Centre for Cities

RDAs - parties need to be clearer

Earlier this month, we said that the scrap versus keep debate on RDAs was too simplistic. We challenged elements of the PwC evaluation of regional development agencies, and shifted attention onto the actual programmes that RDAs run.

This week, we published our second comment piece on RDAs - this one highlights the positions of each of the three main parties. In each case, we need more clarity before the parties issue their Manifestos.

For example:

• Labour is deeply wedded to RDAs and remains the only party committed to their continued existence - especially with Peter Mandelson at the helm of their sponsor department, BIS. But overall, Labour's approach to RDAs has been overly technical and has further complicated the regional tier. There are now too many regional bodies, and central government still calls the shots.

• The Conservatives' position has been inconsistent. The official party line is that RDAs will lose their planning powers, and - if local authorities within a region say so - each RDA will transition into a number of Local Enterprise Partnerships. But it's not exactly clear how this would happen. And Shadow Ministers have confused the situation by saying different things - with CLG spokespeople pushing harder to get rid of RDAs.

• Liberal Democrats are also unclear, and low on detail. Officially, they are committed to reforming RDAs - but Vince Cable has gone further, by suggesting that RDAs - and all their programmes - should be abolished completely. It's not clear whether he really means this, or what his CLG counterpart Julia Goldsworthy thinks.

This confusing situation is far from satisfactory. As I hinted a few weeks ago, we expect the Tories to issue a clarifying statement on this early in the New Year. With the General Election now imminent, all three parties need to clarify their position - and decide exactly what they would do with RDAs' programme funding.

Meanwhile, business groups are starting to speak up for RDAs - we're noticing a concerted pro-RDA campaign by national and regional business organisations. It remains to be seen whether this will have any impact on the Tories' position.

Birmingham needs to grow its private sector

Here's a stark fact. Between 1997 and 2008, total private sector employment across the wider Birmingham economy actually fell by 50k jobs - and over the same period, public sector employment increased by more than 80k jobs.

With public spending cuts on the horizon, cities like Birmingham will not be able to rely as much on the public sector to drive future growth. Adding private sector jobs - especially in the knowledge economy - will be crucial.

We've just published a report on Birmingham, highlighting the need for the city to grow its private sector economy. Birmingham has a lot of assets, but needs to make better use of them - e.g. its young and diverse population, and big pool (over 30k) of research students.

The report has triggered quite a bit of debate in the city. Here's some reaction from the Birmingham Post and blogger Kate Cooper - plus my comment in the Post.

PBR: Darling has the V-Factor

There's been a lot of talk this year about the shape of the recession-recovery. Will it be U-shaped (gradual and slow), L-shaped (very slow and protracted), or W-shaped (double-dip)? The more optimistic commentators have been calling a V-shaped recovery, i.e. a sharp rebound. 

In today's Pre-Budget Report, Chancellor Alistair Darling puts himself even more firmly in the V camp. You could say he's got the V-Factor.

The Treasury's growth forecast assumes quite a large trampoline bounce. This year, the economy will shrink by 4.75% - the biggest 1-year contraction since WW2. Next year, it's due to grow by 1.0-1.5%. And by 2011, growth is forecast at 3.5%.

That's a big bounce, and a very sharp V. If public spending cuts make the recovery look more like one of those other letters (U, L, W), then the deficit  - projected to be £140 billion by 2011-12, or 9% of GDP - will be an even bigger share of GDP. Let's hope Alistair has got his sums, and his alphabet, right.

PBR and Tax Increment Financing

As expected, the Pre Budget Report has just given a cautious nudge towards Tax Increment Financing. No actual pilots yet - more work needed. Details in Chapter 4 (paras 4.35-4.36).

"The Government is interested in exploring, subject to the overall fiscal position, what further finance mechanisms, powers and flexibilities could support local authorities to drive growth and innovation most effectively.

"In light of this, the Government will continue to examine the framework that would be needed to implement Tax Increment Financing and consider the primary legislation that would be needed if schemes were to be introduced.

"The Government will also examine the scope for local authorities to borrow against future Community Infrastructure Levy revenues...and revenues from new council homes."

Other related points:

• Infrastructure UK will be set up in 2010, inside the Treasury. Chaired by Paul Skinner, its strategy will be published at Budget time, and it will focus on stimulating private sector investment in new infrastructure. (see paras 4.30-4.32)
• Govt will shortly publish a revised Planning Policy Statement for economic development, to speed up the local planning process and focus it on growth.
• Agreements with Manchester and Leeds City Region Pilots are also in there.

RDAs - "scrap v keep" is too simplistic

The future of Regional Development Agencies has become one of those dividing lines between the three main parties. At first glance, it looks like Labour wants to keep RDAs intact - and the Tories & Lib Dems want to scrap them. (The photo is Steve Broomhead, by the way - CEO of the North West RDA)

But in fact, the parties' positions are not quite as clear as that:

• The Labour Government is already planning to cut RDA budgets from next year onwards - and the Treasury is looking to RDAs for further savings from 2011.
• The Tories won't quite scrap all RDAs - they will leave that decision to the local authorities in each region, and that could mean a few remain (like One North East and Yorkshire Forward). 
• The Lib Dems say they want to scrap RDAs, but haven't yet worked out what would take their place.

We think the "scrap versus keep" RDAs debate is too simplistic. Scrapping RDAs would save some money - but not that much, because only 7% of their budget is spent on admin. Keeping them fully intact is not an option, either - the next Govt needs to look closely at that other 93%, and see how it could deliver better value for money.

Instead, we should focus more on the programmes that RDAs currently run - and work out (1) whether those programmes are effective, and (2) whether they could be delivered more effectvely by other agencies, or at a different level.

We've started to do this today - see this comment from my colleague Kieran Larkin. His analysis draws on the Government-commissioned PwC evaluation that Ministers love to quote - the one that says RDAs deliver £4.50 of economic benefit for every pound that they spend. Which kind of suggests we need more of them, not less...

We challenge the £4.50 headline, by taking a closer look at the numbers that lie underneath it. Not many people have actually read the PwC evaluation (it was quite long), and we think its findings were probably overstated. So here are some of the facts we found:

• The PwC evaluation was based on RDAs' own project evaluations and surveys of businesses that had received RDA support - and it was carried out before the recession. So its findings were probably overstated.
• RDAs' performance was uneven - the economic impact from their business programmes was far higher than the impact achieved from regeneration and skills programmes.
• RDAs have helped to achieve a range of outputs - jobs, skills, businesses, land remediation - but the additionality of some outputs (e.g. land remediation) was far higher than others (e.g. business assists).
• One North East has had by far the highest spend per head - which helps explain why it is the most popular.
• On average, RDAs account for only 0.7% of total public spending in a region - a lot less than many think.

We think that future policy on RDAs should take account of these facts.

And if you're confused by the Tories' position, here is Lord Bates' explanation - he's the shadow CLG minister in the House of Lords...

"Technically, RDAs will go - and they will definitely lose their powers over planning and housing. RDAs will instead be replaced in a seamless transition by business-led Local Enterprise Partnerships, which will report to BIS.

"However, there is a paradox here. We believe in localism - so if the local authorities in a region want to keep a slimmed-down regional body, they will be able to do so. We are quite relaxed about the actual configuration of sub-national governance."

Sounds like a contender for the next Foot in Mouth award.

In the next week, we'll challenge each of the three main party positions - and set out what we think should happen to RDAs.

Senior Analyst, Centre for Cities

We're looking for a new Senior Analyst to join the Centre. Here's the job ad - also in Guardian jobs. Salary is £38-48k. Deadline for applications is Mon 4th Jan. 

This is a new position. The Senior Analyst will play a big role in developing and delivering our research and policy advice - e.g. leading research project teams, line managing a couple of Analysts, and doing some of our media work.

This could suit you if you've got the right urban policy and research experience, and maybe expertise in e.g. local government finance or land economics. You could be working in Whitehall, or an RDA, or a private consultancy - and might fancy a shot at Think Tank Land.

With an election coming up, and a possible new Government, this is a good opportunity to help us shape the next phase of urban policy.

Do email me if you're interested - d.finch@centreforcities.org

Leeds leads

Congratulations to the Leeds City Region for signing up to its pilot programme - the first (and biggest) city-region to do so.

I was speaking at the Leeds City Region Summit last Friday. Here are my comments on the pilot programme.

This might look like just another strategy - but it's actually quite a big deal, and a real step forward for the 11 local authorities in and around Leeds. By simplifying and streamlining lots of different funding streams, it will help the Leeds City Region move from recession to recovery.

Here are the main highlights:

• Housing and regeneration: The 11 City Region Leaders will set up a new Joint Housing & Regeneration Board, with the Homes & Communities Agency. This will co-ordinate lots of different public funding streams, and target them on an agreed shortlist of priority projects.
• Innovation: The City Region will prepare an Innovation Capital Prospectus and Investment Plan by April 2010. This will coordinate and commission investment in key science and innovation projects.
• Transport: A 20-year Transport Strategy and 10-year implementation plan with a single consolidated funding package.
• Skills and worklessness: A shadow Employment & Skills Board will be in place in the next few weeks. It will draw up an Employment and Skills Plan for the City Region, and will eventually commission adult skills provision across the whole city-region.

All good stuff, and proof that city-regions are really moving forward. But to be honest, most of it is common sense and long overdue - simpler funding packages, joint plans, better coordination between public agencies, etc.

The hard work starts now. After sorting out its internal wiring, Leeds City Region now needs to focus on delivering real improvements for the 3 million people that live there - and turn all those boards and plans into action on the ground, in places like Bradford, Wakefield, Barnsley and Halifax. That won't be easy. With a public spending squeeze round the corner, local politicians will soon face some really tough choices.

All three main parties were represented at the Summit. But the City Region is a bit of a headache for all of them:

• Labour has so far given only muted support to city-regions. For them, the Leeds City Region could soon start to challenge the dominance of the regional development agency Yorkshire Forward - especially if, like Oliver, the City Region starts to ask for more.
• The Tories' plans for elected mayors in Leeds and Wakefield could well cause a rift within the Leeds City Region - we think they should rethink those plans, and go for a Metro Mayor instead. It's also not clear whether the Tories will get rid of Yorkshire Forward, or scale it back.
• The Liberal Democrats' position isn't that clear. They are vocal advocates of localism, but they don't really talk about the more strategic brand of localism that is Leeds City Region.

And here's the big challenge for the City Region. As they take on more responsibility for tough decisions on cuts and investment, the 11 City Region authorities won't be able to blame Whitehall as much.

PS Our recent report on the Leeds City Region found that its towns and cities are becoming more interdependent and distinct. This suggests that all those in the City Region should worry about turf less, and collaborate more. That will mean an even bigger focus on strengthening jobs growth in Leeds - the key driver of the City Region. Making sure that transport, skills and housing are helping people to access those jobs. And building on the distinct assets of all the other towns and cities. Easier said than done...

Young Jobseekers

Here's one of the odd things about this recession - unemployment is high, but not as high as we all expected.

So far, output levels have fallen by a massive 6% - but the recent rise in unemployment has been less steep than many feared. Everyone thought unemployment would have reached 3 million by now - but the official ILO measure is showing 2.46 million right now. That's 7.8% of the adult workforce - still high, but lower than the 13% in Ireland and 10% in the US.

Another puzzle is the big difference between the wider ILO measure of unemployment, and the claimant count. Roughly 1.6 million are now claiming Jobseeker's Allowance - almost 1m fewer than the total unemployed number.

Here's another. A few months ago, everyone was predicting 1m unemployed young people. So far, the official number is still some way below that (943k).

How come we're managing to keep a lid on unemployment rising? And why aren't more people signing on for JSA?

Official explanations include the big increase in part-time work. Employers are shifting more workers than ever before, from full-time to part-time. This is helping to limit the number of job losses, and keeping total unemployment below the 3 million mark.

The Government is taking some of the credit, pointing to the Future Jobs Fund - set up earlier this year, to combat youth unemployment. I got an update on how the Fund is performing, when I chaired a conference in Birmingham yesterday on youth unemployment.

The Fund aims to create 150k temporary jobs over the next year or two. It's part of the wider Young Person's Guarantee, which will be fully up and running from Jan 2010. The Fund has now provided enough money to create 95k jobs for young people and those in unemployment hotspots.

But the Fund has only just started. Only a few hundred real people have been placed in real jobs so far. Swindon - where youth unemployment has risen very sharply - has successfully bid for over 200 jobs through the Fund, but now has to match those jobs to its young unemployed. DWP is aiming to fill 30k of those 95k jobs up to March 2010.

So if the Future Jobs Fund has only just started to kick in, why is the claimant count so much lower than expected?

Here's one answer - lots of young unemployed people simply aren't signing on.

I chaired a panel of six young men at yesterday's conference - and only one of them was claiming Jobseeker's Allowance. The rest of them had decided not to sign on - either because they didn't want to get into the JSA habit, or because they wanted to do more than 16 hours of training a week, or they were picking up casual labour. Most of them had GCSEs, and wanted to work in construction - but Birmingham has been hit worst than most other cities, and there aren't many construction jobs around. Shockingly, none of them had a good word to say about JobCentre Plus or Connexions. And because they weren't signing on, they weren't eligible for the advice and support that JCP offers - and hadn't heard of the Future Jobs Fund.

This got me thinking - there are probably loads of other young people that are unemployed, but not claiming JSA. And youth unemployment could already be above 1 million.

Lots of the conference delegates - all dedicated and committed to helping young people - kept referring to JobCentre Plus programmes as a "customer journey" for young unemployed people. The problem is that too many young people aren't even on the journey.

Business support for RDAs

Business leaders today had a bash at local councils, and appeared to endorse the continuation of Regional Development Agencies.

The Confederation of British Industry, British Chambers of Commerce and Engineering Employers Federation all lined up to warn about the risks of excessive localism. The EEF say they are "scared witless" of local authorities: "They lack the critical mass, the funds and the ability to step outside local politics to identify the priorities for their region, to set out how best to meet them and to make it happen." Ouch.

Here's Adam Marshall (our former colleague, now director of policy at the BCC): "There's a need for something to exist between Whitehall and the level of the local authority. Localism is something many people believe in but there's a danger in going so local that you can't take care of the strategic infrastructure which business thinks is so important."

John Cridland, the CBI deputy, is also worried: "There's a danger the Conservatives' policies don't give business sufficient involvement in key regional decisions which affect them (like transport and planning)."

The Financial Times is calling this a "business backlash" against Tory plans to dismantle "the entire regional tier of government". Sounds to me more like a backlash against excessive localism.

My latest soundings suggest the Tories' plans are rather less seismic, and our business leaders may be worrying unduly. Here's why...

First, the Conservatives have been sending out mixed messages on RDAs. Yes, they have definitely said they would scrap RDAs and devolve everything to councils: Caroline Spelman told the Tory conference in October she would get rid of regionalism "lock, stock and barrel". But other Tory shadows like Stewart Jackson and Justine Greening have also said there may be a role for individual RDAs, and each would be judged on a case-by-case basis.That's quite a different message.

It's clear that the Tories will strip RDAs of their housing and planning powers. But that doesn't mean all RDAs disappear overnight. The Tories need to clarify the rest of their position on RDAs, and soon.  My guess is that the they will want to "refocus" RDAs, take them back to their original remit around business and enterprise. They might get rid of a few, but not all. So, contrary to business concerns, there may still be a role for RDAs under a Tory government.

Second, while the Tories are definitely big fans of localism, they do acknowledge there should be a growing role for clusters of councils at the sub-regional level, like Greater Manchester. It won't just be every local authority for itself. If elected, the Tories will probably convert the current basket of Multi Area Agreements etc into Local Enterprise Partnerships, and give them control over things like regeneration spending.

Business leaders' concerns are understandable - individual local councils can't do everything. We're worried about excessive localism, too. We don't want all economic development decisions taken by individual local authorities. That would be bonkers.

But the choice isn't a black and white one, between RDAs and local authorities. RDAs might survive in some form, under the Tories. And business shouldn't forget about the city-region level for things like housing, transport and skills. We want more decisions to be taken by groups of local authorities that share the same economic area, i.e. Greater Manchester and Greater Birmingham.

My message to business is "don't panic, wait for the detail" - the Tory plans may not be as scary as you think.

PS I understand the Tories are planning to issue a statement some time before the election, clarifying their proposals on RDAs and mayors.

Bremner, Core Cities & Me

Liverpool did a great job staging the Core Cities Summit this week. I've done a lot of conferences, and this was one of the best.

Speakers included the amazing Kjell Nordstrom (+ crazy powerpoint), a turbo-charged Will Hutton (Summit chair Jon Sopel couldn't shut him up), and the multi-faced Rory Bremner (more on him in a minute...).

In my speech at the Summit gala dinner, I said there was a lot of consensus between the Core Cities - but a lot of unanswered questions, too.

We all agree on this:

• Cities are vital to our national economy - together, the 8 Core City regions are 25% of England's economy.
• Our cities need more financial powers, so they can do more to support their different economies.
• Public spending cuts are coming, and cities need to generate more private sector jobs.
• Cities should collaborate more, and city-regions are a good thing.
• A change of government is quite likely next year.

But here are the tricky questions:

• What about under-performing cities, and the places and people in cities that have been left behind?
• What financial powers do cities want? Exactly which tax and spending powers?
• Can devolution deliver real savings, and how can cities grow their private sector?
• Should all city-regions be statutory and binding, or is it OK for some to be voluntary and informal?
• Are cities ready for a Tory Government? Which might mean no RDAs and more elected mayors.

Rory was the star turn, and did his stuff after my speech. But instead of kicking off with Gordon Brown or David Cameron, he did me. V funny.