[Glenn Athey] RDAs probably do not deserve all of the criticism levelled at them, but in my view they were not the best solution to local and regional economic challenges either. RDAs were agencies of central government and that was their fundamental flaw. The big appeal of localism for me personally is being left alone by Whitehall to get on and provide innovative, entrepreneurial solutions to local economic challenges and opportunities. This is why I got involved in local economic development in the first place in the 1990s. On the other hand, what is unappealing is the sheer lack of financial resources. With local authority budgets cut, and approximately 1/3 economic development and regeneration spending retained in the form of RGF, TSB and LEP capacity funding – there is very little funding around.
I think RDAs were ripe for change. If you had asked me in 1998, after completing a Ph.D. on “what makes a best practice economic development agency” I wouldn’t have suggested the RDA model that followed. I wouldn’t have said that agencies of central government, with ever expanding remits, and ever tightening purse strings were the answer. The most interesting agencies in the 1990s were either those that were entrepreneurial and operated near the market (such as Greater London Enterprise); or those that were government agencies but were all powerful and called the shots (such as Singapore Economic Development Board).
RDAs were central government’s strategic funding bodies. Having worked in two RDAs, there were some very dedicated and professional people who strived to deliver real positive change for local economies. They did some good. However, RDAs were always tied to government targets and directives.
I don’t buy the ‘bureaucratic and inefficient’ accusations. There is no evidence of this. Time and again independent audits and HM Treasury reviews rated RDAs highly compared to other parts of government. The RDA evaluation – probably the most expensive and thorough of its kind – found that RDA cost benefit ratios were at the upper end of the scale, compared to the norms of say, transport project appraisal. Get this – a lot of the money was spent on local projects, led by local partners. People who criticise the evaluation (on very thin evidence) are actually undermining the case for local economic development and regeneration.
I think the process of RDA abolition was rushed. Far better to have a proper transition to a local authority driven model, given the time it will take to set up the new fiscal powers.
On balance, I think localism is a good thing - it has far more potential to deliver the truly innovative and entrepreneurial approaches that local economic development needs than RDAs ever did. However, how to do this with so few resources over the next few years is a major challenge.
What can we learn from RDAs and their abolition?
What can we learn from RDAs and their abolition? Several months ago, whilst still working in one of England’s Regional Development Agencies (EEDA), I was asked by the International Consultant Economists’ Association if I could do a presentation about the ‘doing away with’ the RDAs, and to discuss whether they would be missed. I delivered this presentation at the ICEA on 11 October, and again to postgraduate students in the University of Cambridge’s Department of Land Economy.
Of course, since July 2011, I ceased to work in an RDA. The past few months have provided me with the space and opportunity to reflect on RDAs. The main jist of my presentation was as follows:
- Its important to ‘fess up to my particular circumstances – I worked in two RDAs – EEDA and LDA, and I worked for a think tank (the Centre for Cities), and Scottish Enterprise. Perhaps more importantly I did a PhD 1995-98 on what development agencies were for and what made a good development agencies.
- At that time the best agencies were ones that sat between government and business, and could be a bridge and catalyst to economic initiatives and developments. They were open, learning organisations that were entrepreneurial.
- If you’d have asked me in 1998 whether England’s RDAs should be agencies of Whitehall departments – I’ve have definitely said “no”!
- Having said that, I enjoyed working in RDAs, and was fortunate to meet and work with some dedicated professional and effective people – who strived to make the best out of the situation and context. I have no regrets about working in RDAs at all, and I learnt a lot.
- RDAs were the culmination of 60-odd years of regional policy, and the need to put in place some coherence and strategic sense to the raft of local, regional and national initiatives for enterprise, the economy and regeneration that were around in the mid-1990s
- RDAs were creatures of Whitehall – arms length agencies, answerable to the Secretary of State and parliament
- At the start RDAs were no more than administrators of central government grants and initiatives – it took a lot of lobbying and pressure to get them the “single pot” and more
- There was the 2004 failed referendum for a North East regional assembly, then RDA budget cuts in 2007. But I also think that the Sub National Review vastly inflated expectations for a new ‘localism’ and then dashed them completely.
- Also – during the credit crunch and recession, RDAs had almost £1 billion removed from their budgets – this mostly took a toll on local projects, including some that were already contractual committments. Local partners were not happy.
THE LACK OF ANY NATIONAL ECONOMIC POLICY OR INDUSTRIAL POLICY
- The RDAs were the government’s central plank for diversifying the economy, and for economic development
- But there was no real national economic strategy of any merit – instead the default lack of strategy resulted in consumer and financial industries (based on the glut of cheap credit) taking the lead
- RDAs sometimes worked at odds with government – e.g. RDAs championed the commercialisation of innovation and technology, the government implemented a traditional ‘science and technology’ investment approach
(NOT) KEEPING CENTRALISATION AT BAY
- Despite the ‘single pot’ RDAs still did a lot of activities at the governments bidding (e.g. innovation vouchers, business link, MAS, etc)
- Certain initiatives such as “solutions for business” effectively re-centralised enterprise support activities and stamped on any scope for local or regional innovation
REASONS FOR ABOLITION
- I don’t buy the idea that RDAs were wasteful and bureaucratic – time and again audits and studies by HMT and others found RDAs to be amongst the most efficient and effective parts of the government machinery
- Independent evaluations of impact – came out quite favourably. There have been some claims that the evaluation was not independent nor rigorous. It was commissioned by BIS and cost something like £2 million – an unprecedented level of effort and detail for an evaluation. If this is not regarded as valuable and valid, then its probably best not to evaluate anything ever again and just make up policy on the hoof
- There is merit in the fact that the goals of regional policy failed – there was not the desired convergence of regional economic performance, many new jobs were in the public sector and ultimately unsustainable
- As for functional economic areas – there may be some valid points as regions are administrative areas only. But there are also functional administrative areas – it might only make sense to have certain kinds of expertise or capacity at a super-local (or regional) level – such as was done by RDAs for the much applauded strategic transport prioritisation work they did.
- Perhaps the most valid, yet unsaid, reason for abolition is that, as central government agencies, RDAs lacked the ability to be truly dynamic, innovative and entrepreneurial. Whether its the conditions attached to funding, or whitehall civil servants breathing down your neck and moving the goalposts every year – this is not conducive to the ‘best practice’ models of economic development agencies I had in the late 1990s.
MY VIEWS ON WHAT’S NEXT
- The money will be missed by local communities – central government money for economic development and regeneration, at my guestimate has been slashed by at least 2/3 (not counting local government’s own cuts). This is unfortunate at a time of great stress for the economy
- Personally I think that giving local authorities increased powers is a good idea, and removing central government control and interference is also good
- The proposed new fiscal powers for local government are to be welcomed
- Although I think that and local economic development activities will not be as effective unless there are complementary national policies and strategies
- I think that the abrupt abolition and wind down of RDAs was misguided – a transitionary phase into a local authority led model would have been best
- PS there’s lots of learning from RDAs – look at the impact evaluation, audits – there are all clues to what kinds of activities make the biggest economic impact, what kinds of organisational cultures and behaviours lead to better results
- All in all – its exciting times to be involved in economic development. Hopefully scope for new thinking, new ideas, and practical action.