Good news on regions but coalition needs to go further

LEPs will further strengthen city regions like Greater Manchester and Leeds and offer some of the powers that these areas have secured to other conurbations.

Our guest writer is Kieran Larkin, an analyst at the Centre for Cities

The coalition agreement, released on Thursday, confirmed that the Government will take forward the Conservatives’ manifesto commitment to scrap Regional Development Agencies (RDAs) and introduce Local Enterprise Partnerships (LEPs) in their place. In many ways it is unsurprising that the Lib/Con coalition has chosen to take a different direction; RDAs are irrefutably a Labour project and are closely associated with John Prescott.

Both of the coalition parties have criticised the agencies’ effectiveness and accountability. While RDAs can point to the positive impact they’ve had – they claim to have created 213,000 additional jobs between 2002 and 2007 – and can demonstrate vocal support from the business lobby, they’ve also had some pretty big failings.

I think LEPs – partnerships between local authorities and business tasked with delivering policies like business support – are a good idea. LEPs will further strengthen city regions like Greater Manchester and Leeds and offer some of the powers that these areas have secured to other conurbations.

It is possible to be too dogmatic, and too geeky, about who delivers what and which organisational form is best. But it does make sense to take decisions on jobs and business growth policies over the same geographic area as people actually go to work. Regions are too big, local authorities are too small.

Therefore, handing over the powers and budgets of RDAs to LEPs will improve policy making. Labour can rightly argue that they have already recognised this fact and have been transferring powers to statutory city regions.

And the harsh reality is that from next year there may be very little left of the RDAs to share out. Under Labour’s plans the RDA budget was already set to fall from £2.3bn last year to £1.7bn in 2010-11.

Business secretary Vince Cable has announced that RDAs in the south will see their budgets cut as part of this year’s £6bn efficiency savings. In the medium term, the other RDAs are not off the hook; the pot of money remaining for LEPs will not be left unscathed.

This means that reform needs to go beyond the RDAs. To shape their economy LEPs need to have influence over policy areas like housing, planning, skills, and transport. Budgets of other government agencies also need to be devolved, and local authorities will need to be encouraged to pool some of their own powers, in the interest of their wider economy.

RDAs’ days look numbered, but to ensure LEPs are a success, and that they help to rebuild the economy, the Government shouldn’t stop at RDAs when drawing up the powers that cities need.

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