Forward or back?

Forward or back?

Regional development agencies are being wound up, with their replacements still to be decided on. Peter Baber picks over the Yorkshire fallout

“Christ,” the man sitting next to me in the garden outside Yorkshire Forward’s headquarters one warm September afternoon says to his colleague. “In 12 months’ time this will be a ghost town, with no-one here at all.” And he takes another puff of his cigarette.

Whatever your view of public servants and their perceived largesse may be, it seems hard not to acknowledge that a significant period is coming to an end.

Especially in Holbeck, where much of the recent developments you see around you can in some ways be linked back to Yorkshire Forward. Just think of the Round Foundry and much else that is included in the Holbeck Urban Village.

Then there’s the Yorkshire Forward building itself, Victoria House. Up until Bridgewater Place was completed a couple of years ago, for many business people coming to Leeds Yorkshire Forward’s offices in Holbeck were the only reason they had for turning right out of the station entrance. It will be a shift if all of that is to go.

But to the chagrin of many a recently-opened sandwich bar owner, go it must, because new Secretary of State for Communities and Local Government Eric Pickles – himself a Yorkshireman – has now decided that all regional development agencies like Yorkshire Forward are to be disbanded. He has urged them to work with the coalition in putting together a new form of local enterprise partnerships. Their exact nature is still to be spelled out, but he envisaged they would be led where possible by a business leader with a board made up of public and private sector people.

The partnerships, he said, would tackle planning and housing, transport and the transition to a low-carbon economy. But many functions which have in the past been within the regional development agencies’ remit will now be delivered nationally – including business support. It was hardly surprising, therefore, that Business Link Yorkshire was one of the first victims of this new vision.

It is being wound up entirely. Such a response can hardly have been a total surprise. Tom Riordan, who left his position as chief executive of Yorkshire Forward to become chief executive of Leeds City Council earlier this year, concedes this. But like many people, he was expecting less drastic action, such as the demise of the RDAs in the south only.

“I always expected there would be changes,” says Riordan, “but I thought the northern RDAs would be more protected.” Given that he had worked for Yorkshire Forward from its outset and had helped to set up its modus operandi, he also felt his decision to jump ship so close to an uncertain election was an “agonising one”. But Pickles’s letter suggests that one of the key aims of the new LEPs will be to “rebalance the economy towards the private sector”.

Is this some implied criticism of how the regional development agencies including Yorkshire Forward have behaved? In the past it has proved very difficult to get any business figure to criticise Yorkshire Forward publicly and openly. In fact, many would tell you that the RDA we had operating here was the best in the country.

But many column inches have been written about the northern economy being too skewed toward the public sector. This is a key criticism of the new pressure groups the Taxpayers’ Alliance. It has brought out two research reports into RDAs in recent years, criticising them for expanding the public sector too much and for encouraging private enterprise to look for government grants rather than commercial profit – with many of these grants themselves being administered by other public sector agencies.

“They have helped create businesses that are really just grant junkies,” says John O’Connell, deputy director of research. But sitting up in that same Yorkshire Forward headquarters building on this September day, what does Terry Hodgkinson, outgoing chairman of Yorkshire Forward, think? Can he defend Yorkshire Forward’s record? As you might expect, he can – with a bit of “my goodness me” here and there.

In fact he sees one of Yorkshire Forward’s key achievements as being the support it gave to private sector businesses through the recession – and not in terms of grants.

“By mid-2008 business had hit rabbits in the headlights,” he says. “My goodness me – during that three-month period, banks went from lending to zero to withdrawing facilities. To give you some indication of the challenges, Business Link had a target of 28,000 assists for that year. That’s where an assessor goes in for two days. They actually hit 88,000.

“We set up a financial services task force too, and met with senior bankers in the region. The first one was very shaky, but we moved from that to engineering Business Link to have financial advisers to go with the businesses to the banks to get the right facilities. The banks said the businesses were coming to them really badly prepared. So we put that right. In 2008/9 we got 2,800 businesses facilities that they may not otherwise have got.” It’s not surprising to hear that as a result of this he is particularly dispirited at the demise of Business Link.

“When the Government gave us control of Business Link, at roughly the same time, they said they wanted us to improve the performance, but we’ll give you 20% less than the budget last year,” he says.

“We improved the performance by 50%.” Of course, during that period there were huge clouds over the future of HBOS as an employer in Yorkshire, particularly after its takeover by Lloyds TSB.

“One of our big wins was to broker a meeting with Helen Weir (the head of retail banking at Lloyds who took a lead role in the merger). Our then Minister for Yorkshire Rosie Winterton came, and we had four leaders of the affected authorities. We convinced her that Halifax as a location was a positive, not a negative. She swallowed it.” There have, of course, been many redundancies from HBOS in Halifax following the merger. But it’s true that the axe mostly fell on the Cheltenham & Gloucester instead.

“We could have lost many thousands,” says Hodgkinson. “On the wider scale, the regional economic council I co-chaired with Rosie Winterton worked really well. It brought together the universities, the Department for Education and Employment, and JobCentrePlus – the people who were in a direct firing line of the people who were affected by the recession.

In its fairly short life it drew a lot of funding forward.” He cites Yorkshire Universities, a grouping of all the higher education establishments in the region, as an example.

“Within a week of us starting it had agreed to bring £180m of building work forward into this year in construction work,” he says. “So when the industry was looking decimated, we were able to pull forward. The Highways Agency did much the same, and for them it was £100m. Just in the region I would say we brought forward £500m. That is admittedly taking the money from the following year, but when you hit a blank wall, as we did in 2008, the jobs weren’t looking like they were going to taper off, the jobs just stopped.

Our aim was to get that transition going.” As a property man – he still has an interest in Magna Holdings, a Yorkshire-based property company – Hodgkinson can also wax lyrical about the benefits Yorkshire Forward has brought to the challenged Yorkshire property industry. In particular Wakefield, his home town, where a shopping centre and regeneration development looked like it might fail when the property developer behind it went into administration.

“Wakefield we managed to save, but my goodness me that was by sheer determination on the part of the local authorities and ourselves,” he says, “and the bank taking a big hit. We loaned the project £5m via the local authority to see it through.” Of course, many people when talking about property in Yorkshire might point not to Wakefield but to Bradford, a city which despite having a dedicated urban regeneration company in operation for the best part of the last decade is still waiting for most of the ambitious plans it had laid out in Will Alsop’s plan in 2004 to come to fruition. The much-promised Westfield shopping centre, for example, is still a building site.

“The Westfield scenario was unfortunate,” says Hodgkinson. “They were, and are, the right developer. They were an integral part of making the Olympics work, although the amount of pre-lets in that planned centre was struggling at 50%. But retail is starting to come back – certainly in Leeds, and in Sheffield where Hammerson is starting to talk to the council again. That type of thing is really important, because if you let the compulsory purchase orders go, they take 10 years to get back. I hope the visions that were visions five years ago Bradford keeps hold of. They were well thought through and well consulted.” In contrast, Tom Riordan thinks too much emphasis has been put on the Westfield situation in the Bradford story.

“Lots of the public sector projects in the city have come off,” he says, “such as Eastbrook Hall, with its link with the university, and Lister Mills. It’s the private sector part of the city that hasn’t happened.” For his part he believes Yorkshire Forward’s success in beating the South East region for inward investment in 2009 was major achievement. Hodgkinson puts this success down to the agency’s key account management team which interfaces with 700 companies in Yorkshire, encouraging them to stay and grow in the region.

“I went on a visit with one to a £100m Huddersfield business that was on the point of pulling out,” he says. “The break point was the refusal of a planning application. We awoke the local authority to the economic consequences. We weren’t looking to change statutory planning, but to work with business to get a solution that would increase capacity by 50% and create 250 jobs.” Of course, the likes of the Taxpayers’ Alliance would claim that this kind of work is exactly the kind of unnecessary bureaucracy that is best avoided. O’Connell cites in particular a £200,000 grant paid to United Biscuits in 2008, which he claims was aimed at encouraging it to stay.

“Wouldn’t it be better just to reduce the tax burden in our regions, so that United Biscuits didn’t feel it necessary to leave?” he says. One of the Taxpayers’ Alliances more radical proposals is in fact the decentralisation of tax, although as this is yet to feature on any major political party’s manifesto, it could be a long way off happening, if it happens at all.

Nor does its stripping down of government agenda seem to have caught on with the business community. The five new proposed LEPs for Yorkshire, for example, have all been supported by the Chambers of Commerce, the CBI and the Institute of Directors. They are now just waiting to see what will transpire.

But both Hodgkinson and Riordan see even centralisation on the cards instead, and are concerned about the loss of expertise and funding this may cause. “You can’t rebuild the Yorkshire economy from Victoria Street,” says Riordan. In addition to the plans for LEPs, the Government has launched a £1bn regional growth fund that will be spent between 2011 and 2013 on regions in the UK that have been most dependent on public sector employment. Hodgkinson is sceptical about this at best.

“That £1bn amounts to roughly £100m for the Yorkshire region,” he says, “and yet our last budget was £370m alone. And that fund is very controlled. You can’t use it for administration or big capital projects.” He says whatever follows Yorkshire Forward “has not got by any means the freedom that the we had.” He is perfectly happy to admit the RDA may have made some mistakes.

“Not everything we have invested in has been successful,” he says, “but if it had been we would have failed because we wouldn’t have reached the bits that we wanted to.

“Freedom gives you the ability to do things in a different way. That is where the agencies have been able to flex their muscles. With our cash and influence, we have been able to up the game and move projects from being ordinary to being excellent or above.” It is this freedom, and this expertise, which he fears will be lacking in the new set up, particularly if the LEPs are underfunded.

Yorkshire Forward was a unique organisation, he believes, because of the background of its staff – roughly half public sector and half private sector.

“Although many outside are aware of the work of the RDAs, how they have penetrated the economy is not well understood, even in parts of Whitehall,” he says. “When you have executives going down and talking to central government about assets – and we currently have £60m of them – they are not just motorway sites. They are strategic sites that are part of the bigger picture for towns in the region.

We are goingto lobby hard to make sure that at the end of the day they are used for the purpose they were acquired for, not just speculatively sold.” But that won’t be a job for him. Come December, the business of winding Yorkshire Forward up will be the remit of Thea Stein, current chief executive, and whoever is brave enough to follow him.