Public Bodies Bill [HL] — Committee (7th Day) (Continued)

– in the House of Lords at 6:02 pm on 28th February 2011.

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Amendment 48 not moved.

Amendment 49

Moved by Baroness Royall of Blaisdon

49: Schedule 1, page 17, leave out lines 15 to 22

Photo of Baroness Royall of Blaisdon Baroness Royall of Blaisdon Shadow Leader of the House of Lords, Shadow Spokesperson (Cabinet Office), Shadow Spokesperson (Northern Ireland) 6:23 pm, 28th February 2011

My Lords, it is clear from the amendment that these Benches seek to remove RDAs from Schedule 1, which legally enables their abolition. This debate on the chaotic and misguided abolition of RDAs announced by ministerial fiat comes at a time when there is clear evidence that economic growth has flat-lined and that the economic recovery has ground to a halt. Now, more than ever, we need the regions to be motors of economic growth in our country, instead of which the RDAs, which provide the architecture for regional economic development, are being dismantled.

As we have heard at Second Reading and throughout this Committee stage, the Conservative-led Government have failed to follow a satisfactory process or procedure for evaluating the efficiency and effectiveness of the bodies scheduled for abolition. The rushed decision-making and lack of consultation is nowhere more blatantly obvious than with the abolition of the RDAs. The White Paper outlining the Government's plans came after the decision to abolish RDAs had been announced, and it was a real surprise to these Benches to see their inclusion in Schedule 1. The House of Commons Public Administration Committee concluded that the Government did not consult properly on their proposals. It welcomed the Government's agreement to allow for further consultations and said that it expected,

"these consultations to have real effect on the outcome of the review; even if this means reversing decisions that have already been made".

What consultations have taken place since the abolition of RDAs was announced, and how have the conclusions of those consultations been taken into account?

Even if the Government did not make a proper assessment of the value of RDAs, an independent evaluation by PwC found that since their inception RDAs helped to create thousands and thousands of jobs, well in excess of their target; assisted nearly 57,000 businesses-again, well in excess of their target; enabled £5.7 billion of funding to be levered in from the public and private sectors; and created over 8,500 new businesses. The evaluation also demonstrated that every pound spent by RDAs added approximately £4.50 to the regional economy. Other strengths of the RDA model include the ability to pursue a coherent vision for the region that could be turned into a strategy for economic development and investment.

So why are RDAs being dismantled with no credible alternatives? I am sure that the Minister will tell me that they are being replaced by local economic partnerships, which will see business and civic leaders work together to bring economic development, shifting power away from central government towards local communities, which really understand the barriers to growth. But it is not the case that all the RDAs are being localised. Some functions, such as inward investment, innovation, key sector development and response to economic shocks are going to be transferred to the national level. Inward investment is one of the real big successes of RDAs, offering one-stop shops in a region, with fantastic results-for example, Toyota in Derby or Nissan in the north-east. So how does centralising such a function square with the much-vaunted localism agenda? Are the Government really committed to devolving powers and functions when there is clear evidence that they are currently being well managed at regional level? I am more than a little confused about the role of regional government offices, and would be grateful if the Minister could help me. Is it true that Mr Cable is reversing elements of Mr Pickles's Maoist revolution by rebuilding parts of the regional infrastructure that were scrapped last summer? I very much hope that six regional government offices are being reinstated and that that will foreshadow other changes in regional policy.

I think that it will be clear from debates later this afternoon that some RDAs are more effective than others and that there are weaknesses as well as great strengths, but just because reform or change is necessary in some areas, why take the radical step of abolition, especially when it is apparent that the LEPs will not be able to provide the same impetus for regional development as the RDAs? In many areas of the country, there are simply no local economic partnerships; I think especially of my own region of the south-west. Could the Minister update us on how many LEPs have been approved and where the gaps are? How are the gaps going to be filled? It would be, or should be, unthinkable at any time, but especially when economic growth must be the means to kick-start and sustain recovery, that any part of the country should be without proper regional development.

There are many grey areas relating to funding. Can the Minister confirm that it could cost as much as £1.4 billion to wind down RDAs and complete existing programmes? Could he also confirm that funding from the regional growth fund will amount to £1.4 billion over three years, and that that is nowhere near the sum given to RDAs? If that is true, the money available is not adequate, and it suggests that the Government do not take regional growth seriously enough. I also wonder why the Government are approving only projects based on short-term job creation for the first £250 million of funding from the regional growth fund. Job creation is critical, of course, but what about strategic, long-term projects, which are essential for the economic well-being of any region? I would suggest that, by focusing on short-term job creation, the Government are being short-sighted, neglecting the potential for long-term economic growth as well as jobs.

Then there is the question of land and property assets that are currently owned by the RDAs. Given the significant value of many of these assets and their role in future growth and development, I wonder what the Government are proposing to do with them. I would be grateful for reassurance from the Minister that they will not be disposed of in a fire sale, with little regard for the regional and strategic importance of many of the sites held. These assets should be retained and used locally to drive economic growth and recovery.

Many of the successes associated with RDAs are a consequence of the expertise and experience of the staff who have played a pivotal role in the agencies. I am concerned about the staff themselves, but also about the body of knowledge they have built up. What are the Government doing to minimise the number of redundancies which will occur with the abolition of RDAs? How will they ensure that the knowledge, skills, experience and expertise are not going to be lost?

My final question relates to funding from the European Regional Development Fund. Will the Minister confirm that the Government intend to centralise the delivery of ERDF funding into the DCLG? If so, it would appear that LEPs will be excluded and that the management of the funds will no longer have local and regional input, leadership and direction, with the risk that it will fail to reflect the priorities of the regions. Will he also confirm that the European Commission has expressed concern about the changes caused by the abolition of RDAs, and say whether the £1.5 billion of funding is at risk?

It appears that by dismantling RDAs, the Government are creating uncertainty and failing to support strong and credible organisations to replace them. At present, LEPs simply do not have the powers or resources to drive jobs or growth in our regions. It is widely recognised that LEP funding will not be guaranteed, and that they will certainly not have any start-up or core funding. The regional growth fund has already been oversubscribed in its first round, meaning that many strong bids that have already attracted private sector support look set to miss out because the Government are not prepared to invest in private sector growth. This does not bode well for regional growth and development, and I would urge the Government to think again-to reconsider the fine record of RDAs and the huge contribution they have made to the regions and the country as a whole. I beg to move.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Health) 6:30 pm, 28th February 2011

My Lords, in the coalition lexicon, there is a six-letter word missing: it is the word "region". It has been banished by Mr Pickles, and the use of it has been banished from PCTs by the Department of Health. Of course it is true, as my noble friend Lady Royall has implied, that there is a variable geometry about regions. They are not all the same: some are regarded as too big-one thinks perhaps of the south-east, where a predecessor television programme to "Strictly Come Dancing" was called "Come Dancing". Some of your Lordships may recall that then "Home Counties North" and "Home Counties South" were regarded as appropriate areas. Perhaps that might have been better than a single RDA for the south-east. Nevertheless, many of the RDAs have performed extremely well. If there were uncertainty about some of them, the question arises: why abolish all when there may be a very strong case for keeping some, if not all?

Nearly a year ago, Vincent Cable came to the north-east in his first few weeks as Secretary of State, and he declared his belief that the north-east was,

"one region where business support through a regional agency is both necessary and appreciated".

He was right about that, but he subsequently went on to propose the abolition of that agency. In any case, he understates the case.

Consider the report on the RDAs from the Select Committee on Business, Innovation and Skills. It found evidence of effective intervention in the face of economic shocks and strongly endorsed the RDAs' role because they,

"improved the understanding of local economies and their connections with businesses ... They were also able to catalyse delivery of infrastructure ... and took a strategic approach to planning decisions".

It thought that some RDAs were, perhaps, too big to profit from local engagement, but it made it clear that,

"policies were far from being applied on a blanket basis within regions".

Interestingly, the CBI recorded 66 per cent support for continuing regional co-ordination via the LEPs, if they were to be the new mechanism-and especially strong support in the Midlands and the north. Even in areas where the number of Local Enterprise Partnerships was great, it saw the need for an overarching structure. The Select Committee recommended that regional groupings should be recognised where a clear wish was expressed. It also expressed a concern that inward investment and tackling economic shocks would be inadequate without local knowledge and support, as my noble friend has said, when functions were translated to Whitehall. This has been compounded by the proposed abolition of Government Offices for the Regions providing critical intelligence and contact from within the regions to government. Accordingly, the Select Committee recommended that government should devolve powers to regional structures where there was clear evidence of good management of resources.

A back-handed compliment was paid to the Government's policy from one witness to the Select Committee, who said:

"One good thing that the Westminster Government has done is to abolish regional development agencies in England", removing significant competition from the market. That witness was Dr Brian Gibbons, who is Minister for Economic Development in the Welsh Assembly. He clearly took the view-indeed he expressed it-that the Government's decision presented Wales with a significant opportunity at the expense of the English regions.

The Federation of Small Businesses said that the local enterprise partnerships should have the capacity to address all the issues impacting on development, including transport, planning and housing at a strategic level, tourism, the low carbon agenda and skills and training. But that long list begs the question of the scale of the organisation to carry out those functions and the resources it will need. The organisations that will take the place of the RDAs are the local enterprise partnerships and, as my noble friends have said, they will not have responsibility for significant areas of policy including the ERDF. They will be expected to work with Government, whatever that is supposed to mean, on investment priorities, transport infrastructure, the regional growth funds and getting the jobless back to work. Again, there is the question of scale: you will have, as we have in the north-east, at least two organisations, perhaps with an overarching body as well. In other parts of the country there are none, in some there are numerous: how will these work together at the strategic level as opposed to the very local level?

Of course, as my noble friend has pointed out, the funding is very limited: £1.4 billion over three years is very little more than what the Secretary of State himself described as the "trifling" figure-I think that was the word-of £1 billion that was originally proposed. The committee was also concerned about the non-so-local knowledge, about the assets and about the potential for a massive success or failure if the debts were not adequately resources. Of course, they are not being resourced: they will have no funding and no powers. As I have said previously in this Chamber, they are in danger of being penniless, powerless and pointless. That is a real risk.

There are serious questions to be asked about assets. The Government's plan is for the assets to be used to pursue economic development benefits through transferring assets to appropriate hosts. They qualify that promise, which on the face of it looks reasonable, by reference to the need to deliver maximum value on public sector investment in the context of deficit reduction. There is therefore a clear implication that the assets will be realised to meet that agenda. There is also a clear implication that that might lead to early disposal.

I have not had the advantage of reading the entire text because Wikipedia has not yet published it. I have seen only a redacted copy of the submission made by One North East, the agency with which I am most familiar, on the proposal for assets disposal. Interestingly, it is proposed to sell some at market value to local authorities. How local authorities are supposed to fund the acquisition of those assets in the present circumstances is beyond me. Some will eventually be put on the market for open market disposal, with an interim period of management by local authorities. Again, at a time of local authority cuts, where will the capacity exist to manage this estate? Similar difficulties arise in relation to intellectual property. There are no fewer than seven pages on that in the submission, including an interestingly little-known scheme called JEREMIE, which is spelt somewhat differently from the convention. It is to do with finance for business and has been extremely successful in the north-east.

What we have here is really an irony. This Government, above all, look to the private sector to lead and to make good the deficiencies in the economy. The RDAs, which are about to abolish, are heavily engaged with the private sector. They are private-sector-led bodies, and yet they apparently cannot be trusted with economic development in the regions.

The proposals in the Bill bear all the hallmarks of a rush to misjudgment, like so many of the measures that the Government have brought forward. We have seen examples this very day of second thoughts having occurred. I hope that the Government will listen to their natural supporters, if you will, in the private sector, in business and across parties in parts of the country; and will pause, reflect and reconsider proposals that threaten to damage the economic recovery that is essential but seriously at risk in many regions.

Photo of Lord Shipley Lord Shipley Liberal Democrat

My Lords, for much of the period since the Second World War-and indeed before-Governments have pursued some form of English regional policy. There have been several initiatives: regional Ministers in some or all regions; development corporations; development companies; and a variety of government office structures, so that Whitehall could be represented properly across all parts of England. Policies have been chopped and changed, but they have been clarified in recent years-first by the creation of the development agencies in the English regions, and secondly by the strengthening of government offices so that all Whitehall departments were housed in a single government office. The system was far from perfect and led to some unnecessary bureaucracy. There was a lack of democratic accountability within the regions. However, the system had one overriding virtue; it was regionally based and gave a clear and firm focus for each region in England that had previously been lacking.

Some regions did not like the structure because they did not feel that their region really existed as an entity. The south-east is the most obvious example. Others, such as parts of the south-west, felt distant from their RDA and government office. Perhaps it was a mistake by the previous Government to create an RDA in each region. Indeed, it is hard to see, in terms of strategic regeneration, why the south-east needed a development agency at all. However, that is history. What is not history is the decision to abolish all English RDAs.

In the north, people have identified with their RDA to a much greater extent than in the south. Maybe this is a function of the northern regions being further from London and the levers of power. It also reflects the greater needs of those regions, which require government intervention for the ultimate benefit of the UK as a whole. The decision to abolish the RDAs and government offices in the south-east may have been broadly popular but it is most certainly not a popular decision in my own region-the north-east. I declare my interest as a board member of One North East since 2005. There is a constitutional issue here, too. Why do Scotland, Wales, Northern Ireland and London have substantial devolved powers, some of which are set to increase, at the very same time that the English regions are being further centralised within London-based structures?

The accusations against the RDAs were that they wasted money, competed with each other in, for example, tourism and inward investment, and had bloated staffing establishments with expenses systems that were open to abuse. Like all generalisations, such conclusions are exceedingly dangerous. The vast majority did not run bloated staffing structures or see abuse of expenses systems. Most did not compete directly with other RDAs, and all were subject to audit by the National Audit Office. All worked with the single purpose of generating economic growth in their regions. All can point to success stories that would not have been achieved without an RDA. We are now in a position where Scotland, Wales, Northern Ireland and London can spend money on tourism, for example, but the English regions with which they compete cannot. This cannot be right.

My noble friend Lord Beecham reminded us that the Business Secretary admitted publicly a few months ago that the process of abolishing the RDAs had been a bit "Maoist". I agree with him. It was done without any attempt to evaluate the sustainable achievements of each RDA and whether they had delivered value for money in long-term jobs growth. The decision-making on RDAs fell foul of the unhelpful fact that the DCLG had been funding the lion's share of RDAs, with BIS being very much the minority financial partner, even though BIS was the responsible Whitehall department. This has added to the confusion over who was responsible for what.

Can further sustainable jobs be delivered without an RDA structure in England? Can redistribution to the poorer regions and those more dependent on the public sector be achieved, too? While the creation of a regional growth fund, which has £1.4 billion to commit over three years, is designed to just that, it has less to spend than the RDAs had. I declare an interest again as a member of the growth fund's advisory board. When account is taken of the new likely geographical spend and the fund's clear remit to generate sustainable private sector jobs, it will certainly be able to make a difference. I welcome that. However, it cannot be the whole story. At the heart of the matter lies this constitutional issue. I do not feel that sufficient thought is currently being given to English regional policy. Simply abolishing our RDAs where they proved valuable, making little attempt to save the good things they have achieved, is a mistake.

Not surprisingly, we now find that some Whitehall departments are deciding that they must continue to employ staff outside London. I understand that some 20 per cent of One North East's staff will now continue working in the north-east for Whitehall departments. However, they will be split up to work in departmental silos-so much for joined-up working. We cannot run everything in England from Whitehall. I thought we had learnt that lesson many years ago. No doubt local enterprise partnerships will give a focus to regeneration, but since they cover all of England they do not have a responsibility for assisting the weaker local economies, and neither do they have any central government money.

In practice, this is the last operational year for our RDAs. The Government should have paused for thought for longer than they did before deciding to cull them. The process that has been followed, and the absence of any clear regional structural policy behind it, is a matter of serious regret, from which I hope we can yet learn.

Photo of Baroness Armstrong of Hill Top Baroness Armstrong of Hill Top Labour 6:45 pm, 28th February 2011

My Lords, I follow my noble friends Lord Beecham and Lord Shipley. Newcastle has spoken from both sides of the House today. I see that the noble Lord, Lord Bates, is waiting to represent the southern part of our region. I very much represent the middle of the region but also, I hope, the region as a whole. The north-east is a region and feels itself to be a region. It has a sense of identity and believes, partly because it is so near Scotland, that it has to fight both to maintain that identity-of which we are very proud-and to make the best of the enormous talent that is in the region.

Much government policy over the past 40 years has recognised that there is talent there and that the north-east laid the bedrock for much of the development of this country. If you think about the Industrial Revolution and the contribution that the north-east made then and in subsequent years to the growth of the economy across the nation, it was very important. As those prime industries began to decline, a regional voice, and action supported by central government, were seen as important to begin to rebuild. This case was being made very loudly before I became a Member of the other House. Indeed, when I did become a Member of the other House, my then neighbour and now my noble friend Lord Radice proposed a Private Member's Bill, which several of us supported, to enable the north-east to have a regional body that would take strategic decisions with government support. Of course, that was in the era of the Government run by the noble Baroness, Lady Thatcher, so the Government of the day saw the point and the need, and they responded, eventually, to the efforts made by my noble friend and others across the board.

The north-east is parochial, but it is not sectarian. We do not want to get into a situation in which one group fights another within the region for whatever scraps are around. We have always accepted the importance of trying to build the private sector because it is true that at the moment we have too many public sector jobs. Even though we increased the number of private sector jobs in recent years, it was by no means sufficient. That is still a huge job to be done in the north-east, but now we are losing the strategic means of doing it. I just ask the Government to think again.

I accept that there have to be cutbacks in public spending, but it frightens me to see how much money the RDA is having to spend on redundancy and run-down costs when that money ought to be put into economic development. The rise in unemployment, particularly among young people, is frightening. My generation will regret that for many years to come, because we thought we had got through it. We thought that we had got to the stage where we could promise young people in the north-east prospects and opportunities, and that is beginning to fall off the edge again. They see redundancy payments and the struggle to get rid of assets when they know that doing so at this time will not bring in the return that we should be getting from those assets. This is the moment for the Government to think again about the north-east.

The reaction to the Government's announcement on 23 June was bewilderment, particularly, as my noble friend Lord Beecham said, after the Secretary of State for Business, Vince Cable, said on 3 June that, having looked at things, he was convinced of the need for one body across the north-east. It was therefore with bewilderment that the private sector, the regional chamber of commerce and the regional CBI faced the prospect of months of, quite honestly, squabbling again about what the LEPs should look like, how they should be formed and all that, when the key issues of the day were actually slipping out of anyone's responsibility.

It was irresponsible of the Government to appoint a new chair of the RDA on 3 June, and then, on 23 June, to say that the organisation was being abolished. One of the key businessmen of the region was being put in place to manage redundancies. It is nonsense. He should be managing inward investment; he should be managing what possibly can be done with the manner in which the assets have been developed in the north-east, with partners, to draw the best strategic opportunities for the region. Instead, he is managing decline, which is a tragedy. There is no one who does not accept that the Government will have to put in less money this year, although they did with regard to One North East, and I hope that they recognise that from what my noble friend Lord Shipley has said. I acknowledge, welcome and am thankful for his contribution both to the RDA and to the new body. However, the new body-the national body-will not have particular reserves for the north-east. It will accept whatever bid comes from wherever. Therefore we might do more to unbalance the economy in this country rather than address the need to rebalance the economy in this country.

One North East was, according to all the independent audits, very successful in the number of jobs that it created, the number of new businesses that it supported and the number of people it helped to get into employment. I will talk about that in more detail at a later stage. The north-east has had a successful RDA. No one says that it achieved everything that we had ambition for it to achieve, but it is one region in England in which we know that progress was being made, and we know that it makes sense to have a strategic body across the region. We are, after all, a very small region, the smallest in the country. Its success was therefore dependent on being able to be strategic across the region. It had a plan for green jobs; it had been developing green policies in recent years. I know very well, from companies that I have talked to, the work that One North East was able to do in pulling together that strategy and in making sure that one company worked with another in a way that developed each of their interests while working in a more coherent and strategic way across businesses.

As a result, Romag, the glass company, was able to support the development of more charge points for electric cars and to support the electric car makers in where they would be and how they would develop their business in a network of hubs around the country. All these ideas came out of the initiative of One North East. I hope that the Minister will take the opportunity to talk to Nissan about its support for One North East and how important it thinks it has been in its continued presence in the region and its ability to get the parent company to continue to invest in that factory in the north-east, which is, as we know, the most productive car factory across Europe, if not the world.

It is very difficult to talk without emotion about the north-east, a region that means so much to so many of us and to try to get the Government to think again. This does not mean, "You've got to put more money in", but that the money that is going in has to be used in the most strategic way and must not be fragmented. It should not be used in a way that does not maintain the consensus with business, trade unions and local authorities that we have had across the region for many a long month and year. The Government are breaking that consensus, which is incredibly dangerous. I ask them to think again.

Photo of Lord Ramsbotham Lord Ramsbotham Crossbench 7:00 pm, 28th February 2011

I declare an interest: my son is the chairman of the North East Chamber of Commerce, which the noble Baroness mentioned. I endorse everything that has been said by the noble Lords, Lord Beecham and Lord Shipley, and by the noble Baroness, Lady Armstrong. Politically, people think of the north-east as being divided by rivers. Economically, the north-east is divided between the rivers. Now, instead of having one regional development agency, which has been looking over the whole of that area and easing that division, the Government are setting up local enterprise partnerships that are separating the region. It seems to be madness. All that I can say, from the points of view that I have heard from everyone, is that there was not just confusion but anger up there after Mr Cable made his announcement. Having observed the situation, the Government seemed to be prepared to listen to what people up there were saying and proving, but suddenly that was all dashed, apparently in alliance with a mantra that everything should be localised.

If there is one issue that should be borne in mind, it is communications. The communications system in the north-east is not all that good. There are not the motorways or the means of connecting the various areas. Why not? It is because, over the years, there has been all this local scrapping. Yes, bypasses have been built around areas and there have been local communications, but the region was never looked at as a whole until there was an RDA. Until and unless you get the region to be looked at properly, you will not get the communications that should be the hub of any future development. I join everyone who is begging that the north-east be, if necessary, taken as a separate area and looked at separately again, in order not to throw away what has happened.

Photo of Lord Bates Lord Bates Conservative

My Lords, in many ways, this debate reflects the sense of where we are with the whole Bill, because we have heard speech after speech about the north-east of England, which we all love dearly, pointing out what an exceptional region it is and how it needs special attention and help. People have been saying that it had a regional development agency that performed better than any other and was adhered to and held in affection by the business community of the region. It is a small region, with 2.6 million people. The Northwest Regional Development Agency, on the other hand, covers an area from the Scottish border to Cheshire. That is not a homogeneous region to which people can feel an affinity.

There are different views on this. We are having this debate, but let us remember that there is an option available to the local authorities and the business community of the north-east to have a single local enterprise partnership for the whole of the region. That offer was put forward and I supported it, so that there should be one voice for the north-east. However, the local authorities, in their wisdom, could not agree on that. We therefore have this breakaway on Teesside. In fairness to Teesside, and given my credentials in the north-east that I offer to this debate-I was born on Tyneside, represented a seat on Teesside and now live on Wearside-I understand what the noble Lord, Lord Ramsbotham, said about the region between the rivers. There are different perspectives. The people on Teesside felt strongly at the last general election that they had been let down by the regional development agency. The closure of Corus TCP was a real issue. The people felt that they wanted to reflect the fact that the economy and the process industry of the Tees valley made up a unique and discrete entity and that they might perform better on their own. I disagreed with them, but they took that decision, which was for them to take. It was on offer.

Perhaps I may offer this point of view. As well as the sort of romance that we have heard about One North East, let us remember-I am sure that my noble friend Lord Shipley from the board can confirm this-that its budget two years ago was £290 million. Under the previous Government, that was to be cut this year to £180 million. The idea that there was some sort of love-in and that somehow money was being poured into the good north-east was not true. A cutting back of the reach of that agency, and some may say its effectiveness, was already in train.

It is also worth putting this on record. Other noble Lords will also remember the time when I was Minister for the north-east under the previous Conservative Government. There were the Northern Development Company and the Teesside and Tyne and Wear development corporations, to which the noble Baroness, Lady Armstrong, referred. The development corporation for the north-east was fantastic and very well run under John Bridge, with George Russell as chairman-Ron Dearing was a previous chairman. These were terrific ambassadors for the region. They brought in significant amounts of foreign direct investment; 75,000 jobs were brought into the region during their time, although their organisation was very thin. They did phenomenal work. Our reward for having one regional development agency, going head-to-head with the Welsh Development Agency and Scottish Enterprise in trying to bid for projects, was that the incoming Labour Government created seven competitors for us in the other regional development agencies around the country. That was a mistake. There is a case for north-east exceptionalism in these matters. I should have preferred the continuation of a single entity, but that has not been possible.

In conclusion, we are entering a time when there is a change of approach. An interesting study into regionalism by the Smith Institute looked at a set of data covering a period between the peak before the recession hit and its trough. It showed that a recession born of the financial services industry, which should therefore have primarily impacted on the City of London, in fact hit the regions of the country, such as the north-east, Yorkshire and the north-west, hardest. That seemed to fly in the face of the argument that regionalism would balance the national economy. Regionalism was meant to give a little bit of emphasis and push to those regions that, because they were peripheral to the centre, struggled in economic terms. However, we were actually hit hardest.

The north-east will have a good and positive future, not because of organisations and institutions, but because of the quality of its entrepreneurs and businesses. The entire budget of One North East is only half as much as the amount by which Greggs increased its turnover last year, in terms of investment in the region. The company employs 18,000 people. The private sector is doing it. Companies such as Sage are doing fantastically well. I was at the opening of a new facility for OneX in Teesside, which is now exporting server capacity into Denmark through a new cable across the North Sea. There are some fantastic things happening.

It is worth remembering that the north-east is the only region in the country that exports more than it imports. That is a great place to start, and we have to have far greater confidence in our own ability. A good policy is the introduction for the first time of a difference in national insurance contributions, with a preference for allowing people outside the south-east and London to benefit from lower tax rates. Personally, I would go much further. There is a real case for reintroducing enterprise zones across places such as the north-east. In places such as Blyth, Easington and Middlesbrough, where there is no enterprise at all at present, you could create enterprise zones under which businesses could be set up.

The opportunity was there for us to have a single voice in the north-east, although it was not taken. However, the prospects are good, but only because our entrepreneurs and businessmen are good.

Photo of Baroness Whitaker Baroness Whitaker Labour

I rise to speak to Amendment 55, leaving the north-east. The grounds for my amendment, in contrast to the eloquent plea by my noble friend Lady Armstrong, are not that every part of the South East England Development Agency should remain exactly as it is now, but that, at present, without it, there is no adequate support for some of the poorest parts of the south-east. I am thinking in particular of Newhaven, next to where I live, where over a quarter of households earn 60 per cent less than the national median income. Newhaven would hugely repay investment. It is poised to become the key commercial port in Sussex and 30 per cent of local companies are in the manufacturing, construction and building sectors. But its high street is withering away and its residents have little spending power.

The Government have proposed local enterprise partnerships in place of the regional development agencies, as we discussed earlier. But at the moment Lewes district, where Newhaven sits, is covered by an LEP for East Sussex, Kent and Essex. This is hopeless. Newhaven has few links to the east. The travel-to-work area is west towards Brighton, north to Gatwick and Crawley, and, for commuters, north-west to London. Unless Newhaven can go into the Coast to Capital LEP, there is little hope for the prosperity of the hardworking and friendly people who live there.

There are acres of brownfield land designated for industrial and commercial use which will be of little interest to an LEP focused on Hastings, Kent, Essex and the Thames Gateway. But it is all ripe for investment. The town is well placed to provide work for the Brighton area and there are promising signs that land with planning permission for housing will soon be developed. The port owners are actively pursuing regeneration of the port, which again has few synergies with the east and north-east.

You could argue-indeed, it has been argued-that SEEDA is too big and there could be other solutions to the regional investment problem. But the worry is that places such as Newhaven will simply drop out of the loop unless the Government pay more attention to practical realities. I ask the Minister: what in the Government's arrangements for LEPs demonstrates any improvement for Newhaven?

Photo of Lord Greaves Lord Greaves Liberal Democrat 7:15 pm, 28th February 2011

My Lords, we have heard a lot from the north-east during the discussion on these amendments and I want to broaden it a little to the rest of the north of England. I have Amendments 52 and 58 in this group, which refer to the three regions of northern England: the north-east, Yorkshire and the north-west. I speak as a Yorkshireman who lives in the north-west-just-and, in view of what I am going to say, I should remind the Committee that I am a member of Pendle Borough Council.

Here, we are dealing with a government policy based on the view that regions do not really exist in England. I think that that is a metropolitan/south-eastern view of life and does not apply in the north. I believe that regions exist. I certainly believe that the north-east exists but I have to say to the noble Lord, Lord Bates, that most people in the north-west are very clear that they live in the north-west. North-west England may be a boring name; nevertheless, most people in the north-west know perfectly well that they live in the north-west and they have an allegiance to it.

There are boundary problems, but there always are. I live in Pendle, which is on the border with Yorkshire. We have an area called West Craven, which includes the small towns of Barnoldswick and Earby, where everyone believes that they are still in Yorkshire for everything other than administrative purposes. There is always a problem with Cumbria, which in a sense is a mini-region on its own. If Cumbria had been twice the size it is, it would always have been a separate region. It has always had to choose whether to be tagged on to the north-east or the north-west. However, that is not to say that in Lancashire, Cheshire, Merseyside and Greater Manchester in particular, and in south Cumbria, people are not very clear that they are in the north-west, and they have an allegiance to it. I do not object to an attempt by the Government-if this is what they have done-to rationalise our regional structures and make them more efficient, more logical and more sensible.

Perhaps I may talk for a minute about regional structures in general in the north-west and about the government office for the north-west. A close member of my family had a job as a permanent temp in the regional office in Manchester for the best part of a year. This was a while back but not that far back. I do not want to breach lots of confidentialities concerning what she did there-she had to sign the Official Secrets Act to work there and she asked me whether it was all right to sign it. However, I think I can mention one thing without having her hauled off to the Tower of London. She said to me, "You know when MPs and people put questions down and ask questions of the Government?". I replied, "Yes", and she said, "Well, if they're about transport, I have to deal with them, find out the answers and send them back to London". I remind noble Lords that she was a temp. I thought about it and asked her what she meant by "and people", but she said, "Please don't, daddy".

The regional offices and the North-West Development Agency were probably overstaffed. They were not wholly efficient, but that is a reason for slimming them down, making them efficient and getting them to do their job more effectively rather than abolishing them. The North-West Development Agency had the same task as the others. It had to deal with business support, which I think is very valuable. It also had the task of directly stimulating development and regeneration by directing funds-many of them government funds-into schemes in the region. One problem is that a large number of those funds have dried up for the moment and there is no money to hand out. However, the present Government seem to be of the view that regeneration in terms of investment in the public realm and the public infrastructure is not efficient development and, unless the money goes directly to commercial activity to create jobs, it should not be done. However, who else is going to renovate the public realm and regenerate rundown areas if not the public sector? The commercial sector will come in and help but the underlying funding has to come from the public sector. However, it seems to me that that is drying up and it will need to be reinstated as soon as possible.

Furthermore, following the latest planning legislation, the regional development agencies were in charge of producing the regional strategies along with the leaders' boards, which had a temporary existence. I always thought, as I think my party did by and large, that it was not appropriate for an unelected regional development agency to act effectively as a regional planning authority. Whatever was going to happen to regional planning-it is currently being abolished, although it will probably have to come back-we would have had no problem at all if it had been taken away from regional development agencies, because it was not a suitable thing for them to do. I went back to the coalition agreement and it says:

"We will support the creation of local enterprise partnerships ... to replace regional development agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular".

That was a fudge when the coalition agreement was hammered out, a compromise between the Liberal Democrat view that regional development agencies should continue to exist in areas such as the north of England and the Conservative view that they should be swept away. Within Government that turned into a turf war between BIS and the CLG and the CLG came out on top. Like the north-east, we in the north-west and people in Yorkshire thought that RDAs were going to continue in a slimmed-down form.

So what is happening? We are told that there's a regional growth fund, but there is much less to spend and it is being doled out centrally. The idea that politicians and civil servants in London are the right people to decide which projects in the north-west or in the other parts of the north of England-places 200 or 300 miles away-should be funded is not really credible. Decisions made in that way are not going to be good decisions. There is European funding-the ERDF-and the Rural Development Programme for England, but again the decisions are being taken centrally. A Written Statement from my noble friend Lady Hanham says:

"I have concluded that, in order to maintain compliance with the regulations and spending momentum, we should transfer the existing ERDF staff and functions into my department by the beginning of July".-[Hansard, 3/2/2011; col. WS 86.]

Except in London where it will be devolved to the Greater London Authority, presumably because the Greater London Authority exists. But in the rest of the country decisions about regional development funding are going to be made here in London. That just seems illogical.

Then we have the question of the transfer of assets. The regional development agencies have been asked to produce plans but they are not being allowed to make their own decisions. The decisions are going to be made by the CLG and BIS, depending on what those decisions are. Then, as one noble Lord pointed out, assets are going to be offered to local authorities at a commercial rate. In my experience in Pendle, some of the property which belongs to the regional development agency was bought by the RDA off local authorities in order to provide a source of regeneration funding by those local authorities. But the local authorities are not going to have that money-so what is now happening? People are realising that this is topsy-turvy and that it is not going to work. We are told that for future regional development agency funding, ERDF funding and rural funding, there are going to be teams based in the regions, perhaps collocated with the Homes and Communities Agency. We read in the papers that BIS is talking of setting up small regional offices in order to make sure that the decisions made are right for that region because people in London cannot do it. And we are told that for decisions on the regional growth fund the CLG is going to have teams of people in the regions because, again, people in London cannot do it. It is a scorched-earth policy. Everything is being abolished. I always thought that it would have to be rebuilt sometime. They are beginning to rebuild it at the very time they are abolishing what is there at the moment. There does not seem to be a great deal of logic about this.

The last thing I want to say is about LEPs-local enterprise partnerships-which are supposed to deliver the local growth policies, though they will have precious little government funding. The specific question I want to ask the Government-I do not expect my noble friend Lord Taylor to know but perhaps somebody can write to me and tell me afterwards-refers specifically to Pennine Lancashire, the part of Lancashire that wants to be a separate LEP from the rest of Lancashire based on Blackburn, Burnley, Hyndburn, Pendle, Rossendale and Ribble Valley, a very clear economic area which already has institutions in PLACE, which is a regeneration and development agency set up by the authorities in our part of Lancashire under a multi-area agreement. So we have a Government who tell us multi-area agreements are the way forward. We get on with it and produce an effective, genuine partnership between the local authorities, working very closely with the private sector, ready to go as a LEP. We know exactly what we want to do to convert it into a LEP and how to do it and still we are not being given the go-ahead. And yet the regional growth fund already exists. So who bids for our part of Lancashire? It is the body called PLACE which is the multi-area agreement body. That body exists and is bidding. Can the Government give an assurance that bids from areas like ours which are properly organised and properly submitted, even though we do not yet have an agreed LEP, will be treated on exactly the same basis as areas which already have a LEP? Otherwise we are being dreadfully discriminated against. I hope the answer will be yes but I would be grateful if somebody could write to me and tell me.

The regions in the north of England need to be recognised. Just because the existing RDAs have not managed to narrow the gap between areas like the north and London does not mean they have not done a good job. There is no evidence whatever that by maintaining the gap as it is, even if it has not been narrowed, they have not been doing a job. Without them the gap might now be a lot larger. Unless we see some research and proper evidence to the contrary, we will continue to believe that regional institutions are necessary.

Photo of Lord Knight of Weymouth Lord Knight of Weymouth Shadow Spokesperson (Work and Pensions)

My Lords, I want to speak to Amendment 56, drawing on my experience as the Minister with responsibility for the south-west in the year running up to the last general election. I agree with much of what has been said in this debate so far, but I want to start by paying tribute to Sir Harry Studholme, the chair of SWRDA, and Jane Henderson, the chief executive, and all of their staff for the excellent work that I observed them doing during that year and the time preceding that when I was a Member of Parliament in the region. They were doing excellent work, largely on the supply side of the economy, developing sites such as Osprey Quay in my constituency, without which the Olympics would not be coming to the south-west, Gloucester Docks and the Science Park Network in the Bath and Bristol area. I endorse the questions that were asked by my noble friend Lord Beecham about assets and what happens to those assets owned by the regional development agency in reality.

SWRDA did excellent work in developing skills and 130,000 people have been provided with new work-related skills since 2002 in the south-west. Without SWRDA we would not have the combined university, the only university in Cornwall, which has been doing stunning work in developing the economy in that part of the region. Without it we would not have the marine skills centres across the south-west or the nuclear skills centre that is being developed in Somerset. SWRDA has been developing connectivity-the new generation broadband initiative in Cornwall, for example. It has been developing finance for business. The South West Angel and Investor Network comes to mind, as does the work that I was a part of in trying to get banks to focus on the needs of small businesses. Hooking banks up with a federation of small businesses in the region was very important as we were trying to respond to the recession.

So plenty of good work went on across the region, and although it is possible to argue that a region the size of Denmark will have some issues around its edges as to whether, for example, Bournemouth and Poole as a conurbation is best placed in the south-west or the south-east-and similarly with Swindon and Gloucestershire, given that Tewkesbury is closer to Scotland than it is to Land's End; these arguments will run-I would argue that we were just starting to get a sense of identity in the region as the RDAs were becoming successful.

I would argue that the sort of centralisation that we are getting, and which others have argued against, is a backward step. LEPs have already been announced across the south-west but there is none so far in Dorset, Bournemouth, Poole, Devon, Somerset Wiltshire or Gloucestershire. Huge swathes of my region will not have an LEP. Indeed, as the BBC reported, there is one down in Cornwall where we have the interesting spectacle of Sir John Banham being generously engaged for just over 20 days at half his daily rate-it is usually £4,000 but is now £2,000-to produce a strategy which has now been rejected. He has now left at a cost of more than £40,000 to the taxpayer. I cannot see that as good value for money from this new system.

We are seeing a centralisation caused by Whitehall dictating what the LEP boundaries should be. As far as I can tell, the LEP proposals from the south-west have been knocked back because they do not appeal to Whitehall's notion of what the boundaries should be. The regional growth fund has been referred to, as has the centralisation of the Rural Development Programme for England and the ERDF. I had a conversation with a leading multinational technology company based in Swindon which said, "Once the RDAs are gone we cannot really have a good relationship with the two regions that are most important to us, as we do with other regional governments around Europe. Frankly, we haven't the energy to engage with lots of individual little LEPs, so we will engage with Swindon council and central government. We can't afford to do any more than that". We will have less engagement with the economy and less investment coming from a very important investor around the world.

I would also argue that there is an ideology attached to this. Clearly the Government are against regional policy even though it works in many other successful economies around the world. But they are also against an industrial policy and industrial activism. We would not have the Eden project were it not for the risks that were taken in part by the South West Regional Development Agency. Everyone knows the impact on south-west tourism to have Eden developed in Cornwall. As I said, we would also not have the Olympics. We should consider what has been done around creative hubs across the south-west, which is one of the strengths of our region, or for green industries. The Minister needs to give us an answer on whether the Wave Hub, which is so important in the south-west, would have been developed without a regional development agency. Could LEPs develop that? Would it just be one of the things that would bid into the regional growth fund? I do not know.

The composite centre, which I was pleased to open, built on the aerospace expertise of the region held by Rolls-Royce, GKN, Westland and Airbus. Aerospace manufacturers and the University of Bristol bring their expertise and they are supported not only by BIS in Whitehall but, crucially, the RDA. World-beating composite technology is being built in Bristol. Would that have happened with a LEP? Would it get through a much more competitive regional growth fund strategy? More than 100,000 public sector jobs are projected to be lost in the south-west, many of them in areas where LEPs are not set up. Under this new set-up, how will those jobs be filled in an area that is peripheral compared with the south-east?

My final substantive point concerns value for money. I have already mentioned the scandal of the amount of money that went to Sir John Banham. I looked at the independent evaluations of RDAs, and it appears that only 10 per cent of the overall budget was spent on administration and that it had a clean bill of health from the National Audit Office. That 10 per cent figure is something that many parts of the public sector and indeed some parts of the private sector would be pleased to score. I think that £238 million was spent on administration. That is all the saving that is potentially there. As has already been said, even if my party had been re-elected, we would have had to cut the overall budget and the administration costs with it. It is not a massive saving given that for every pound spent, £4.50-the more conservative estimate-is generated in the economy. These are the questions that the Government need to answer.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Liberal Democrat 7:30 pm, 28th February 2011

I am sorry to interrupt the noble Lord, but he has twice mentioned Sir John Banham, and his last reference was in terms of a scandal. Will he make it clear to the Committee that if scandal there be, it is not to be laid at the door of Sir John Banham, who is a friend of mine and a considerable public servant, but should be laid at the door of those who put him on the task?

Photo of Lord Knight of Weymouth Lord Knight of Weymouth Shadow Spokesperson (Work and Pensions)

I do not know Sir John Banham but it seems extraordinary that more than £40,000 has been paid out from the Cornish LEP to commission him to do a job that was then rejected. Something in that process has gone wrong. I know that he has done other work and given service in public life. I have nothing against him personally, but something has gone badly wrong. We need to learn lessons from that. If we are to make savings out of this process, which one assumes is part of the motivation, we cannot afford for any of those individual LEPs to be making £40,000 errors. That money needs to be spent on creating jobs, particularly for young people-to reprise what my noble friend Lady Armstrong said.

In summary the Minister needs to say why we are going for an ideological centralisation and anti-industrial policy position. Where is the value for money out of this abolition of the regional development agency?

House resumed. Committee to begin again not before 8.38 pm.