The centrepiece of the present Government’s regional policy is the Regional Development Agencies. In this respect, the experience of England is markedly different from the other countries of the UK, where there have been statutory bodies responsible for administering regional economic policy for many years.

After the passing of legislation in 1998, eight RDAs were established in England on 1st April 1999. The ninth, in London, was inaugurated on 3rd July 2000 following the establishment of the Greater London Authority (GLA).

They aim to co-ordinate regional economic development and regeneration, enable the English regions to improve their relative competitiveness, and reduce the imbalances that exist within and between regions.

Their statutory purposes are:

• development and regeneration;
• to promote business efficiency, investment and competitiveness;
• to promote employment;
• to enhance development and application of skills relevant to employment; and
• to contribute to sustainable development.

In order to fulfil these purposes they are required to:

• formulate a regional strategy;
• take charge of regional regeneration;
• take forward the Government's competitiveness agenda in the regions;
• promote regional inward investment;
• develop a regional Skills Action Plan to ensure that skills training matches the needs of the labour market; and
• play a leading role in regard to European funding.

Government Offices continue to be the arm of Government in the regions. They have a number of responsibilities, including housing, planning and transport. To this end, they must inevitably work closely with the RDAs.

Local authorities also have a significant stake in the work of the RDAs. Four of the 13 board members at each RDA are drawn from local government.

The policy of devolving the co-ordination of regional economic development to RDAs begs a number of important questions. At the most fundamental level this issue is ‘what are RDAs for?’

Is their purpose to improve the development potential of the whole economy, with their success measured in terms of the economy’s sustainable rate of growth? Alternatively, is it intended that they should help to close the regional divide?

Given that all regions of the country now have some form of development agency, albeit that some are resourced more generously than others, is it reasonable to expect them to bring about any change in the regional pecking order, even in the long term?

For this to happen would imply that some RDAs have succeeded while others have failed. Accountability procedures have been put in place to make sure that they do not fail. It is hard to imagine the north-south gap being closed by setting up RDAs in the South East and Eastern England.

The trickle down effect

Those involved in running RDAs in the richer regions tend to see their role in terms of the “trickle down” effect. This is an argument in favour of maximising aggregate economic activity, on the basis that increased investment and output in richer areas will stimulate additional demand for goods and services in other areas.

But to what extent extra activity in the South East feeds into higher output in the North East, in poorer areas of the South East, or in areas of the near continent, is unclear.

The counter argument is that unless measures are taken to restrain economic growth in the south and east, the divide will continue to widen.

This will not only affect the operation of macro-economic policy and result in a sub-optimal rate of sustainable growth, but will also impose unnecessary costs in terms of infrastructure investment, congestion and environmental degradation.

RDAs - closing the inter-regional gap?

Bearing all this in mind, the most likely outcome is that RDAs may make some progress in closing the intra-regional gaps in their territories. It is, however, extremely unlikely that RDAs on their own will make much of a difference to regional imbalances.

In many quarters, the Government stands accused of continuing to favour London and the South East. This is understandable from the viewpoint that as the UK’s economic dynamo, restricting further development in south eastern areas could kill the goose which has laid the golden egg.

The Communities Plan unveiled in February 2003, under the banner of ‘Sustainable Communities’, set out a common framework for tackling housing, planning, regeneration and the environment. It also enshrined the belief that further development in the greater South East should be encouraged.

The four ‘growth areas’ identified in the plan are all in this area, with the largest slice of the £22 billion earmarked for facilitating regeneration and development being channelled into the Thames Gateway initiative.