RDAs: a waste of £15bn?

A new report argues that Regional Development Agencies are a complete waste of time and money...

Last Updated: 31 Aug 2010

The Taxpayers’ Alliance reckons that the RDAs, Government quangos set up in 1999 to improve the economic competitiveness of the nine English regions, have cost us more than £15bn (that’s £600 per household) – yet ‘have contributed nothing to the economic development of England's regions’. In fact, the report suggests, the regions actually performed better (on almost every measure) in the seven years before the RDAs were introduced. So should the government have spent the money on small business tax cuts instead?

The report says RDAs have failed to live up to all three of their key aims since their introduction. They’ve failed to create more jobs: in fact employment growth has slowed (from 0.3% pa to 0.1% pa). They’ve failed to help regional economies grow faster: with the exception of London and the South-East, growth was actually faster pre-1999. And they’ve failed to improve equality between the regions: the other seven regions now contribute just 52% of economic output, compared to 64% in 1992, suggesting that the gap between rich and poor is getting wider.

OK, so you might argue that the explosive growth of the City in recent years has skewed these figures. But if these quangos are as profligate as the Taxpayers’ Alliance suggests, that would be far less forgivable. It cites various examples to prove that RDAs are ‘riddled with waste and excess’, including sky-high salaries and ‘ludicrous’ travel expenses (like a £20,000 bill to send staff to a film festival in Dubai). ‘RDAs have become a symbol of wasteful bureaucratic excess,’ says TA policy analyst Ben Farrugia. ‘They should be abolished before the Government hands them even greater powers.’

The Taxpayers’ Alliance reckons a far more sensible way to spend the money currently lavished on RDAs would be to cut corporation tax for small businesses (it reckons the £2bn a year saved by scrapping the quangos could finance a 4p cut). This 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.’

The government begs to differ, of course, arguing that RDAs have attracted £8.2bn of inward investment and created 125,000 jobs since 1999. Unfortunately, we’ll never know how many jobs would have been created if it had just left things as they were...

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