Mandelson: scrapping the RDAs would be totally reckless

Speaking at the University of Manchester, the Business Secretary said the economic challenge for regional policy and infrastructure policy had a common theme – both required strong Government action to unlock investment and growth.

The Business Secretary, Lord Mandelson, has reignited the row over the future of regional development agencies by claiming they have “too good a record for any Government or opposition to dismiss”.

He was speaking during a recent whistle-stop tour of Manchester, which saw him open an advanced welding school in Salford and pay visits to Media City and Nanoco Technologies, a successful spin-out business from Manchester University’s Core Technology Facility.

In a speech at Manchester University he accused his opposite number, Shadow Business Secretary Ken Clarke, of being reckless in promising that the Conservatives would scrap all of the eight regional development agencies because they were a “failed experiment”.

“Ken Clarke wants to scrap the regional development agencies and replace them with a pick’n’mix policy that would give a scattering of local authorities the illusion of a regional role but without the focus, the machinery, the specialist staff, the resources or the networks across the region that they need,” he said.

Praising the RDAs for having played a “really important role in thinking big and making strategic interventions and investment”, he went on to warn that the future of our regional economies should not be put at risk for “ideological” reasons.

“We want to make the agencies one of the key channels we use for investing in advanced, modern industrial capabilities like the Daresbury Science and Innovation Campus, Media City and the National Skills Academy for Nuclear in Cumbria – all transforming the potential of the region’s private sector and its ability to generate enterprise and new jobs.”

“The free market ideology of the 1980s walked away from the challenge of regional economic regeneration because it believed it had to leave economic change and growth largely to the market,” he said. “A more pragmatic view says if you invest in the right ways in local capabilities, local skills and local initiative then private enterprise and private capital will follow that lead.”

Issuing a robust defence of the RDAs record – he argued that for every pound they invest they produce more than four pounds in growth – Lord Mandelson nevertheless admitted the relationship between RDAs, universities and the business sector could work better to leverage even more results.

“We want to make the agencies one of the key channels we use for investing in advanced, modern industrial capabilities like the Daresbury Science and Innovation Campus, Media City and the National Skills Academy for Nuclear in Cumbria – all transforming the potential of the region’s private sector and its ability to generate enterprise and new jobs.”

Accepting that Britain’s economy had become too heavily reliant on financial services, he added that the challenge of rebalancing our economy meant that over the next decade “perhaps as much as £500 billion” of new infrastructure investment was needed.

“Not only does our current infrastructure stock of roads and airports and ports and railways and waste management need renewal, but our energy infrastructure needs to adapt to decarbonisation and our communications infrastructure needs to move to fibre-optic and mobile broadband,” he explained.

He did nothing to dampen speculation that the Government’s budget on March 24 might consider setting up a Government-backed investment fund to help finance such infrastructure projects.

“Unless we understand this role of public investment and Government action as a way of driving growth it is all too easy to fall into the trap of believing that the quickest way to balance the British budget deficit is to cut away public spending as quickly as possible. To forget that we need a plan for sustainable economic growth alongside the plan we have to reduce the deficit.”

“We need to mobilize private investors on a totally new scale,” he said. “That has to include examining the case for public-sector backed financial institutions to achieve this mobilisation.”

One area he singled out where the Government had already set out plans for public private strategies for infrastructure was digital broadband.  Pointing to £200 million of Government money being used to extend coverage of broadband across the UK, he said that an additional small levy of 50p per month on phone lines to pay for faster net access would help close the gap between what the market will fund and what it won’t.

Admitting he was impatient to see “the final third of the country reached by superfast broadband,” he added that he was concerned that other countries were getting on with doing this and that Britain needed to act fast to remain competitive.

“I believe that those who oppose this levy are throwing away a huge opportunity,” he argued. “It is not just a betrayal of the principle of the digital future belonging to everyone. It is a betrayal of Britain’s economic future.”

He concluded by warning that the challenge of reducing Britain’s budget deficit must not allow us to lose sight of the role of Government in driving growth. “The best antidote to debt is growth,” he stressed. “Unless we understand this role of public investment and Government action as a way of driving growth it is all too easy to fall into the trap of believing that the quickest way to balance the British budget deficit is to cut away public spending as quickly as possible. To forget that we need a plan for sustainable economic growth alongside the plan we have to reduce the deficit.”

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