Scrapping RDAs has made Osborne’s task harder

By Kevin Meagher

As the Tories’ main political strategist, George Osborne knows only too well that winning the next election means convincing people they’re getting better off, or soon will be. In the next six months, his task is to make sure the warm rays of economic prosperity are felt across all parts of the country.

Yet as the dust settles on the Autumn Statement, recovery remains stubbornly uneven and tackling Britain’s asymmetric economy, split between a galloping London and South East and, at best, a cantering North and Midlands, looks as forlorn a prospect as it has for the past three decades.

Yet the bodies set up by Labour in 1998 to narrow these deep economic disparities – the nine English regional development agencies – were in coalition ministers’ crosshairs from day one. To Conservative eyes, RDAs were quintessentially old Labour. The state getting involved in promoting economic growth.

While the concept of “regions” was an unwelcome affectation, dreamt up by John Prescott in all his pomp running the sprawling Department of Environment, Transport and Regions.

In fact, David Cameron used his first major speech as prime minister to herald a different approach to driving local growth. It mattered little that the boards of the RDAs were private sector-led. Or that there was strong business support for retaining the northern agencies in particular. Or, indeed, that they were actually succeeding in their task of boosting growth. (In 2009, PriceWaterhouse Coopers calculated that the economic value they generated was equivalent to £4.50 for every £1 of public money invested).

But the RDAs fate was sealed because the Lib Dems didn’t think much of them either. Business secretary Vince Cable suggested scrapping them himself in a paper for the Reform think tank before the 2010 election. So when the “bonfire of the quangos” was lit, the English RDAs were the Guy Fawkes effigy placed right at the top of the pyre.

Since then, ministers have created a total of 39 local enterprise partnerships – effectively mini-RDAs but without the budgets – or the experienced staff – to drive local growth. This disjointed, stop-start approach, just as the economy was going through the bumpy 2010-12 period, was one of the more politically indulgent things the government has done.

And, potentially, one of the more politically costly.

In their 2010 manifesto, the Tories set out a series of “benchmarks” that are meant to allow voters to “judge the economic success or failure” of the government.  One of these measures should send shivers down the spines of Treasury ministers:

“[In order to] ensure the whole country shares in rising prosperity: We will increase the private sector’s share of the economy in all regions of the country, especially outside London and the South East.”

Some task, especially when you bear in mind the scale of the imbalance. Indeed, the Centre for Cities think tank has calculated that four out of every five jobs created in the private sector between 2010 and 2012 were in London.

So in those early days of the coalition, could ministers have made better use of the expertise, insight, know-how and roster of shovel-ready projects on the RDAs books to help with the task of stimulating growth and rebalancing the economy, especially in the north and midlands? This seems to be the view of Vince Cable, who has conceded scrapping them was “a little Maoist and chaotic.”

Do Conservative ministers now entertain similar doubts that they may have cut off their noses to spite their faces; as they continue to sell their story about how we are all on the road to the sunny uplands of economic prosperity? Perhaps they should, given the geographic under-appreciation of the UK’s return to growth.

According to a recent Ipsos-MORI poll, 49 per cent of people in Greater London thought the “economic condition of the country” would improve in 2015. Respondents in the Midlands lagged behind with 41 per cent sharing this assessment, while it was just 40 per cent for those in the north of England.

With the prospect of a ‘voteless recovery’ – with little political payback for the improving economic picture – and with so many marginal seats in the northern half of the country up for grabs – this really is one deficit George Osborne has to close.

Kevin Meagher is associate editor of Uncut

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4 Responses to “Scrapping RDAs has made Osborne’s task harder”

  1. Madasafish says:

    If RDAs were so successful from their startup in 1998, why did the South of England grow more than the other regions when they were operating?

    Was it because the RDAs were a waste of money, or are the regions outside the south full of lazy indolents with no business skills?

    Any cry to replace the RDAs has to start with an analysis of why they failed…

    And where is it?

  2. swatantra says:

    Britain is a Country of the Regions znd that is reflected in their food and quaint customs and accents. You can tell Yorkhire person from a Cornish person. Unless they are spad MPs who have been parachuted into working class areas to just get a safe seat. The worst thing the Tories did was abolish RDAs; now the call is for more Regionalism and Regional Govt.

  3. BenM says:

    It’s too late to convince the electorate to change sides through major set pieces.

    The flat non existent polling response to the Autumn statement proves that.

    The Tories are heading out of office, not a moment too soon for the country. The Osborne game playing has come to naught.

  4. LEPandRDAemployee says:

    I have worked for 2 RDAs, and 1 LEP; and have worked north of the border too. I what we miss from RDAs is their resources, expertise and capacity. There could have been an evolution from RDAs to LEPs, but instead the coalition decided to have a scorched earth policy.

    It wasn’t just the loss of RDAs – it was the loss of government offices, and a group of civil servants who understood their local and regional issues; and the loss of ALL regeneration funding (and subsequent community organisations/capacity) for the most deprived communities. We’re talking about 25 years of accumulated capacity and knowledge for regional and local economic development and regeneration just erased over an 18-month period. What I would have liked to have seen is some of this expertise and capacity retained and evolved into LEPs or such like.

    Contrast this with the USA. With the federal stimulus package, local economic development has blossomed and grown, and entered into new areas such as green energy and technologies since 2009.

    Instead what we’ve seen with LEPs is them, in the main, learning the ropes all over again sometimes with board members and Chairs who don’t know the brief. So some LEPs have wandered about for the first 3 years to finally decide that their priorities need to be business, skills, innovation. And guess what? government gives them money for roads.

    I think the bigger question is about resources for economic development activities – these are down to 1/3 of their levels in the 2000s. And even then, most are controlled by Whitehall – the main expenditure item is the Regional Growth Fund which is administered by Whitehall based civil servants. This coupled with swingeing cuts to local authorities. Means there is a lack of capacity and resources.

    In all evaluations and performance reviews, RDAs came out very well against their benchmark – Whitehall departments. What this proves at this point in time is that – create a focused organisation with resources and professionals, and they will get on with the job. Take note for LEPs, combined authorities etcetera.

    There’s a fair argument to be had about how these resources should have best been used. However, the agenda has moved on and its best asking what resources, powers and institutions the North now needs to boost its economic performance.

    And its more than grants etc. The bulk of public R&D spend and capital expenditure on transport goes to the Greater SE (I know I live there).

    At the end of the day people ask ‘where’s the evidence’. But with only 0.5% of public expenditure (at the peak) going to subnational economic development and regeneration in the noughties, and with some pretty substantial evaluation evidence – its been a completely political decision to ignore it all and instead punt the ‘shrill politics’ of bombast, denial and blame.

    Yes folks – the conservatives and lib dems deliberately decided to close it all down because they wanted to and it was an easy target, not because it made any informed sense or was a rational decision based on evidence.

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