Public Bodies Bill [HL]

My Lords, in Committee I dealt with the historical debate in the Labour movement and the very significant contribution made by my noble friend Lord Prescott and by Bruce Millan as a European Commissioner. I want to concentrate today on the future. I declare an interest in that my daughter-in-law works for Yorkshire First. However, my thoughts and comments are based on conversations with people in the north-west region and within the Northwest Regional Development Agency, which covered my former constituency following the creation of the agency in 1997. My only interest in this issue is whether the new structures can deliver. I say that in the context of having spent almost 40 years of my life living in a region, or a sub-region, of the United Kingdom where historically there has been heavy unemployment. Delivery has been of primary concern to the Institute of Directors, which supports change but in its recent briefings has questioned whether LEPs have the resources, the focus and expertise to be able to deliver. In one of its most recent briefings, it states on resources that, "““concerns remain that without any central government funding at all, LEPs may quickly become ineffective talking shops. Government will need to allow a small amount of funding as catalysing capital for private sector investment as well as setting out how LEPs will be able to fund the small economic secretariats that will be needed to serve the bodies and their directors … some provision of funds will have to be considered in order to provide: (a) basic administration and secretariat functions … and; (b) economic advice resources, such as economists and infrastructure expertise””." In other words, it says that, starved of resources, the LEPs will be in difficulty. On expertise and the ability of the LEPs to focus, the IoD states that, "““there remain notable concerns that the proposals submitted to government by many bidding local authorities already suggest a wide array of duties, from business support and inward investment to skills development and social regeneration. In many cases, the bids submitted resemble mini-RDA submissions, with all the potential for additional cost, loss of focus … Many of the plans submitted to government in the form of LEP proposals looked and felt like wholesale plagiarism of RDA regional plans and activities””." We need a far narrower focus. How can an organisation in the form of an LEP, with minimal resources, possibly cover a wide-ranging brief which includes transport, planning, infrastructure, housing delivery, development of growth hubs, local business regulation, skills in conjunction with Jobcentre Plus, leverage of funding from the private sector, development of financial entities for renewable energy projects and digital infrastructural projects? Some LEPs are talking in terms of inward investment initiatives, joint exhibition stands overseas and the organisation of European funding. In my view, they simply cannot do all that work with the resources that they have available and without the necessary expertise. They need far greater focus. What I find really worrying is that the close relationship between larger regional employers and the regional structures is now in jeopardy, yet it is those links which more often than not have been the source of inward investment leads. Experience among agencies in the north shows that most of the foreign investment projects that came to the regions came through regional-partner contacts and not through the centre; that is, Whitehall. Many global players will simply not play ball with some of the more inexperienced LEPs, which they believe will lack the muscle to open the doors necessary to facilitate inward investment. I accept that some LEPs will seek to be dynamic and ambitious, but a lot will not. Cash-starved LEPs will simply not attract the staff. In some areas of the country, regional policy and strategy will simply wither on the vine. I find it difficult to accept that a few BIS reps, genuinely committed to the regions as they may well be, along with the proposed UKTI-nominated single national contractor, will be able to maintain the contacts that the RDAs have so painstakingly built up over the years. The task requires more than a few well motivated and talented individuals from the centre, subject to Civil Service rotation, if regional strategies are to work, particularly in periods of recession. The idea that local authority-driven LEPs can provide the levels of service required is questionable. Furthermore, it is my experience that large employers often steer clear of local authorities as they are often seen as too politicised and unprofessional. We learn from history in places such as Cumbria, where I have spent most of my life, that LEPs—and, I suppose, the West Cumbria Development Agency, which had all the characteristics of an embryo LEP—can work and be successful. However, it had the nuclear industry in the background. The problem is that only too often you end up with overlapping provision, inter-authority conflict and jealousies. It is a recipe for turning off the big players in a big way, and we will suffer potentially unless we can sort out that problem. I find it extraordinary that we are all turning our back on the experience of regions throughout the European Union, which are doing precisely the reverse by developing and maintaining their regional structures as they compete for intra-Community infrastructural funds and inward investment. They will obviously place far more emphasis on regional GDP figures than will be the case in the United Kingdom. Our Government will no doubt concentrate on pushing national GDP as the measure of success so as to appease domestic concerns, thereby avoiding a more realistic focus on possible declines in regional GDP, which is what really matters. This is important because the RDAs have made a considerable contribution to the increase in regional GDP over all these years. I find myself asking simple questions. Will efforts to secure regional funding from the European Union’s various regional and sectional assistance pots be as vigorously pursued when they may become more dependent on Whitehall initiatives? We again cannot be sure. I note the assurances in the letter of the noble Lord, Lord Taylor of Holbeach, but will the centre be as effective in driving the innovation agenda and the links with the universities? What about the handling of green and environmental infrastructural projects such as barrages, environmental parks and large-scale environmental clean-ups? These are often driven at a local level, but it is only with regional intervention that they seem to take off. For example, in my former constituency there is a beautiful site for a potential large regional project—the RNAD dump at Broughton Moor. There had been some pollution on the site from munitions in storage after the Second World War. I managed to negotiate with Lewis Moonie—now the noble Lord, Lord Moonie—who was then a Defence Minister, for the local authority to take over that site for the sum of £1, which would compensate for the considerable funds that would have to be invested in environmental clean-up. Eleven years later almost nothing has happened. There have been lots of false starts, and even today proposals for the site are still under consideration. What went wrong? The councils own the site. The Northwest Regional Development Agency had offered millions for its development as long as the councils could firmly establish the future development of the site for housing, leisure or something substantial. The council simply did not have the drive to pull the project together. In my view, if the Northwest Regional Development Agency had owned that site and had been responsible for its development, things would have been very different. With its funding, experience, contacts and drive, we would have been well on the way to a visionary use of one of Cumbria’s most important potential development sites. With the wind-up of the RDAs the writing is on the wall for these types of projects, and that worries me. What about the future of RDA work in the film and creative industries? I cannot see the LEPs getting their heads around project work in those sectors. Do we have confidence in the arrangements for business advice to SMEs? Do we believe that a national website, along with back-up from cash-starved, local authority-funded LEPs, can deliver business support services on the scale required in a downturn? On the treatment of assets and liabilities, we were told in Committee that there would not be a fire sale—but will there? In his letter, the noble Lord, Lord Taylor of Holbeach, said: "““RDA asset disposal plans have been developed taking account of the principles set out at high level in the Local Growth White Paper. These include maximising value for money from these assets, ensuring liabilities follow assets, and passing control down to the local level where possible””." ““Maximising value for money”” means selling off before assets fall further in value in the market that we are in at the moment. ““Passing control down to the local level”” means selling off to local authorities where they can afford to purchase. That is what I understand is going on at the moment. Plans are being laid for those purchases where possible. If we want the measure of the real-world value of assets, we need do no more than look at what is happening in property auctions throughout the United Kingdom and in the property market more generally. What do we find? There are empty shops and offices all over the country. Commercial property is collapsing in value. Commercial rents in much of the country are falling. A lot of property companies are collapsing. A lot of factory leases are being sold off. The buy-to-let market is in difficulty. Repossessions in parts of the country are increasing. Large tracks of land—agricultural, agricultural with hope value, and residential land—are all coming on to the market. Just look in the auction catalogues. We can see what is happening. People are off-loading in a market that is going down. House prices are falling as the market seizes up—a market where we have very low interest rates. What happens when interest rates rise? That is the market in which asset sales are taking place. That should surely worry the Treasury. We are talking about major assets—buildings, land, head leases, clawback assets, business and technology-related assets and the rest. I can only presume that the assets and liabilities working groups must have had a hell of a time sorting out the complicated business of sharing out assets and liabilities, although I know that the working groups have had great difficulty preparing the databases, identifying the extent of RDA overall assets and liabilities in both tangible and non-tangible form. In the case of the Northwest Regional Development Agency, I understand that it has joint venture projects with partnerships, termination and poor-performance payments based on final portfolio valuations. These must be extremely hard to value. It also has rights to income from the sale of land acquired under grant. These sites are often complicated by title rights, rights to the reclaim of grant clawback. The lawyers are going to have a field day on those issues. There are some Northwest Regional Development Agency-owned sites where the agency funds the revenue costs. What happens if the LEPs, councils or successor bodies simply want rid of the liabilities against the wishes of the local communities? Then there are the liabilities that arise in respect of CPO activities by the agency, such as the Ancoats development in Manchester and Kingsway in Rochdale. I am not altogether clear on the position, but these could carry substantial liabilities. We need to know how they are going to be sorted out. What about lease liabilities on properties currently leased to the Northwest Regional Development Agency for its own operational activities? Many of these properties do not include break clauses. Perhaps these problems have been sorted out. Again, I do not know what the final position is. What I do know is that the universal view across the north is that everyone wants to keep the assets in the region available for the use of the region. They do not want the ownership partnerships breaking up. They do not want a fire sale of assets in a collapsed market. They do not want the private sector to move in and take vast profits out of assets built up at the taxpayers’ expense. This could easily happen on the back of hope-value assets. They want some form of successor body to be established, if necessary, for the handling of those assets, which for all sorts of reasons in the public interest should not be distributed at an early stage. They want to be assured—this is very important—that the survival of the Welsh and the Scottish development agencies will not place them at an advantage over the regional and national residual arrangements in the English regions for the attraction of inward investment, otherwise we will be placed at a disadvantage. That was the complaint of the English Forum of Regional Development Organisations in the mid-1990s. It cited marketing material in evidence for its accusations. I keep asking myself, ““Why destroy all this structure, which has been so painstakingly created?””. I have learnt over my lifetime that it is very hard to build from scratch, anew. Think of the work that goes into the design of the product and the establishment of the brand name, the quality of the service and the development of a pool of expertise capable of delivering a viable service, in all senses of the phrase. Yet it is so easy to destroy it overnight—to destroy the product and end the service, breaking up the pool of talent and expertise, to put the padlocks and chain on the gate and close it all down and walk away. That is so simple; it is much easier than actually creating an organisation. I hope that that is not what is going to happen here. Finally, it might be helpful if I remind the House what happened 30 years ago. History will repeat itself on occasions. After the election of the Conservative Government in 1979, the Conservatives went in with calls from their supporters for the closure of the Welsh and Scottish development agencies. Then what happened? The Government took stock and stood back to consider the implications of such vandalism; they consulted and finally relented, and both the WDA and the SDA survived. Rational thought took over from blind prejudice. They realised that the agencies had a real role to play. Let us hope that events over the coming months give the Government, even at this very late stage, cause for thought and that in some way history may repeat itself.