Review of Economic Development & Regeneration

To meet the challenge of globalisation and technological development, the government is reviewing and reforming the way it does work to respond quickly and effectively to economic and social change. The government is building upon earlier reforms to devolve further responsibility to the regions and local authorities to deliver governments objectives to encourage economic growth and tackle deprivation.

The review has identified the following structural problems:

To many strategies, bodies and funding streams

Decisions taken at sub-optimal spatial levels

Weak incentives to support growth

To much centralisation, not enough flexibility and responsiveness

Lack of accountability regionally and locally for economic outcomes

Need for evaluation evidence of Regional Development Agency impacts

Weak engagement with the private sector, including poor delivery of business support

The key proposals announced within the review are somewhat of a paradigm change to local policies for economic development over the last twenty five years; the key proposal to create a statutory duty for Local Authorities to deliver economic development is a change of direction for government, giving powers back to the local level. Other proposals include:

A reform of the Local Authority Business Growth Initiative, and consultation on a power to levy a supplementary business rate

A merger of regional strategies to produce a single integrated regional strategy setting out the economic, social and environmental objectives for each region

Regional Development Agency funds maybe delegated to Local Authorities or Sub National Partnerships

The possible creation of creating sub national authorities in some areas to deal with issues such as planning and housing

Further commitments to work in partnerships to develop Multi Area Agreements (MAA)

The creation of locally led employment and skill boards

The reviews conclusions will help to ensure that:-

Local authorities and Regional Development Agencies are empowered to spread economic wellbeing and opportunity to everyone in their region

Sub national structures are simplified, with strengthened accountability

Objectives for promoting growth and tackling deprivation are clear focused and relevant

Policy decisions that affect economic well being are taken at the right levels

The review does provide the opportunity of new powers to the Local Authorities, Sub National Partnerships and Regional Development Agencies, however with shared service working, pathfinders for shared service delivery, different approaches to sub national partnerships nationally, one might argue that this review will only complicate local deliver further, as it is not strong enough to enforce change, and may therefore only provide more of an optional approach by service providers, thereby not achieving any further improvement on delivery.

The creation of a statutory duty for economic development on local authorities, added with a capping regime, and the lowest government settlement in recent years, and the requirement to adhere to comprehensive area assessments, may mean that the duty placed by local authorities will be that of a low priority. This will mean that economic development may become a policy framework approach by local authorities, as capacity will not be sufficient in any other area than that of a city. This will therefore affect both the deliverability of the LABGI and the delegated powers and finance of the local RDA.

December 2007

Neil Cuttell