Labour in the North has today condemned the Tory/Lib Dem Coalition’s announcement of cuts to support for the North East and Cumbria.

In a letter to Local Authorities today the Tory Communities Secretary, Eric Pickles and his Lib Dem colleague, Vince Cable set out details of their plans to replace Regional Development Agencies, One North East and the North West Regional Development Agency.

Under the new arrangements, some powers currently held at a region level would move back to Whitehall, including powers over inward investment and business support.

The letter also revealed that any new Local Enterprise Partnerships established would have to meet their own running costs from existing local authority budgets.

Roberta Blackman-Woods, Labour's Shadow Business Minister and City of Durham MP said;

“The Coalition just hasn’t listened to the region when it comes to keeping One North East. Nick Clegg even had the temerity today to write that RDAs could be kept in areas which thought they had worked. Then in the afternoon, his Tory masters announce their complete abolition. Either Nick Clegg is misleading people or is being misled. Local Councils and Business leaders have been clear on how they value the work of One North East.”

This decision will set this region’s economy back a decade.  There is a real danger their Partnerships could turn into powerless talking shops, stripped of the resources they need to support private industry in the region. In addition, rather than devolving power to the region the Coalition has announced that a whole swathe of powers held at a regional level will be handed back to London. “

Labour’s Shadow Secretary of State for Business, Innovation and Skills, Pat McFadden MP said:
"This is a broken promise and a clear breach with what the Coalition agreement said just a few weeks ago.  Then, the Government said the future structure "may take the form of existing RDAs in areas where they are popular".  Yet now the Government is announcing the abolition of all RDAs.
"They seem to be vacating the pitch when it comes to growth. As the G20 stressed at the weekend, a strategy for growth is important as well as a strategy for deficit reduction.  RDAs have done a good job for regional economies.  They have been independently evaluated and shown to lever in on average £4.50 of benefit for regional economies for every £1 spent.
"To announce a consultation on the future while ruling out the option of keeping the RDA which the Government previously said would be available is to ride roughshod over the views of business in different regions.


Notes to Editors:

The Government have broken their promise to consult businesses and the regions on the fate of RDAs. The Coalition agreement stated that the future structure of RDAs “may take the form of the existing RDAs in areas where they are popular”.
“We will support the creation of Local Enterprise Partnerships – joint local authority-business bodies brought forward by local authorities themselves to promote local economic development – to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”
       The Coalition: our programme for government, published May 2010, pg 10
Shortly after his appointment as Secretary of State for Business, Vince Cable stated that RDAs could “continue in a similar form” and that in certain regions “they will continue in pretty much the way they did before”.
"What we have said is where RDAs are doing a good job and where the partners recognise they are doing a good job, they can continue in a similar form to what they have at the moment. 
"We believe that the RDA function is relatively more useful in areas which have got big structural problems.  The North East is probably the most extreme but also the North West, West Midlands and Yorkshire."
Vince Cable, Yorkshire Post, 01 June 2010
“… and in the north of England we have identified some of the vulnerable areas where they will continue in pretty much the way they did before so there will be a strong emphasis on the vulnerable parts of the UK making sure they have relatively more resources.”
Vince Cable, Today Programme, 03 June 2010
Vince Cable has been clear that the future of RDAs would “depend on the reaction of local businesses and local authorities.”
“In my first answer, I stressed that the changes depend very much on the reaction of local business and local authorities. “
Vince Cable, Hansard, 3rd June 2010, Cmn 556
Despite these statements the Government’s Budget confirmed that all RDAs will be abolished.
“The Government will enable locally-elected leaders, working with business, to lead local economic development. As part of this change, Regional Development Agencies will be abolished through the Public Bodies Bill.”
Budget 2010, pg 31

The Coalition plan remove powers from the regional level and move them to the national level.

 We are working with the Regional Development Agencies (RDAs) to enable this transition. Some of their existing roles are being scrapped, such as Regional Strategies. Other roles which we believe should be led nationally will be carried out elsewhere. These include inward investment, sector leadership, responsibility for business support, innovation, and access to finance, such as venture capital funds.
Letter from Vince Cable and Eric Pickles to local authority Leaders and Chief Executives,  29 June 2010

As late as today, the Deputy Prime Minister was writing that areas that felt RDA’s were working would not find them replaced by LEPs,

“In areas where local people don’t feel that their Regional Development Agency is working, it will be replaced with a Local Economic Partnership…”
Op-ed by Nick Clegg MP, The Northern Echo, 29 June 2010