TUC response to Prosperous Places

TUC response to the implementation plan for the Sub-National Review of Economic Development and Regeneration

1.1Introduction

1.1 The TUC welcomes the opportunity to comment on the Government's proposals set out in Prosperous Places: Taking forward the Review of Sub-National Economic Development and Regeneration. The TUC is the voice of Britain at work, representing 6.5 million employees in 58 affiliated trade unions.

1.2 The TUC welcomes the fact that the proposals in the Sub-National Review of Economic Development and Regeneration (SNR) facilitate greater policy coordination at regional level, combining planning and transport strategies with economic strategies. With the simplification of the targets towards economic improvement and a duty on local authorities to achieve this, the SNR provides a clear and simple measure of success. The TUC also supports the strengthening the voice of regions within Central Government through the creation of Regional Ministers.

1.3 However, the TUC would caution against the creation of a system of policy development concentrated among local authorities to the exclusion of stakeholder input, especially that of employers and trade unions. Moreover, the economic growth targets for the region should not be achieved at the expense of measures to tackle climate change, foster social inclusion or reduce intra-regional disparities.

1.4 The TUC welcomes the suggestion in paragraph 3.5 of the consultation document that RDA boards will need members with experience of working with regional stakeholders. The TUC believes that there is a need for a wider trade union perspective within the governance arrangements for RDAs. Trade unions represent millions of working people across every region and in a range of sectors. This gives unions an unparalleled ability to access networks in workplaces throughout the region, providing invaluable experience and knowledge to the development of regional economic strategies. However, the current restriction to simply one seat means that the responsibility for ensuring an effective contribution from the trade union movement falls to one individual. It also restricts the ability of the union movement to reflect the broad diversity of the working population. Given that RDA boards only have one seat for trade union members while half of the boards are reserved for employers, the TUC would strongly urge the Government to consider an increase in the number of seats for trade union members on RDA boards.

2.1Q1. How should RDAs satisfy themselves that sufficient capacity exists for programme management and delivery at local or sub-regional level?

2.1 Moving to a system whereby whole programmes, as opposed to individual projects, are managed by local authorities will, in many cases, require significant improvements in the capacity of local government to deliver those programmes. While the TUC shares concerns that many local authorities may currently lack the capacity to manage the programme envisaged by the SNR, with the correct support the new responsibilities may see an increase in innovation appropriate to local areas, which a more centralist approach might never have allowed.

2.2 However, a major barrier to effective local delivery will be the capacity of local government to engage with the business community. This includes both employers and trade unions. Given that improving productivity within the locality or sub-region is a key element of delivery, sufficient capacity should include the existence of institutions which facilitate social partnership at a workplace and sub-regional level to meet the high performance workplace agenda. The importance of this at a regional level was demonstrated by the South East of England Development Agency's decision to establish a Social Dialogue Forum bringing together the RDA, employers and unions to improve the region's economic performance. The Social Dialogue Forum has promoted good practice in areas such as tackling gender segregation, creating a healthy workplace and innovative workforce pooling initiatives^[1].

2.3 Workplace relationships are an important element in boosting productivity, particularly the contribution made by constructive relations between employers and trade unions. Businesses depend on the efforts of the people they employ. Enterprise is not only about the role of employers, but also about giving employees the confidence to take initiatives and risks within a companywide enterprise culture. This is a key factor in building adaptable organisations in which staff can and will undertake new processes, and where they have a sense of involvement and ownership in change. Those organisations that are successful make the best use of the experience and ideas of workers not routinely involved in company decision-making, but who would encounter operational difficulties when putting new ideas into practice.

2.4 Capacity to engage meaningfully with employers and unions should, therefore, be a key criterion for RDAs in satisfying themselves that capacity exists for programme management and delivery at local or sub-regional level.

3.1Q2. Do you agree that local authorities should determine how they set up a local authority leaders' forum for their region, and that the Government should only intervene if the required criteria are not met or if it failed to operate effectively? If not, what would you propose instead?

3.1 The TUC understands that the enhanced role for RDAs and local authorities is intended to lead to much greater efficiency and delivery of objectives at the regional and sub-regional level. However, while the TUC recognises the importance of the additional accountability provided by the local authority leaders' forum, the TUC does have a number of concerns about the proposals for the forum. One of the consequences of abolishing Regional Assemblies, taken together with proposals for scrutiny to be performed by a local authority leaders' forum, is that there will no longer be any direct involvement of other stakeholders. This will undermine one of the central thrusts of the SNR, which is that accountability and scrutiny will be important in ensuring the successful delivery of each region's economic growth and housing supply objectives. The TUC is also concerned that such a model, as envisaged in the SNR, may not prove to be practical in every region. The number of local authorities will vary considerably between regions, and in order to be effective, it may mean that in some regions not all local authority leaders will be represented.

3.2 While greater detail is required on how each forum would be constructed, the TUC takes issue with the view that the body which holds each RDA and its delivery partners to account should consist exclusively of local authority leaders. Engaging employers and unions at a regional level can help boost productivity. Positive engagement between employers and trade unions boosts performance and productivity. This is the case at a workplace level, at a sectoral level and at regional level. That is why the arrangements which emerge from the SNR must ensure that there is a strong voice for unions both in determining the integrated regional strategy, and in scrutinizing the delivery of that strategy.

3.3 As long as the criteria includes a requirement for trade union involvement and representation, then the TUC would see no reason for central government intervention, but this should not simply be left to local authority leaders to determine.

3.4 The TUC notes that some transition bodies have come to an arrangement which includes trade unions and other stakeholders sitting alongside local authority leaders. In the North West, for example, a Leaders' Forum structure has already been agreed which is based on the existing North West Regional Assembly Executive Board. This structure includes three local authority leaders from each sub-region and six leading stakeholders drawn from the business, social and environmental sectors, including trade unions. The TUC understands that this body will help to shape, as well as agree, both the integrated regional strategy and the resulting implementation plan. It may well be that this is an option worth exploring as an alternative to a purely local authority-led forum.

3.5 It is clear that any local authority leaders' forum will require a smaller executive body for the detailed administration of the forum's work. The TUC would propose that such a body should include representatives of stakeholders in the region, in addition to local authority leaders. The capacity of stakeholders to engage in such a process will require that adequate resources are made available.

4.1Q3. Are the proposed regional accountability and scrutiny proposals proportionate and workable?

4.1 The TUC has concerns that the new arrangements will diminish the accountability of regional bodies, rather than improving it. This is because the proposal to delegate RDA funding to local authorities means that the effectiveness of programmes and funding allocation will be scrutinised by the leaders of those authorities charged with their delivery. Moreover, the TUC would hope that any scrutiny model would add value, rather than simply replicating the audit processes to which both RDAs and local authorities are currently subject.

4.2 Furthermore, the decision on how stakeholders are to be engaged appears to rest with RDA and possibly local authorities, without the involvement of existing stakeholder groups. The TUC would define stakeholders as either social partners - employers and trade unions - or wider social, economic and environmental representatives who are accountable and represent significant and substantial interests across a region. Those stakeholders and their individual networks which make up the current membership of Regional Assemblies may have views on how they wish to be engaged. They will also have views on what would constitute meaningful engagement, which should include influence, negotiation and agreement, not simply consultation. In the view of the TUC, there should be a positive duty on RDAs to work through a collective forum of regional stakeholders, where the stakeholders agree to work in that way. Stakeholders should also be included in the development of the regional strategy, as well as in the scrutiny process.

5.1Q4. Do you agree that the regional strategy needs to cover the elements listed at paragraph 4.13 (of the document)? Are there other matters that should be included in the regional strategy to help in the delivery of key outcomes?

5.1 In addition to the six bullet points listed, the TUC would argue that the regional strategy should also cover how it will tackle gender segregation and women working below their potential, as well as disadvantage in the labour market for disabled workers and workers from black and minority ethnic communities. The strategy should also include sustainable development; the impact of inequality in access to housing and transport, and the impact of demographic changes within the region.

5.2 The UK has one of the most highly gender segregated labour markets in the European Union. One of the characteristics of the UK economy is that occupations are divided into those that are deemed to be only suitable for full-time workers, and those that are better done by part-time workers. As a consequence, in a society where women continue to hold the majority of caring responsibilities, the UK has one of the highest rates of women's part-time employment in the European Union.

5.3 In its General Formal Investigation (GFI) into gender segregation among apprenticeships, the Equal Opportunities Commission (EOC) identified occupational segregation as a major cause of the gap between female and male earnings, as women tend to be concentrated in sectors that pay less than those which predominantly employ men^[2]. For example, average earnings in the male dominated sectors of construction, plumbing and engineering were very significantly higher than in the female-dominated childcare sector.

5.4 The UK's highly segregated labour market exacerbates skills shortages in key sectors such as construction, engineering and childcare. Occupational segregation ensures that women's skills are often poorly matched to the work they do, and it discourages women from either working at all, or at least working to their full potential. For many regions, local skills deficits are found in the five sectors highlighted by the EOC, and regional strategies to tackle occupational segregation are an important part of the way forward.

5.5 In addition to issues of gender segregation, the likelihood of living in poverty is significantly higher for people from black and Asian communities than it is for white people^[3]. Moreover, half of black children and nearly two-thirds of Bangladeshi and Pakistani children live in poverty, compared to a quarter of white children^[4]. People from ethnic minority communities are also heavily concentrated in the most deprived wards in England^[5].

5.6 Furthermore, according to research the Chartered Institute of Personnel and Development, 33 percent of employers stated that they deliberately excluded people with a history of long-term sickness or incapacity when recruiting staff. By contrast, only three percent had a positive policy of targeting such workers for recruitment^[6].

5.7 The TUC believes that integrated regional strategy should also include tackling social inequality, particularly in relation to housing and the impact this has upon public health. Housing deprivation appears to pose a health risk that is of the same magnitude as smoking and, on average, greater than that posed by excessive alcohol consumption^[7]. Many vulnerable groups, including the elderly, the very young and those suffering from long-term ill health, are particularly at risk. People with health problems are more likely to live in accommodation which actually exacerbates their health problems.

5.8 Regarding transport, more than half of households in the lowest income quintile do not have access to a car^[8] and households without a car make five times more trips by bus than people in households with a car[9].

5.9 The TUC would also argue that the regional strategy should include sustainable development. This is because the shift to a lower carbon economy is essential, but must be managed by a 'just transition', based on a fair distribution of the costs and benefits of environmental policies across the economy. It is imperative that sustainability is built into integrated the regional strategy.

6.1Q5. Do you agree with the way in which we propose to simplify the preparation of the regional strategy, as illustrated in the figure (on page 35 of the document), in particular allowing flexibility for regions to determine detailed processes? If not what other steps might we take?

6.1 To ensure the legitimate voice of working people is heard, the TUC believes that the Government should consider proposals to include stakeholder representation in the scrutiny process, as set out above. However, the TUC would caution against the creation of a system whereby policy development lay with business-led RDAs and wider stakeholder engagement was largely focused on the scrutiny of the outcomes of such policy. Trade unions are key partners in the delivery of the regional development agenda and should be involved at the stage of policy development itself, as part of a statutory requirement for wider stakeholder engagement. Such arrangements for stakeholder engagement will require effective resourcing. They must also allow stakeholders to be able to initiate, challenge or amend elements of the regional strategies, so that engaging with such structures is seen to be a meaningful exercise.

6.2 Such powers would require statutory underpinning for stakeholder engagement. This would ensure that there was a positive duty in law for RDAs, or the relevant lead body in the region, to bring together social, economic and environmental partners to examine, scrutinise and make recommendations in regard to the strategies and policies to meet each region's economic growth and housing objectives. Where such arrangements have operated, for example in the South West, they have been widely regarded as successful examples of collaboration. Similarly, where RDAs have brought together social partners, such as in the South East, there is wide recognition that innovative solutions have been found to some of the challenges facing parts of the regional economy.

6.3 The TUC would, therefore, argue that RDAs be placed under a duty to engage with stakeholder forums where stakeholders in the region decide to operate collectively through such a mechanism.

6.4 Greater clarity is also needed in the proposal for independent panels to be appointed in each region. There is no description of how they would be appointed and who would determine their composition.

7.1Q6. Do you think that the streamlined process would lead to any significant changes in the costs and benefits to the community and other impacts?

7.1 The consultation document makes no reference to the need for a collective voice for stakeholders. Currently regions benefit from the ability of stakeholder groups to identify cross-sectoral interests and where possible resolve any apparent differences of view before engaging with regional agencies such as the RDA. Although this does not prevent those interest groups from individually engaging with RDAs, it does improve the overall efficiency of the stakeholder engagement process.

7.2 The legislation should require the RDA and local authorities to agree with existing stakeholder groups the arrangements for the engagement of stakeholders in regional development and regeneration.

8.1Q7. Which of the options for the local authority economic assessment duty (or any other proposals) is most appropriate?

8.1 It should be noted that there is some confusion in the options presented in the paper and in Appendix One. This response, therefore, refers to the options as set out on pages 40-41 of the main document. The most appropriate option is Option 2. The guidance set out in Option 1 is too prescriptive and would, in effect, render local authorities as information collecting vehicles on behalf of central government. If the purpose of enhancing the local authority role is that they are democratically accountable to electors in their area, the only constraint on the information they collect should be the requirements as set out in the relevant legislation.

8.2 However, among the priority areas which need to be covered should be included the strength of union and employee voice mechanisms within the locality in order to enhance productivity. In the context of improving economic performance, it is important to remember that skill levels account for between 10 and 20 per cent of the UK's productivity gap with France and Germany. The proportion of employers reporting skills gaps varies considerably between regions^[10]. Partnership between unions and employers can improve the skills base of the workforce, which in turn has a powerful effect upon productivity. Workers get more training when there is formal negotiation, not just consultation. In workplaces where training is negotiated, almost 40 per cent organise an average of five or more training days a year, compared to less than a quarter of workplaces where training is only subject to consultation^[11].

8.3 The presence of a recognised trade union is also positively associated with policies that contribute to high performance workplaces, according to recent evidence from Managing to Change, which confirms the positive productivity gains available^[12]. Moreover, evidence from the United States shows that attempts to improve productivity through workforce involvement are far more effective in unionised businesses. Black and Lynch analysed data from the Educational Quality of the Workforce National Employer Survey and found that 'employee voice' arrangements had a larger positive effect in unionised establishments^[13].

8.4 An economic assessment duty should, therefore, include the level of union membership and collective bargaining coverage in key sectors of the locality or sub-region.

Q8. What additional information or support do local authorities consider valuable for the purpose of preparing assessments?

Other parties may be better placed to respond to this question.

Q9. How should lead local authorities engage partners, including district councils, in the preparation of the assessment?

Other parties may be better placed to respond to this question.

9.1Q10. Which partner bodies should be consulted in the preparation of the assessment?

9.1 Social partners in each region, including trade unions through the Regional TUC, should be consulted in the preparation of the assessment.

10.1Q11. Should any duty apply in London and, if so, which of the proposed models is most appropriate?

10.1 It is the view of the TUC that, while fragmented in many ways, London as a region has an integrated labour market that can only be fully assessed and understood from a regional perspective.

10.2 The transitory nature of the workforce and the travel to work patterns both within London, between Boroughs, and from outside London mean that local assessments performed on a local authority basis would not be the most effective way of meeting the five main objectives outlined in the rationale for the local authority duty indicated in paragraph 5.5 on page 38 of the consultation document.

10.3 To illustrate this point, it is worth noting that only 31 percent of Londoners live and work in the same Borough and that around two thirds of all London's jobs are concentrated in the key employment zones of inner central London, the M4 corridor and centres such as Croydon, Isle of Dogs and Heathrow.

10.4 Thirty-three separate local authority assessments would hinder rather than support the aim of developing a greater understanding of economic development. If Boroughs were to form multi-area partnerships to conduct assessments, this would be in danger of duplicating existing research and analysis that the GLA and LDA are perhaps better placed to undertake.

10.5 It is obvious that local knowledge and information on the labour market and businesses within a Borough is important in the formulation of policy and the delivery of services on a local level and, as such, it is important that mechanisms are in place to ensure that labour market information and other local data is shared and understood between the regional and local tiers of government in London.

10.6 As such, the TUC supports of option 3 in the consultation document, that no duty should be place on local authorities in London. However, if such a duty were to be considered the TUC's preference would be for option 2, with joint local assessment by Boroughs and the GLA.

Q12. Do you agree that there is value in creating statutory arrangements for sub-regional collaboration on economic development issues beyond MAAs? What form might any new arrangements take?

Other parties may be better placed to respond to this question.

Q13. What activities would you like a sub-regional partnership to be able to carry out and what are the constraints on them doing this under the current legislation?

Other parties may be better placed to respond to this question.

Q14. How would a sub-regional economic development authority fit into the local authority performance framework?

Other parties may be better placed to respond to this question.

Q15. Should there be a duty to co-operate at sub-regional level where a statutory partnership exists? To whom should this apply?

Other parties may be better placed to respond to this question.

11.1Summary

11.1 The TUC believes that the involvement of stakeholders is crucial to the successful implementation of the vision set out in the SNR. This belief runs throughout the TUC's responses to the questions in this consultation. The social partners are key stakeholders at a regional level and mechanisms must be developed which engage employers and trade unions in the development and scrutiny of the integrated regional strategy and its delivery.

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[1] 'Workforce Pooling: Report on the Feasibility of, and Best Practice in Workforce Pooling in the Marine Industries', SEEDA, 2004.

[2] Plugging Britain's Skills Gap: challenging gender segregation in training and work Report of phase one of the EOC's investigation into gender segregation and Modern Apprenticeships, Equal Opportunities Commission, 2004

[3] Households Below Average Income, DWP, 2004

[4] Average Income, DWP, 2004

[5] ODPM Survey of English Housing, as in Housing in England, ONS and ODPM, 2004

[6] Incapacity Benefit Reform: why it is needed and how to engage employers, John Philpott, CIPD, 2006

[7] Housing and health: building for the future, British Medical Association, May 2003

[8] Transport Trends 2005, DfT

[9] Young people and public transport, NYA, January 2007

[10] National Employers Skills Survey 2007, Learning and Skills Council, May 2008

[11] The Learning Curve, TUC, January 2006

[12] Managing to Change, chapter 10, Management versus regulation? ESRC Future of Work programme

[13] 'What's Driving the New Economy: the benefits of workplace innovation', Black and Lynch, NBER working paper 7479, 1999.