1. INTRODUCTION

  1.1 The TEC National Council welcomes the opportunity to submit evidence to the Environment Sub-committee enquiry into Regional Development Agencies. TECs and CCTEs[3] support the Government's actions to improve the competitiveness of the English regions and have therefore welcomed the introduction of RDAs. They also recognise and support the need for a regional strategy to provide a coherent framework for local and subregional economic development activity.

  1.2 TEC/CCTEs have also endorsed the key principles underpinning the development of RDAs, including the broad and integrated approach to economic development, the emphasis on working in partnership and on private sector leadership.

  1.13 The TNC response on the individual questions raised is set out in detail below.

2. DEVELOPING AND DETERMINING REGIONAL STRATEGIES

  2.1 TECs and CCTEs support the need for regional strategies and believe that it will be important for RDAs in drawing them up to:

—  focus on enhancing each region's economic strengths and on overcoming barriers to improved competitiveness;

—  balance national policy priorities with local and regional needs;

—  achieve greater coherence in regional strategies and set out priorities for the region whilst taking account of local needs and local delivery arrangements;

—  reduce duplication, overlap or competition within a region where this adds little or no value.

  2.1 The principle of subsidiarity should apply so that, within the context of the broad strategy, flexibility to respond quickly and effectively to local needs is maintained. RDAs should seek to build on the work of existing partners and partnerships and capitalise on the knowledge and expertise of those organisations that are close to the point of delivery.

  2.2 Above all, regional economic frameworks should be comprehensive and aimed at creating both prosperity and equity; they should incorporate strategies for enhancing business competitiveness, skills and learning, infrastructure and land use planning whilst ensuring that those most need benefit from improvements in economic performance. No one organisation or agency can deliver this broad range of activities and therefore it is imperative that the regional strategy is developed and delivered in partnership.

3. BALANCING URBAN AND RURAL CONCERNS

  3.1 We welcome the recognition given in RDA draft guidance to the differences in urban and rural development. The success of both urban and rural development strategies depends on the same factors—successful businesses to generate wealth and jobs and a skilled and productive workforce able to access the opportunities. However, there are different factors that require consideration in each case. For example, the very high rates of self employment in rural areas and the reasons for it, the preponderance of micro businesses, the dispersed nature of deprivation.

  3.2 The rural premium, i.e., the additional costs of delivering skills development and business support programmes, must be recognised by RDAs. It is also important to recognise that some regeneration schemes may be biased in favour of urban areas and it may be very difficult for rural areas to access resources that are allocated by standard ward based deprivation indices. Rural deprivation tends to be more dispersed and occur in smaller pockets.

  3.3 The synergy between urban and rural strategies needs to be maximised in regional economic development. It is in the interests of both urban and rural environments that the countryside provides enough employment to meet demand from local residents and that commuting into towns and cities is minimised. It is also in the interests of both communities that businesses find the urban environment a sufficiently attractive place to operate and do not migrate to the countryside in large numbers. Both must have effective strategies for business retention and growth and to enable access to local employment opportunities for town and country residents alike.

4. DELIVERING ADDED VALUE TO THE REGIONAL ECONOMY AND MEASURING PERFORMANCE

  4.1 Regional disparities are not new and those areas that were underperforming 50 years ago are largely the same today. If RDAs are to reverse the decline which has affected a number of regions, RDAs will need to develop an in depth understanding of the functioning of their regional economies and develop strategies to foster successful businesses to generate wealth and jobs in tandem with strategies to provide individuals with appropriate skills.

  4.2 The regional competitiveness indicators provide a sound and relatively straightforward basis for measuring differences in regional performance. The most striking differences between regions revealed by the BCIs are in GDP per head and in unemployment rates. However, what the BCIs do not do is to provide a comprehensive view of the competitiveness of a region's businesses and their ability to provide high quality jobs in sufficient numbers (although both employment in high tech sectors and total jobs are measured).

  4.3 The absence of sufficient large firms and head office functions has been pointed to as one of the root causes of regional underperformance in the past. It is undoubtedly the case that large companies are a key driver of local and regional economies both in terms of their effect on investment levels, supply chains and their role in retaining higher level skills. When surveyed on barriers to improved competitiveness, TECs and CCTEs also point to:

—  the preponderance of small and very small companies in our economy;

—  too many firms in the sunset industries and not enough in sunrise sectors;

—  low levels of entrepreneurial activity;

—  poor management skills;

—  low levels of workforce skills.

  4.4 These underlying causes of regional underperformance require longer-term integrated strategies which seek to alter both the structure and performance of the business base as well as improving the quality of education and training. Land use planning and infrastructure development will be important supporting elements of regional strategies.

  4.5 It is also important that RDAs seek to promote regional prosperity and social inclusion and seek to close the gap between economically successful and deprived communities. This can only be achieved through linking strategies for regeneration to wider economic development activities. Many examples exist of deprived communities existing side by side with areas of economic growth but with those most in need unable to access the opportunities provided.

5. WORKING WITH PARTNERS

Local and sub regional partnerships

  5.1 The draft guidance for RDAs stresses the need for RDAs to work in partnership but draws no distinction between a wide range of potential "partners". As there will be many hundreds of organisations in each region it will be essential for RDAs to distinguish between core and supporting partners, as well as between strategic and delivery partners. It is equally important that RDAs correctly identify the strengths, remit, capability and capacity of each partner or group of partners at the outset.

  5.2 We note that RDAs are expected to evaluate the effectiveness of the business support partnerships in each area and are confident that they will find that business support partners: TECs, Chambers of Commerce, Enterprise Agencies and other partners with a key role to play such as local authorities, have made significant progress in reducing duplication and eliminating confusion under the Business Link banner. Organisational structures vary but in over 50 per cent of cases TECs and Business Links are now part of the same company and all but one of the 16 CCTEs have an integrated Business Link.

  5.3 There are many examples of local and subregional economic development partnerships that have been highlighted in recent reports.[4] We recommend that RDAs build on the work that has already been carried out by these partnerships and use them as a mechanism for consultation. We also recommend that RDAs take into account the lessons from evaluation of past economic development and regeneration initiatives such as SRB and City Challenge.

The role of TECs and CCTEs

  5.4 TEC/CCTEs believe that they have a key role to play as the remit of the RDAs at the regional level is very similar to their own remit at the local and subregional level. TECs and CCTEs also take "an integrated approach to economic issues, tackling business competitiveness and the need to increase productivity and also the underlying problems of unemployment, skills shortages, social exclusion . . . ".[5]Whilst TEC/CCTEs do not have a direct role in tackling physical decay, in other respects their strategic remit at the local level is almost entirely congruent with that of RDAs at the regional level.

  5.5 TEC/CCTEs have, in addition to contracting and delivery capability, much to offer RDAs in terms of economic intelligence and knowledge of the local business base and labour market, all of which will be key to developing effective regional strategies. Therefore, we believe TECs are uniquely positioned to help RDAs in both the development and delivery of regional strategies.

Relationships with GOs

  5.6 It is vital that the links between GOs and RDAs are strong and that roles in all areas of joint interest are clearly defined and complementary. TEC/CCTEs have a particular interest in this area since they will continue to contract with GOs but wish to have an active and effective working relationship with RDAs. TEC/CCTEs have recommended that RDAs are consulted on and sign off TEC plans but in order to do this, RDAs will need to understand the planning, contracting and funding regime under which TECs operate. This will require an interactive dialogue between RDAs and GOs in order for RDAs to understand what TEC/CCTEs are doing to address regional priorities.

6. ACCOUNTABILITY

  6.1 TECs have direct experience of the issues surrounding accountability and the difficulties which can arise. While RDAs as NDPBs are directly accountable for the proper use of public funds to the Secretary of State, this will not satisfy the need for local accountability. Indeed it may lead to the perception that RDAs primarily belong to central Government and not the regions they were set up to represent.

  6.2 In order to ensure the full support of the region and its local communities, RDAs should ensure that the local community is able to understand and influenced their aims, objectives and plans and activities.

  6.3 TEC National Council has developed a local accountability framework which is now being implemented by all TECs and CCTEs. Under this framework, TEC apply not only the seven "Nolan" principles but also five further principles as follows:

Clarity and openness in the selection of well qualified and trained board members;

The board is seen to act effectively in the best interests of the local community;

TECs are open about their performance and their employment and financial policies;

Dealings with customers are on a basis of openness and high quality service, with a robust complaints procedure;

In dealing with partners and suppliers they seek to be trustworthy, transparent, and follow fair commercial practice.

  6.4 They apply these principles in a number of ways including regular public meetings, producing accountability statements, drawing up public corporate plans which are agreed with partners, publishing annual reports and financial statements, communicating performance, and providing information on request on contractual relationships and commercial interests. TEC/CCTEs seek to improve their performance against the framework as part of an ongoing process and progress is monitored regularly by DfEE.

  6.5 We recommend that RDAs examine the TNC local accountability framework as a possible model for managing their own local accountability. If and when elected regional assemblies are put in place and the relationship with RDAs clarified, this will provide a mechanism for democratic local accountability. However, we would still recommend that the principles of clarity, openness and fairness be applied to RDA operations.

7. SKILL NEEDS AND COMPETENCE OF RDA STAFF

  7.1 The primary issue that TEC/CCTEs have raised in relation to staffing of RDAs is the need for staff with an understanding of the "people and business" elements of economic development strategies. There is a view that the basis of RDA budgets towards the physical development and the absorption of staff from English Partnerships and regional development corporations will mean that strategy and priorities will also tend to be biased in this direction.

  7.2 We are aware that significant number of staff with DTI and DfEE backgrounds are being seconded from GOs. However, TEC/CCTEs would like to see as many posts as possible opened up to external recruitment and that RDAs put in place organisational structures which primarily reflect their broad remit and not their budgets.

February 1999

4   Coventry and Warks CCTE: "The private sector in local economic development" TEC National Council: "Local Development Partnerships" DETR: "Building partnerships in the English regions." Back

5   DETR Draft Guidance on RDA strategies. Back