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The review of sub national economic development and regeneration

Date of statement	17 July 2007
Type	Oral

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Oral statement by John Healy MP on 17 July 2007.

With permission, Mr Speaker, I would like to make a statement on local and regional economic reform in England.

The Government is today publishing the conclusions of the review of subnational economic development and regeneration, launched at Budget 2006 as groundwork for this year's Comprehensive Spending Review. 

In this report, we set out the compelling case for reform to:

• give local authorities and communities greater responsibility and opportunity to boost economic growth in their area
• bring consultation and planning for jobs, homes, investment and the environment closer together at both local and regional levels
• strengthen public scrutiny and accountability of regional plans and the work of Regional Development Agencies, both in the region and in this House.

Mr Speaker, this report builds on substantial work since 1997 to devolve economic decision making to regions and local authorities. 

It is informed by Sir Michael Lyons' comprehensive review, in which he underlined the important economic role of local authorities as part of defining and delivering a vision for the places they serve. 

And it is informed by Kate Barker's recommendations to bring together planning for homes and the environment, with planning for economic growth.

This review takes reform a stage further, giving local authorities stronger incentives and greater powers to support economic growth. 

As the constitutional Green Paper launched a fortnight ago by the Prime Minister said, the Sub National Review "will signal a shift of focus to local authorities, open up the possibility of powerful city regions and give a clearer role for the regions of England".  

This report also reflects the Prime Minister's vision of a modern democracy, in which power is exercised at the lowest level and those with power are held more clearly to account.

Moreover, these reforms are essential, as global economic and technological change place an increasing premium on enterprise, innovation and skills.

This means our Government's commitment to increase growth in all regions, reduce regional disparities and deliver neighbourhood renewal will in the future be all the more challenging, and all the more important.

It means that further freedoms and devolved decision-making are required for regions and local areas: first, to respond to rapid economic change; second to deal with persistent local deprivation or poor economic performance and third to enable all places to develop to their fullest potential.

Our year-long review has been very open - visiting every region and consulting with over 300 stakeholders at all levels.

So Mr Speaker, I can confirm our main conclusions to the House

To give local authorities greater powers, flexibilities and incentives we will:

• consult on creating a focused statutory economic duty for local councils
• put economic development and neighbourhood renewal at the heart of  the new local government performance framework;
• consider options for supplementary business rates, working closely with business, local government and other experts
• require RDAs to delegate funding  to local authorities and subregions wherever possible, so they play a more strategic role; and
• move funding for most 14-19 year-olds education and skills to local authorities, as announced in the recent machinery of government changes.

To reinforce our cities and larger towns as the engines of economic growth - and to recognise that labour, housing, retail and other markets often don't correspond to council boundaries - we will:

• allow local authorities working together in sub-regions, to strengthen management of transport;
• develop proposals for Multi-Area Agreements to encourage groups of local authorities to agree collective targets for economic development priorities
• work with interested city and sub-regions on scope for statutory sub-regional arrangements, which could allow greater devolution of national and regional economic functions.

To strengthen, simplify and improve scrutiny of the necessary strategic role of regions, we will:

• combine the Regional Economic Strategy and Regional Spatial Strategy into a single integrated regional strategy. Following consultation, this will bring together the economic, social and environmental objectives for each region;
• charge RDAs with executive responsibility to prepare the single regional strategy, on behalf of the region. In doing so, they will have a duty to consult widely. They will work closely with local authorities, and the first step will be for local authorities or sub-regions to set out a vision for the sustainable development of their area.  Regional Assemblies will no longer exist in their current form. The spacial and planning aspect of the strategy will continue to form the regional tier of the statutory development plan, which will remain subject to independent testing through the examination in public and will be issued as a statutory document as it is currently.
• strengthen the scrutiny and accountability of RDAs, with this House's new regional select committees holding RDAs and others to account in Parliament … and with local authority leaders holding the RDA to account in the region and approving the regional strategy. We will consult on how best to implement this.

And finally, to improve support and reduce restrictions from central government, we will:

Give the Department for Business, Enterprise and Regulatory Reform single lead responsibility across Government for performance management of the RDAs and lead responsibility for the Regional Economic Public Service Agreement (PSA);

• Simplify the targets RDAs' must meet; and
• appoint a Minister for each of the regions, to provide a sense of strategic direction for their region and to give citizens a voice in central government

This report sets out the principles and direction for future policy, and the consultation we will undertake on our reforms.

Important government announcements will follow on: implementing the Leitch report, the Housing Green Paper and the Welfare Reform Green Paper and, in the autumn, the Comprehensive Spending Review itself.

My statement this afternoon is the start of further reform, not the final word.

I commend the report to the House.