House of Commons portcullis
House of Commons
Session 2000-01
Publications on the internet
Standing Committee on Regional Affairs

Regional Economic Performance and Imbalances

Standing Committee on Regional Affairs

Thursday 10 May 2001


[Mr. John McWilliam in the Chair]

Regional Economic Performance and Imbalances

1.30 pm

The Chairman: As this is the first meeting of the Regional Affairs Committee under the procedures set out in Standing Order No. 117—with which I assume all hon. Members are familiar—it may be convenient for hon. Members if I summarise the proceedings of the Committee.

To avoid confusion, I should be called either Mr. Chairman or Mr. McWilliam, not Mr. Deputy Speaker. Secondly, we shall begin with a statement from the Minister on the matter referred to the Committee by the House on 2 May. That will be followed by questions to the Minister on the statement, which may continue for up to an hour. We shall then move to the general debate on the matter referred to in a motion moved by the Minister; it is for her to decide whether to move that motion formally. Other hon. Members, including any sitting for English seats, not just the 13 core members of the Committee, will be called in the normal way until I call the Minister to wind up. At the conclusion of her speech, or at 4 o'clock, I shall put the question on the motion.

Mr. Anthony Steen (Totnes): On a point of order, Mr. McWilliam. Since the House will rise tomorrow and the Minister is sadly unlikely, even if she is returned, to be in her position after the election, is it appropriate for the Committee to sit this afternoon? It need not do so, because if no hon. Member were to stand up after I sit down, the Committee would adjourn. Do hon. Members feel it appropriate to fiddle while Rome burns? There are things to do outside; the campaign has started. Although we are, as always, delighted to see the Minister and it is a marvellous opportunity to quiz her because many things are happening in the regions—particularly in the south-west, which I represent, with all our foot and mouth problems—she could do nothing about such problems. If it sits, the Committee would be wasting its time, even though there are important matters to discuss. If no hon. Member gets up after I sit down, could the Committee adjourn until after the general election?

Mr. A. J. Beith (Berwick-upon-Tweed): Further to that point of order, Mr. McWilliam. I am confident that I can rely on you to protect the rights of members of the Committee, and of other hon. Members who sit for English constituencies, to put their concerns on the future of regional expenditure and other regional issues. If we were not allowed to proceed, we would be denied the opportunity of questioning some of the proposals for cuts in support for the regions, which the Conservatives announced this morning.

The Chairman: First, the Italian elections are nothing to do with us, so Rome is out of the question. Secondly, we are sitting at the direction of the House. Thirdly, I see a quorum before me, so there is no reason why we should not sit.

1.33 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): Thank you, Mr. McWilliam. I am delighted to see you in the Chair; I am sure that that augurs well for what I hope is an important and useful sitting of the Committee. I am delighted that the Committee has been re-established and I do not share the views of the hon. Member for Totnes (Mr. Steen).

I begin by paying tribute to all my hon. Friends--Ministers and Back Benchers--and hon. Members in other parties who have, for many years and long before 1997, pressed the case for a strong regional dimension to economic and other policies. Some of those hon. Members are present as Committee members and others, including my right hon. Friends the Minister for Trade and the Deputy Prime Minister—who have long been strong supporters of the regional case and have ensured that it is a strong theme of the Government's policy—are not. Given the significant developments in regional issues over the past four years, it is important that developments specific to the English regions are discussed by a Committee along the same lines as the Scotland, Wales and Northern Ireland Grand Committees.

During the past four years, how to raise the economic performance of the English regions and deal with regional imbalances has been one of the Government's key priorities, although it has not always attracted the attention that we believe it deserves. There have been some considerable policy developments. That the matter is a priority springs from our firmly held belief that regionally led growth is not only desirable in its own right, but is an essential element of the drive to raise the economic performance of the nation as a whole.

When we were elected in 1997, our priority for regional development in England was to ensure that the right framework could be put in place for regional economies to flourish in the future. We wanted to ensure that all regions of the country, including the best performing ones, have the opportunity to reach their full economic potential. I wish to put it on the record that, contrary to some press reports, the Government have never denied that there are economic differences between some parts of the north and south. Regional gross domestic product figures tell their own story. For example, within the United Kingdom, based on 1999 figures, gross domestic product per head in the north-east made a welcome increase to about £10,000, but that lags behind the United Kingdom average of £13,000 per head and the south-east figure of £15,000 per head. However, we cannot lose sight either of the fact that disparities in economic performance are, if anything, even more stark within some regions than they are between regions.

It may come as a surprise to some people when they realise that the supposedly prosperous south-east of England barely scrapes above the European Union average for GDP. In fact, only London is comfortably ahead of that average and no one, particularly my hon. Friend the Member for Regents Park and Kensington, North (Ms Buck), needs telling that there are significant pockets of deprivation in the capital, too. That serves only to reiterate my point about economic imbalances being more pronounced within regions.

Regional disparities are nothing new, yet no previous Government have seriously attempted to tackle the country's historical regional inequalities in a systematic and sustained way. Even in a period of growth, we know from history that it does not automatically follow that there will be a greater sharing of wealth throughout regions or communities. Areas that do not, for whatever reason, share in rising prosperity represent a huge waste of economic, human and social potential.

I come now to how the Government have dealt with such issues. In 1997, we started from the premise that we did not have all the answers. It was also clear that individual regions faced different problems and that no single solution could be applied throughout the whole country. We wanted to establish structures that ensured strategic decision making and accountability at regional and local level. We therefore set up regional development agencies and set them the tasks, first, of building up a shared understanding and consensus within each region of the challenges that they faced and, secondly, of developing a strategy to meet those challenges and to implement the vision. The Act that established the RDAs was passed in the Government's first parliamentary Session. Eight RDAs were set up in April 1999, followed by the London development agency in July 2000. The eight initial RDAs inherited £900 million from existing programmes, such as the single regeneration budget, the land and property budget, the skills development fund and the competitiveness development fund.

RDAs are the building blocks for economic growth in the regions. They represent a bottom-up, rather than a top-down, approach and, as such, they are a form of economic devolution to the English regions. It is a major step for a United Kingdom Government to decentralise economic decision making in such a manner, and I hope that that will be seen as a positive commitment by us to the wider regional agenda.

The RDAs have made an excellent start since their establishment only two years ago. As hon. Members wish to contribute to the debate, I shall merely offer a brief summary of their achievements. They have consulted with local partners to produce regional strategies that provide a focal point for regional economic development, and they have begun to establish a promising track record in the creation and protection of jobs—35,000 jobs were created or saved in the first year. Their good start shows that they have the potential to establish lasting regional economic stability and growth.

Their swift success was rewarded in the Chancellor of the Exchequer's spending review 2000, which introduced three major new measures. First, they were granted a substantial year-on-year increase in resources, from £1.2 billion for the present year to £1.7 billion in the 2003-04. Secondly, they were given more budgetary flexibility, which will lead to a single funding scheme in April 2002. Thirdly, they were given a strengthened economic regeneration role.

The decision to allow RDAs maximum flexibility in the allocation of their resources is particularly significant. Their programmes will no longer be administered by three Departments—my Department, the Department of Trade and Industry, and the Department for Education and Employment. Instead, they and their local partners will be given the freedom to identify the overriding priorities of their regions and to allocate resources accordingly. They will be able to choose to spend more money on, for example, regeneration, training, or the promotion of business and enterprise. RDAs have therefore been given the tools to build on their success and to make an even greater difference in their regions.

I expect the RDAs to deliver on several key matters over the coming years: the promotion of competitiveness in their regions, including the development of clusters of innovation; the regeneration of brownfield land and buildings; the creation and protection of more jobs; the promotion of enterprise and business-led growth, and of other means of tackling deprivation and promoting social renewal.

The counterpart of that greater freedom is that we are establishing challenging collective targets for the RDAs. In March 2001, we set out 11 targets that we expect them to achieve. Those targets are consistent with the public service agreements signed up to in the spending review 2000 by the three parent Departments—the Department of the Environment, Transport and the Regions, the Department of Trade and Industry and the Department for Education and Employment. RDAs will also be key players in the delivery of the measures set out in the urban and rural White Papers, and in the recent White Paper on enterprise and skills innovation that was produced by the Department of Trade and Industry and the Department for Education and Employment.

As we develop economic policies that are regionally generated, we must ensure that there is local and regional accountability. In that vein, we have recognised the need for RDAs to respect the views and needs of the regions that they serve. To that end, we have encouraged the creation of voluntary regional chambers, to provide the main link between the RDA and the region. With the increased flexibility and resources that we have given to RDAs, the chambers' role has become more crucial than ever. That is why we announced £5 million a year for chambers to provide for the expanded scrutiny role that the new flexibility of RDAs requires the chambers to have.

The expanded role for the chambers could also take in regions' wider strategic activities and frameworks, such as regional sustainable development frameworks and regional planning guidance, which in turn incorporates regional transport strategies.

As a first step, by working together and providing joined-up governance for the regions, the RDAs, chambers and other partners such as Government offices have the potential to make a real impact on, and difference to, people's lives. That is what the matter is about, and why it is such a tragedy and an indictment that the hon. Member for Totnes is the only member of Her Majesty's Opposition who has taken the time to participate in the debate and share concerns about regions. I welcome the hon. Gentleman's presence, but it is a pity that today he is on his own.

I conclude by restating the importance that the Government attach to regional development. It is not putting it to strongly to state that the matter is crucial to the future well-being of the whole country. By setting up RDAs, we have put in place the building blocks for better strategic co-ordination at regional level. We have delivered resources to the RDAs and given them the flexibility that they need to do the job. That has been a radical and fundamentally different approach—not one that simply tinkers at the edges of previous policies. The approach is also long term, and is aimed not at holding back the best performing regions to allow the others to catch up, but to get all our regions firing on all cylinders and widening the circle of winners, as my right hon. Friend the Secretary of State for Trade and Industry recently said.

In short, we see RDAs as the strategic drivers of economic development in our regions, and therefore for the whole country. There is clearly some say to go before we can turn round several of our underperforming areas, but we are now better placed than ever before to achieve across-the-board growth, and thus ensure that we get all our regions performing to their full economic potential.


House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2001
Prepared 10 May 2001