Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Memoranda

Memorandum by London Development Agency (GRI 25)

  1.  The London Development Agency (LDA) is one of the nine Regional Development Agencies that have been established in England. The LDA is London's business-led economic development agency, working to the Mayor to deliver the economic aspects of a programme for renewal. The LDA, as the Mayor's economic development agency, is democratically accountable to the people of London through the Mayor. The main purposes of the LDA are defined by the Regional Development Agencies Act as:

    —  To further the economic development and regeneration of its area;

    —  To promote business efficiency, investment and competitiveness in its area;

    —  To promote employment in its area;

    —  To enhance the development and application of skills relevant to employment in its area;

    —  To contribute to the achievement of sustainable development in the United Kingdom, where it is relevant to do so.

  2.  There are four policy objectives for economic development in London:

    —  Supporting London's economic growth, both as a world business centre and as a balanced regional economy.

    —  Developing London as a city of knowledge and learning in order to fulfil the potential of its people and its businesses.

    —  Working to support London's continuing renewal as a vibrant and inclusive city, acknowledging the ethnic, cultural and linguistic diversity of London's people as an asset.

    —  Ensuring that London's growth respects the need for social progress, environmental protection and conservation of scarce resources.

  The LDA plays a key role in delivering and co-ordinating activities to achieve these objectives. However, the LDA is not a universal service provider. The LDA works with its Charter partners and other public and private agencies to deliver the objectives for economic development in London.

  3.  The LDA strongly supports the role of area-based initiatives in government policy. The work of the Social Exclusion Unit, for example, demonstrates how market and co-ordination failures tend to be cumulative and to manifest themselves geographically. The geographical dimensions of market and government failures require geographical—ie area-based—solutions.

  4.  The LDA also agrees with the well-rehearsed, general criticisms of past central government area-based initiatives (ABIs) that they have tended to be:

    —  ad-hoc;

    —  expensive in terms of limited local capacity and personnel;

    —  often pursued in ignorance of other relevant local initiatives;

    —  short on sustainability and policy linkages; and

    —  lacking rigorous processes for lesson-learning.

  5.  The Single Regeneration Budget (SRB) was an improvement on previous ABI regimes. Created to overcome some of these problems by bringing together a range of separate funds, it was a "single pot" of its day. Through a lightly directed bidding process, it gave local interests—assumed to have the local knowledge essential for effective ABIs—(limited) influence over how and where projects should be located and funded.

  6.  The flexibility and broad scope of SRB also represented, we believe, a step forward in combining the land and property objectives of many previous ABIs with a more comprehensive, partnership-based, regeneration approach. Consequently, SRB has proved very flexible and "holistic" in its approach to regeneration. Of the 170 SRB programmes (involving 3000 individual projects) that LDA inherited, we have many that are very well designed and very effective.

  7.  However, the very flexibility of SRB has proved to be one of its drawbacks; "flexibility" has often been a euphemism for a degree of randomness. The process of the SRB fund allocation, with awards made by central government (DETR) to a small local partnership, has meant that they have often failed to reflect wider, regional, needs. This is the case even when SRB projects have been led by local authorities: the scale of the problems they sought to address have often extended beyond local authority boundaries.

  8.  LDA believes that ABIs are necessary. They are needed in order to address the spatially concentrated problems created by the workings and failings of market forces in the urban system; to address social exclusion through spatial targetting of additional resources; and to supplement mainstream programmes in areas of severe deprivation. But experience shows that they need to be:

    —  set in the context of regional economic strategies;

    —  linked into national policies and fiscal redistribution;

    —  informed by community participation on a consistent basis;

    —  underpinned by a rigorous and relevant evidence base;

    —  subject to a degree of local democratic accountability.

  9.  Area based activities devised by the regional development agencies (RDAs) fit that bill. By acting as an intermediary between national and local policies and agents, RDAs are well placed to:

    —  identify localities which the markets and government have failed but which can be of strategic significance to the region;

    —  select from a wide range of targetted physical and human capital interventions;

    —  co-ordinate strategy with national and local governments;

    —  and co-ordinate delivery with local partners in the public, private and third sectors.

  10.  The "London Plan", the Greater London Authority's draft spatial development plan to accommodate the expected future growth of the capital, has taken an area-based approach by identifying areas of (i) regeneration, (ii) intensification and (iii) opportunity. LDA has created a consistent set of "Priority Areas" in London. This year we have concentrated on three: Wembley and Park Royal, the City Fringe and London Riverside. In future years we will include: Lower Lee valley, Upper Lee Valley, South Central area, King's Cross/Finsbury Park and Woolwich/North Bexley. We have done this through a systematic process of:

    —  consulting widely on the production of a London-wide economic development strategy;

    —  drawing on regeneration research and best practice through the RDA network, Best Value reviews and other sources to identify prime areas and cross-cutting themes;

    —  designing sub-regional strategies for each priority area;

    —  signing up key regional stakeholders to a Charter for London;

    —  setting up "matrix groups" for each of the priority areas which include members from external stakeholder groups to agree priorities and propose specific interventions.

  11.  We have specified LDA's role as:

    —  leadership with ideas, providing strategic leadership by building consensus around London's priorities and co-ordinating the collective efforts of those involved in London's economic development;

    —  direct impact through our own resources, focusing them on areas of greatest opportunity and need;

    —  leveraging the resources of our partners, attracting public and private sector resources to address shared priorities and maximise our combined impact.

  12.  We have experienced some difficulties as a result of the exclusion of key elements of economic development from the remit of the RDAs, eg transport, housing, delivery of business support. The value we have found in our ability—unique amongst the RDAs—to work closely with our GLA family member, Transport for London (TfL), highlights this gap for others. We welcome the recent announcements from HMT as a result of the SR2002 spending review which begins to redress the omission.

  13.  There are also continuing issues with DTI's performance monitoring and targets regime for the RDAs. Whilst we acknowledge the attractions of a few clear and measurable targets for accountability and transparency, the range of problems we have to deal with and the range of possible delivery mechanisms we can use means that the "simplicity" of the monitoring regime does not reflect the complexity of the regeneration problem.

  14.  It follows that Government should leave decisions on new ABIs to its regional strategic bodies: the RDAs. Even new ABIs that cross regional boundaries can, we believe, remain the responsibility of the relevant sub-set of RDAs, since we have a well-developed network which is increasingly enabling us to work together, to share strategies and co-ordinate work programmes.

  15.  We do acknowledge that central government will of course take the lead in selecting and managing ABIs of perceived national significance. However, we—along with all the other RDAs—would equally expect to be consulted fully on the regional and local implications of such decisions.

  16.  While new endogenous growth theories and evolving policy approaches such as "economic inclusion" give the RDAs an ever-widening canvas on which to paint, we accept that there are many policy issues that continue to fall outside our remit—eg fiscal policy, health sector policy, law and order—for which an ABI approach might conceivably be considered. In these cases we welcome the role of ODPM's Regional Co-ordination Unit in acting as the "gatekeeper" for the regions in relation to departments, providing them with guidelines on when—and when not—to consider introducing an ABI.

  17.  Other support for RDAs, such as the piloting of truly innovative policy vehicles, and guidance on agreed project appraisal methodologies or on how to interpret EU directives is also valued.

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