good work in their time, but as I listened to the debate I have become more and more convinced that we are right to try to bring forward a new approach to this enormously challenging problem. Where I differ is on whether a regional approach is an appropriate one in the circumstances in which we find ourselves in 2011. The noble Lord, Lord Empey, speaking from his experience in Northern Ireland, pointed out the degree to which, during their time, the RDAs had access to highly significant budgets. When money is abundant it is easy to find supporters, even if the projects you fund are not necessarily the most appropriate for the growth of particular places.
However, even before the last election there were signs that the situation was unsustainable. The funding to which the noble Lord, Lord Hoyle, referred is no longer available. The previous Government found that they had to reduce RDA budgets several times, including by more than £300 million in the 2010-11 financial year. When the present Government came to power, it was clear that the reductions in spending would need to continue. In our earlier debate, noble Lords criticised the regional growth fund for providing less money than the RDAs had at their peak. The fact is that spending at that level is no longer sustainable. We cannot return to a position where the eight RDAs outside London had a combined budget of nearly £2 billion a year, as they did in 2006-07, whether or not the bodies continue to exist.
It would have been perfectly possible to have continued with the existing structure. This would have meant retaining bodies in each region with a wide range of responsibilities, but with seriously diminished resources. Since we are committed to the effective delivery of economic growth throughout the country, we considered that that would be irresponsible. Put bluntly, we need to ensure that we get more bang for our buck than we were getting from the RDAs. In our earlier debate, noble Lords referred to estimates made by PricewaterhouseCoopers that every pound spent by an RDA added £4.50 to the regional economy. I do not wish to cast those figures in doubt, but the same report showed that more than half of those benefits came from less than 20 per cent of RDA total spending. There was a long tail of projects that delivered little or no value to the regional economy. Nor was it clear whether the benefits of investment were spread equally throughout the region or were strongly localised. Finally, the fact remains that the gap in growth rates between the regions and the rest of the country, to which the noble Lord, Lord Prescott, rightly drew attention at the time when he took initiatives on RDAs, remained stubbornly wide for all the regions and all that money. Inequality in growth rates has not been reduced by the RDAs.
In proposing changes to the delivery of local economic development, we have two guiding principles. The first is partnership. Although the RDAs have broadly representative boards, these were selected in Whitehall. The boards of local enterprise partnerships are chosen locally and directly involve local authorities and businesses with a stake in a specific area. The second is appropriate geography. As in our previous discussion, I refer to the south Midlands, where joint work on economic development was hampered by the borders of three different artificial regions. I live on the border between the east Midlands and the eastern region and it creates real practical difficulties.
My Lords, the Minister refers to the problem of borders but how are the Government dealing with the problem of borders by splitting Birmingham from the Black Country? It is sheer madness in terms of getting support across a region for the major infrastructure projects that are so desperately needed.
I think the noble Lord is under a misapprehension. The difficulty with RDAs was that they had clearly defined, strict borders. The great thing about LEPs is that they are partnerships and they are flexible enough to be able to work together when they need to. That is our answer to the question of the north-east. There are opportunities for LEPs to work together across boundaries. That is their huge advantage over the strictly geographically delineated boundaries that existed between RDAs and the difficulty of getting joint projects going with them.
The south Midlands was an area of the country where the south-east, the east Midlands and the eastern region met in an area around Milton Keynes, Northampton and Bedford. That particular group now has an LEP in common. It is a true economic region in the sense that there is a community of interest across what previously was RDA territory. We have deliberately placed the onus on the partners to show that they have identified a real economic area to cover. We have not sought to second-guess them. We have asked the partners to think again about a particular proposal only where there is a substantial difference of view in the area itself and in the places around it.
The RDAs were expensive bodies to run and often duplicated activities which could be better undertaken at local or national level. In much of the country people felt little or no attachment to regions. In our earlier debate much was made of the local support for the north-eastern and north-western regions. The noble Lord, Lord Clark of Windermere, talked of the way in which Cumbria identifies more strongly with Newcastle than with Manchester. Only yesterday the House approved the creation of the Greater Manchester combined authority. The noble Lord, Lord Beecham, and I took that through as a statutory instrument in the Moses Room last week. It reflected the desire of that area for a stronger local focus. I remain doubtful that the enthusiasm for a unified north-east region runs quite as high by the Tees as it does by the Tyne.
In our new circumstances we need lighter, more nimble bodies, capable of forging new linkages and alliances, rather than being caught up in regional straitjackets. Where partnerships wish to work together, we welcome it. If they had chosen areas which had matched one or more of the former regions and been able to demonstrate economic benefits and support from businesses and local authorities, we would have welcomed that too, but the fact is that they did not. In our previous discussion I pointed to the enthusiastic response we have received throughout the country to our call to develop local enterprise partnerships. On 8 March 2011 the 31 partnerships sent 90 representatives to a summit in Coventry. The Prime Minister, the Deputy Prime Minister and the Secretaries of State for Business and Communities were all present. They confirmed their support for the formation of an association to help partnerships share knowledge and ideas. This idea came from the partnerships. The Deputy Prime Minister also announced that the second of the regional growth funds would open on 12 April, and those successful in the first round will be announced shortly. Some £1.4 billion will be in that fund over the next three years.
I am grateful that my previous letter has been well received. I shall do my best to answer some of the questions that have been asked tonight, although it may not be possible to do so in the case of some of those which were highly specific. I shall do my best to give answers that cover some of the most central points raised. The first question was what the Chancellor announced today. He announced that the Government would introduce 21 new enterprise zones. I do not belittle them—the noble Lord, Lord Prescott, did rather. They will all be important; they will all be established in LEPs; and they will be focuses for growth. The Budget names the LEPs that will receive the first enterprise zones, plus London. The next 10 will be established through a competitive process. Benefits include the business rate discount over a five-year period.
It was asked whether LEPs have the capacity to take on the wide range of projects envisaged—the noble Lord, Lord Campbell-Savours, made this point particularly strongly. The capacity of LEPs will vary initially. Some are based on well established structures—Manchester being an example of an existing structure, let alone the fact that it now has a combined authority—but others are entirely new. The LEPs are establishing a network to share experience and best practice to bring new partnerships up to speed quickly.
The noble Lord, Lord Campbell-Savours, in what I acknowledge was a very impassioned speech, asked whether there would be a fire sale of assets. The brief answer to that is no. It will be a managed process. Assets of which it makes commercial sense to dispose in the short term are being identified and a list will be made available to local authorities shortly. However, where it is more sensible to dispose of assets over the medium or long term, it will be done. It is important to emphasise that the RDAs are liaising with the local authorities within their patch and with the LEPs to make sure that this process is managed efficiently.
It was suggested, I think by the noble Lord, Lord Beecham, that the LEPs will not have a role in inward investment and European funding. That is not the case, because UKTI and the DCLG have made it clear that they will work closely with LEPs and other local partners on inward investment and on the European regional development fund. The noble Lord, Lord Beecham, also asked what discussions were going on about the position of the North East Economic Partnership and its assets. Discussions are ongoing; I cannot comment on the path that they are taking. However, we have confirmed that that we are not able to pass on assets as gifts or for deferred consideration to that partnership.
The noble Baroness, Lady Quin, also raised questions about the north-east.
The letter to my noble friend refers to a nominated single national contractor. Could the Minister give us a little more information as to what is intended? What sort of body would it be? Would it be a private sector body or an existing company? Is it to be established by some consortium? What actually is it as an entity?
When we are in a position to make an announcement about that, we shall. I am not in a position to do so at this point in the debate.
The noble Lord, Lord Clark of Windermere, raised a number of interesting questions based not only on the experience of his work with the Forestry Commission but on his location in Cumbria. On the issue of competition with Scotland for inward investment, UKTI co-ordinates the work on this, and one of its main aims is to avoid wasteful competition between different parts of the UK for inward investment. The noble Lord, quite appropriately, asked specifically about the trees and their liabilities. At present, the Northwest Regional Development Agency is discussing plans for its assets and liabilities with the Government. I cannot give a response on the future of these assets until these discussions are completed.
A number of noble Lords asked about the process of consultation. One of the lessons noble Lords will take from this Bill is that the Government are serious about consultation. The procedures laid down in the Bill require Ministers to come to Parliament with full details of the impacts of any policy change that they seek to bring in through statutory instruments. There will be full consultation. I shall be happy to keep the House informed on the nature of this consultation over the next few months while this process of change is going on.
From a standing start in September 2010, partnerships now cover 80 per cent of active businesses in the UK and 87 per cent of the population. We are looking forward to reaching 100 per cent. We believe that we have unleashed a wave of enthusiasm for economic development at local level. In many places there is no appetite to go back to the old arrangements. It was clear from our earlier debate that many noble Lords retain their attachment to RDAs as they were. However, we do not believe that a return to the circumstances of a few years ago is either appropriate or possible. We are now in a new situation and we need to ensure that economic activity is taken forward across the right geography by fully committed partnerships. RDAs do not fit in with that new approach and I therefore ask the noble Lord to withdraw the amendment.
Will the Government consult on the basis of all or nothing or will they approach each case in each region on its merits and listen with an open mind to the arguments of business as well as local government and its social partners? Will they take a decision on a case by case basis or, as I say, will it be all or nothing.
My Lords, I am very disappointed by the Minister’s response. I thank all noble Lords who have spoken in the debate—my noble friends Lady Royall, Lord Campbell-Savours, Lord Beecham, Lady Quin, Lord Grantchester, Lord Hunt of Kings Heath, Lord Hoyle, Lord Clark of Windermere and Lord Prescott, the noble Lords, Lord Cavendish of Furness and Lord Empey, and, of course, the Minister.
My noble friend Lord Prescott, as did many other noble Lords, stated clearly why the Labour Government established the RDAs in 1999, what they began to tackle, the progress they made and why they should be kept. The Government have not made the case for the RDAs to be abolished. All have outlined why they worked sub-regionally.
I am happy to withdraw my amendment in favour of the amendment of my noble friend Lady Royall. In doing so, I shall leave it to my noble friend to decide whether she wishes to test the opinion of the House.
Amendment 16 withdrawn.
16A: Schedule 1, page 16, leave out lines 12 to 19
My Lords, I am grateful to the Minister for his reply and for his offer to keep us informed of the consultations as they go on. The Minister was right to say that it is a political decision that has been taken by this Government. We believe that this is fundamentally the wrong decision. We believe that it is wrong for the economic growth of our regions and it is wrong for the economic well-being of our country. Therefore I wish to test the opinion of the House.
Amendments 17 to 18 not moved.
19: Schedule 1, page 16, line 20, leave out “Security Industry Authority.”
My Lords, I am delighted that the noble Lord, Lord Taylor of Holbeach, has come in behind an amendment that I put down. I hope that this is one of many occasions when the noble Lord will come in behind amendments that I put down in this House.
I am very interested to hear from the Minister—the noble Baroness, Lady Neville-Jones—why the Government have decided to join the Opposition on this amendment. Both at Second Reading and in Committee, I raised concerns that there are real risks of allowing criminality to return to an industry that has cleaned up its act dramatically in recent years. I have always felt it to be reassuring when you go into a venue and meet security personnel with credentials on display that show that the individual has reached a certain standard, had a Criminal Records Bureau check and is deemed to be a fit and proper person to undertake this kind of work.
Maybe the Minister will tell us that the Government are prepared to delete this body from the Bill, but will work behind the scenes and bring something back in the future. If that happens, I am sure that this House will give it the line-by-line scrutiny it deserves. It is important to ensure that we take the industry with us; the industry does not want to see the criminals return. Security checks on individuals who want to join the industry remain. A common approach to a problem that has largely been solved, but may need to be reviewed and updated as things change, could command support across the House if handled properly and built on what has been achieved in recent years.
I will leave it there; I do not wish to detain the House longer than necessary. I am eager to hear from the Minister.
My Lords, the amendment removes the Security Industry Authority from the list of public bodies that the Minister can abolish by secondary legislation. Some noble Lords may wonder why the Government are supporting an amendment which is the same as one which the Opposition put forward a few weeks ago and which we then resisted. If I go into the Government’s reasoning behind our approach to the Bill, it will then become clear why we are now supporting this amendment.
First, our willingness to accept the amendment does not represent a change of policy; it remains the Government’s intention to abolish the SIA in its present form. We have, however, decided that this will be best achieved through a different piece of primary legislation. As noble Lords know, it was announced on 14 October as part of the public bodies review that the SIA would no longer be a non-departmental public body and that we would take forward a phased transition to a new regulatory regime. I went through the reasons for that during the Committee debate on 28 February, and I do not intend to detain the House at this hour by going over that ground again. I am sure that noble Lords will welcome that.
Home Office Ministers asked the SIA last October to consult key stakeholders, including the industry, and to produce a detailed plan of how the phased transition to the new regulatory regime could be achieved. As the House will know, the chair of the SIA, the noble Baroness, Lady Henig, and its chief executive, Bill Butler, presented their plan to the department on 16 February and there has been a subsequent meeting with the Home Secretary on 14 March, so there has been close dialogue between the SIA and the department.
The key points that emerge from the proposals are that: regulation will shift from licensing individuals to registering businesses, which will have to meet a comprehensive set of conditions set by the new regulator; the regulation of individuals will become the responsibility of registered businesses, which is an important point; the new regulator will have the power to impose sanctions, including removing the right to trade in the private security industry on the part of businesses that fail to comply with the conditions that it sets for registration; and the Government’s aim is for the new regulatory regime to be in place by the end of 2013, using a phased approach to ensure a smooth transition.
We have decided to support the amendment to remove the SIA from the Bill because Clause 1 includes only powers to abolish bodies and transfer functions via secondary legislation. It does not include powers to set up new regulatory bodies, and it has become clear that primary legislation will be required to establish a successor self-regulatory body that will have the power to impose sanctions on businesses that do not comply with set standards. If I understood the noble Lord’s point, he attaches importance to the idea that the regulatory body should have teeth. The Government agree—in other words, it must have powers that will enable it to enforce sanctions against companies that breach standards.
We have therefore taken the opportunity to review, and decided that references to the SIA should be removed from the Bill. The same primary legislative vehicle that will establish the successor regulatory body will also be used to abolish the SIA, so we will put it all in another Bill. I am sure that noble Lords will understand that I cannot give further detail on that legislation today, except to say that we will bring it forward when parliamentary time allows.
A final point: the Home Secretary has also written to Ministers in the Scottish Government and in the Department of Justice in Northern Ireland to advise them of this amendment. Regulation of the private security industry in their nations is a policy decision for the devolved Administrations to make. We are working with them to ensure that transitional and subsequent arrangements meet the needs of all UK Administrations.
Accepting the amendment does not constitute a change in policy; it is a change to the vehicle that the Government will use to deliver that policy. There is wide agreement between the Government and what I understand to be the points made on the opposition Benches regarding the substance. It is still the Government’s intention to abolish the existing body and replace it with another body for the private security industry that is self-regulatory. I therefore support the amendment.
My Lords, I apologise that I did not stand up before. As the name of the noble Lord, Lord Taylor, is on the amendment, I wanted to see what the noble Baroness was going to say in response before I could intervene. I have a couple of questions further to her speech.
The Minister suggested that we are thinking very much along the same lines; I think that that was what she said towards the end of her speech. Let me be clear that we do not agree with the Government about the future of the SIA because we believe that it is essentially doing a good job as it is. As we understand it, the industry itself is content with the present situation and willing to pay for the present system.
I return to two issues that were raised in the debate that we had in Committee. One was the attitude of the police. As all noble Lords will know, when we brought forward the primary legislation, one of the main bodies in favour of primary legislation being introduced were the police themselves, who felt that the security industry when unregulated was rather a dangerous industry, not just for the people working in the industry themselves but also for the wider society. It was as a means of protecting wider society that the legislation was introduced.
I will be grateful if the noble Baroness can tell us whether or not a consultation with the police and other concerned bodies will take place before a Bill is introduced. I will also be grateful if she can tell the House when a Bill is likely to be introduced. One of the issues that concerns these Benches is the fact that, in future, it is hoped by the Government that the regulation of individuals working within the security industry should become the responsibility of the security businesses themselves. That is precisely why primary legislation was introduced in the first place. The industry was not properly investigating or in charge of the individuals who were working in the industry and this led to endangering some of the people who depended on the security industry—for example, the young in nightclubs.
The noble Lord, Lord Ramsbotham, raised a question about prisoners in the last debate on the subject. At the moment where prisoners are moved from prison to prison, the wherewithal to do it is provided by the security industry. That is an extremely important part of the industry that needs to be properly regulated. Will the Government consult with the Ministry of Justice and everybody else who has anything to do with the movement of prisoners and the wider care of prisoners? As I understand it, people who work within the security industry are sometimes employed within private prisons. It does not seem a sensible move or good idea to reintroduce some form of self-regulation rather than to have proper regulation for an industry that is extremely important for the well-being of our society.
My Lords, I am slightly puzzled that the noble Baroness says that the opposition Benches do not agree with the approach that I have just outlined. Before the Government came to office, the noble Baroness, Lady Henig, herself was moving towards a more self-regulatory regime. She has seen the Home Secretary and other Ministers and is working with the Government on a transitional regime to a new body. I find it difficult to see why there should be such a problem for the opposition Benches.
On the question of the attitude of the police, we are consulting ACPO, which supports the approach. The police attach importance to effective regulation. That is precisely why I made my third point, in relation to the point made by the noble Lord, Lord Ramsbotham, in the previous debate. This body will have power to impose sanctions on businesses that do not comply with set standards. There will be set standards in a number of areas. Certainly, the whole question of custody will be one of those areas of set standards. I have to say that the differences are more synthetic than real. I hope that in due course, when we introduce and come to debate the legislation—I am not, unfortunately, able to give the noble Baroness a date for that because it depends on the crush of parliamentary business—there will be cross-party agreement.
My Lords, my name is also on this amendment. Indeed, it was my amendment in Committee to which the noble Baroness responded. The Government, understandably, are a little diffident towards the Opposition tonight. The fact is that there has been, if not quite a U-turn, definitely a bit of a C-turn on this—quite rightly, too. Under the Bill as printed, the Government were going to abolish this body. They were not going to substitute statutorily backed self-regulation. What existed in the SIA was going disappear. The regulation of the industry and the personnel within it, and the standards and the great improvement in those standards that we have seen since the SIA was set up, could have been seriously endangered.
Just before the previous vote, the noble Lord, Lord Taylor, met a certain degree of scepticism from these Benches when he said that the Government were a listening Government. At least on this amendment the Government have listened to some degree.
I remind the noble Lord that the Companion says:
“Only the mover of an amendment … speaks after the minister … except for short questions … or where the minister speaks early to assist the House”.
The noble Lord should have spoken before the Minister. He is out of order, I am afraid.
My Lords, I thank the Minister for her response to my amendment. As I have said on several occasions, whatever happens we need to ensure that criminality does not return to the industry and that the public are able to remain confident that the people employed in the industry are fit and proper. The overwhelming majority of the industry acts responsibly and supports retention of the SIA. If the Government bring forward a Bill for consideration, it will be important to give it detailed line-by-line scrutiny. In particular, I concur with the comments of my noble friends Lady Royall and Lord Whitty.
Amendment 19 agreed.
20: Schedule 1, page 16, line 21, leave out “Valuation Tribunal Service.”
My Lords, Amendment 20 would remove the Valuation Tribunal Service from the Schedule. I am not quite clear about what the Government propose here. I could be persuaded to withdraw my amendment and not divide the House, but I need quite a detailed response from the Minister on what he is proposing. I look forward to his response and hope I will not have to divide the House. I beg to move.
My Lords, I am grateful to my noble friend for moving the amendment and for allowing us to debate for a few minutes the Valuation Tribunal Service. It is one of a number of bodies which are either listed or not listed in the Bill and whose work is not particularly well known by the general public. However, these are bodies that have played an important role in terms of the good order of society. As we have debated the 150 or so bodies under consideration, there has been a tendency and temptation—given that we have all agreed that it is right that these bodies should be reviewed on a regular basis—to underestimate the contribution of the people who have worked for them or sat on their boards. It is right for me to invite the Minister—who has, if I may say so, expertly steered the Bill through your Lordships’ House—to reflect on the importance of the tone with which we debate these organisations.
I say that because, in relation more generally to debates in your Lordships’ House, in the other place and among the public on public services, there has been an unfortunate tendency to speak in a pejorative way about back-office functions. That is a matter for regret. It is not sensible to suggest, for instance, that only a policeman is doing a good thing while someone who works for the police force in a back office is not. That is not a sensible way forward. Back-office staff are being made redundant from police services, while bureaucratic tasks have to be undertaken by front-line police officers. That demonstrates some of the perverse incentives of taking a black-and-white approach.
I mention that because, as we close our first day on Report, we have an opportunity to reflect on the fact that many of these organisations will go out of business. The functions of some will be transferred to another body while the functions of others will come to a close. It is important to send a message out to the people who have worked in these bodies that we do not underestimate the contribution that they have made. The regular review that is taking place should be sensible, but in no way should it be taken as a criticism of the work that is done by thousands of people up and down the country.
My Lords, I happily associate myself with the remarks of the noble Lord, Lord Hunt, because we all share his sentiment. The more you become involved in this process, the more you realise that you are dealing with bodies that in many cases are performing important tasks and are staffed by people with a due sense of purpose and public service.
What is interesting about the amendment—I am grateful to the noble Lord, Lord Kennedy of Southwark, for giving us a chance to talk about it—is that in many ways it brings continuity between the previous Government’s proposals in the area of tribunals and our own. As will be clear from my explanation of why the Valuation Tribunal Service is in Schedule 1, noble Lords will recognise that the foundations for this decision were laid by the legislation of the previous Government.
The Valuation Tribunal Service is a non-departmental public body that provides administrative support and all the services required by the Valuation Tribunal for England, which hears appeals on council tax and business rates—in other words, national non-domestic rates.
Taken together, the Valuation Tribunal for England and the Valuation Tribunal Service—I will use the acronyms from now on—provide an independent appeals service for business rate or council tax payers who wish to challenge either the basis on which the banding or valuation of their property has been calculated, or their liability to pay business rates or council tax. In the Government's recent announcement about the future of arm’s-length bodies, both the VTS and the VTE were identified as bodies that could be abolished. However, I stress that the Government recognise that the jurisdiction that the VTE exercises, and the functions undertaken by the VTS, are still necessary—the noble Lord, Lord Hunt, is correct—and plan to transfer them so that they become part of the unified structure for tribunals, thus ensuring that the independence of the appeals process for business rates and council tax will be maintained. The achievement of these transfers would be a further step in the achievement of the long-standing policy introduced by the previous Government, following the 2000 Leggatt report, Tribunals for Users: One System, One Service, which this Government are continuing. The aim is to bring central government-sponsored tribunals in England and Wales under a single umbrella organisation.
The Government's proposal is that the jurisdiction of the VTE and the functions of the VTS should transfer respectively to the First-tier Tribunal and Her Majesty's Courts and Tribunals Service. It is important that noble Lords should note that the planned transfers are fully supported by both the chairman of the VTS, Anne Galbraith, and the president of the VTE, Professor Graham Zellick. The jurisdiction of the Valuation Tribunal for England will be transferred to the soon-to-be-created Land, Property and Housing Chamber—the Land Chamber—of the First-tier Tribunal, which was formally established under the Tribunals, Courts and Enforcement Act 2007. Powers in the 2007 Act would allow the formal transfer of the VTE's jurisdiction to the First-tier Tribunal, and the subsequent abolition of the VTE as a separately constituted tribunal. Since the 2007 Act powers are already available to achieve this, the Government do not need—and nor do they intend to seek—its abolition through the powers in the Bill. I trust that noble Lords will be comforted to learn that the jurisdictional independence currently enjoyed by the VTE will continue, following the transfer of that jurisdiction to the First-tier Tribunal.
Noble Lords will also wish to be made aware that the transfer will bring added opportunities. Members who would formerly have been in separate tribunals will be able, following the transfer, to sit on tribunals in all jurisdictions exercised within the First-tier Tribunal Land Chamber. Such arrangements are already in place elsewhere and have brought significant operational and jurisdictional advantages.
I turn to the Valuation Tribunal Service that is the subject of the amendment. If the jurisdiction of the VTE is transferred and the VTE is abolished, the VTS will effectively cease to have any purpose and powers. Therefore, the Government's intention is that, in tandem with the transfer of the VTE, the parallel administrative functions provided by the Valuation Tribunal Service should also transfer at the same time to Her Majesty's Courts and Tribunals Service, an executive agency of the Ministry of Justice that is shortly to be established following a merger between Her Majesty's Courts Service and the Tribunals Service.
The functions of the VTS, which are essentially to provide all administrative support for the operation of the VTE, including staff, accommodation and IT, would be absorbed into the tribunal service to sit alongside the administrative support for all jurisdictions within the First-tier Tribunal and Upper Tribunal. Once these functions had been transferred, there would be no further need for the VTS to remain in existence as a separate body and it could then be formally abolished. However, as the VTS was established under statute—in the Local Government Act, to be precise—new powers would be required to achieve both the transfer of the VTS’s functions and its subsequent abolition. The power set out in Clause 1 would allow an order to be laid to achieve this transfer, and that is why the VTS is included in Schedule 1.
Planning for the transfer of both jurisdiction and administrative functions is in its very early stages but, following the transfer, we confidently expect the realisation of economies of scale, operating efficiencies and added service improvements, which the unified tribunals system was established to provide. The noble Lord will, I hope, recognise and be reassured that the Government’s proposals will maintain and sustain the independence of the appeals process for council tax and business rates, and that they are a continuation of the policy pursued by the previous Government. Therefore, I hope that he will feel able to withdraw his amendment.
My Lords, I thank the Minister for his response and I also thank my noble friend Lord Hunt of Kings Heath for his comments. I should have mentioned that earlier in my local government career, in the 1980s, I was the deputy chair of the London South East Valuation Tribunal. I am persuaded by the Minister’s reply and beg leave to withdraw the amendment.
Amendment 20 withdrawn.
Consideration on Report adjourned.
House adjourned at 10.46 pm.