Axing RDAs could be costly mistake says Bailey

THE abolition of Regional Development Agencies has been criticised by one of the West Midlands’ leading business experts.

Professor David Bailey, of Coventry University’s Business School, said many business organisations were concerned because of the Government’s lack of clarity over what would replace the RDA structure.

“Vince Cable and Eric Pickles have written to council and business leaders inviting them to replace RDAs with Local Enterprise Partnerships (LEPs),” he said.

“While Pickles and Cable have technically left open the possibility that some partnerships could match existing regional boundaries, the lack of powers envisaged for these new LEPs has left many business groups worrying that policy and support for business and economic development will be fragmented.”

He said the timing of the announcement came just as additional pressure was being placed on the private sector and the expectation it would generate the new jobs to replace those being shed in the public sector.

“When many have been calling for a rebalancing of the economy away from an over dependency on retail and financial services, one wonders how scrapping bodies which had been supporting manufacturing will actually help this along,” added Professor Bailey.

“While the new government may dress this up as decentralisation, the changes outlined so far involve a substantial degree of recentralisation to Whitehall, away from the regional level completely.
 
“This amounts to running an industrial policy from the centre and it’s doubtful that policy can be finessed to the degree that it is now, and a centralised policy will probably miss all sorts of opportunities that at the moment can be spotted more easily as much of industrial policy is effectively delivered regionally.”

There have been suggestions that the new LEPs will have responsibility for transport, housing, employment, enterprise and supporting business start-ups.

Professor Bailey said there was also a strong case for having some degree of regional planning otherwise there could be a fragmented and piecemeal approach to this important policy area.

“In reality we can expect a sizeable cut in funding for the regions and it is likely to come from existing budgets, notably the RDAs’ current funding of £1.4bn a year,” he said.
 
“The new LEPs will have to bid for funding against other private and public-private bodies, with ministers deciding where the cash goes. It isn’t clear as yet what funding LEPs will get other than what they can win from the growth fund.

“What is disappointing here is that the new government, after sending out hugely conflicting messages throughout and since the election campaign, has simply gone ahead and scrapped RDAs lock stock and barrel.”

He said business groups in the West Midlands had been supportive of the work done by Advantage West Midlands and would be “very sad” to see its demise.

“Of course, London gets to keep its Development Agency and will probably avoid the impending disruption in business support, industrial policy, planning and much more.

“So in other words, we have been told that it is all right to bail-out London based financial services, and hence the South East, to an incredible degree, but the mediocre long-term investment in the rest of England’s regions will be scaled back even further,” he said.

“I’m not impressed with this policy as it could prove to be a very costly mistake both for the economy and for manufacturing in the West Midlands,” he added.