HERTFORDSHIRE COUNTY COUNCIL

PLANNING & EXTERNAL RELATIONS PANEL

TUESDAY 10 JUNE 2008 AT 2.00 PM

Consultation on the Sub-national Review of Economic Development and Regeneration

Report of the Director of Environment

Author:Tom Hennessey, Team Leader, Economic Development and Regeneration – Forward Planning Unit

Tel:01992 556243

Executive Member: Derrick Ashley

  1. Purpose of report

1.1To advise Members on the content and implications for Hertfordshire County Council and partners of the proposals set out in the Department for Business Enterprise and Regulatory Reform’s consultation, ‘Prosperous Places: Taking forward the Review of Sub-National Economic Development and Regeneration’ (31 March 2008) and to set out a response to that consultation paper.The deadline for responding to the consultation is 20 June 2008.

  1. Summary

2.1In July 2007 the Government published a review of sub-national economic development and regeneration, which also raised issues about the future architecture of regional government.Following the Sub-NationalReview,(SNR) the Government has now published a consultation paper which seeks views on the proposals contained in the SNR for putting into place reforms that would :-

  • Streamline the regional tier of government by abolishing Regional Assemblies and strengthening the role of Regional Development Agencies.
  • Give Regional Development Agencies ( RDAs) the lead on strategic planning through the development of a single strategy based on the merger of the Regional Economic Strategy and the Regional Spatial Strategy
  • Strengthen the local authority role on economic development including a new statutory duty to assess local economic conditions
  • Support collaboration by local authorities across economic areas.

2.2The proposals to transfer responsibility for strategic planning to the RDA are a matter of serious concern. RDAs have no democratic mandate and are responsible to Ministers notsub-regional authorities. RDAs do not have experience in complex spatial plan making or community engagement. Their key focus is economic growth rather than sustainable development.

2.3The SNR proposes the development of a Regional Local Government Forum and giving local authorities the role of scrutiny of the RDA. This relegates local government to a reactive role. Local Government needs to press for a central role in shaping the thinking, vision and priorities of the region, and also having a key role in plan making. Within the East of England, local government leaders are developing a model to ensure that local government has a central role in policy development and plan making, for further discussion with EEDA and Go East.

2.4The duty on upper tier authorities to carry out an economic assessment is welcomed, together with the recognition of the role of economic intelligence at the heart of decision making for delegating funding and shaping interventions within sustainable community strategies, local development frameworks and local and multi area agreements.It places a strong commitment on County and District councils to work more closely together to develop an iterative intelligence base.

2.5The consultation also proposes anumber of very significant changes to the way in which Regional Strategies are prepared and to the role of Local Government in this preparation process. In particular the Regional Spatial Strategy is now to be embedded within a much compressed process for the production of an Integrated Regional Strategy, raising a number of major areas of concern.

3. Conclusions

3.1Many of the principles set out in the SNR are welcomed and strengthens the role of local authorities to be place shapers and promote economic well-being through the strategic delivery of economic development to Hertfordshire’s communities and businesses. However, there remain major concerns about the capacity and role of the RDA to be the steward of economic development across the region and the ability of local authorities to influence and shape policy at a regional level and also hold RDAs to account. It is critical that final proposals address the issue of the democratic deficit which could be created by an unelected body leading on policy development at the regional level.

3.2The proposals alsoplace significant pressure on local authorities to assess its own level of resources and capacity to deliver and enhance its role in economic development. Local authorities will be compensated for the additional costs associated with the new duty on economic assessments, but there is a strong requirement for a revitalised partnership topool knowledge, capacity and resources between local authorities to maximise the benefits of economic development across the county and position the authorities to respond to possible economic downturns.

3.3Finally there are a number of more specific concerns relating to the proposals for the Integrated Regional Strategy and the impacts this will have on the strategic planning function. The proposals for the IRS appear to overlook the statutory requirements of the planning system, the need to balance economic development objectives against other important considerations such as quality of life and sustainability, and also the need to allow enough time in any Strategy preparation process for community engagement and local democratic input.

3.4The proposed consultation response is set out at Appendix 1. In view of the nature of the questions posed in the document, which do not enable full emphasis to be given to the range of concerns raised in this report, it is also proposed that a covering letter be sent along side the questionnaire and a draft of that letter is attached as Appendix 2.

4.Recommendation

Members of the Panel are asked to comment on the proposed response to the SNR consultation and the proposed covering letter, as set out in the Appendices to this report, in order to advise the Executive Member and finalise the County Council response to the Consultation paper.

5.The Sub-National Review Proposals

A Single Regional Strategy

5.1.The proposals contained in the consultation paper would mean an end to regional assemblies with the RDAs assuming responsibility for the preparation of a Single Regional Strategy (merging the RSS, RES and a range of other regional strategies) and become the regional planning body. The consultation proposes that SRSs are produced within 24 months. With this RDAs may also assume a regional leadership role for transport strategy and prioritisation, bringing together economic and spatial planning, and be responsible for agreeing drafts with a regional local authority leaders’ forum. RDAs will remain accountable to Parliament through the Secretary of State for Business, Enterprise and Regulatory Reform and this performance framework is the principal way in which the RDAs will be subject to external (local authority) scrutiny and held to account.

Decision-making at the regional level

5.2.RDAs will have the executive responsibility for developing regional strategies such as the Single Regional Strategy;however, all local authorities in the region would be invited to engage in the decision making process through a Leaders' Forum, which would be asked to ‘sign off’ the SRS.

5.3.The Government believes that local authorities themselves should decide the most effective structure for a Leaders’ Forum and that regional differences will emerge.

5.4.The Government however, holds the right to intervene in the formation of the Forum if the local authorities in a region are unable to reach consensus on arrangements that are:

  • streamlined, manageable and able to make strategic, long term decisions and engage effectively with the RDA;
  • representative of local government across the region, for example, in terms of representation of key sub regions and upper and lower tier authorities; and
  • comprised of local authority leaders and have sufficient authority to sign off the draft strategy on behalf of all local authorities in the region.

5.5.The consultation sets out a range of performance management regimes for the RDA at a national level through audit and appraisal processes. With the abolition of Regional Assemblies, local authorities willneed to develop new arrangements for exercising their scrutiny powers at a regional level.

Delegation of RDA funding

5.6.RDAs will become more strategic in line with devolved decision-making principles but will continue to deliver and manage services that are best implemented at the regional level such as business support, co-ordinating inward investment, support for innovation and responding to economic shocks.

5.7.RDAs will delegate funding, where appropriate, to those best placed to deliver economic improvements provided the recipients have the capacity to undertake this activity. The consultation paper says that the RDAs will need to ensure that capacity exists at local authority or sub-regional partnership level to undertake the delegated activities.

Statutory arrangements for sub-regional collaboration

5.8.The consultation paper invites consideration of the advantages in strengthening the statutory basis for sub-regional collaboration between authorities where there is a demand from councils. It asks whether statutory arrangements should be created for sub-regional collaboration on economic development that goes beyond Multi Area Agreements.

Economic assessment duty

5.9.The paper consults on three options for a new duty on councils to carry out an economic assessment of their areas:

  • a duty with statutory guidance issued by the Secretary of State;
  • a duty specified in primary legislation but without accompanying guidance;
  • or no duty.

5.10Although the duty will apply to upper tier authorities, the paper says that the government is committed to ensuring that “where the duty applies principally to upper-tier authorities in two-tier areas, the lower tier should be fully involved”.

Transitional Arrangements

5.11.The government expects RDAs to work with local authority partners in each region to develop a change management programme which addresses the changes needed including how:

  • local authorities would organise themselves to act collectively at regional level;
  • RDAs would adapt to address their new role; and
  • RDAs and local authorities need to work more collaboratively with each other and engage with stakeholders.

What Happens Next?

5.12The outcomes of this consultation will be used to inform new legislation. The Community Empowerment, Housing and Economic Regeneration Bill forms part of the Government’s Draft legislative Programme, expected to be introduced in the Queens Speech later this year.

5.13Depending on the speed with which the Bill passes through its Parliamentary stages, powers will be transferred to RDAs and the regional assemblies abolished in either April 2009 or more likely April 2010.

6.Hertfordshire County Council’s View on the SNR

A Single Regional Strategy

6.1.The proposals clearly raise major issues in relation to the democratic accountability of the strategic policy making body for the Region. One of the major issues raised consistently by the public at the various stages of consultation on the recently published East of England Plan was that there was very little acceptance of the legitimacy of the Regional Assembly to make decisions about the future of communities throughout the Region

6.2.However, this is an area of concern for local authorities especially in the detail of the extent to which the RDAs will work with and be accountable to local authorities and therefore the County Council will wish to be keenly involved in the Leaders Forum (see 7.3 below). Whilst local authorities are grappling with the implications of the proposals in terms of capacity and resources this is equally an issue for RDAs.

6.3.The consultation proposes that SRSs are produced within 24 months. This timeframe does not appear to appreciate the scale, intricacies and complexity of the task, the likely associated legislative requirements and need to bring forward stakeholders and communities. Indeed, much of the proposed shortening of timescale for strategy preparation appears to be at the expense of public consultation. This is extremely concerning given the significance of the new SRSs.

6.4.There also appears to be no allowance in the process for the resolution of any significant conflict arising out of the proposals or recognition of the need to take into account periods when stakeholder consultation may not be possible, such as holidays or pre election purdah. In short it appears to be a process timetable which has no basis in the reality of developing a complex strategy which is part of the legal basis of the planning system, and which makes little attempt to engage or build consensus with the communities for which it is prepared,

6.4.Finally, the intention for the IRS is that it will be a concise and “high level” statutory document. If the spatial planning issues in the IRS are made even more strategic than current regional plans this begs the question of where the more detailed content of current Regional Plans will be picked up? Many of these issues are simply not appropriate to be handled at an individual Local Development Document level, or will be inefficient to do so. If they are not picked up, there is a danger of a policy vacuum developing between the IRS and the more detailed Local Development Documents.

Decision-making on regional strategies

6.6.At a regional level a range of partners as well as EEDA will need to contribute to the delivery of the SRS. The county council is strongly supporting the development of a Leaders Forum that has the appropriate representation. Decision making at the regional level needs to drive the co-ordinated delivery of the SRS utilising the existing resources and capacity of local authorities. It is considered to be essential for strategies authorities to have an equal voice in the policy development and decision making arrangements with the RDAs.

Leaders’ Forums

6.7.As is set out in Section 2 of this Report, the County Council is currently working with other strategic authorities within the East of England to determine how best to deliver local government engagement in the new regional structures. The proposals in the SNR for Leaders Forums are unacceptable in that they relegate local government to effectively reviewing policy development after the event, rather than being involved in policy development and policy shaping from the outset.

Accountability and Scrutiny

6.8.The County Council is very keen to work in an open and equal partnership with the RDA to develop and co-ordinate strategy based on available evidence. It is important that strategic authorities such as the County Council have a strong and collective role and voice in the shaping of and responsibility for regional policy. Hertfordshire County Council would like to see a model where accountability is weighted equally between representative Council’s on the Leaders Forum and the RDA. An equal partnership arrangement may help to counter concerns over the democratic deficit the proposals suggest with the RDAs having the power to sign off regional strategies without the full agreement of the Leaders Forum.

6.9.Scrutiny needs to be distinguishable from strategy and policy development so that the RDAs can be held accountable to a wider range of stakeholders.

Delegation of RDA funding

6.10It is accepted that RDAs will only delegate activities and funding to local authorities where the appropriate capacity to deliver exists. Hertfordshire is in a strong position to accommodate this given its capacity and track record of delivery pf economic development and regeneration programmes. However, there remains concerns over the extent of willingness by RDAs to relinquish controls of funding programmes to local authorities and when such funds are delegated onerous bureaucratic arrangements must be avoided. The focus needs to be on outcomes linked with wider strategies such as the Local Area Agreement.

Transition

6.11The offer to work with the RDAs to deliver a change management programme is welcomed. There are a number of important initiatives that are coming on stream that will help with this including the review of the RSS, the preparation of the joint RSS/RES implementation plan as well as the Regional Funding Advice (Allocations). Hertfordshire County Council will play an active role in the ongoing and constructive discussions are invited

Statutory arrangements for sub-regional collaboration

6.12It may be too early to discern the exact arrangements for sub-regional collaboration but the principle is welcomed and Hertfordshire County Council is open for further debate amongst local authority partners. The key principle however should be that any sub-regional arrangements should be left to the relevant local authorities to organise and implement as they see fit.

Economic assessment duty

6.13This is welcomed and offers significant scope for the County Council to work much closer with districts and other stakeholders to gather and understand the economic and demographic intelligence. This is consistent with the current duty to act as place shapers through influencing policy and strategy development and to draw down funding to respond to economic difficulties and emerging growth in the region.

7.Financial Implications

7.1The consultation proposals recognise that there will be costs in implementing the new proposals particularly in performing the new duty on economic assessments (gathering specialist knowledge in labour market analysis and information). It suggests that compensation to local authorities will be forthcoming using a formula based approach but it is unclear if this will meet the full costs and what level of investment will be required from the County Council to meet any deficit.