Stay of execution offers RDAs a chance to demonstrate their clarity of purpose - as seen in June 2010 issue of NewStart magazine

For Regional Development Agencies (RDAs) hamstrung by the political uncertainty of the last 18 months, the Chancellor's first statement on spending cuts must have been relief of sorts.  In-year cuts of £270 million are hardly to be celebrated.  But at least they begin to clarify the future of regional development.  RDAs have not been abolished outright.  We are led to believe the views of business will determine their future.  But they will play a pared back role and have less to invest.  Behind the front line numbers the Government seems more inclined to cut in the south and east than elsewhere.  The picture is hardly crystal clear as yet, but at least the RDAs have something to work with.

As with any organisations, the RDAs have done some things well and could do some things better.  Independent evaluation suggests the RDAs return an average of £4.50 for every £1 they spend.  RDA investment has been an essential catalyst to major regeneration programmes, such as the Ipswich Waterfront and the renaissance of NewcastleGateshead.  The RDA role in business support has helped turn a baffling array of services for small businesses into a more streamlined and cost effective offer.  But RDAs have suffered when Government has broadened their remit with new responsibilities and diluted their focus on business led economic development.  Whether or not Regional Spatial Strategies were a good thing, RDAs were left with this unpopular responsibility as a consequence of their geographic remit, rather than their expertise in housing and planning.

Perhaps most significantly, RDAs have faced difficulties communicating what they do.  They use relatively small budgets (only in the Northeast is RDA expenditure more than one per cent of public spending) as a catalyst to private sector investment and to align the spending of other public sector bodies.  But while they serve this strategic role they have been measured against tactical results on the ground, such as the number of jobs created and the area of brownfield land regenerated.  This leads to confusion about what the RDAs are for – hands on delivery or strategic leadership.  And it results in bad feeling locally, where all the agents involved in a scheme set out to claim its results on the ground for themselves.

Local and regional confusion is compounded at national level.  RDAs are tasked with supporting the economic growth of all regions while reducing the disparity between regions – a built in contradiction in terms.  The Greater South East economy grew by nearly 18% from 1999 to 2006.  This was not reported as success for the RDAs in the south and east but as a failure of those in the north, although the economy there expanded by 15%.  On these measures, RDAs are damned if they do and damned if they don't.  But it shouldn't be a zero sum game.  To address inter regional disparities the UK’s economic drivers in the south and east need continued investment, so the returns of economic growth can be reinvested in the north where needs are different.

So what can RDAs learn from their journey so far and where do they go next?  Again, communication is one of the biggest challenges.

We are told that the future shape of RDAs will depend on the views of businesses and local authorities.  Businesses in the north have convinced business secretary Vince Cable to look with fresh eyes at the RDA record of achievement.  In the East of England, businesses have prepared a blueprint for investment that makes the case for strategic economic development at a scale beyond the local authority.  But persuading businesses and councils to champion the role of RDAs while previously committed programmes of investment are being cut is a big ask.

Three key principles can help the RDAs grapple with the task.
First, personal detachment.  Jobs and egos are on the line but the challenge facing the public finances and the economy supersedes the interests of any institution.  To fulfil their public duty to promote the economic development of their regions, RDAs need to set aside personal interest.  The arguments for and against strategic investment to create an environment in which business can thrive are top of the agenda.  The names of public bodies, or even their precise remits, are 'any other business'.

Second, RDAs need to demonstrate how their core strategic role is in line with the Government agenda.  They can bring greater efficiency to public sector spending by aligning streams of funding and targeting investment where it will deliver greatest economic return.  This can be exemplified by the nature of the cuts RDAs choose to make.  Which programmes are of greatest strategic importance to the economy and which, however worthy, would return least per pound of investment?  By shouldering these tough decisions RDAs will demonstrate their value in austerity Britain.  They may lose some friends in the process, but it's better to be respected than liked.

Third, RDAs need to live up to their billing as business-led and arms length from Government.  They need to challenge Government thinking where necessary, provide impartial economic evidence that no other body can provide and demonstrate that local businesses support their arguments.  If they wait to be told what to do by Government, they will both abdicate their responsibilities and speed their own demise.

RDAs must demonstrate their impact on their own terms, make cold, calculated economic arguments, and shoulder some unpopular funding decisions.  They may still be abolished, but at least people would understand what they stood for.

Jon Bennett - Director 

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