Policy/agency responses

8 Components of regional planning

8.3 Policy/agency responses

Regional economic issues relate to performance in the evolving ‘modern’

economy of advanced countries. Determinants of performance of a particular region are likely to include some or all the competitive factors noted in Chapter 4 (section 4.2). The UK State of the Cities report (ODPM 2005d), illustrated rel- ative factor performance with reference to data on criteria such as patent appli- cations, and change in percentage of working age with degree level qualifications. The resultant indicators of relative prosperity include measures such as: weekly earnings, gross disposable household income, visible exports per capita, GVA per capita, rate of change in productivity (GVA per employee) and change in employment rate. Figure 8.1 provides some examples of these indicators by TTWAs within regions. There are considerable inter- and intra- regional variations. Some regions and sub-regions, especially in the GSE, have a good mix of the growth sectors, represented in positive economic indicators.

However, they may still have economic issues, for example, skill capacity con- straints, high costs, congestion and imbalance in prosperity within a region. For other regions the indicators may also show regional imbalances, perhaps reflect- ing pockets of decline in primary and manufacturing activity, but also higher rates of unemployment, inactivity and outmigration, and lower levels of produc- tivity growth and labour skills.

Figure 8.2 from the Wales Spatial Plan (WSP) illustrates some of the spatial variations of economic characteristics within that country – including some of the determinants and indicators of economic prosperity.

Planning – to ensure that the benefits of economic development are fully taken into account in plan making and decision taking. There are many other policy initiatives; for example, the DfES focuses on gaps in education and skills, through programmes such as Excellence in Cities, a programme aimed at areas with low educational achievement, and Sure Start, aimed at pre-school learn- ing. The DTI administers the (albeit much reduced) regional preferential Components of regional planning: economy 159

Town Centre Employment 2000 Over 20,000

Highest percentage employment rate 2002/2003

Universities

Long-term limiting illness (2001 census)

Banking, finance and insurance Manufacturing

Public administration, health and education 5,000 – 20,000

2,000 – 5,000

Highest percentage inactivity rate 2002/2003 Largest percentage VAT registrations 2002/2003 (per 1000 working age population)

Highest percentage of degrees (NVQ level 4) 2002/2003 Highest percentage with no qualifications 2002/2003

Other HE/FE

High proportion of employment 2001 in Over 30 percent of population by Electoral Division

Figure 8.2 Promoting a sustainable economy – some characteristics of the Wales economy. (Source:Welsh Assembly Government (2004).)

assistance to industry (RSA and Enterprise Grants) of approximately

£200–£300 million per annum. It also has targets to establish at least one risk capital fund in each of the English regions, and boost R&D, innovation and technology transfer by developing the university–business interface. The DTI is also the lead sponsor for the RDAs.The aim of national policies is to help all regions, but in particular those regions, or parts of regions, suffering from long- term structural and locational problems. There has been a strong emphasis on the regeneration and renaissance of formerly run-down areas. The overall aim is economic growth, but sustainable economic growth, with a focus on so-called

‘smart growth’ – in high-value, low-impact activities/sectors. The competitive agenda has been much to the fore, with benchmarking against the perceived top-performing EU or world regions, and with ambitious targets to move up the

‘league tables’.

The RDAsfor the English regions, and their Scottish, Welsh and Northern Ireland equivalents, provide an important regional tier to economic develop- ment policies. Set up in 1999 to provide the strategic framework to improve the sustainable economic performance of each English region, the RDAs have wide-ranging portfolios and significant budgets. Their portfolio of activities includes: economic development and regeneration; promoting business effi- ciency, investment and competitiveness; promoting employment and skills development; and contributing to the achievement of sustainable development.

Haughton and Counsell (2004) see the RDAs as emblematic of New Labour’s approach to a more ‘competitive and collaborative regionalism’.

Table 8.1 summarises the RDA budgets, which show some element of skew towards the ‘problem regions’; it also includes some of the RDA outputs for 2005–2006, illustrating the range of their activities. The objectives, targets and spending programme of each RDA are brought together in the RESs, first pro- duced in 1999, and subsequently in 2002 and 2006. The first round of activity resulted in RESs which were broad, and aspirational rather than strategic, but this has shifted in later documents. The evolution of the relationship of the RESs with the RSSs (and the previous RPGs) has been uncomfortable, partly reflecting the ongoing ‘silo-mentalities’ of separating regional economic plan- ning and regional physical planning (Haughton and Counsell 2004). However, Central Government now clearly specifies that RSSs should have regard to the RES, and that the RES should sit within the spatial planning framework of the RSS (HM Government 2004).

Evidence to date on RES and RSS alignment has been very mixed (see Box 8.1). There are various reasons for this including policy differences, timing horizon differences (the RES operates on a five to ten year horizon compared with the 15 to 20 years horizon for the RSS), timing sequencing differences (with different timeframes and start dates), different evidence bases and sub- regional definitions (HM Treasury 2006). One solution would be to merge RSS and RES into a single strategy, but this has a number of institutional implica- tions stemming from the different statutory roles of the two documents. In the meantime the Barker Review of Land Use Planning calls for better integration

Table 8.1English RDAs – budgets and some output indicators (2005–2006) RDABudget: Some output indicators for year of 2005–2006 2005–2006 (£m) Jobs created or New businesses Hectares of brownfield Number of people assisted safeguardedcreated and surviving land reclaimed or in skill development through first yearredevelopedRDA programmes Advantage West 27211,50016509027,500 Midlands East of England 129430025633932,700 Development Agency East Midlands 1568200220810714,600 Development Agency London Development 37321,30030775734,300 Agency North West 38215,700277032723,100 Development Agency One North East24016,0003406139121,000 South East England 1574200202710141,800 Development Agency South West of England 15363001989419,600 Development Agency Yorkshire Forward29523,800100711758,600 Total2157111,30018,9061071373,200 Source:Adapted from RDA end-year results for 2005–2006 (DTI: London).

of RESs and RSSs through enhanced alignment of timescale and more compati- bility of evidence bases (HM Treasury 2006a).

Box 8.1 RES and RSS – varying degrees of alignment

• The South West RSS acknowledges that successful RES delivery is more likely to result in the continuation of strong growth. However, the draft RSS plans only for average economic growth at 2.8 per cent growth in GVA per annum rather than the ‘strong’ growth that the region has witnessed over the past ten to 15 years. Therefore the RSS growth predictions imply that the RSS is not planning for successful RES delivery. This in turn is used to justify lower than necessary levels of housing provision. Evidence suggests that approximately 30,000 dwellings per annum are needed to support RES delivery whereas the draft RSS plans for only 23,000. The RDA has estimated that this contrast could have a large impact on the delivery of the RES.

• The East Midlands Development Agency commissioned Experian (consultants) to look at the impact of housing options to inform the development of the draft RSS in May 2006. Experian’s report high- lighted a significant concern that the RSS’s preferred housing option would be likely to hold back employment and economic output in some parts of the region.

• The East of England RA prepared their draft RSS largely on the basis of the 2001 RES, which used a range of economic growth targets.

The RDA has affirmed its support for the RSS through its continued engagement in the RSS process and joint research. The two strategies do have a major policy divergence in relation to the growth of air- ports, notably at Stansted. Although the RA has acknowledged that airports are key economic drivers, it has consistently opposed a second runway. The RSS gives greater emphasis to retail than is sup- ported in the RES. The review of the RES will begin before the pub- lication of the RSS.

• GLA Economics provides a good example of a common information and research base which is used by both the London Development Agency and the GLA in preparing the RES and the London Plan, respectively.

(Source:HM Treasury 2006.)

The EU Structural Fundsprovide a further source of support for the economic development of the regions, with overall aims of reducing inter-regional imbal- ances and creating competitive regions. The ERDF focuses on economic infra- structure (e.g. transport, energy); the ESF supports training and mobility. Under the EU 2000–2006 programme, UK Objective 1 regions, including locations

such as Merseyside and South Yorkshire, received over £1.5 billion; a wider range of Objective 2 regions received over £2.2 billion, but relative support is changing with the widening membership of the EU (see Chapter 13 for more discussion).

8.3.2 Some characteristics of economic policies for regions and sub- regions

Economic development policies can be characterised in many ways, for example, by their overall aims, by the type of targeted economic activity, by the preferred spatial distribution, and by associated support measures (including a skilled workforce and employment land). Economic development aimstend to vary by sub-region. The WSP: Consultation Draft (Welsh Assembly Govern- ment 2003a) has the general economic spatial challenge of ‘Increasing and Spreading Prosperity’, including developing the potential of places to adapt to change, for example, through a flexible skills base and accessibility. However, it also differentiates according to location and relative prosperity. Thus, aims for the more urban South East and North East Wales include increasing the eco- nomic potential of links with adjoining English regions, and enhancing R&D, innovation, the knowledge economy, and Higher Education (HE) and Further Education (FE) potential as motors for economic development. In the more rural areas of mid Wales, aims include mobilising opportunities for economic development linked to indigenous potential particularly in terms of tourism and recreation, natural resources, renewable energy, agriculture and lifestyle; and devising strategies to retain and attract back skilled people.

There are many common items on the shopping list of contemporary regional strategies for types of economic activity (Glasson 2002). These include targeting knowledge-based sectors, high-tech, R&D and high value-added activities; links with HE and FE are also seen as of growing importance. Typical target growth sectors are life sciences industries (biotechnology and pharmaceu- ticals), medical equipment and technology, financial and professional services, computer software, creative industries and environmental technologies. But there may also be support for the modernisation and diversification of older manufacturing industry as appropriate, plus of course support for more tradi- tional high-tech manufacturing such as aerospace and automotive engineering.

Support for an increase in the tourism industry tends to be another common feature. Most policies also include support for diversification, plus a mix of attracting in new industry from outside the region, and often outside the country, but also encouragement for indigenous development. Common fea- tures in the preferred spatial distributionsinclude regeneration zones, both urban and rural, high-tech corridors, innovation hubs/clusters, science and technology parks, and strategic investment sites.

Yet without associated support measures and, in particular, the supply of a skilled workforce, employment land and infrastructure and key services, few of the above characteristics may be achievable. There is increasing recognition in Components of regional planning: economy 163

regional planning of the importance of human resource development. Success- ful places need well-qualified people, but lower-skilled jobs will also be needed to support the growing service sector, itself driven by rising disposable incomes and the ageing workforce. As such, policies need to support a dual and inter- connected labour market. Regional Skills Partnerships (RSPs) are being pro- moted as a way of integrating activity on skills, training, business support and labour market activity. Planning the overall provision of employment land is also of vital importance in the delivery of an economic strategy. The RSS for Yorkshire and Humberside to 2016 (GOYH 2004) identifies three key stages in an employment land policy – determine the overall level of provision of employ- ment land, establish criteria for choosing and prioritising sites, and develop a continuing process for managing and bringing forward the supply. These are amplified in Table 8.4 in the next section. The provision of sites for employ- ment, and especially large serviced sites, often close to motorway junctions and on or adjacent to greenfield land, can create considerable tension between development and conservation lobbies in the regional planning process (the wider and vital role of infrastructure, and especially transport infrastructure, is discussed in Chapter 10).

8.3.3 Implementation and monitoring

Many agencies are involved in the planning and development of a regional economy, including industrialists, developers, infrastructure providers, RDAs, Government and the European Commission. It is important to highlight mechanisms and roles and responsibilities for implementation, as illustrated in Table 8.2. It is also important to have clear output indicators and targets as noted in Chapter 7. For economic policies, indicators might include, for example, progress on the provision of the range of sites, noted in Table 8.4; on the percentage of sites on previously developed land; on percentage of employees in high-tech sectors; on relative unemployment rates; on total tourist visits to the region; and on percentage of new businesses surviving for three years.

Table 8.2 Examples of economic policy implementation mechanisms and roles Economic policy Mechanisms Lead agency roles Support agency roles Provision of Development plans; Local authorities; RDA; developers employment land regional employment Regional Assembly

land survey

Promotion of Development plans; Local authorities; English Heritage;

tourism local transport plans; Regional Tourist Countryside tourism strategies and Board; RDA; Agency; Regional action plans tourism operators Assembly

and developers