Regional Development Agencies: £15 billion thrown away

August 08, 2008 9:54 AM

  • Detailed analysis of regional economic performance shows no improvement - and even a slowing - in regional performance since RDAs were created.

  • Since 1999 these failed quangos cost taxpayers £15 billion, nearly £600 for every household - money that has effectively been thrown away.

  • The money saved by abolishing RDAs would be enough to cut Corporation Tax on small companies by 4p.

New research from the TaxPayers' Alliance (TPA) demonstrates conclusively that the Regional Development Agencies (RDAs) have contributed nothing to the economic development of England's regions. Detailed and comprehensive analysis of regional economic development over the last fifteen years shows that in almost every measure their allotted regions performed better in the seven years before the Agencies were established than in the years since they were set up. The £15.3 billion spent on RDAs since 1999 has been wasted, and the report lays out a clear alternative to these massive quangos that would provide a genuine motor for regional development.

For the full report click Download structure_of_government_3_the_case_for_abolishing_rdas_e.pdf (PDF).

KEY FINDINGS:

RDAs have failed on their three key aims:


  • Employment – growth in the number of jobs and the number of people in work, has slowed since RDAs were set up in 1999. Between 1995 and 2000 the number of jobs in England increased by 9.5 per cent, while between 2000 and 2005 it increased by 3 per cent. From 1992 to 1999 employment rose by 0.3 percentage points a year. From 1999 to 2006 that rate has dropped to just 0.1 percentage points.

  • Economic Growth - apart from London and the South East, England’s regions grew faster in the seven years before RDAs were introduced than in the seven years after, in both per head and total output terms. The rate of business creation has not significantly increased since 1999.

  • Regional equality – in economic output, the relative contribution of the seven regions besides London and the South East has dropped from 64 per cent in 1992 to 52 per cent in 2006. The gap between the richest and poorest regions has grown over the past decade, not diminished. Local inequality within the regions has got worse, too.

RDAs are riddled with waste and excess:


  • The report features a full RDA rich list detailing the 39 top earners raking over £100,000 each in England's Regional Development Agencies.

  • Examples of waste within RDAs abound; extravagant trips to the south of France, ludicrous taxi expenses and lavish one day conferences are all commonplace. James Braithwaite, Chairman of SEEDA, spent £53,803 on transport in 2006-07. Yorkshire Forward spent £20,000 sending staff to a Film Festival in Dubai in 2006.

There is a simple, effective alternative: Cut taxes on small businesses


Abolishing the Regional Development Agencies would have no negative impact on the regions, given the RDAs' failure since 1999. Their 2009-10 budget of £2.19 billion could then be used to pay for a 4p cut in the Small Business Rate of Corporation Tax - from 22 per cent to 18 per cent. Reducing tax on small businesses would create new jobs, boost existing businesses, make life easier for people starting business and give the regions an economic leg-up: exactly what the RDAs were meant to do and have failed to achieve.


Ben Farrugia, Policy Analyst at the TaxPayers’ Alliance, said:

“Regional Development Agencies have failed in their core mission to narrow the gap between the economic performance of England’s regions. At a time when businesses are increasingly over-regulated and over-taxed, RDAs have become a symbol of wasteful bureaucratic excess. They should be abolished before the Government hands them even greater powers.”

Download the full report (PDF).

  • Detailed analysis of regional economic performance shows no improvement - and even a slowing - in regional performance since RDAs were created.

  • Since 1999 these failed quangos cost taxpayers £15 billion, nearly £600 for every household - money that has effectively been thrown away.

  • The money saved by abolishing RDAs would be enough to cut Corporation Tax on small companies by 4p.

New research from the TaxPayers' Alliance (TPA) demonstrates conclusively that the Regional Development Agencies (RDAs) have contributed nothing to the economic development of England's regions. Detailed and comprehensive analysis of regional economic development over the last fifteen years shows that in almost every measure their allotted regions performed better in the seven years before the Agencies were established than in the years since they were set up. The £15.3 billion spent on RDAs since 1999 has been wasted, and the report lays out a clear alternative to these massive quangos that would provide a genuine motor for regional development.

For the full report click Download structure_of_government_3_the_case_for_abolishing_rdas_e.pdf (PDF).

KEY FINDINGS:

RDAs have failed on their three key aims:


  • Employment – growth in the number of jobs and the number of people in work, has slowed since RDAs were set up in 1999. Between 1995 and 2000 the number of jobs in England increased by 9.5 per cent, while between 2000 and 2005 it increased by 3 per cent. From 1992 to 1999 employment rose by 0.3 percentage points a year. From 1999 to 2006 that rate has dropped to just 0.1 percentage points.

  • Economic Growth - apart from London and the South East, England’s regions grew faster in the seven years before RDAs were introduced than in the seven years after, in both per head and total output terms. The rate of business creation has not significantly increased since 1999.

  • Regional equality – in economic output, the relative contribution of the seven regions besides London and the South East has dropped from 64 per cent in 1992 to 52 per cent in 2006. The gap between the richest and poorest regions has grown over the past decade, not diminished. Local inequality within the regions has got worse, too.

RDAs are riddled with waste and excess:


  • The report features a full RDA rich list detailing the 39 top earners raking over £100,000 each in England's Regional Development Agencies.

  • Examples of waste within RDAs abound; extravagant trips to the south of France, ludicrous taxi expenses and lavish one day conferences are all commonplace. James Braithwaite, Chairman of SEEDA, spent £53,803 on transport in 2006-07. Yorkshire Forward spent £20,000 sending staff to a Film Festival in Dubai in 2006.

There is a simple, effective alternative: Cut taxes on small businesses


Abolishing the Regional Development Agencies would have no negative impact on the regions, given the RDAs' failure since 1999. Their 2009-10 budget of £2.19 billion could then be used to pay for a 4p cut in the Small Business Rate of Corporation Tax - from 22 per cent to 18 per cent. Reducing tax on small businesses would create new jobs, boost existing businesses, make life easier for people starting business and give the regions an economic leg-up: exactly what the RDAs were meant to do and have failed to achieve.


Ben Farrugia, Policy Analyst at the TaxPayers’ Alliance, said:

“Regional Development Agencies have failed in their core mission to narrow the gap between the economic performance of England’s regions. At a time when businesses are increasingly over-regulated and over-taxed, RDAs have become a symbol of wasteful bureaucratic excess. They should be abolished before the Government hands them even greater powers.”

Download the full report (PDF).

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