UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 977-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

OFFICE OF THE DEPUTY PRIME MINISTER:

HOUSING, PLANNING, LOCAL GOVERNMENT AND THE REGIONS COMMITTEE

IS THERE A FUTURE FOR REGIONAL GOVERNMENT?

Monday 13 March 2006

MR NEIL KINGHAM, MR MARK KLIENMAN, MR ANDREW CAMPBELL, MR BOB LINNARD and MR STEPHEN SPEED

Evidence heard in Public Questions 1 - 124

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Office of the Deputy Prime Minister:

Housing, Planning, Local Government and the Regions Committee

on Monday 13 March 2006

Members present

Dr Phyllis Starkey, in the Chair

Sir Paul Beresford

Mr Clive Betts

John Cummings

Mr Greg Hands

Martin Horwood

Mr Bill Olner

Dr John Pugh

Alison Seabeck

________________

Memorandum submitted by ODPM

Examination of Witnesses

Witnesses: Mr Neil Kingham, Director General, Local Government and Fire Group, Mr Mark Klienman, Director, Urban Policy Unit, and Mr Andrew Campbell, Director General, Regional Co-ordination Unit, Office of the Deputy Prime Minister, Mr Bob Linnard, Director of Local and Regional Transport, Department for Transport, and Mr Stephen Speed, Director, Regional, Department of Trade & Industry, gave evidence.

Q1 Chair: Can I welcome you to this first evidence session of the Committee's inquiry into the future for regional government. Obviously, the referendum result in the North East in November 2004 left a rather large hole in the Government's policy towards the English regions. Could you outline how that vacuum has been filled so far and what changes are being planned for the future?

Mr Kingham: Would it be helpful to the Committee if we started by introducing ourselves?

Q2 Chair: It would, and obviously, I will leave it entirely to you which one of you answers which question.

Mr Kingham: I will start, if I may. Let me introduce my two colleagues at the same time. I am Neil Kingham. I am the Director General for Local and Regional Government in the Office of the Deputy Prime Minister. On my left is Andrew Campbell.

Mr Campbell: I am Director of the Regional Co-ordination Unit, which is the bit of government that looks after Government Offices, and I also now have responsibility for regional assemblies too.

Mr Klienman: I am Director of Urban Policy at ODPM.

Mr Kingham: As you say, Chair, in November 2004 the referendum in the North East region was defeated. The DPM then said that the Government would not be going ahead with the referenda in the other two northern regions. At the same time, he made a commitment that the Government would maintain a strong regional presence in the North East and that the Government would continue to strengthen its regional dimension and the regional institutions that we use. Since then, the main points I would make are that the Northern Way has been taken forward, which is an amalgam of the three northern regions getting together to work more closely to improve opportunities for business and the community in the North. In June 2005 the Northern Way group published its business plan, which set out how the eight city regions in the North would contribute to closing the productivity gap between them and the South East. It also announced investment of £100 million in projects which will demonstrate how the North can use its assets to become more prosperous, competitive and dynamic. We have also strengthened our support for the regional assemblies through increased funding to reflect their new statutory planning responsibilities, and we will be transferring to them, to take the forward-looking part of your question, responsibility for the regional housing boards, which will give them responsibility to produce a regional housing strategy. We have been consulting on how to do that and the intention is to announce that soon. We have also strengthened the Government Offices, which now represent ten Whitehall departments. The most recent strengthening has involved the appointment of new Directors of Children and Learning on behalf of the DfES. We have recently carried out a regional funding allocation exercise, asking the regions to provide advice on how spending in the regions should be taken forward, both in the next two years and through the Comprehensive Spending Review, looking further forward.

Q3 Chair: Presumably, all of those announcements would have been made whatever the result of the North East referendum. Has there been any change in thinking as a result of that?

Mr Kingham: This is a "what if" type of question, is it not? If the referendum had gone a different way, we would have seen referenda in the other regions as well, and actually, that would have started a process going forward. It is very difficult to answer "What if the results had been different?" as a question. The point of the examples I was giving was to demonstrate the Government's continuing commitment to regional institutions, as it were, despite the referendum result.

Q4 Sir Paul Beresford: Of course, the other question is, to turn it back the other way, the result was a resounding, and probably the most dramatically resounding defeat for regionalism. There was a feeling that it should in fact go the other way. Why is the Government not going in the opposite direction? Why is it not recognising that there is a need for elected representation, perhaps, but in a different way from the non-elected organisation with people on there who have not been elected in many instances even to the local authority?

Mr Kingham: If you are talking about the existing regional assemblies, 70 per cent of members of the existing regional assemblies are local authority members, though obviously they are not directly elected; I recognise that. The Deputy Prime Minister obviously accepted that the referendum result was a defeat, as you say, and he was quite clear about that and that we would not go forward with the elected regional assembly process in the North, though he did also make the point that in 1979 referenda on Scotland and Wales were lost, and 20 years later they returned.

Q5 Sir Paul Beresford: I do not think he is going to be here in 20 years, fortunately. He made that sort of point to us when he saw us the other day. The other question was that, looking forward, it looks as though he is intending to demolish local government in the two-tier region down to one, and move powers up to the non-elected assembly. Is this correct? What are you anticipating will happen?

Mr Kingham: I do not recognise that description at all. We do have a debate going on about the possibility of reorganisation of the two-tier areas but, as I am sure you know, the Government has not made a decision on whether to go ahead with that. That is about whether or not it would be more efficient or effective, better for local democracy, if there were a single tier in the present two-tier areas, but I do not think there has been any suggestion that that would be accompanied by a return to the proposition that we should have elected regional assemblies in the short term.

Q6 Sir Paul Beresford: What has already happened is that powers have already gone from the counties to the non-elected authorities. If you remove the counties altogether, there is the prospect, in the minds of those of us who are somewhat concerned, that we will have more powers going to the non-elected assemblies.

Mr Kingham: The powers you are talking about as having changed are in relation to planning, where the role of the regional bodies has been clarified to produce regional spatial strategies, but they have not taken over the powers of the counties. The planning-making at local authority level is now at district level. What the Government did there was to take out a tier on the grounds that that would be a more efficient way of organising things.

Q7 Sir Paul Beresford: So recommendations to the Deputy Prime Minister on housing numbers, for example, in the South East, just to choose one area, done by the assembly actually is not a power?

Mr Kingham: They produce regional spatial strategies.

Q8 Sir Paul Beresford: That has been taken away from the counties, who used to do it as a group of elected members.

Mr Kingham: The counties used to produce structure plans, but the role of the regions is not to produce structure plans; it is to produce spatial strategies for the regions, and indeed, it is my understanding that the counties are consulted as part of that process as well.

Q9 Mr Olner: A quick question on what Mr Kingham said when he spoke about strengthening the regions. Did you mean strengthening the Government Office of the regions or actually strengthening the regions themselves in making their own decisions? There is a world of difference.

Mr Kingham: I understand the point. We have, I think, strengthened the role of the regional assemblies in the way that I described, which is strengthening another regional institution. We have also strengthened the Government Offices. There is another point about improving the economic performance of the regions, which I suspect you will come on to in the context of our PSA target, but as far as institutions are concerned, what I was trying to say was that we have strengthened both the existing regional assemblies and the Government Offices.

Q10 Alison Seabeck: If we can move on to the effectiveness of the three main agencies, do you think that the regional assemblies, the regional development agencies and the Government Offices are working well? If so, on what would you base that judgment?

Mr Kingham: I think they are all doing a good job in their own area. We do assess the performance of the regional assemblies as regional planning bodies, and they come out well through that process. Obviously, the reason why we are giving them the housing responsibility is because we think it makes sense to put the two together, which was one of the recommendations of Kate Barker's inquiry two years ago, so we have taken that forward. As far as the Government Offices are concerned, we keep them under review all the time, their performance is kept under review all the time, the regional directors of the Government Offices report to me, and I am accountable for their performance. We have recently reviewed the Government Offices and will be publishing the results of that review, I hope, later this month, which will have proposals in it for taking forward the Government Offices. As far as the RDAs are concerned, you might want to return to this when my colleague from the DTI joins us, but they have had a number of successes, including 270,000 jobs created or protected, 17,500 new businesses started, and another set of opportunities. We do think that each of the bodies has made an important contribution, but obviously we want to keep them under review and not be complacent about their performance.

Q11 Alison Seabeck: On the review that has been carried out by your Unit and the Treasury - you helpfully answered one of my questions, which was when that would be made public - will each of the individual organisations be looked at not only in the round, as to how they deliver collectively for a region, but their own performance and their interaction with the other agencies as well as with government? There are concerns that there are weaknesses, particularly in policy development within Government Offices, for example, and from people on the ground in the South West and other regions there is a feeling that perhaps they are not arguing the South West case in terms of policy strongly enough - just taking the South West as an example, because it is one I am familiar with.

Mr Kingham: I understand the question. I will ask Andrew to join in the answer, if I may. The GO review does not compare the Government Offices. It is not that sort of review.

Q12 Alison Seabeck: Sorry. I am talking about the Regional Co-ordination Unit, which we have been led to understand will be looking at not only the Government Offices but some of the other organisations in the regions. Is that correct or incorrect? I may have it wrong.

Mr Campbell: That is incorrect. Our responsibility is as the corporate centre of the Government Office network, so some of what you say is our responsibility. The assessment of how well the GOs are able to influence policy development in Whitehall is very much in my bailiwick, but I do not get involved with seeking to assess RDA performance, for example. One of the features of the review and the emerging conclusions which were published a year or so ago, but will be there, I am sure in the final review, is seeking to further strengthen the links between GOs and Whitehall, so that as policy is developed nationally, there is input from the Government Offices about how policies can best be implemented. So that angle will be in the review. I am aware of the general comment sometimes about the GO role in lobbying of regional issues. There is a lot of traffic, but that tends to be behind the scenes, government to government, rather than more visible lobbying from a particular region on a particular issue.

Alison Seabeck: Obviously, if you are moving additional civil servants down into the regions, what we do not want to see in the regions is that we have an unaccountable body that is effectively a mini-national government in a region, that is telling us how to do things. We want to feel that there is two-way traffic. The review will certainly be interesting.

Q13 Chair: How will you assess how a regional office is affecting national policy?

Mr Campbell: From feedback from departments. What we have been keen to do over the last year is within each region, a regional director has a policy lead on a particular issue. In East Midlands, for example, the regional director there has lead relationships with the Home Office; the North East with the Department of Trade & Industry. So we rely on feedback from those Whitehall departments, and indeed, talking to the regional directors themselves, to get a sense of how well or otherwise policy is being influenced to take account of regional concerns. The other thing we do is we have instituted a system of peer reviews over the last couple of years, that is, talking to departments and regional and local stakeholders about what they perceive to be the strengths and weaknesses of GOs, which, again, helps pick up how well-regarded they are on policy issues too.

Q14 Alison Seabeck: I can understand why you might want to have specialists for the different departments around the country, but how much inter-linking is there, so from the South East, the East Midlands, up to the North East for Trade and Industry? There is a real risk you will get a slightly skewed view of things unless there are really good communication links.

Mr Kingham: I absolutely agree; it is really important to have good communication links. I meet the Government Office regional directors every month, and we consider a range of issues, but that includes interactions between them and Whitehall departments. Andrew chairs a group which involves departments as well. I quite take the point. The point of the pairing exercise is to give a particular emphasis to each regional director, but it is, as you rightly say, very important that all of them are seen to be influential in their key departments. That is one thing that we are keen to not only maintain standards on but develop them.

Q15 Alison Seabeck: Which regional director is responsible for transport link to the DfT?

Mr Kingham: It was until very recently Paul Martin in the South East but given some recent regional director changes, it is Brian Hackland in GO-East. In transport, for example, when Paul did it, he was supported by someone within his office, but in order to avoid a solely South East perspective on transport, there is another what we call twin, who is based in Yorkshire & Humber, ie deliberately trying to get more than one regional perspective, which is fed through the lead RD.

Alison Seabeck: It all seems terribly complex.

Q16 Dr Pugh: the Deputy Prime Minister, in a splendid statement to this Committee, said, "What I do not like, and inevitably it is happening more and more, is regional decisions being taken which are less and less accountable." He then went on to say, "I belong to the school that believes there should be democratic accountability." Obviously, he would prefer regional government in one form or another. What plans though has the Department to make such regional government as we have at the moment more accountable to the stakeholders and communities that they allegedly serve?

Mr Kingham: As you say, the Deputy Prime Minister was seeking to establish elected regional assemblies. That option is no longer available to us, at least for the moment. The regional bodies, the RDAs and the Government Offices in particular, are accountable through Ministers to Parliament, and that is their main accountability, but the RDAs in particular are also held to account in practice by the regional assemblies, and do meet with them regularly and are scrutinised by them. That is the main form of accountability at regional level as far as the RDAs are concerned.

Q17 Dr Pugh: In terms of that scrutiny, the development agencies produce a lot of documents, and I have been scouring their websites today looking at some of those documents, huge things, called "strategies" and "corporate documents" and "mission statements" and so on. One thing that is missing from most of them is something which I think they call their strategic investment plan, which tells you what particular projects their cash actually goes on - not their cash; the public's cash. These are somewhat elusive documents, not easily obtained. Is that a satisfactory situation, where we cannot tell very easily precisely in which places the development agencies spend their money?

Mr Kingham: I am afraid that we do not at the moment have the people who can answer that question. A colleague from the DTI will be joining us - in fact, he is already in the room - in the second half of this session, and I think I had better leave that question for him to answer, because it is the DTI which sponsors the RDAs, if you will forgive me.

Q18 Dr Pugh: But you can understand the issue, can you not? If, for example, you are Bentley and you are looking for money from the North West Development Agency and they happen to have spent it on museums, you are interested to know why, you are interested to have a debate about whether the money should be spent in one place rather than another, but you have to be able to tell, do you not?

Mr Kingham: I understand the point you are making but you are going to draw me into something which I would be better to leave to my colleague.

Q19 Dr Pugh: Can we briefly touch on what you did mention, which is the degree of scrutiny exercised by the assemblies over the regional development agencies. Are you aware if they do have a painstaking analysis of money spent or do they just simply receive documents, look at them broadly and nod acceptance?

Mr Kingham: Again, I think I should leave that to my colleague. I am not trying to be unhelpful. It is just that he is better able to answer questions about the RDAs than I am.

Q20 Dr Pugh: So you cannot talk about the scrutiny? You are just not informed about the degree of scrutiny exercised by the assemblies over the development agencies?

Mr Kingham: I know that it occurs, and I know that it has developed since the RDAs were set up, and that the scrutiny has improved and that both sides, both the regional assemblies and the RDAs, are becoming more used to dealing with each other, and it has improved in that sense. But I do not think I should try and answer a question on the detail.

Q21 Dr Pugh: Are you aware - you may not be - or have you ever heard of any substantial critique by an assembly of the pattern of spending exercised by its development agency?

Mr Kingham: I cannot answer that, I am afraid.

Q22 Dr Pugh: If the pattern of decentralised decision-making, spending public money, through agencies scrutinised by assemblies is going to continue, are you aware of any further decentralisation that will take place as part of it, further powers being given in that direction?

Mr Kingham: Do you mean to the regional development agencies?

Q23 Dr Pugh: To the development agencies and to the assemblies.

Mr Kingham: I do not think we have any plans to devolve further decision-making to either organisation at the moment, apart from the regional housing board responsibilities that I referred to earlier on in relation to the regional assemblies.

Q24 Dr Pugh: Before you did, or if you did, would you like to have better scrutiny arrangements, better accountability, as part of that package of decentralisation?

Mr Kingham: We would certainly need to look at the accountability arrangements. I agree with you. If the Government as a whole was going to take a view about further responsibilities for either the RDAs or the regional assemblies, then certainly we would want to look at the accountability arrangements at the same time.

Mr Campbell: I do not know whether I can just help a little bit on the scrutiny role. I think there are two RDAs which are going through something called an independent performance assessment at the moment by the NAO. That complements the regional assembly scrutiny role, which is less...

Q25 Dr Pugh: Less rigorous?

Mr Campbell: No, to get at the value for money and spending issues, and the Audit Commission actually did a pilot of the London Development Agency a year or so ago. So the NAO are doing two independent performance assessments at the moment of two RDAs.

Q26 Chair: Is that two RDAs other than the London one?

Mr Campbell: Yes. One is the North West and the other is East of England. The assemblies' scrutiny role will often also pick up a general policy issue and look at that, just as much as the way in which money has been spent. So it might look at transport, for example, in a particular region.

Q27 Sir Paul Beresford: Mr Kingham, would you understand if somebody in a local authority found what you have just been saying as appallingly depressing? Their comment at local government is that they are now local but they are no longer government, because the Government looks at every move they make. When there is a decentralisation, it is decentralisation so long as you go back to the Government for the nod. What you have been describing now is a creeping, almost sticky gel of government coming right the way down through to the bridge of local authorities - by that I mean the assemblies. They cannot move without you creeping all over them. They cannot make decisions independently. They are not democratic, unless they are right down at that lower level. Essentially, what you are doing is just extending the Deputy Prime Minister's and the Prime Minister's glue over this country to the point of a dictatorship.

Mr Kingham: I do not think you would expect me to accept that. The Government has devolved in a number of areas as far as local government is concerned. One particularly important example was the removal of the capital control system, which allows local authorities to borrow, subject only to a prudential limit. It is a very important freedom, if I may say so.

Q28 Sir Paul Beresford: You and I have been in this sort of battle before, years ago, when there was a slightly different situation. You know and I know that the control of capital through revenue ensures that the Government has a hold.

Mr Kingham: The Government does...

Q29 Sir Paul Beresford: Control the revenue.

Mr Kingham: ...allow of the possibility that it may cap authorities' spending. That is certainly true. But I do think most local authorities would tell you that the freedom to borrow is a significant one, and not a trivial one at all. As you know, I am sure, we are preparing for the possibility of a Local Government White Paper later this year, which will look at further devolutionary and decentralisation opportunities.

Sir Paul Beresford: Demolishing local government.

Q30 Chair: Please do not interrupt.

Mr Kingham: Can I say, as far as the regional tier is concerned, I think it is true that successive governments have regarded it as desirable that there should be institutions operating at a regional level. It was in 1994 that the existing Government Offices for the Regions were established and they took over from regional offices of several departments that had been there for a long time. There are a number of reasons why governments have taken the view that institutions should operate at regional level. There is the economic argument about seeking to reduce differentials between regions; there is a strategic argument that we have referred to already in relation to the regional spatial strategies; and there is a pragmatic case as well. There are some things which it is convenient and helpful to organise at regional level, because at regional level you can deal with resilience threats, and Government Offices have played a significant part in helping to cope with things like foot and mouth disease. I think I would contend both that the Government is maintaining its commitment to devolve to local government and that there is a strong case for some things to be done at a regional level.

Chair: I am anxious that we move on down the agenda, because we have a lot of questions to get through.

Q31 Martin Horwood: It is a question of who it is convenient and practical for, because it does not always seem to be practical and convenient for the local authorities or for the communities these organisations are supposed to serve. I have to go along with Sir Paul's earlier example of planning powers as being an example where in effect a power certainly has been taken up from county and local level to now be exercised clearly at regional level. My question was really to come back on your first answer to Dr Pugh, which was saying that if you see the assemblies as the main route to democratic accountability, quite apart from the fact they are not directly elected, which is a major problem, there are quite a lot of other problems with them, are there not? First of all, if you take the South Western one as an example, because again, it is the one that is familiar to me, it meets very infrequently. When it does meet, it has very limited debate. The elected members have very few resources with which to challenge the officers' technical reports and assumptions. You can have examples, as we had on Friday in the South West, of two political groups who would otherwise have commanded a majority of the elected members in the assembly being out-voted by appointed members, in combination with the third political group. That is not really democracy as we know it, is it?

Mr Kingham: I do not think we would claim that the regional assemblies as they stand are democratic bodies in the way that they would have been if we had had elected regional assemblies. I cannot argue that point. I do think that the fact that the assemblies that we now have are organisations that carry forward a tradition that has been going for a long time is important. Before the 1998 legislation which designated regional assemblies as responsible for planning, there were in all regions of the country chambers and assemblies, which were organisations which the local authorities had largely pulled together for themselves because they thought it was valuable to discuss things at regional level. The one in the South East was the best known one. There is a long tradition of local authorities wanting to discuss things at regional level because that makes sense, but also involving people from the private and voluntary sectors.

Q32 Martin Horwood: But at that time they were not determining how many houses were built on exactly which area.

Mr Kingham: They are not determining it now, of course. They are giving advice.

Q33 Martin Horwood: No, they are determining it.

Mr Kingham: The Deputy Prime Minister is ultimately accountable, and indeed to Parliament, for that.

Q34 John Cummings: Paragraph 58 of your memorandum to the Committee states that the Government does not impose a single model on regional assemblies. To what extent does the model vary across the regional? Do you have any concerns that certain models are proving less effective than others?

Mr Kingham: I might ask Andrew to follow up on this but I think what that refers to is that it is up to the members of the assembly, primarily the local authorities in each region, to decide exactly what the voting pattern should be, for example. So in some regions every member authority has the same vote and in others it is weighted according to population. I think probably that is what that was referring to.

Mr Campbell: Yes.

Q35 John Cummings: Is it what you are referring to?

Mr Campbell: Paragraph 58 referred to the individual circumstances of each region and its sub-regional areas. Each assembly therefore structures its business, or can do, in a slightly different way. What the rest of that paragraph mentions is that we are seeking assurances from assemblies that, as they take on an additional regional housing role, their systems and structures are as efficient as they can be and as fit for purpose as they can be. All the assemblies have recently submitted proposals as to how they might reorganise themselves in order to take on that new role, and we are looking at those at the moment. That will involve a degree of looking across the assemblies.

Q36 John Cummings: Does the variance between models give rise to any concern?

Mr Campbell: It has not done to date, no.

Q37 John Cummings: To what extent does the model of the Government Offices and RDAs also vary to reflect the difference in character of the regions?

Mr Campbell: Taking Government Offices as an example, it will do quite a bit, so, for example, if you are thinking about housing in the South East, the housing teams will have a particular focus on affordable housing and housing growth, whereas if you are thinking about housing in the northern GOs, there will be much more of an emphasis on homes meeting the Decent Homes Standard. One is about making the best of the existing stock and one is thinking about the growth agenda.

Q38 John Cummings: How do you monitor the variance in models in different regions?

Mr Campbell: Again, taking it from a Government Office approach, what we will do is we will use a mix of departmental feedback, peer reviews, the extent to which the GOs are contributing to the meeting of departmental PSA targets, which we have a quarterly monitoring system on, so it is a mix of indicators to reach a view as to how each GO is performing.

Q39 John Cummings: Have you had cause for concern in relation to any particular model at the present time?

Mr Campbell: Our views about individual GOs vary, but there is no right or wrong model. Some GOs are organised primarily on a geographical basis, so in East Midlands, say, there will be a team which looks after, say, Northampton, and a team which is focused on Nottingham. In another GO they will be organised by housing or planning or transport. There is no consistent factor which says that geographical is better than thematic, or vice versa.

Q40 Mr Olner: Do you mean no consistency on your part or no consistent model?

Mr Campbell: There is no consistent model to suggest that one way of structuring is better than the other.

Q41 Mr Olner: Could I perhaps put it to you that you have now moved on to Plan B, you are forgetting the regions and you are starting to talk about city regions as an alternative? What are your thoughts behind that?

Mr Klienman: It is not a question of Plan B; it is question of recognising the contribution that city regions can make. For some time there has been a variety both of academic and research evidence, but also to some extent policy initiatives coming up from local authorities and the regions themselves.

Q42 Mr Olner: So you are saying to us that the local authorities asked for the formation of city regions?

Mr Klienman: Yes, certainly many of the local authorities are interested in city regions, because they are increasingly recognising that, in terms of their economic performance and strengthening their economic performance, that is the appropriate level at which they need to act.

Q43 Mr Olner: That is not what I recognise, coming from my region in the West Midlands. It is being driven by your Department.

Mr Klienman: I have had a series of meetings with representatives from Birmingham and the other seven metropolitan districts in the area, and the impression - and it is only an impression I have...

Q44 Mr Olner: How many more local authorities does that leave after you have spoken to them?

Mr Klienman: Sorry. You were just asking me specifically about city regions and I was saying I detect a huge degree of enthusiasm.

Q45 Mr Olner: What I want to get down to, Mr Klienman, is that you seem to have dangled a carrot in front of the cities that is going to say to the cities, "You can now be a city region and envelope all of the local authorities around it." Who put that idea into their minds? Where did it come from? Did it come from the Department, the Deputy Prime Minister or who?

Mr Klienman: The idea of city regions and local authorities collaborating together is not a carrot that has been dangled by this or any other Government. It is a carrot, if you like, that has been around for a very long time. It is an established pattern of metropolitan development right across North America and Europe. It is a major component, for example, of the Northern Way in the UK, which is an RDA-led initiative across the three regions of the North West, Yorkshire & Humberside and the North East, which has at its heart eight city region development plans. I would like to claim credit for inventing this but this is not a new idea at all, and we are responding both to the developments which have occurred from the RDAs and, as I say, from the cities themselves, and also from the overwhelming bulk of the academic and research evidence.

Q46 Mr Olner: You obviously have a strategic view on this. How many city regions are there going to be in the United Kingdom?

Mr Kingham: Before Mark answers that, there is a slight danger that we are talking about two different things here. You may have in mind a particular government model. We start from the premise that city regions are an essentially economic proposition, so the reason why it makes sense for Birmingham and the other metropolitan areas in the West Midlands to work together on a city region is to deliver economic improvements in that part of the country, and indeed, that those benefits should go to the rest of the West Midlands as well; indeed, the rest of the country.

Q47 Mr Olner: Mr Kingham, we already work together in partnership in the West Midlands, because we have a West Midlands Regional Development Agency, and the Government Office for the West Midlands. We all work together within that. Now, all of a sudden, there is this new kid on the block called city regions, and I want to know what the difference is between that and the regional government you were proposing beforehand, which by your own admission died in the water after the vote on it.

Mr Kingham: As I said, the primary emphasis in the discussions that we have been having is about economics. It is not about a new form of governance. You say that the areas in the West Midlands work together, and I do not think we would deny that, but they themselves see the strength of working together more effectively in the future and like Mark, I have been talking to people in the West Midlands, and there is a real enthusiasm for wanting to work together, put together packages of proposals for the Government and others to consider.

Q48 Sir Paul Beresford: It is a great relief to hear that you are listening to local government. If local government n the South West and the South East said, "We want to work at city and county regions," would you take notice of that? They do not particularly want regional authorities.

Mr Kingham: Sir Paul knows that I and the Deputy Prime Minister are always very keen to listen to what local government has to suggest, so we will of course listen to ideas people come forward with.

Q49 Mr Betts: Coming on to city regions, given that the electorate in the North East eventually decided that trying to inject a bit of demographic accountability into what essentially was a government administrative unit, and they did not like the idea, do you think there is any chance the public are going to embrace the concept of city regions with a bit more enthusiasm?

Mr Klienman: Following on from what Neil said, a city region is essentially an economic concept, and while there may be governance implications for that, I think it is very important that you start from understanding the economic reality and work towards ways in which the existing local authorities within a city region, and, crucially, their partners, which means the RDA, other regional institutions, business in particular, can actually work together to raise economic performance. The question of governance, how that is structured and to whom it is accountable, is some way down the line from that.

Q50 Mr Betts: So at this stage are you saying that you do not have any definite ideas about how city regions might be comprised, how they might actually operate? Are you willing to look for ideas coming up from city regions themselves or do you have ideas which you think may eventually develop down the line that you are committed to?

Mr Klienman: We are very much in the listening mode at the moment, and we are digesting, for example, the State of the Cities report, which we published last week, which is probably the largest study of urban conditions in England ever, and we are also digesting the results from the first round of eight city summits which David Miliband and other Ministers carried out in the second half of last year. We have just embarked on a second round of summits with towns and cities, and there are a lot of ideas that are coming up, as you say, from local government, from the towns and cities themselves.

Q51 Mr Betts: How did you react to the IPPR report?

Mr Klienman: It was an interesting contribution to the debate.

Q52 Mr Betts: Would you rule out the possibility of elected mayors for city regions?

Mr Kingham: No, we do not rule it out, but we do want to discuss with the cities and those coming forward the business cases, as Mark has described, how best to help them take things forward, primarily on an economic level, but no, we do not rule out changes to government.

Q53 Mr Betts: One of the aims, surely, must be to get some real powers and some real tax revenue into organisations at city regional level to make them work. The Treasury is not going to give powers to a body unless there is some sort of constitution there which gives them accountability and responsibility, is it? A loose federation is not going to get the Treasury signing off large sums of money for people to spend.

Mr Kingham: I think you are inviting us to speculate on what the Treasury might or might not do. You will know that Michael Lyons has been asked to look at the future of local government finance and I have no doubt that he will be looking at the possibilities about economic powers in city regions as well as the other things he is looking at.

Q54 Mr Betts: If all they are going to do is get better local working within the framework of the RDAs, what happens to city regions that cross regional boundaries?

Mr Kingham: If we see them primarily as an economic force, then it will be important in those city regions where people do see links across regional boundaries that people do work together. When David Miliband had a city summit in Sheffield towards the end of last year, and I went with him to attend that, it was very interesting that the local authorities which came to that discussion included authorities in Derbyshire, which, of course, are from a different region, because they wanted to work with Sheffield and the other South Yorkshire authorities in thinking about the prospects for that city region.

Q55 Mr Betts: Are we actually going to have some proposals for city regions in the White Paper?

Mr Kingham: That depends on the discussions that happen between now and when the White Paper is published. It depends on how the discussions about the business cases go forward. Possibly.

Q56 Mr Betts: If we do not have it in the White Paper, we will have to have it some time soon. Might we have it in a separate White Paper?

Mr Kingham: No. I think you are asking us to anticipate what might be in the White Paper. We cannot do that at this stage, but obviously, city regions are an issue that is likely to be covered in the White Paper, yes.

Q57 Chair: Can I clarify, at the moment in the Department's thinking about city regions, is there a clear definition in your mind of what a city region is, or is it a concept with a variety of different possible interpretations?

Mr Klienman: I think as a concept we have a very clear idea of what we mean by a city region, and our thinking is to separate at least three distinct meanings of the word "city". One is what you might call the municipal city, which is the local authority boundary, so in the case of Manchester that would be Manchester City Council which is clearly only a part of the built-up area. We would then talk about the metropolitan city, which is the built-up boundary, the area covered in the case of Manchester by the Association of Greater Manchester Authorities, and then a third concept, the city region, which is the economic footprint, if you like, of the city which is much larger, and which in the case of Sheffield spreads out into Derbyshire and in the case of Manchester spreads out into Cheshire. So we have a clear conceptual view. How that should be taken forward and how that relates to existing arrangements is something where we are much more in the listening mode at the moment listening both to what comes up from the city sides and also from the body of research evidence, some of which we have commissioned ourselves.

Alison Seabeck: There seems to be an altogether much more fluid dynamic about what a city region is. In a sense you are throwing all the boundaries up in the air and seeing how they come down again because, whilst there is good cross boundary, cross departmental working in a number of areas, city regions in a sense cross all of that in quite a significant way and I would be incredibly interested to see how it all pans out. In this report they are talking about suggesting there should be fewer strategic interventions into city regions from government. I think Parkinson's proposal is just as a starting point ---

Chair: Have you got a question?

Q58 Alison Seabeck: Yes. Would you be nervous with a sweeping statement saying "Let's have fewer intervention with the nine bigger cities", given the difference in delivery and efficiency of the nine bigger cities?

Mr Klienman: When you said earlier on that we are throwing everything up in the air, we need to be clear about this. We are saying city region is an important way of thinking about the city as an economic unit. It is much less relevant for thinking about the city in terms of service delivery and neighbourhoods and what people identify with. So we are talking there about probably a limited number of strategic type interventions like transport, skills and so on, which have a direct connection with economic performance. But in response to your question, that is a very clear recommendation from Parkinson's team and it is something we will take seriously and think through but we have not yet formulated a response to that. It is very clear from the recommendation from the report that there should be a smaller number of interventions but those interventions at that level should be more strategic.

Q59 Martin Horwood: One of the problems with city regions, surely, is what happens in the bits that are not cities and, for instance, if you taken the economic drivers around Bristol as justifying city region status there, what happens if Cornwall and Gloucestershire then decide they like the look of that model and decide they have very little in common economically with each other and therefore each wants the equivalent of city region powers over economic planning, for instance, to be taken back down from regional level to county level. Would you support that?

Mr Klienman: The point you make is very important particularly in the relationship between cities or city regions and regional institutions. Regional institutions, particularly the Regional Development Agency, are the level for taking that broader view of what is the balance between the greater Bristol or the Bristol city region as an economic driver, if that is what it is, and the very different needs of Cornwall or rural parts of the South West. That is a very important point because this agenda is sometimes presented as if it is cities versus regions, whereas it is clear from the analysis that you need interventions at both level. The crucial question is getting the interventions right at each level and the balance between them.

Q60 Mr Betts: So we are going to end up with a local authority, a city region and a Regional Development Agency?

Mr Kingham: We do not know yet what proposals we are going to pursue. What Mark was describing was one of a number of possibilities. You were pressing us to say whether or not there will be something about the city regions in the Government White Paper and I said it was possible, I think it is likely, that the Government White Paper will talk about city regions but exactly what it will say Ministers will need to decide between now and then. But we come back to the point that we are not necessarily talking about governance changes. There may be governance changes ---

Q61 Martin Horwood: I was talking about economic planning actually because you were talking about the economic role.

Mr Kingham: I understand, and if we take forward economic planning changes then obviously we need to think about what that means for the rest of the region.

Q62 Martin Horwood: You would support in principle the concept of breaking up the South West region on an economic planning basis if it did not prove to be a sensible unit ---

Mr Klienman: No. I thought your question was pointing towards the role of the Regional Economic Strategy, the RES, which is an RDA document, precisely designed to balance the economic needs across the region, and it is noticeable that as the RDAs are going through the process of reviewing their RESs they are taking on board the concept of city regions as important to their overall view on what the economic strategy should be.

Q63 Dr Pugh: I do not think the Chairman's question has been answered about what actually is a city region? In Lancashire, or the North West rather, you have a Merseyside city region and a Manchester; some people even suggest there is a Central Lancashire city region, which is a line drawn vaguely around a lot of towns which are left out of the other city regions. Do we have a concept here of a city region possibly without a city?

Mr Klienman: The concept of the city region is primarily an economic one which means it does not have to have one major city. There are examples all around the world of where you have three or four equally sized cities, none of which are dominant, of which the most obvious example is the Randstad in the Netherlands where you have four essentially equally sized cities which have different roles and none of them would claim to be primus inter pares against the other. That is between Amsterdam, Rotterdam, The Hague and Utrecht. But they found it useful for more than thirty years to cooperate together as an economic unit, not as a governance unit or a fiscal unit.

Q64 Chair: Can we try to move on because I am conscious that we have representatives from the Departments for Transport and Trade and Industry. Would you like to introduce yourselves?

Mr Linnard: I am director of regional and local transport policy in DfT.

Mr Speed: I am head of regions at DTI.

Chair: It might be most appropriate, John, if you have a go at the questions you were asking about RDAs very briefly, and we can deal with that and then get on with the other ones.

Q65 Dr Pugh: There are documents which lay down precisely what the Regional Development Agencies will spend money on. They are kept rather covertly and are called Strategic Investment Plans. They are not on the website of the Regional Development Agencies but are the most discussible documents in a sense because they indicate where one sum of money is spent this year and next, and also where it will not be spend because there are always many more projects around than are funded by the RDAs. Do you think it reasonable that such documents of such importance as these should be well distributed and open to discussion and serious examination and scrutiny from all the stakeholders in whatever region these documents apply to?

Mr Speed: The short answer to the question is yes. There is a sort of hierarchy of documents which exists. There are the regional economic strategies which Mark referred to earlier which are, if you like, overseen by the Regional Development Agencies but they belong to the region as a whole. From those derive each Regional Development Agency's corporate plans which are signed off by Ministers, and at the end of each year the agencies, like most other publicly accountable organisations, produce annual reports of what they have achieved during the year, and certainly I believe all of those documents should be, as it were, widely available and certainly in the case of the regional economic strategies, many of which are being rewritten at the moment, the degree of public participation and public scrutiny in the development of those documents has been very widespread indeed, in my experience.

Q66 Dr Pugh: But you will acknowledge that hitherto the strategic investment plans that say what projects give what money and when have been not elusive but have not been given the same visibility as the other documents that festoon the postbags of MPs and the like on a regular basis?

Mr Speed: I am not sure whether I am in a position to answer that question except to say that I do not think the Regional Development Agencies have anything to hide, and nor should they.

Q67 Chair: Can I probe further the role of the RDA and the DTI in making sure that each region fulfils its growth potential but also in reducing disparities between regions? What is it that the RDAs do and what is it that the DTI does, and how does each of you help the other to do your job more effectively?

Mr Speed: That is very complex. What we both share, of course, is our regional economic PSA, our public service agreement, and indeed several other PSAs which the Regional Development Agencies contribute to, and what that means is that the Department of Trade & Industry has a key role in looking at the drivers of productivity which we have set out in the memorandum for you, and as employment issues, and determining to the extent we need to how we should improve regional and, indeed, national growth through national frameworks. So we have national frameworks for things like enterprise, innovation, business support, science and so on. I think what we try to do with Regional Development Agencies is develop a complimentarity where the agencies who have far greater knowledge than we can ever have in Whitehall of what is happening at regional and local level, are able to produce actions in support of regional economic strategies which, when they work with partners in the region, are able to deliver in a regionally intelligent way, if you like, which we would find very difficult to do from where we sit. So there is an enormous complementarity and very many of my colleagues right across the Department work very closely with RDAs.

Q68 Chair: What does the DTI do to try to reduce regional disparity?

Mr Speed: We have in support of the regional economic PSA devolved quite a lot of the things we used to do ourselves to the Regional Development Agencies in recognition of the fact that the agencies are in a better position to deal with the issues which are unique to them. A particular obvious example would be BusinessLink where the service delivery was devolved to the agencies last April. The RDAs work with BusinessLink on a national framework in that they are able to tailor the information, brokerage and delivery within each region and that is very important because one of the things which is very obvious if you look around the country, particularly at the business environment, is that the problems facing businesses in the North East, for example, can be very different from those in the South East, and we have tried to develop systems which allow the regions both to deliver through a well-known national brand which reduces confusion, but also to tailor their delivery to the circumstances which they understand in their region better than we do.

Q69 John Cummings: Current trends tend to suggest that regional economic disparities are set to grow further between London and the rest of the country. Is that your understanding?

Mr Kingham: I think you are referring to the PSA target which is jointly owned by the ODPM, the Treasury and the Department of Trade & Industry. I think our information is that the trends at the moment are encouraging for the target which relates to economic disparities. There is stronger employment growth in the north midlands and the west and at the moment there are signs that the gap is narrowing, but we do recognise that these developments are cyclical and as the economy in London takes off again we will have to be careful to ensure that the growth in the other parts of the country remains strong.

Q70 John Cummings: You see, your written evidence tends to suggest that the gap in growth rates between London and the South East and the East and the other regions declined in the last two years?

Mr Kingham: The gap? Yes, which is what we are seeking to achieve.

Q71 John Cummings: But you accept that the definitive judgment should be over a full economic cycle.

Mr Kingham: Yes.

Q72 John Cummings: Can you tell the Committee what is a full economic cycle? When did it begin? When do you expect it to end? And will you also indicate to the Committee whether judgement will treat the rest of the regions as one unit or consider them separately?

Mr Kingham: The target relates to our desire over the long-term to reduce the persistent gap in growth rates between the regions and to demonstrate progress by 2006. The period that we are looking at is the period from 2003 to 2012, so I think for these purposes that is where the economic cycle has been identified.

Q73 John Cummings: The cycle is a nine-year cycle?

Mr Kingham: You are asking me to be more precise than I feel able to be. I do not know.

Q74 John Cummings: It is a simple sort of question.

Mr Speed: It is a simple question, I agree, but I think as the Treasury has found out there is not always a simple answer. The Treasury, indeed, themselves have had to revise not only the endpoints of economic cycles but the start points ---

Q75 John Cummings: I am sure you are a lot more astute than those in the Treasury!

Mr Speed: I am not suggesting that the cycle will necessarily coincide with those points but the 2012 date emphasises the long-term nature of the problem we face which has built up over many decades in the North West and the Midlands versus the South and the East. We need to allow ourselves quite a significant amount of time in order to address the disparity.

Q76 John Cummings: Would the judgment to which you refer treat all the regions as one unit? Or would you consider them separately?

Mr Speed: Of course all this is driven by data and data economists for each of the regions.

Q77 John Cummings: So does the data indicate whether they will be judged separately or as one?

Mr Kingham: The disparity we are seeking to address is between the Greater South East region which would mean London and the South East on the one hand, and I think probably Eastern region as well, and the North, the Midlands and the West on the other. So in that sense we are taking it as two big blocks.

Mr Speed: I beg your pardon; I misunderstood the question. That is the way the target is technically measured, yes.

Q78 Chair: Can I turn to the funding projections which seem to be based on a standard annual increase of 2 per cent for 2015/16 without taking account of regional variations in prosperity? To what extent do you expect to adhere to those figures, and what is the evidence base on which those annotations are decided?

Mr Kingham: I will start if I may. I think what you are referring to is the regional funding allocations exercise that we are involved in at the moment. What we are seeking to do was to get advice from the regions on the priorities in their regions in order to inform government decision-making both in the short term and in the context of the Comprehensive Spending Review, so what we did was to give each of the regions an allocation which was firm for the next two years but indicative for the following seven, which takes you up to 2015, so we are not saying that the allocations will actually increase by 2 per cent of the year over that time: what we are saying is: "This is an indicative allocation. If this is what happens then tell us what you think the priorities are within that spending pattern", and then that would feed back into the decision-making process which will initially be taken forward in the Comprehensive Spending Review.

Mr Campbell: It was exactly that. It was a figure for planning assumption purposes to give each region an idea. 2 per cent is in line with the Government's inflation target so that was the basis for it. So it is not saying, "This is a forecast of what you think you will get"; it was a planning assumption figure.

Mr Speed: I wanted to add the detail that when the advice was given to the regions we also asked the regions to say what they would do if those numbers were either 10 per cent greater or 10 per cent lower than the figures published.

Q79 Dr Pugh: But surely in connection with transport allegations the North West knows, or was told, it had 1.4 billion to spend over ten years; it was not told everything was going to be revised within two years. Given that it has that figure and that London has a different one which will have to accommodate huge projects like Crossrail and so on, what is the basis for saying to a particular area, "That is your figure; that is for transport; that is what you need for the next ten years?" How is that figure arrived at? I know there is consultation about how that will then be divided up and what they will wish to do with it, but I suppose one could argue about the fairness and the figure and argue about where the figure comes from in the first place.

Mr Linnard: London is excluded from this exercise; London's funding for transport is different. There is a five-year settlement that is agreed between the Government and the Mayor. What we are talking about here is the exercise for the English regions outside London. How the figures were arrived at: we took the funding settlement after the 2004 Spending Review that came to the Department for Transport and we identified within that in the usual divvy-up process how much funding was going to be available for local authority and Highway Agency schemes ---

Q80 Dr Pugh: I do not understand the expression "the usual divvy-up process". What do you mean?

Mr Linnard: We get a funding settlement and we have to divide it up, having received it from the Treasury, and we have to decide what we are going to spend the money on. Some goes to railways, some goes to national roads, some goes to a variety of other things. Within that process there then emerges a figure which is available for major projects which in this case is a project of above 5 million ---

Q81 Dr Pugh: I understand that.

Mr Linnard: For local authorities, both roads and public transport, and for Highway Agency schemes which are less than national schemes, so it does not include the M25, for example.

Q82 Dr Pugh: I understand that.

Mr Linnard: That then produces an overall figure for England outside London. Having then looked at various ways of dividing it up we decided on a population basis. That produces firm figures for two years and then, as we have described, for illustrative purposes, increase it at 2 per cent per annum thereafter up to 2015/2016.

Q83 Dr Pugh: So it could change?

Mr Linnard: It could change.

Q84 Alison Seabeck: The ODPM Treasury review is expected to agree that Government Offices need "new freedoms and flexibilities" because there is a view that they are not operating particularly effectively across departmental boundaries. Would you agree with that statement?

Mr Campbell: Well, I do not think I do agree. What has happened over the last two years is the Government Offices have been given responsibility for negotiating local area agreements, for example, on behalf of the whole or central government, and they would not be able to do that as well as they have been doing were they not able to work across departmental boundaries.

Q85 Alison Seabeck: It is an interesting statement but what freedoms and flexibilities would you want to see in addition to those which have already been granted which would enable improved relationships, not only with local authorities but with other bodies in the regions?

Mr Kingham: I do not think we are talking about freedoms and flexibilities in relation to Government Offices. I do not know what you are looking at but that language tends to be used in relation to local authorities. Government Offices are part of government so anything that they are given to do is still accountable back to Ministers and, through Ministers, to Parliament.

Q86 Alison Seabeck: But the additional staffing that is going in, for example, should enable ---

Mr Kingham: I refer to the appointment of directors of children and learning on behalf of the DfES. We are confident and hope that those people will strengthen the relationship between the DfES and the regions, and it will make the Government Offices more effective in dealing with local authorities and other local partners, but it is not a matter of giving Government Offices freedom or flexibility in a way you would do to a local authority.

Q87 Chair: The phrase comes from the Chancellor's Budget 2005 Statement.

Mr Kingham: In relation to Government Offices?

Q88 Chair: Indeed: "new freedoms and flexibilities ... to enable them to join up their activities more effectively across departmental boundaries".

Mr Kingham: In that case I should retract my statement that it was not the right language, of course, if I made be permitted to do so!

Q89 Alison Seabeck: This may be a question better directed at your political masters, if you like, but to make RDAs more accountable what measures do you think could be introduced to do that, to achieve that? For example, would you consider offering a specific Select Committee to each of the regions to which the RDAs could be accountable? It is not necessarily a model I would want to follow but are you looking at means and methods to make them more accountable?

Mr Kingham: I do not think we have any specific propositions, certainly not of that kind which would be specifically for Parliament.

Mr Speed: I think it is a question for politicians but it is open to Select Committees to talk to RDAs just as anybody else, and certainly I am sure over time that happens. I think one thing I would say is that if you talk to the RDAs themselves I think you will find they are very conscious of, and indeed keen, if you like, to be scrutinised. They are very conscious of the fact that they have been fairly generously dealt with both financially and in terms of the freedoms they have, and I think they welcome the scrutiny that comes both from the Regional Assemblies, which you talked about earlier, and also from their relationship with Ministers. Tomorrow, for example, all nine of the chairs of the Regional Development Agencies will be meeting with my Minister and several others for a six weekly session, and those are really quite helpful and constructive discussions where I think there is a fair degree of genuine accountability going on.

Q90 Alison Seabeck: You say that but business members of Regional Assemblies have expressed concerns that Regional Development Agencies are in some areas undertaking work because it is an easy option on sites, for example, that are easy to develop rather than allowing the private sector to do it in a way that the private sector could do quite easily. How are you assessing what Regional Development Agencies are doing in terms of whether or not it could have been achieved by another body as easily or more easily? Does that make sense?

Mr Speed: Yes, it does. Can I say first that we are on a journey I think with Regional Development Agencies. They have not really been around that long and we are still trying to get better at measuring what they do so our approach, which is not surprising in the past, has been very much around inputs and outputs and certainly the tasking framework as it has evolved since 1999 has been very much about inputs and outputs and we are trying, I think, to move along a journey which would make us better placed to look at the outcomes that the RDAs are seeking and link them into the economic performance work we want to do.

Q91 Alison Seabeck: But thinking about the sense, in terms of outcomes some of the easiest outcomes for them to achieve perhaps in terms of hitting government targets at whatever level are to do things that are the easiest things to do that could be quite easily be done by somebody else, and if you are just looking at the outcomes you will say, "They have achieved X, Y and Z", but you will not necessarily look at whether there was value-added, really?

Mr Speed: I think that is fair and what I was going on to say is that in terms of trying to make this a more sophisticated approach and to some extent partly in readiness for the Comprehensive Spending Review which is just getting under way now we have put in place with the Regional Development Agencies both an independent performance assessment framework which is developed from the experience of the London Development Agency, which is a rather strange beast in that it is, in fact, a local authority and therefore it is subject to the comprehensive performance assessment process, so we are learning from that and, as one of my colleagues mentioned earlier, there are two agencies going through that process already and the rest will be complete by about this time next year, and in parallel with that we have also given the Regional Development Agencies a thing called the impact evaluation framework which is a project appraisal framework based on the Treasury's Green Book which they are now implementing, because what we want to know is not so much what are the individual numbers you are producing but what is the economic impact of what are you trying to do.

Mr Kingham: Coming back on the parliamentary accountability point, I have been reminded that there is a Regional Affairs Standing Committee of the House, which I do not think has met for some time -but it could meet again, if Parliament so wished, I think!

Q92 Martin Horwood: On the suggestion that the Regional Development Agencies welcome the scrutiny of Regional Assemblies, I have already expressed some scepticism about the democratic nature of Regional Assemblies but is it not true that only a small minority of RDA spending is actually subject to the scrutiny of Regional Assemblies in any case? Or you might have thought that percentage is nationwide?

Mr Speed: I am not sure there is a percentage ---

Q93 Martin Horwood: Certainly it is quite small in the South West.

Mr Speed: As far as I know from my reading of the RDA Act, somewhere in Section 18 or something, the entirety of what the Regional Development Agencies do is subject to the scrutiny of the Regional Assemblies.

Q94 Chair: Can we ask you to check up on that afterwards and either confirm or not?

Mr Speed: Certainly.

Q95 Martin Horwood: Can you confirm or deny that?

Mr Kingham: I was going to say that we should check that and let you have a note about it.

Q96 Mr Olner: In 2003 this Committee did a report on "Reducing regional disparities in prosperity" and it found that different departments treated regional dimension to policy with different levels of seriousness. You mentioned, Mr Kingham, that the office of the regions now has been increased by averaging more that it can do and overseeing and what-have-you. Can I ask what mechanism there is in place and are you satisfied that the top priority for a region manages to come up through all of those areas in the region? Do they all treat the regional aspect with the same amount of seriousness?

Mr Kingham: I think we now have ten government departments who are involved with the Government Offices for the regions, and I think we would take the view that the Government Offices are in a position to pull together the interests of those departments in a way that works both for the regions and is a source of advice back to Government. If you are asking me to say: Do all government departments treat the regions with equal seriousness then obviously there are going to be judgments about that, but I do think we feel that the development of the Government Offices, since they were first established in 1994, has meant that the interaction between officials in the regions and Whitehall has improved as we have gone along.

Q97 Mr Olner: So they are now working?

Mr Kingham: They are effective. I would always say there was always room for improvement and we welcome suggestions for improvement, but I do think the Government Offices are doing a good job in many areas. Andrew referred to the local area agreements which is a process which has been a big challenge for the Government Offices where we have asked them to take the lead in negotiating on behalf of Whitehall with individual local authorities. It has been very demanding for Government Offices. There are 66 agreements in negotiation in the present financial year and on the whole they have done a good job in that negotiation, so we do think Government Offices are improving as they go along but as I said there is always room for improvement.

Q98 Mr Olner: Which of the government departments is the worst and which is best?

Mr Kingham: I am sure you do not expect me to answer that question! I do not feel able to do so!

Q99 Chair: Are any of the other gentlemen going to put their head on the block?

Mr Speed: I could say, as somebody coming into regional work last July, that the one thing that struck me very forcefully about Government Offices, and this is true I think of all nine of them I have worked with, is they present Whitehall in an extremely joined-up way. So if you talk to people who work in Government Offices they do not feel they belong to a particular silo in perhaps the same way as people in Whitehall almost inevitably have to because of the organisations they work in. They really zip it up and present government as a united front in the regions to an extent that quite surprised me when I first started working with them.

Q100 Sir Paul Beresford: A derogatory comment back to central Government?

Mr Speed: No, I do not think it is. It is very difficult. Any large organisation has these problems but the real value-added that the Government Offices bring is being able to present to the region something which is very joined-up indeed.

Q101 Dr Pugh: There is a temptation, to which I must admit I succumb at times, to regard the Government Office North West and the Regional Development Agencies and so on as a form of latterday colonial government administering the provinces on behalf of Westminster. One thing that could give a lie to that would be a practical example of how the regions themselves have influenced national policy so it has not all been one way. Can you think of a good example?

Mr Kingham: I think the regional funding allocation process that I was describing a few minutes ago is a good example of us providing a system which enables us to get advice from the regions which is co-ordinated by the Government Offices, comes back to Whitehall and will influence the way in which spending decisions are made not only over the next two years but in the course of the Comprehensive Spending Review.

Q102 Dr Pugh: And did any of the regions ask for it to be done like that?

Mr Campbell: The regions have come up with the advice as to what ---

Q103 Dr Pugh: I do not think you are contradicting me but the region did not ask for it to be done like that so the one proposal that has come from the regions turns out to be a government initiative imposed on the regions because they would have the other option open to them which they had previously which was agreeing all their transport priorities through the Passenger Transport Authorities and the counties and so on. You have imposed a new model on them which they have not sought and expressed this as an innovation which they brought to you. It is bizarre.

Mr Linnard: We have not imposed it on them. We have given them an opportunity to provide advice on these things and it was quite open to them to say "No, we do not want to play".

Q104 Dr Pugh: Was it? Was it seriously possible for, for example, Merseyside PTA and Manchester PTA to say: "We would sooner do it the old way, if you do not mind, and agree our transport priorities in our own region, in our own way"? It was not, was it?

Mr Linnard: What they could have done was come back to Government and say: "This exercise will not work because the funding is inadequate". They have not done that.

Q105 Dr Pugh: They certainly said the funding was inadequate but they knew it was the only game in town.

Mr Linnard: But all of them have made a very serious job ---

Q106 Dr Pugh: Well, they would, would they not?

Mr Linnard: ---of analysing the transport priorities, looking at the value for money of different schemes ---

Q107 Dr Pugh: What you are saying is they are playing according to the rules you set them. Of course they will, otherwise they will not get any money. If they do not make up their minds how to spend the money you will not give them the money. But if they said to themselves: "We as a region wish to do our transport priorities in a different way, not on a regional basis but on a sub regional basis or through the PTEs", or counties as we used to do, you would have said "No". I go back to the point I made: I asked for an example where a region had influenced government policy and the one prime example that came up was an example of where the Government said to the region: "This is how you are meant to do it", and all right, they set to and they played along with abidity -as you do to the colonial government because you have not got an option -but nonetheless that is what happened.

Mr Kingham: What we asked them to do was give views on the priorities for spending over the next nine years, but that is a very important invitation. It is asking the regions to say to Whitehall: "Do not wait for Whitehall to tell you what its priorities are going to be; you tell us what you think the priorities for your region should be over the next nine years". I think that is an important step forward.

Q108 Dr Pugh: That would be fine but it does not quite answer the point which is did the regions suggest that this new way of doing things, which may be a boon bestowed by the colonial government, if I can put it like that, and it may be better for them in the long run, is an example of where the regions have given something to central Government and central Government have said: "That is a good idea. We can learn from that"? No, it is not.

Mr Campbell: The other example which occurs to me is regional housing strategies. Again, you mentioned the regional and sub regional dimension. What tends to have happened in a lot of those is the regions looking at housing markets and thinking about how money should be allocated on a sub regional basis either to reflect importance of new affordable housing or whether the money should be spent primarily on improving the existing stock. So that does take you to different solutions being found for different regions depending on -

Dr Pugh: I am not trying to defeat the suggestion that you are in many ways empowering regions in a way that possibly they have not been at all, but the specific question I asked is basically what have the regions brought to central Government policy that has influenced and changed central policy? I was looking for aspirations expressed by them or practices embodied by them which Government responded to.

Q109 Chair: On this transport issue, just as an example, the discussions that go on in central Government about how much money is going to be spent on transport are obviously dependent on the arguments made by the Department for Transport in favour of certain schemes and how important they are to the Government's overall priorities. Do regions have an input to that extent in the sense could a region, by saying that such-and-such a transport scheme was absolutely essential to economic development in that region, get through directly to Treasury and persuade Treasury to give more money to transport than it otherwise would?

Mr Linnard: We are really talking about how spending reviews are conducted. Departments make a case to Treasury for how much money they think is justified and they take into account a whole range of schemes that they have in mind and representations that they have had from individual regions and organisations like the CBI, so you have a whole range of factors that shapes a discussion between a spending department and the Treasury. It is never very clear when you are looking at the settlement that emerges at the end of it, you can never really track the settlement back to individual items, but certainly it is open to regional government to help to shape the debate that happens within Whitehall in the course of a spending review.

Q110 Martin Horwood: Coming back to the example of housing strategies as an example of regional governments influencing national, this is breathtaking to me. Mr Kingham has already explained that actually the sole responsibility really in the end for determining the numbers and the allegation of the housing that is going on is one that rests with the Deputy Prime Minister, so I cannot see how that is an example of regional government influencing national.

Mr Kingham: It is an example in which regional bodies made their views very firmly known to central Government and central Government takes account of their views and, indeed, in the planning system, as we talked about earlier, the regional spatial strategies are subject to decision by the Deputy Prime Minister but that decision takes account of the advice of the regional assemblies.

Q111 Martin Horwood: I beg to differ a little actually but our experience is of countless consultations certainly at local level trying to feed up to regional level constantly being blocked by the technical models and directives coming down from the Deputy Prime Minister. If you can give me counter examples of anything that has changed national government policy as a result of regional input on housing I would be interested to hear it.

Mr Kingham: We will go away and reflect on that.

Mr Campbell: My understanding is that the vast majority of regional housing strategies, and recommendations as to how many might be adopted, are accepted by the Deputy Prime Minister, but we are very happy to research the issue further around policy changes that might have resulted.

Q112 Martin Horwood: As in the transport examples that Dr Pugh gave, in effect they are boxed in by national policies and models, are they not?

Mr Kingham: We would want to say there was a national framework within which the regions operated but, in the end, it is the Deputy Prime Minister who is accountable to Parliament for these decisions so he must set the overall framework, but he is influenced by the views of regional bodies. Some may prefer he takes a different view of the way he puts his argument across but he will take into account their views.

Q113 Martin Horwood: It is one thing to say that there is a framework within which some latitude is left to regional bodies, but it is quite a different one to answer Dr Pugh's question which was can you come up with a single example of government policy ever having changed as a result of regional input?

Mr Kingham: I think it depends on what you mean by "government policy". I am sorry that is a very civil servantish answer!

Q114 Martin Horwood: Anything on which the Deputy Prime Minister has changed his mind.

Mr Kingham: Policy is influenced by debate between government departments and regional bodies and other bodies, and certainly government departments do take account of the views that regional bodies and others put forward. I am sure we can come back with examples of where the government has consulted and has adjusted its decisions in the light of views ---

Q115 Chair: Can I take you up on that one then, rather than you try and make one up here? If I can send you off with some homework, can you give us a practical example of how the regions have influenced national policy?

Mr Kingham: Yes.

Q116 Mr Betts: Can I ask the Transport and Trade and Industry spokesmen whether you believe, as ODPM do, that the concept of city regions is primarily about improving and driving forward economic performance and, if so, how do you think establishment of city regions in some form could help with the implementation of policy in your departments and meeting national and regional targets?

Mr Linnard: If city regions came about, if there were any governance changes, which is quite a big "if" as we have described, one of the things we have been looking for from transport was to try to make sure that, as with the regional funding allocations exercise, transport, housing and economic development are properly joined-up together. At the moment arguably that is one of the weaknesses of the present structure in the PTE areas -that you have Passenger Transport Authorities' executives that are responsible for passenger transport. So ways not necessarily involving changes in the machinery of local government but ways that transport, housing and economic regeneration can be joined-up better is certainly one of the things we would be interested in.

Mr Speed: My Department certainly thinks that this whole agenda has a great deal to offer. Obviously given our sponsorship role with the RDAs we are very keen to get the interplay right between what is going on in the cities and what needs to happen in the regions. Our view, and the RDA said this themselves at the launch of the State of the Cities report last week, that they have a considerable amount to bring to the city regions' table and they have been working quite hard with the cities to develop that. In terms of the Department's own agendas, you could imagine if there were more coherence around city regions then there might be frameworks in which things like small business and enterprise and all those sorts of mechanisms could be brought to bear in a more focused way but, in a sense, until we see what shape comes out of all this, it is rather hard to say.

Q117 Mr Betts: Would each Department like to give one specific example of powers that currently exist higher up the ladder somewhere which would be devolved to the city region?

Mr Kingham: I think that is inviting us to speculate first on the possibility that there will be governance changes in the city regions, and we are not in that position yet. I am more than happy to give you examples where there is something real to give an example about, but we do not know what is going to happen as far as the governance of the city regions is concerned.

Q118 Mr Betts: Irrespective of the governance would not the intention still be to pass some powers down, even if it were a collective of local authorities coming together in some form, a bit like the Manchester example where they are looking at some sort of executive board drawn from local authorities?

Mr Kingham: There is certainly a possibility that we could be looking at different arrangements for the future but we cannot at the moment give examples of that kind ---

Q119 Mr Betts: But you could give examples of powers that might better operate at city regional level than currently at regional or national level?

Mr Kingham: That is predicated on governance changes and on other system changes in city regions which we are not in a position to speculate on at this moment. If we do go down a route of looking to offer the possibility of governance changes in the city regions then the question becomes more meaningful.

Mr Klienman: We cannot speculate on what Ministers might or might not decide but if you look at city region or metropolitan governance around the world, particularly ones that have been more successful, as mentioned earlier, they focus on strategic powers. They are not primarily about service delivery. They tend to be about transport, about economic development, about skills, about issues which work across labour market or travel-to-work areas, so without speculating one could say generally it is likely to be in that kind of area, and you have the example of the GLA in London where you have a strategic authority and it has a particular set of functions.

Q120 Mr Betts: It has but it also happens to be effectively in some areas the RDA which is precisely one of the problems, surely. If we get to the creation of a city region based on economic reasons we are presumably going to have some form of arrangement, either a collaboration with local authorities or an executive board but some form of arrangement, which enables people in the city regions to take decisions, presumably about economic activity, because that is one of the issues. They sit down, make their decisions, and let us take the Sheffield example based on the meeting ---

Mr Kingham: Which we were both at!

Q121 Mr Betts: ---and then they have to put those decisions for second-guessing, for approval, to a non-elected Regional Development Agency -in fact two in the case of the Sheffield City region. It hardly gives the impression of a streamlined way forward to make more effective decision-making, does it?

Mr Kingham: I do think you are asking us to speculate about what might happen if various things were to happen. If the cities come forward with proposals that Ministers want to act on, if they then want to give more force to the concept of a city region possibly through governance changes, then the relationship between those bodies, if they existed, and the Regional Development Agencies are one of the things that we would need to think through.

Q122 Mr Betts: But it is an issue that has to be addressed?

Mr Kingham: We would have to look at the relationship but there would still be a role for the Regional Development Agencies carrying out their current functions, but we would need to think about those relationships in the future. But this is all very hypothetical.

Q123 Mr Betts: Picking up a point with the Department for Transport, the Department for Transport has not got a wonderful track record for devolving, has it? We have had the draft Regional Assemblies Bill in front of this Committee a couple of years ago and when you looked at it there was not a single power being devolved to the Regional Assemblies from the Department for Transport. The Regional Assemblies could basically talk about what the Department for Transport was going to do and that was it.

Mr Linnard: Against that background it is quite a big step to be going through the regional funding allocations exercise, and to go back to your question that was asked earlier about what policies the regions would have influenced it is inconceivable that at the other end of the regional funding allocations exercise the schemes that are taken forward in the regions will be the same as the schemes that would have been drawn up had it been done in the old way, which is basically in Whitehall. So that will be proved to be something which has given real influence to the regions.

Q124 Mr Betts: So coming on to the concept of the city regions then, you might be quite relaxed as well as giving the powers of the PTE over to the city region, which seems to be not a terribly devolving sort of mechanism, to look at something in terms of devolving powers down from the Department nationally or even regionally to a city regional level?

Mr Linnard: Well, all these things are ---

Mr Kingham: You are trying to get us to speculate again!

Chair: Can I thank you all very much and we will look forward to your homework in due course.