Regional development agencies lack the flexibility to target funds quickly enough to help businesses through the recession, according to the man brought in to transform the capital’s economic support body.

Peter Rogers, chief executive of the London Development Agency (LDA), criticised regional agencies for acting as simple funders of “random regeneration”, rather than as influential bodies that can take a strategic role in bringing businesses and local authorities together to work more efficiently.

He said the government’s rules forced RDAs to commit all their funds to specific projects, instead of allowing them to hold money back from their annual budgets to create a fighting fund that could be directed quickly to help combat the effects of the downturn. His comments will add to the political battle over the future of England’s nine RDAs.

Lord Mandelson, the business secretary, recently urged the agencies to sharpen their focus on helping businesses to tackle the recession, while the Conservatives have pledged to allow local authorities to scrap RDAs.

“We are in danger of not having the flexibility to invest money where we need it if we have already committed money to things that aren’t working,” Mr Rogers said in an interview with the Financial Times.

“The government drives the RDAs towards inflexibility, which doesn’t make sense for them.”

Mr Rogers has spent the past year radically restructuring the LDA after its reputation was dragged through the mud during the London mayoral election campaign last year. The former chief executive of Westminster council was appointed by Boris Johnson, London mayor, to cut waste and improve the agency’s efficiency. He has axed one in three of the LDA’s 560 staff and slashed £11m ($16m) from its overheads of £40m.

Meanwhile, he has imposed a new investment strategy, cutting funding for many existing projects and seeking to shape the LDA as an “influencer – not just a funder”.

The agency has generated an extra 11 per cent of economic benefits by switching only 10 per cent of its resources, he says.

He has also created a flexible pot of up to £30m that is not committed to specific projects and can be deployed on new initiatives, such as a planned £2m tourism advertising campaign.

He thinks that RDAs can work better as “regional economic power-houses” that act across boundaries to stimulate co-ordinated action from other public and private-sector bodies rather than funding the delivery of projects on their own.

A more sophisticated role would also encourage a higher calibre of staff because RDA jobs are currently seen unfairly as “second-best choice” in the public sector.

Mr Rogers added: “More investment in environment and skills provides much better returns than continuing to invest in random regeneration …And we don’t need to deliver everything. Why spend money on something when other people are doing it?

“Taking a more influential role without doubt improves our reputation, and it frees up money to be spent elsewhere.”

Mr Rogers has held discussions with the Department for Business, Enterprise and Regulatory Reform about creating a national model to improve the functioning of the RDAs in the light of the LDA’s revamp.

The LDA has been able to reorganise itself and create more flexibility because, unlike the other RDAs, it comes under the direction of the mayor as well as the government, and is allowed to make provisions to carry money over from its annual budget. Other RDAs are directed by ministers and have less freedom to manoeuvre, Mr Rogers said.

Get alerts on UK business & economy when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article