ANALYSIS: Red tape bedevils agencies

Whitehall meddling is setting regional development bodies an impossible remit, reports Huw Morris.

It was a Whitehall farce to rival any subterfuge by Sir Humphrey Appleby, the fictional mandarin of the BBC's comedy classic Yes Minister.

Appleby's real-life counterparts, charged with the task of setting three tiers of targets for the South East England Development Agency (SEEDA), produced a similar fiasco.

The tier one targets were confusing and merely repeated the agency's statutory purpose. Tier two reflected national priorities rather than regional objectives and were even out of kilter with other major public programmes and targets. To make matters worse, the tier three targets covered some areas for which the agency is not responsible while ignoring others that are under its control.

The result was a bureaucratic disaster. Under pressure from the Department of Trade and Industry (DTI), SEEDA was forced to draft a corporate plan at a cost of £500,000 that was so useless it had to produce a second for its own purposes. The scandal was revealed last week in an investigation into the work of the nine regional development agencies by the public sector's own witchfinder-general, the National Audit Office (NAO).

The report makes grim reading. It details a Whitehall culture of meddling and delay that is threatening the economic growth that the regional development agencies (RDAs) are supposed to promote. Agencies are spending time and resources feeding the Whitehall beast when they should be meeting regional priorities.

It was all so different when eight of the RDAs were launched in April 1999 - the London Development Agency followed in July 2000. Their business-led approach was intended, in the words of prime minister Tony Blair, "to bring fresh vitality to the task of economic development and social and physical regeneration in the regions". They have substantial budgets: £1.6 billion last year rising to £2 billion by 2005-06.

No-one denies that the agencies have their work cut out. As the NAO acknowledges, "economic development is an inexact science, so there will be associated risks, particularly where an intervention is new and untried".

Yet far from using their clout, agency staff find themselves increasingly hamstrung by a conflicting Whitehall agenda.

Their first problem is one of too many cooks spoiling the broth.

At least 11 government departments have some impact on their work. "We have the DTI, the ODPM and the government office on our backs and then there is always the Treasury in the background," complains a senior figure in one agency.

Also impinging on their activities are the Home Office, the Department for Work and Pensions, the Department of Health, the Department for Transport, the Department for Education and Skills, DEFRA, UK Trade and Investment and the Department for Culture, Media and Sport. "Trying to keep all this lot happy is impossible," admits another agency insider.

Not surprisingly, many councils, businesses and voluntary groups wonder who calls the shots in the regions. Inevitably, the targets that emerge out of this muddle reflect national priorities, in contrast to the regional economic strategies that agencies develop with their partners. Such short-term targets are forcing the agencies to go for "easy wins rather than long-term goals", one agency figure admits.

In some cases, the agencies have struggled to balance conflicts between their priorities and national policies. In one example, SEEDA had recognised the need to provide abattoirs to support producers who enhance the environment through landscape diversity. Meanwhile, DEFRA's policy favoured fewer large abattoirs.

The picture elsewhere is just as bad. The Northwest Development Agency reported damaging delays to the launch of the Cumbria Rural Regeneration Company, a public-private partnership set up to pump in £56 million to help the area recover from the foot-and-mouth outbreak. Approval to set up the company took five months, followed by a further two months of delay for the separate funding to come on stream.

The East Midlands Development Agency (EMDA) reported a similar tale of Whitehall prevarication over a major regeneration project to buy derelict properties across 11 areas and then deliver a combination of demolition, refurbishment and public realm works. Approval took five months, severely damaging relationships in the community. Red tape also held up the National Manufacturing Centre in Speke, Liverpool, for nearly two years.

But the problems reach farcical proportions when it comes to cash management.

The South West of England Regional Development Agency told the NAO that the DTI's diktat that each agency should predict its monthly spending to within five per cent forces staff to devote so much time to achieving the target that it is "out of proportion to the benefit".

Advantage West Midlands (AWM) nearly lost out on a land deal because the government regional office withheld funds until the agency could confirm that it needed them. In this case, the agency received confirmation of the deal from its solicitors late in the financial year, by which time the government office systems had closed. The deal was only rescued by AWM securing a loan from another agency.

Gideon Amos, director of the Town and Country Planning Association, which recently published research into joint stakeholder involvement in regional planning, is dismayed but not surprised by the NAO's findings and complains about "myriad standards" facing the agencies. Decision-making on regional investment, he argues, must be left to the agencies so that "they can take advantage of any development opportunities".

Indeed, when they are left to get on with the job, the agencies can more than deliver the goods. The EMDA wins NAO plaudits for leading a task force of MPs, trade unions, government departments, learning and skills councils and business to combat the fallout from Rolls Royce's shedding of 2,000 jobs in 2001.

Yorkshire Forward's £10 million investment in the metals industry in 2002 safeguarded more than 700 jobs and generated an extra £50 million of business. SEEDA points with some pride to Chatham Maritime, its largest project, comprising more than £400 million of public and private sector investment. This mixed-use development, featuring 80,000 sq m of office accommodation, 800 homes and an award-winning marina, is the type of scheme that the agencies are intended to deliver.

The NAO calls for simpler targets, less meddling by civil servants and improved monitoring for agency projects. But the agencies have little reason for optimism. Two years ago, ministers agreed to give them greater flexibility by streamlining an array of funds into a single pot. That was a bureaucratic exercise. Overcoming a culture of interference is a different ball game.

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