INTRODUCTION

  Leeds Training and Enterprise Council welcomes the formation of the Regional Development Agencies from 1 April 1999. Strategies to achieve economic growth are fundamental for the future of the United Kingdom. Success requires policy frameworks and interventions at national, regional and local levels. We believe all the economic evidence indicates the regional dimension as opposed to the local dimension is one of the critical factors in determining how business makes investment decisions, and how business then performs. The Regional Development Agency will provide the strategic overview and focus on regional economic performance. We believe that clear definitions of agreed roles and responsibilities, and the applications of the principle of subsidiarity by all Central Government departments, and the Regional Development Agencies, to the "lowest" appropriate level is vital in ensuring successful delivery and that all stakeholders are kept on board. TECs welcome the inclusion of the skills' agenda as part of the Regional Development Agencies' strategic overview. The skills and abilities of the workforce is often the most important factor when making business investment decisions, both Foreign Direct Investment and through indigenous growth. National, regional and local actions are essential, therefore, to achieve the improvements expressed in the recently revised National Targets for Education and Training.

  Yorkshire and Humberside is a diverse region, with differential economic performances.[6] There is a clear imperative to build on the economic strengths, including Leeds' success as the capital of the region. The Leeds Economy Handbook, 1998,[7] identified the following factors of importance for Leeds to the regional economy. Leeds:

—  has the largest population and labour force;

—  is the regions largest employment centre with the greatest concentration of professional services;

—  is the location for major education and health facilities;

—  has cultural, entertainment and porting facilities of national and international significance;

—  is the regions largest retail centre;

—  is the location of the region's integrated government office;

—  is the location of major transport facilities and interchanges;

—  provides employment and business opportunities for communities and companies in the wider region.

  This role is overlaid by the importance of West Yorkshire which, while it comprises less than 25 per cent of the region's area, has 40 per cent of its population and employment and generates 40 per cent of the regions GDP. Addressing the strategic issues which may be barriers to further economic development in Leeds and West Yorkshire must be a priority for the RDA.

DEVELOPING STRATEGIES

  As local private sector-led economic development bodies, TECs strongly believe in the need for a "bottom-up" approach to the development of strategies. In Yorkshire and Humberside, the preparatory work undertaken by the Regional Assembly[8] is a model of good practice in identifying the key issues, engaging partners in consideration of priorities and developing a framework. This participative process is essential if all the regional actors are to make full contributions.

  Within such an agreed framework the Regional Development Agency Board must have total clarity around its short, medium and long-term priorities, including the issues which are important, but are not for it to tackle. There will be a strong temptation on existing agencies to refer to the RDA where controversial or difficult decisions are their sole responsibility.

  Similarly, the management of expectations is important and the Regional Development Agency needs to take the long-term view. Sustainable economic development will be a long-term process. Therefore strategic plans should look five to 10 years ahead, not at the next financial year.

URBAN/RURAL BALANCE

  As a predominantly urban TEC, Leeds recognises the case of the rural areas, which in our region include the coalfields areas and significant agricultural interests. The issues of the coalfields, agriculture, rural transport and fishing will therefore need appropriate weight in our region's strategy. In our view the targeting strategy, and benchmarking methodology, will be critical. For example, Leeds by all economic indicators is a booming City with strong economic growth, low unemployment and high incomes. Yet, we have small pockets of deep-seated poverty, primarily in the Inner City, but also in the former coalfields. In the application of regeneration resources, and any future role in respect of the European structural funds as applied under Agenda 2000; the Regional Development Agencies' benchmarking process must be sufficiently sophisticated to capture the recognise this micro-picture, as well as more global issues at, for example, local authority district level. Recent work on the index of local deprivation[9] at ward level is helpful, but close/targeting at Enumeration Districts should be an objective.

  In the context of Yorkshire and Humberside, the divergent economic base of each of the sub-regions may give rise to potential tension within the Regional Development Agency, and its impact on public policy. In making its investment the Agency must consider the needs of the whole region, and be led by the investment decisions of private sector investors. A concern for West Yorkshire is that its needs and economic opportunities may receive lower priority because of its position relative to the region, particular so far as Regional Selective Assurance and European Union support is concerned. In addition, however, it is important that all parts of the Region recognise the secondary and tertiary impact through the Region of significant Foreign Direct Investment.

  It is important for us, therefore, that sub-regional partnership arrangements are encouraged by the Regional Development Agency. In West Yorkshire, the four TECs already collaborate on a range of issues, including Manufacturing and Information Technology support. We also have collective discussions with the Leaders and Chief Executives of the four Local Authorities. All Regional Development Agencies should encourage similar developments.

REGIONAL PLANNING

  This is not an issue for TECs.

ADDED VALUE

  The board of the Regional Development Agency should be required to demonstrate the real difference it is making to the economy of the region. This is easy to say and difficult to do. The debate round "narrow outcomes" and "real impact" is one which appeals, but careful consideration is needed. In particular, the RDAs should be encouraged to look more at outcome and impact, rather than the "traditional" approach of most Government Departments on "inputs" and "outputs".

  For example, the Regional Development Agency will command significant resources, and the Government will expect to assess the value for money, and effectiveness of its work. This has over recent years been around nationally defined "outcomes", for example through the outcomes in the Single Regeneration Budget. We expect national Government and, in particular, Treasury pressures for this approach to continue. TEC's are generally uncomfortable with the "paying for inputs" "recording of outputs" approach and think that the harder edged "payment for outputs" approach adopted by TECs' has played a part in driving up levels of performance. This process of course could be adopted by National Government. The opportunity at a Regional level will be for the Regional Development Agency strategy to define the results, which it believes, are needed for the interests of the region, effectively selecting regional results against which resources are allocated. This approach together with proper independent qualitative and quantitative evaluation could prove very powerful. Impact should additionally be measured by the "hard" economic indicators of regional (and sub-regional) GDP, and the extent to which the Regional Development Agency persuades public and private bodies to apply resources in line with its published strategy. Particular attention ought to be paid to the application of TEC, FE and Housing Corporation resources.

RELATIONSHIPS WITH PARTNERS

  In the initial months, this will be the key relationship for the Regional Development Agency to establish. With Government Office for the Regions still making key decisions on TEC and European funding, and other government resources there is a potential for conflict and difficulty, in particular with those who are from non-DETR departments. Clear lines of communication, and a willingness to share agendas will be vital. In particular the purpose of resources allocated by Government Office for the Regions needs to be defined. The customary view has been that Government Office for the Regions act on national policy, national spending plans, to achieve national outcomes and objectives. Will the Government Office for the Regions' be expected to "buy in" to the Regional Development Agency regional strategy? If so, the focus will move to Regional policy and outcomes, possibly merged with a regional concept of "Best Value". TECs would welcome this approach, which should be a step to achieving a culture of trust, rather then a culture of control between the National, Regional and local levels.

RDAs and TECs regionally

  In each of the English Regions TECs have established a collective regional voice to co-ordinate activity. The culture of these bodies is that they act as a sharing of local sovereignty—rather than as a controlling "regional office". Nevertheless, they will play a significant role in co-ordinating and representing TEC opinion and as a catalyst for skills and enterprise related activity, which impacts regionally and sub-regionally. Here in Yorkshire and Humberside we already have examples of good practice. For example the TECs and partners have recently developed a draft "Blue print for Business Support". This piece of work draws on TECs strategic responsibility for Business Links, and a culture of partnership, consultation and collaboration. Initiatives of this nature show the practical benefit from co-ordination based on an agreed regional framework. It remains a draft as it is subject to additional consultation with the Regional Chamber. The TECs have also seconded a member of staff to work with the RDA project team on initial skills strategy work. Other areas of co-ordination include work-force development; Individual Learning Accounts; and European projects, such as ADAPT. In many cases the Regional TEC body has provided the co-ordination which has involved other partners. In future this activity will need to be co-ordinated with the Regional Development Agency.

RDAs and Individual TECs

  The major worry for individual TEC's is that the Regional Development Agencies will find it difficult to understand the Labour Market differences between different TEC (and individual Local Authority) areas. This is linked to concerns about the composition and capabilities of RDA staff, which we discuss below.

  Whilst the final outcome of the TEC review has yet to be announced by ministers, planning guidance for TEC's/CCTE's indicates the DfEE expectation that;

"The Strategic Guidance will be cross Government, reflecting TECs contribution to DETR's objectives of economic development and social cohesion though the work of Regional Development Agencies (RDAs) and the regeneration of local communities as well as the DfEE and DTI objectives set out below."

  Our hope is that this process will go beyond the RDA's role in approving the new Strategic Business Plan of individual TECs. The RDA's strategy will become reality if it is able to persuade central government to allocate its funds to outcomes, targets and measures which the RDA has developed and agreed are of specific regional significance; and at regional level virement of funds could be permitted.

  Examples of policy areas where this might be useful, include Individual Learning Accounts, and training policy in relation to freelance and self-employed people.

  On Individual Learning Accounts the RDA might persuade government that a prescriptive national model was inappropriate, and a regional (or sub-regional) approach would meet objectives more effectively. At Leeds TEC we have piloted an individual awards approach, which has targeted specific skill shortages with a contribution from both the TEC, and the delivering institution, increasing the value to the individual beyond the proposed £150.00 ILA "grant". This is one of a number of innovative approaches where more can be achieved with the available resources.

  The contribution of self-employed and freelance staff is significant in flexible economies, and in some sectors it is the dominant form of employment. For example, research by the Yorkshire Media Training Consortium[10] has identified an extensive network of freelancers in the media sector, where access to training is low. Regional flexibility could address this area, should the RDA choose to prioritise it.

RDAs and Local Authorities

  Council powers, and responsibilities are key to effective economic development. Their response to planning and land use issues, transportation, education and housing make significant impact on their districts, or counties. The effectiveness of the Regional Chamber will be the key to ensuring Local Authority co-ordination, and that elected members and officers feel they are sufficiently involved in shaping a regional agenda. There is also a danger that excess effort is expended in the push to the next stage which many Local Authority representatives seek elected regional government. Whilst it is not for TECs to comment on the merit of the next stage, particularly as government has expressed its intention to proceed on the basis of regional referenda, we do think it would be right to say that RDAs should be given some time, say three years, to prove their effectiveness before the debate on regional government proceeds.

RDAs and Cities

  At Leeds TEC we agree with our Local Authority partners that there must be a recognition of the distinct role of major cities within regional economies.[11] The development of strong independent public/private city partnerships has made a significant contribution to their city economies. In Leeds, the Leeds Initiative which has developed after intensive public consultation the "Vision for Leeds" is a text book example of positive practice. The work of the Regional Development Agency will provide a strategic framework for the regional economic issues, but room must be left for adaptation to the circumstances of the cities and the city level partnership delivery. We comment above on the specific contribution of Leeds to the strength of the region, it is worth emphasising the benefit derived by other parts of the region from strong city economies; for example Leeds position as a national focus for call centres has led to call centres locating elsewhere in the region.

ACCOUNTABILITY

  The perceived democratic deficit is likely to prove the most difficult issue for the Regional Development Agencies Boards to overcome. Ministers have been clear in their explanation of the merits of this structure, and the checks and balances offered by the Regional Chambers. In early years, Government endorsement of legitimacy will prove very important. However, the Regional Development Agencies will need to work hard to establish their representative credentials. Clear consultation strategies with business, and their representatives in Chambers, TECs and other forums will be critical. Special effort will be needed to explain their decisions.

SKILLS AND COMPOSITION OF RDA STAFF

  We indicate above we are concerned that the Regional Development Agency staff could mirror too closely the superseded organisations. We particularly note that the over concentration on Foreign Direct Investment would be an error. The arrival of the Euro makes the UK less attractive in the short-term, and the whole case made by Government is that a more balanced and rounded approach to regional economic development. We welcome the Lifelong Learning Minister's[12] advice to Regional Development Agencies that on Labour Market Intelligence issues, the Regional Development Agencies should not "second guess the TECs'" but should rely on their advice; there remains a concern that the staff will not have sufficient expertise in skills, labour markets and education, and this should be addressed at an early stage in organisational development.

CONCLUSION

—  The creation of Regional Development Agencies is a real opportunity to create an integrated economic development policy for the regions which will achieve economic growth.

—  The role of the cities, and subregional economies must not be ignored.

—  Real flexibility on the application of government resources in the region will maximise results.

—  TECs/CCTEs can play a significant role in delivering the regional strategy at the local level, particularly around the skills and business support agenda.

Alistair Graham

Chief Executive

Leeds Training and Enterprise Council

February 1999

7   Leeds Economy Handbook, 1998, Leeds Development Agency, and Leeds TEC. Back

8   Yorkshire and Humberside-Advancing Together in the New Millennium: A Strategic Framework-Regional Assembly March 1998. Back

9   Index of Local Deprivation, DETR 1998. Back

10   Training needs in Yorkshire's television, radio, film, video and multi media industries-survey of businesses and survey of freelances December 1998-Yorkshire Media Training Consortium. Back

11   Leeds City Council Development Services Group Committee, November 1998. Back

12   Letter from George Mudie MP, Minister for Lifelong Learning to RDA Chairman, November 1998. Back