Public Bodies Bill [HL] — Committee (7th Day) (Continued)

House of Lords, 28 February 2011.

Baroness Royall of Blaisdon (Labour)

My Lords, it is clear from the amendment that these Benches seek to remove RDAs from Schedule 1, which legally enables their abolition. This debate on the chaotic and misguided abolition of RDAs announced by ministerial fiat comes at a time when there is clear evidence that economic growth has flat-lined and that the economic recovery has ground to a halt. Now, more than ever, we need the regions to be motors of economic growth in our country, instead of which the RDAs, which provide the architecture for regional economic development, are being dismantled.

As we have heard at Second Reading and throughout this Committee stage, the Conservative-led Government have failed to follow a satisfactory process or procedure for evaluating the efficiency and effectiveness of the bodies scheduled for abolition. The rushed decision-making and lack of consultation is nowhere more blatantly obvious than with the abolition of the RDAs. The White Paper outlining the Government's plans came after the decision to abolish RDAs had been announced, and it was a real surprise to these Benches to see their inclusion in Schedule 1. The House of Commons Public Administration Committee concluded that the Government did not consult properly on their proposals. It welcomed the Government's agreement to allow for further consultations and said that it expected,

"these consultations to have real effect on the outcome of the review; even if this means reversing decisions that have already been made".

What consultations have taken place since the abolition of RDAs was announced, and how have the conclusions of those consultations been taken into account?

Even if the Government did not make a proper assessment of the value of RDAs, an independent evaluation by PwC found that since their inception RDAs helped to create thousands and thousands of jobs, well in excess of their target; assisted nearly 57,000 businesses-again, well in excess of their target; enabled £5.7 billion of funding to be levered in from the public and private sectors; and created over 8,500 new businesses. The evaluation also demonstrated that every pound spent by RDAs added approximately £4.50 to the regional economy. Other strengths of the RDA model include the ability to pursue a coherent vision for the region that could be turned into a strategy for economic development and investment.

So why are RDAs being dismantled with no credible alternatives? I am sure that the Minister will tell me that they are being replaced by local economic partnerships, which will see business and civic leaders work together to bring economic development, shifting power away from central government towards local communities, which really understand the barriers to growth. But it is not the case that all the RDAs are being localised. Some functions, such as inward investment, innovation, key sector development and response to economic shocks are going to be transferred to the national level. Inward investment is one of the real big successes of RDAs, offering one-stop shops in a region, with fantastic results-for example, Toyota in Derby or Nissan in the north-east. So how does centralising such a function square with the much-vaunted localism agenda? Are the Government really committed to devolving powers and functions when there is clear evidence that they are currently being well managed at regional level? I am more than a little confused about the role of regional government offices, and would be grateful if the Minister could help me. Is it true that Mr Cable is reversing elements of Mr Pickles's Maoist revolution by rebuilding parts of the regional infrastructure that were scrapped last summer? I very much hope that six regional government offices are being reinstated and that that will foreshadow other changes in regional policy.

I think that it will be clear from debates later this afternoon that some RDAs are more effective than others and that there are weaknesses as well as great strengths, but just because reform or change is necessary in some areas, why take the radical step of abolition, especially when it is apparent that the LEPs will not be able to provide the same impetus for regional development as the RDAs? In many areas of the country, there are simply no local economic partnerships; I think especially of my own region of the south-west. Could the Minister update us on how many LEPs have been approved and where the gaps are? How are the gaps going to be filled? It would be, or should be, unthinkable at any time, but especially when economic growth must be the means to kick-start and sustain recovery, that any part of the country should be without proper regional development.

There are many grey areas relating to funding. Can the Minister confirm that it could cost as much as £1.4 billion to wind down RDAs and complete existing programmes? Could he also confirm that funding from the regional growth fund will amount to £1.4 billion over three years, and that that is nowhere near the sum given to RDAs? If that is true, the money available is not adequate, and it suggests that the Government do not take regional growth seriously enough. I also wonder why the Government are approving only projects based on short-term job creation for the first £250 million of funding from the regional growth fund. Job creation is critical, of course, but what about strategic, long-term projects, which are essential for the economic well-being of any region? I would suggest that, by focusing on short-term job creation, the Government are being short-sighted, neglecting the potential for long-term economic growth as well as jobs.

Then there is the question of land and property assets that are currently owned by the RDAs. Given the significant value of many of these assets and their role in future growth and development, I wonder what the Government are proposing to do with them. I would be grateful for reassurance from the Minister that they will not be disposed of in a fire sale, with little regard for the regional and strategic importance of many of the sites held. These assets should be retained and used locally to drive economic growth and recovery.

Many of the successes associated with RDAs are a consequence of the expertise and experience of the staff who have played a pivotal role in the agencies. I am concerned about the staff themselves, but also about the body of knowledge they have built up. What are the Government doing to minimise the number of redundancies which will occur with the abolition of RDAs? How will they ensure that the knowledge, skills, experience and expertise are not going to be lost?

My final question relates to funding from the European Regional Development Fund. Will the Minister confirm that the Government intend to centralise the delivery of ERDF funding into the DCLG? If so, it would appear that LEPs will be excluded and that the management of the funds will no longer have local and regional input, leadership and direction, with the risk that it will fail to reflect the priorities of the regions. Will he also confirm that the European Commission has expressed concern about the changes caused by the abolition of RDAs, and say whether the £1.5 billion of funding is at risk?

It appears that by dismantling RDAs, the Government are creating uncertainty and failing to support strong and credible organisations to replace them. At present, LEPs simply do not have the powers or resources to drive jobs or growth in our regions. It is widely recognised that LEP funding will not be guaranteed, and that they will certainly not have any start-up or core funding. The regional growth fund has already been oversubscribed in its first round, meaning that many strong bids that have already attracted private sector support look set to miss out because the Government are not prepared to invest in private sector growth. This does not bode well for regional growth and development, and I would urge the Government to think again-to reconsider the fine record of RDAs and the huge contribution they have made to the regions and the country as a whole. I beg to move.

Lord Beecham (Labour)

My Lords, in the coalition lexicon, there is a six-letter word missing: it is the word "region". It has been banished by Mr Pickles, and the use of it has been banished from PCTs by the Department of Health. Of course it is true, as my noble friend Lady Royall has implied, that there is a variable geometry about regions. They are not all the same: some are regarded as too big-one thinks perhaps of the south-east, where a predecessor television programme to "Strictly Come Dancing" was called "Come Dancing". Some of your Lordships may recall that then "Home Counties North" and "Home Counties South" were regarded as appropriate areas. Perhaps that might have been better than a single RDA for the south-east. Nevertheless, many of the RDAs have performed extremely well. If there were uncertainty about some of them, the question arises: why abolish all when there may be a very strong case for keeping some, if not all?

Nearly a year ago, Vincent Cable came to the north-east in his first few weeks as Secretary of State, and he declared his belief that the north-east was,

"one region where business support through a regional agency is both necessary and appreciated".

He was right about that, but he subsequently went on to propose the abolition of that agency. In any case, he understates the case.

Consider the report on the RDAs from the Select Committee on Business, Innovation and Skills. It found evidence of effective intervention in the face of economic shocks and strongly endorsed the RDAs' role because they,

"improved the understanding of local economies and their connections with businesses ... They were also able to catalyse delivery of infrastructure ... and took a strategic approach to planning decisions".

It thought that some RDAs were, perhaps, too big to profit from local engagement, but it made it clear that,

"policies were far from being applied on a blanket basis within regions".

Interestingly, the CBI recorded 66 per cent support for continuing regional co-ordination via the LEPs, if they were to be the new mechanism-and especially strong support in the Midlands and the north. Even in areas where the number of Local Enterprise Partnerships was great, it saw the need for an overarching structure. The Select Committee recommended that regional groupings should be recognised where a clear wish was expressed. It also expressed a concern that inward investment and tackling economic shocks would be inadequate without local knowledge and support, as my noble friend has said, when functions were translated to Whitehall. This has been compounded by the proposed abolition of Government Offices for the Regions providing critical intelligence and contact from within the regions to government. Accordingly, the Select Committee recommended that government should devolve powers to regional structures where there was clear evidence of good management of resources.

A back-handed compliment was paid to the Government's policy from one witness to the Select Committee, who said:

"One good thing that the Westminster Government has done is to abolish regional development agencies in England",

removing significant competition from the market. That witness was Dr Brian Gibbons, who is Minister for Economic Development in the Welsh Assembly. He clearly took the view-indeed he expressed it-that the Government's decision presented Wales with a significant opportunity at the expense of the English regions.

The Federation of Small Businesses said that the local enterprise partnerships should have the capacity to address all the issues impacting on development, including transport, planning and housing at a strategic level, tourism, the low carbon agenda and skills and training. But that long list begs the question of the scale of the organisation to carry out those functions and the resources it will need. The organisations that will take the place of the RDAs are the local enterprise partnerships and, as my noble friends have said, they will not have responsibility for significant areas of policy including the ERDF. They will be expected to work with Government, whatever that is supposed to mean, on investment priorities, transport infrastructure, the regional growth funds and getting the jobless back to work. Again, there is the question of scale: you will have, as we have in the north-east, at least two organisations, perhaps with an overarching body as well. In other parts of the country there are none, in some there are numerous: how will these work together at the strategic level as opposed to the very local level?

Of course, as my noble friend has pointed out, the funding is very limited: £1.4 billion over three years is very little more than what the Secretary of State himself described as the "trifling" figure-I think that was the word-of £1 billion that was originally proposed. The committee was also concerned about the non-so-local knowledge, about the assets and about the potential for a massive success or failure if the debts were not adequately resources. Of course, they are not being resourced: they will have no funding and no powers. As I have said previously in this Chamber, they are in danger of being penniless, powerless and pointless. That is a real risk.

There are serious questions to be asked about assets. The Government's plan is for the assets to be used to pursue economic development benefits through transferring assets to appropriate hosts. They qualify that promise, which on the face of it looks reasonable, by reference to the need to deliver maximum value on public sector investment in the context of deficit reduction. There is therefore a clear implication that the assets will be realised to meet that agenda. There is also a clear implication that that might lead to early disposal.

I have not had the advantage of reading the entire text because Wikipedia has not yet published it. I have seen only a redacted copy of the submission made by One North East, the agency with which I am most familiar, on the proposal for assets disposal. Interestingly, it is proposed to sell some at market value to local authorities. How local authorities are supposed to fund the acquisition of those assets in the present circumstances is beyond me. Some will eventually be put on the market for open market disposal, with an interim period of management by local authorities. Again, at a time of local authority cuts, where will the capacity exist to manage this estate? Similar difficulties arise in relation to intellectual property. There are no fewer than seven pages on that in the submission, including an interestingly little-known scheme called JEREMIE, which is spelt somewhat differently from the convention. It is to do with finance for business and has been extremely successful in the north-east.

What we have here is really an irony. This Government, above all, look to the private sector to lead and to make good the deficiencies in the economy. The RDAs, which are about to abolish, are heavily engaged with the private sector. They are private-sector-led bodies, and yet they apparently cannot be trusted with economic development in the regions.

The proposals in the Bill bear all the hallmarks of a rush to misjudgment, like so many of the measures that the Government have brought forward. We have seen examples this very day of second thoughts having occurred. I hope that the Government will listen to their natural supporters, if you will, in the private sector, in business and across parties in parts of the country; and will pause, reflect and reconsider proposals that threaten to damage the economic recovery that is essential but seriously at risk in many regions.

Lord Shipley (Liberal Democrat)

My Lords, for much of the period since the Second World War-and indeed before-Governments have pursued some form of English regional policy. There have been several initiatives: regional Ministers in some or all regions; development corporations; development companies; and a variety of government office structures, so that Whitehall could be represented properly across all parts of England. Policies have been chopped and changed, but they have been clarified in recent years-first by the creation of the development agencies in the English regions, and secondly by the strengthening of government offices so that all Whitehall departments were housed in a single government office. The system was far from perfect and led to some unnecessary bureaucracy. There was a lack of democratic accountability within the regions. However, the system had one overriding virtue; it was regionally based and gave a clear and firm focus for each region in England that had previously been lacking.

Some regions did not like the structure because they did not feel that their region really existed as an entity. The south-east is the most obvious example. Others, such as parts of the south-west, felt distant from their RDA and government office. Perhaps it was a mistake by the previous Government to create an RDA in each region. Indeed, it is hard to see, in terms of strategic regeneration, why the south-east needed a development agency at all. However, that is history. What is not history is the decision to abolish all English RDAs.

In the north, people have identified with their RDA to a much greater extent than in the south. Maybe this is a function of the northern regions being further from London and the levers of power. It also reflects the greater needs of those regions, which require government intervention for the ultimate benefit of the UK as a whole. The decision to abolish the RDAs and government offices in the south-east may have been broadly popular but it is most certainly not a popular decision in my own region-the north-east. I declare my interest as a board member of One North East since 2005. There is a constitutional issue here, too. Why do Scotland, Wales, Northern Ireland and London have substantial devolved powers, some of which are set to increase, at the very same time that the English regions are being further centralised within London-based structures?

The accusations against the RDAs were that they wasted money, competed with each other in, for example, tourism and inward investment, and had bloated staffing establishments with expenses systems that were open to abuse. Like all generalisations, such conclusions are exceedingly dangerous. The vast majority did not run bloated staffing structures or see abuse of expenses systems. Most did not compete directly with other RDAs, and all were subject to audit by the National Audit Office. All worked with the single purpose of generating economic growth in their regions. All can point to success stories that would not have been achieved without an RDA. We are now in a position where Scotland, Wales, Northern Ireland and London can spend money on tourism, for example, but the English regions with which they compete cannot. This cannot be right.

My noble friend Lord Beecham reminded us that the Business Secretary admitted publicly a few months ago that the process of abolishing the RDAs had been a bit "Maoist". I agree with him. It was done without any attempt to evaluate the sustainable achievements of each RDA and whether they had delivered value for money in long-term jobs growth. The decision-making on RDAs fell foul of the unhelpful fact that the DCLG had been funding the lion's share of RDAs, with BIS being very much the minority financial partner, even though BIS was the responsible Whitehall department. This has added to the confusion over who was responsible for what.

Can further sustainable jobs be delivered without an RDA structure in England? Can redistribution to the poorer regions and those more dependent on the public sector be achieved, too? While the creation of a regional growth fund, which has £1.4 billion to commit over three years, is designed to just that, it has less to spend than the RDAs had. I declare an interest again as a member of the growth fund's advisory board. When account is taken of the new likely geographical spend and the fund's clear remit to generate sustainable private sector jobs, it will certainly be able to make a difference. I welcome that. However, it cannot be the whole story. At the heart of the matter lies this constitutional issue. I do not feel that sufficient thought is currently being given to English regional policy. Simply abolishing our RDAs where they proved valuable, making little attempt to save the good things they have achieved, is a mistake.

Not surprisingly, we now find that some Whitehall departments are deciding that they must continue to employ staff outside London. I understand that some 20 per cent of One North East's staff will now continue working in the north-east for Whitehall departments. However, they will be split up to work in departmental silos-so much for joined-up working. We cannot run everything in England from Whitehall. I thought we had learnt that lesson many years ago. No doubt local enterprise partnerships will give a focus to regeneration, but since they cover all of England they do not have a responsibility for assisting the weaker local economies, and neither do they have any central government money.

In practice, this is the last operational year for our RDAs. The Government should have paused for thought for longer than they did before deciding to cull them. The process that has been followed, and the absence of any clear regional structural policy behind it, is a matter of serious regret, from which I hope we can yet learn.

Baroness Armstrong of Hill Top (Labour)

My Lords, I follow my noble friends Lord Beecham and Lord Shipley. Newcastle has spoken from both sides of the House today. I see that the noble Lord, Lord Bates, is waiting to represent the southern part of our region. I very much represent the middle of the region but also, I hope, the region as a whole. The north-east is a region and feels itself to be a region. It has a sense of identity and believes, partly because it is so near Scotland, that it has to fight both to maintain that identity-of which we are very proud-and to make the best of the enormous talent that is in the region.

Much government policy over the past 40 years has recognised that there is talent there and that the north-east laid the bedrock for much of the development of this country. If you think about the Industrial Revolution and the contribution that the north-east made then and in subsequent years to the growth of the economy across the nation, it was very important. As those prime industries began to decline, a regional voice, and action supported by central government, were seen as important to begin to rebuild. This case was being made very loudly before I became a Member of the other House. Indeed, when I did become a Member of the other House, my then neighbour and now my noble friend Lord Radice proposed a Private Member's Bill, which several of us supported, to enable the north-east to have a regional body that would take strategic decisions with government support. Of course, that was in the era of the Government run by the noble Baroness, Lady Thatcher, so the Government of the day saw the point and the need, and they responded, eventually, to the efforts made by my noble friend and others across the board.

The north-east is parochial, but it is not sectarian. We do not want to get into a situation in which one group fights another within the region for whatever scraps are around. We have always accepted the importance of trying to build the private sector because it is true that at the moment we have too many public sector jobs. Even though we increased the number of private sector jobs in recent years, it was by no means sufficient. That is still a huge job to be done in the north-east, but now we are losing the strategic means of doing it. I just ask the Government to think again.

I accept that there have to be cutbacks in public spending, but it frightens me to see how much money the RDA is having to spend on redundancy and run-down costs when that money ought to be put into economic development. The rise in unemployment, particularly among young people, is frightening. My generation will regret that for many years to come, because we thought we had got through it. We thought that we had got to the stage where we could promise young people in the north-east prospects and opportunities, and that is beginning to fall off the edge again. They see redundancy payments and the struggle to get rid of assets when they know that doing so at this time will not bring in the return that we should be getting from those assets. This is the moment for the Government to think again about the north-east.

The reaction to the Government's announcement on 23 June was bewilderment, particularly, as my noble friend Lord Beecham said, after the Secretary of State for Business, Vince Cable, said on 3 June that, having looked at things, he was convinced of the need for one body across the north-east. It was therefore with bewilderment that the private sector, the regional chamber of commerce and the regional CBI faced the prospect of months of, quite honestly, squabbling again about what the LEPs should look like, how they should be formed and all that, when the key issues of the day were actually slipping out of anyone's responsibility.

It was irresponsible of the Government to appoint a new chair of the RDA on 3 June, and then, on 23 June, to say that the organisation was being abolished. One of the key businessmen of the region was being put in place to manage redundancies. It is nonsense. He should be managing inward investment; he should be managing what possibly can be done with the manner in which the assets have been developed in the north-east, with partners, to draw the best strategic opportunities for the region. Instead, he is managing decline, which is a tragedy. There is no one who does not accept that the Government will have to put in less money this year, although they did with regard to One North East, and I hope that they recognise that from what my noble friend Lord Shipley has said. I acknowledge, welcome and am thankful for his contribution both to the RDA and to the new body. However, the new body-the national body-will not have particular reserves for the north-east. It will accept whatever bid comes from wherever. Therefore we might do more to unbalance the economy in this country rather than address the need to rebalance the economy in this country.

One North East was, according to all the independent audits, very successful in the number of jobs that it created, the number of new businesses that it supported and the number of people it helped to get into employment. I will talk about that in more detail at a later stage. The north-east has had a successful RDA. No one says that it achieved everything that we had ambition for it to achieve, but it is one region in England in which we know that progress was being made, and we know that it makes sense to have a strategic body across the region. We are, after all, a very small region, the smallest in the country. Its success was therefore dependent on being able to be strategic across the region. It had a plan for green jobs; it had been developing green policies in recent years. I know very well, from companies that I have talked to, the work that One North East was able to do in pulling together that strategy and in making sure that one company worked with another in a way that developed each of their interests while working in a more coherent and strategic way across businesses.

As a result, Romag, the glass company, was able to support the development of more charge points for electric cars and to support the electric car makers in where they would be and how they would develop their business in a network of hubs around the country. All these ideas came out of the initiative of One North East. I hope that the Minister will take the opportunity to talk to Nissan about its support for One North East and how important it thinks it has been in its continued presence in the region and its ability to get the parent company to continue to invest in that factory in the north-east, which is, as we know, the most productive car factory across Europe, if not the world.

It is very difficult to talk without emotion about the north-east, a region that means so much to so many of us and to try to get the Government to think again. This does not mean, "You've got to put more money in", but that the money that is going in has to be used in the most strategic way and must not be fragmented. It should not be used in a way that does not maintain the consensus with business, trade unions and local authorities that we have had across the region for many a long month and year. The Government are breaking that consensus, which is incredibly dangerous. I ask them to think again.

Lord Ramsbotham (Crossbench)

I declare an interest: my son is the chairman of the North East Chamber of Commerce, which the noble Baroness mentioned. I endorse everything that has been said by the noble Lords, Lord Beecham and Lord Shipley, and by the noble Baroness, Lady Armstrong. Politically, people think of the north-east as being divided by rivers. Economically, the north-east is divided between the rivers. Now, instead of having one regional development agency, which has been looking over the whole of that area and easing that division, the Government are setting up local enterprise partnerships that are separating the region. It seems to be madness. All that I can say, from the points of view that I have heard from everyone, is that there was not just confusion but anger up there after Mr Cable made his announcement. Having observed the situation, the Government seemed to be prepared to listen to what people up there were saying and proving, but suddenly that was all dashed, apparently in alliance with a mantra that everything should be localised.

If there is one issue that should be borne in mind, it is communications. The communications system in the north-east is not all that good. There are not the motorways or the means of connecting the various areas. Why not? It is because, over the years, there has been all this local scrapping. Yes, bypasses have been built around areas and there have been local communications, but the region was never looked at as a whole until there was an RDA. Until and unless you get the region to be looked at properly, you will not get the communications that should be the hub of any future development. I join everyone who is begging that the north-east be, if necessary, taken as a separate area and looked at separately again, in order not to throw away what has happened.

Lord Bates (Conservative)

My Lords, in many ways, this debate reflects the sense of where we are with the whole Bill, because we have heard speech after speech about the north-east of England, which we all love dearly, pointing out what an exceptional region it is and how it needs special attention and help. People have been saying that it had a regional development agency that performed better than any other and was adhered to and held in affection by the business community of the region. It is a small region, with 2.6 million people. The Northwest Regional Development Agency, on the other hand, covers an area from the Scottish border to Cheshire. That is not a homogeneous region to which people can feel an affinity.

There are different views on this. We are having this debate, but let us remember that there is an option available to the local authorities and the business community of the north-east to have a single local enterprise partnership for the whole of the region. That offer was put forward and I supported it, so that there should be one voice for the north-east. However, the local authorities, in their wisdom, could not agree on that. We therefore have this breakaway on Teesside. In fairness to Teesside, and given my credentials in the north-east that I offer to this debate-I was born on Tyneside, represented a seat on Teesside and now live on Wearside-I understand what the noble Lord, Lord Ramsbotham, said about the region between the rivers. There are different perspectives. The people on Teesside felt strongly at the last general election that they had been let down by the regional development agency. The closure of Corus TCP was a real issue. The people felt that they wanted to reflect the fact that the economy and the process industry of the Tees valley made up a unique and discrete entity and that they might perform better on their own. I disagreed with them, but they took that decision, which was for them to take. It was on offer.

Perhaps I may offer this point of view. As well as the sort of romance that we have heard about One North East, let us remember-I am sure that my noble friend Lord Shipley from the board can confirm this-that its budget two years ago was £290 million. Under the previous Government, that was to be cut this year to £180 million. The idea that there was some sort of love-in and that somehow money was being poured into the good north-east was not true. A cutting back of the reach of that agency, and some may say its effectiveness, was already in train.

It is also worth putting this on record. Other noble Lords will also remember the time when I was Minister for the north-east under the previous Conservative Government. There were the Northern Development Company and the Teesside and Tyne and Wear development corporations, to which the noble Baroness, Lady Armstrong, referred. The development corporation for the north-east was fantastic and very well run under John Bridge, with George Russell as chairman-Ron Dearing was a previous chairman. These were terrific ambassadors for the region. They brought in significant amounts of foreign direct investment; 75,000 jobs were brought into the region during their time, although their organisation was very thin. They did phenomenal work. Our reward for having one regional development agency, going head-to-head with the Welsh Development Agency and Scottish Enterprise in trying to bid for projects, was that the incoming Labour Government created seven competitors for us in the other regional development agencies around the country. That was a mistake. There is a case for north-east exceptionalism in these matters. I should have preferred the continuation of a single entity, but that has not been possible.

In conclusion, we are entering a time when there is a change of approach. An interesting study into regionalism by the Smith Institute looked at a set of data covering a period between the peak before the recession hit and its trough. It showed that a recession born of the financial services industry, which should therefore have primarily impacted on the City of London, in fact hit the regions of the country, such as the north-east, Yorkshire and the north-west, hardest. That seemed to fly in the face of the argument that regionalism would balance the national economy. Regionalism was meant to give a little bit of emphasis and push to those regions that, because they were peripheral to the centre, struggled in economic terms. However, we were actually hit hardest.

The north-east will have a good and positive future, not because of organisations and institutions, but because of the quality of its entrepreneurs and businesses. The entire budget of One North East is only half as much as the amount by which Greggs increased its turnover last year, in terms of investment in the region. The company employs 18,000 people. The private sector is doing it. Companies such as Sage are doing fantastically well. I was at the opening of a new facility for OneX in Teesside, which is now exporting server capacity into Denmark through a new cable across the North Sea. There are some fantastic things happening.

It is worth remembering that the north-east is the only region in the country that exports more than it imports. That is a great place to start, and we have to have far greater confidence in our own ability. A good policy is the introduction for the first time of a difference in national insurance contributions, with a preference for allowing people outside the south-east and London to benefit from lower tax rates. Personally, I would go much further. There is a real case for reintroducing enterprise zones across places such as the north-east. In places such as Blyth, Easington and Middlesbrough, where there is no enterprise at all at present, you could create enterprise zones under which businesses could be set up.

The opportunity was there for us to have a single voice in the north-east, although it was not taken. However, the prospects are good, but only because our entrepreneurs and businessmen are good.

Baroness Whitaker (Labour)

I rise to speak to Amendment 55, leaving the north-east. The grounds for my amendment, in contrast to the eloquent plea by my noble friend Lady Armstrong, are not that every part of the South East England Development Agency should remain exactly as it is now, but that, at present, without it, there is no adequate support for some of the poorest parts of the south-east. I am thinking in particular of Newhaven, next to where I live, where over a quarter of households earn 60 per cent less than the national median income. Newhaven would hugely repay investment. It is poised to become the key commercial port in Sussex and 30 per cent of local companies are in the manufacturing, construction and building sectors. But its high street is withering away and its residents have little spending power.

The Government have proposed local enterprise partnerships in place of the regional development agencies, as we discussed earlier. But at the moment Lewes district, where Newhaven sits, is covered by an LEP for East Sussex, Kent and Essex. This is hopeless. Newhaven has few links to the east. The travel-to-work area is west towards Brighton, north to Gatwick and Crawley, and, for commuters, north-west to London. Unless Newhaven can go into the Coast to Capital LEP, there is little hope for the prosperity of the hardworking and friendly people who live there.

There are acres of brownfield land designated for industrial and commercial use which will be of little interest to an LEP focused on Hastings, Kent, Essex and the Thames Gateway. But it is all ripe for investment. The town is well placed to provide work for the Brighton area and there are promising signs that land with planning permission for housing will soon be developed. The port owners are actively pursuing regeneration of the port, which again has few synergies with the east and north-east.

You could argue-indeed, it has been argued-that SEEDA is too big and there could be other solutions to the regional investment problem. But the worry is that places such as Newhaven will simply drop out of the loop unless the Government pay more attention to practical realities. I ask the Minister: what in the Government's arrangements for LEPs demonstrates any improvement for Newhaven?

Lord Greaves (Liberal Democrat)

My Lords, we have heard a lot from the north-east during the discussion on these amendments and I want to broaden it a little to the rest of the north of England. I have Amendments 52 and 58 in this group, which refer to the three regions of northern England: the north-east, Yorkshire and the north-west. I speak as a Yorkshireman who lives in the north-west-just-and, in view of what I am going to say, I should remind the Committee that I am a member of Pendle Borough Council.

Here, we are dealing with a government policy based on the view that regions do not really exist in England. I think that that is a metropolitan/south-eastern view of life and does not apply in the north. I believe that regions exist. I certainly believe that the north-east exists but I have to say to the noble Lord, Lord Bates, that most people in the north-west are very clear that they live in the north-west. North-west England may be a boring name; nevertheless, most people in the north-west know perfectly well that they live in the north-west and they have an allegiance to it.

There are boundary problems, but there always are. I live in Pendle, which is on the border with Yorkshire. We have an area called West Craven, which includes the small towns of Barnoldswick and Earby, where everyone believes that they are still in Yorkshire for everything other than administrative purposes. There is always a problem with Cumbria, which in a sense is a mini-region on its own. If Cumbria had been twice the size it is, it would always have been a separate region. It has always had to choose whether to be tagged on to the north-east or the north-west. However, that is not to say that in Lancashire, Cheshire, Merseyside and Greater Manchester in particular, and in south Cumbria, people are not very clear that they are in the north-west, and they have an allegiance to it. I do not object to an attempt by the Government-if this is what they have done-to rationalise our regional structures and make them more efficient, more logical and more sensible.

Perhaps I may talk for a minute about regional structures in general in the north-west and about the government office for the north-west. A close member of my family had a job as a permanent temp in the regional office in Manchester for the best part of a year. This was a while back but not that far back. I do not want to breach lots of confidentialities concerning what she did there-she had to sign the Official Secrets Act to work there and she asked me whether it was all right to sign it. However, I think I can mention one thing without having her hauled off to the Tower of London. She said to me, "You know when MPs and people put questions down and ask questions of the Government?". I replied, "Yes", and she said, "Well, if they're about transport, I have to deal with them, find out the answers and send them back to London". I remind noble Lords that she was a temp. I thought about it and asked her what she meant by "and people", but she said, "Please don't, daddy".

The regional offices and the North-West Development Agency were probably overstaffed. They were not wholly efficient, but that is a reason for slimming them down, making them efficient and getting them to do their job more effectively rather than abolishing them. The North-West Development Agency had the same task as the others. It had to deal with business support, which I think is very valuable. It also had the task of directly stimulating development and regeneration by directing funds-many of them government funds-into schemes in the region. One problem is that a large number of those funds have dried up for the moment and there is no money to hand out. However, the present Government seem to be of the view that regeneration in terms of investment in the public realm and the public infrastructure is not efficient development and, unless the money goes directly to commercial activity to create jobs, it should not be done. However, who else is going to renovate the public realm and regenerate rundown areas if not the public sector? The commercial sector will come in and help but the underlying funding has to come from the public sector. However, it seems to me that that is drying up and it will need to be reinstated as soon as possible.

Furthermore, following the latest planning legislation, the regional development agencies were in charge of producing the regional strategies along with the leaders' boards, which had a temporary existence. I always thought, as I think my party did by and large, that it was not appropriate for an unelected regional development agency to act effectively as a regional planning authority. Whatever was going to happen to regional planning-it is currently being abolished, although it will probably have to come back-we would have had no problem at all if it had been taken away from regional development agencies, because it was not a suitable thing for them to do. I went back to the coalition agreement and it says:

"We will support the creation of local enterprise partnerships ... to replace regional development agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular".

That was a fudge when the coalition agreement was hammered out, a compromise between the Liberal Democrat view that regional development agencies should continue to exist in areas such as the north of England and the Conservative view that they should be swept away. Within Government that turned into a turf war between BIS and the CLG and the CLG came out on top. Like the north-east, we in the north-west and people in Yorkshire thought that RDAs were going to continue in a slimmed-down form.

So what is happening? We are told that there's a regional growth fund, but there is much less to spend and it is being doled out centrally. The idea that politicians and civil servants in London are the right people to decide which projects in the north-west or in the other parts of the north of England-places 200 or 300 miles away-should be funded is not really credible. Decisions made in that way are not going to be good decisions. There is European funding-the ERDF-and the Rural Development Programme for England, but again the decisions are being taken centrally. A Written Statement from my noble friend Lady Hanham says:

"I have concluded that, in order to maintain compliance with the regulations and spending momentum, we should transfer the existing ERDF staff and functions into my department by the beginning of July".-[Official Report, 3/2/2011; col. WS 86.]

Except in London where it will be devolved to the Greater London Authority, presumably because the Greater London Authority exists. But in the rest of the country decisions about regional development funding are going to be made here in London. That just seems illogical.

Then we have the question of the transfer of assets. The regional development agencies have been asked to produce plans but they are not being allowed to make their own decisions. The decisions are going to be made by the CLG and BIS, depending on what those decisions are. Then, as one noble Lord pointed out, assets are going to be offered to local authorities at a commercial rate. In my experience in Pendle, some of the property which belongs to the regional development agency was bought by the RDA off local authorities in order to provide a source of regeneration funding by those local authorities. But the local authorities are not going to have that money-so what is now happening? People are realising that this is topsy-turvy and that it is not going to work. We are told that for future regional development agency funding, ERDF funding and rural funding, there are going to be teams based in the regions, perhaps collocated with the Homes and Communities Agency. We read in the papers that BIS is talking of setting up small regional offices in order to make sure that the decisions made are right for that region because people in London cannot do it. And we are told that for decisions on the regional growth fund the CLG is going to have teams of people in the regions because, again, people in London cannot do it. It is a scorched-earth policy. Everything is being abolished. I always thought that it would have to be rebuilt sometime. They are beginning to rebuild it at the very time they are abolishing what is there at the moment. There does not seem to be a great deal of logic about this.

The last thing I want to say is about LEPs-local enterprise partnerships-which are supposed to deliver the local growth policies, though they will have precious little government funding. The specific question I want to ask the Government-I do not expect my noble friend Lord Taylor to know but perhaps somebody can write to me and tell me afterwards-refers specifically to Pennine Lancashire, the part of Lancashire that wants to be a separate LEP from the rest of Lancashire based on Blackburn, Burnley, Hyndburn, Pendle, Rossendale and Ribble Valley, a very clear economic area which already has institutions in PLACE, which is a regeneration and development agency set up by the authorities in our part of Lancashire under a multi-area agreement. So we have a Government who tell us multi-area agreements are the way forward. We get on with it and produce an effective, genuine partnership between the local authorities, working very closely with the private sector, ready to go as a LEP. We know exactly what we want to do to convert it into a LEP and how to do it and still we are not being given the go-ahead. And yet the regional growth fund already exists. So who bids for our part of Lancashire? It is the body called PLACE which is the multi-area agreement body. That body exists and is bidding. Can the Government give an assurance that bids from areas like ours which are properly organised and properly submitted, even though we do not yet have an agreed LEP, will be treated on exactly the same basis as areas which already have a LEP? Otherwise we are being dreadfully discriminated against. I hope the answer will be yes but I would be grateful if somebody could write to me and tell me.

The regions in the north of England need to be recognised. Just because the existing RDAs have not managed to narrow the gap between areas like the north and London does not mean they have not done a good job. There is no evidence whatever that by maintaining the gap as it is, even if it has not been narrowed, they have not been doing a job. Without them the gap might now be a lot larger. Unless we see some research and proper evidence to the contrary, we will continue to believe that regional institutions are necessary.

Lord Knight of Weymouth (Labour)

My Lords, I want to speak to Amendment 56, drawing on my experience as the Minister with responsibility for the south-west in the year running up to the last general election. I agree with much of what has been said in this debate so far, but I want to start by paying tribute to Sir Harry Studholme, the chair of SWRDA, and Jane Henderson, the chief executive, and all of their staff for the excellent work that I observed them doing during that year and the time preceding that when I was a Member of Parliament in the region. They were doing excellent work, largely on the supply side of the economy, developing sites such as Osprey Quay in my constituency, without which the Olympics would not be coming to the south-west, Gloucester Docks and the Science Park Network in the Bath and Bristol area. I endorse the questions that were asked by my noble friend Lord Beecham about assets and what happens to those assets owned by the regional development agency in reality.

SWRDA did excellent work in developing skills and 130,000 people have been provided with new work-related skills since 2002 in the south-west. Without SWRDA we would not have the combined university, the only university in Cornwall, which has been doing stunning work in developing the economy in that part of the region. Without it we would not have the marine skills centres across the south-west or the nuclear skills centre that is being developed in Somerset. SWRDA has been developing connectivity-the new generation broadband initiative in Cornwall, for example. It has been developing finance for business. The South West Angel and Investor Network comes to mind, as does the work that I was a part of in trying to get banks to focus on the needs of small businesses. Hooking banks up with a federation of small businesses in the region was very important as we were trying to respond to the recession.

So plenty of good work went on across the region, and although it is possible to argue that a region the size of Denmark will have some issues around its edges as to whether, for example, Bournemouth and Poole as a conurbation is best placed in the south-west or the south-east-and similarly with Swindon and Gloucestershire, given that Tewkesbury is closer to Scotland than it is to Land's End; these arguments will run-I would argue that we were just starting to get a sense of identity in the region as the RDAs were becoming successful.

I would argue that the sort of centralisation that we are getting, and which others have argued against, is a backward step. LEPs have already been announced across the south-west but there is none so far in Dorset, Bournemouth, Poole, Devon, Somerset Wiltshire or Gloucestershire. Huge swathes of my region will not have an LEP. Indeed, as the BBC reported, there is one down in Cornwall where we have the interesting spectacle of Sir John Banham being generously engaged for just over 20 days at half his daily rate-it is usually £4,000 but is now £2,000-to produce a strategy which has now been rejected. He has now left at a cost of more than £40,000 to the taxpayer. I cannot see that as good value for money from this new system.

We are seeing a centralisation caused by Whitehall dictating what the LEP boundaries should be. As far as I can tell, the LEP proposals from the south-west have been knocked back because they do not appeal to Whitehall's notion of what the boundaries should be. The regional growth fund has been referred to, as has the centralisation of the Rural Development Programme for England and the ERDF. I had a conversation with a leading multinational technology company based in Swindon which said, "Once the RDAs are gone we cannot really have a good relationship with the two regions that are most important to us, as we do with other regional governments around Europe. Frankly, we haven't the energy to engage with lots of individual little LEPs, so we will engage with Swindon council and central government. We can't afford to do any more than that". We will have less engagement with the economy and less investment coming from a very important investor around the world.

I would also argue that there is an ideology attached to this. Clearly the Government are against regional policy even though it works in many other successful economies around the world. But they are also against an industrial policy and industrial activism. We would not have the Eden project were it not for the risks that were taken in part by the South West Regional Development Agency. Everyone knows the impact on south-west tourism to have Eden developed in Cornwall. As I said, we would also not have the Olympics. We should consider what has been done around creative hubs across the south-west, which is one of the strengths of our region, or for green industries. The Minister needs to give us an answer on whether the Wave Hub, which is so important in the south-west, would have been developed without a regional development agency. Could LEPs develop that? Would it just be one of the things that would bid into the regional growth fund? I do not know.

The composite centre, which I was pleased to open, built on the aerospace expertise of the region held by Rolls-Royce, GKN, Westland and Airbus. Aerospace manufacturers and the University of Bristol bring their expertise and they are supported not only by BIS in Whitehall but, crucially, the RDA. World-beating composite technology is being built in Bristol. Would that have happened with a LEP? Would it get through a much more competitive regional growth fund strategy? More than 100,000 public sector jobs are projected to be lost in the south-west, many of them in areas where LEPs are not set up. Under this new set-up, how will those jobs be filled in an area that is peripheral compared with the south-east?

My final substantive point concerns value for money. I have already mentioned the scandal of the amount of money that went to Sir John Banham. I looked at the independent evaluations of RDAs, and it appears that only 10 per cent of the overall budget was spent on administration and that it had a clean bill of health from the National Audit Office. That 10 per cent figure is something that many parts of the public sector and indeed some parts of the private sector would be pleased to score. I think that £238 million was spent on administration. That is all the saving that is potentially there. As has already been said, even if my party had been re-elected, we would have had to cut the overall budget and the administration costs with it. It is not a massive saving given that for every pound spent, £4.50-the more conservative estimate-is generated in the economy. These are the questions that the Government need to answer.

Lord Phillips of Sudbury (Liberal Democrat)

I am sorry to interrupt the noble Lord, but he has twice mentioned Sir John Banham, and his last reference was in terms of a scandal. Will he make it clear to the Committee that if scandal there be, it is not to be laid at the door of Sir John Banham, who is a friend of mine and a considerable public servant, but should be laid at the door of those who put him on the task?

Lord Knight of Weymouth (Labour)

I do not know Sir John Banham but it seems extraordinary that more than £40,000 has been paid out from the Cornish LEP to commission him to do a job that was then rejected. Something in that process has gone wrong. I know that he has done other work and given service in public life. I have nothing against him personally, but something has gone badly wrong. We need to learn lessons from that. If we are to make savings out of this process, which one assumes is part of the motivation, we cannot afford for any of those individual LEPs to be making £40,000 errors. That money needs to be spent on creating jobs, particularly for young people-to reprise what my noble friend Lady Armstrong said.

In summary the Minister needs to say why we are going for an ideological centralisation and anti-industrial policy position. Where is the value for money out of this abolition of the regional development agency?

House resumed. Committee to begin again not before 8.38 pm.

Lord Campbell-Savours (Labour)

My Lords, I intervene briefly because I shall concentrate my remarks during proceedings on the Report stage of the Bill. I want to say a few words about how we need to consider what has happened historically when considering the future of the development agencies. I believe that the closure of the RDAs, particularly in the north of England-and when I talk about the north of England, I mean the north-west, Yorkshire and Humberside and the north-east-is ill-advised and misconceived, and will ultimately be damaging to the regions.

We really need to learn the lessons of history. My mind goes back to the early 1980s, around 30 years ago, when I was a young MP. The debates in the Commons at that time were totally dominated by the decline in the regional economy in the north of England-particularly in shipbuilding, steel, heavy engineering, mining and textiles. Week after week, Question Time after Question Time, Labour MPs-sometimes with Conservatives joining in as well-got up to object to what was happening in the region and to ask how the problems of the region were to be resolved. I was a member of the northern group of Labour MPs. We were constantly being lobbied by industry, employer groups, the trade unions and the local authorities. The CBI in the northern region was prominent in lobbying Labour Members of Parliament to ensure a change in the Government's regional strategy at that time. I remember a man called James Cran, whom some of us might recall. He subsequently became the Member of Parliament for Beverley in Yorkshire but was then the leading figure in the northern CBI. I remember him appearing on Border Television and north-east television repeatedly, week after week, demanding a reversal of the strategy and some alteration in regional policy. The cry was universal: "We need a regional strategy". The constant refrain was, "The centre cannot deliver", because the centre was not delivering. Laissez-faire regional strategy, despite European money, meant that the concentration of footloose investment and capital accumulation more widely was in the south. That was our problem.

Time and again, the differential in house prices and unemployment rates between the north and the south was cited as evidence of a north-south divide in economic development. As the late John Smith put it 26 years ago, in a debate on regional policy and the need for a regional strategy with agencies delivering, which I remember well from 17 January 1985:

"What is frightening is that the Government appear to be impervious to the damage that they are causing. As the economic storm clouds gather over Britain and become more serious every day, the Government plunge blindly on 544 destroying as they go. When they are finally called to account, the missed opportunities and wanton destruction of regional development policy will, I hope, be high on the indictment".-[Official Report, Commons, 17/1/85; cols. 543-44.]

I say that history will repeat itself. What John said then will be relevant in these coming years unless there is a change in strategy by the Government.

Then I remember the Labour Party conferences in the north of England being dominated by the debate on the need for a regional strategy. Often at the forefront of those debates was the then north-east Member of Parliament Ian Wrigglesworth-now Sir Ian-who I understand the Government have brought in to help with their new regional strategy. Maybe that is no longer true and my noble friends can correct me if I am wrong, but I read somewhere that he has now been brought in. I remember it all as though it were yesterday. It was the debate that dominated all of my 21 years in the House of Commons.

I remember the huge debate that was launched in the north in the early 1980s following the publication of a paper entitled-I know my noble friends will remember this-Let's Pull Together for a Better North. If I recall correctly, it was a paper jointly sponsored by the late Joe Mills of the Transport and General Workers' Union and the late Lord Burlison, who was in this House. I go on about this because history will repeat itself if we go down this route. Even at this late stage, the Government should revise their strategy.

The paper was closely followed by a substantial piece of work-a paper published by my noble friend Lord Prescott on an alternative regional economic strategy. He is not here but he was certainly in his place earlier. He will not mind my saying that it was a very significant paper for Labour MPs; it dominated debates in the parliamentary party over several months. It formed the embryo of the regional strategy that Labour subsequently adopted when we came into government. There were innumerable debates in Parliament on the need for a rethink on regional strategy at the time. During that period there were only two Conservative Ministers who really understood what was happening. One was a chap called Jim Lester. He was a Member of Parliament in a Nottinghamshire constituency-Beeston, if I remember rightly. He had come from the shoe industry and he was an employment and skills Minister. On the Labour Benches, we always felt that he was the one who understood the problems that we had. Surprisingly there was another one, and it was Michael Heseltine. He took the decision to establish the enterprise agencies. Some of them went to the north of England, south Wales and the north-east. He also took the vital decision to put money into Toxteth in Liverpool, the effect of which was to pump prime and bring in additional money from the private sector for environment improvements in Liverpool. The reason I mention those two is that both men, in their own way, were introducing measures to leverage in substantial private investment, a role which ultimately fell upon the broader remit of the RDAs. They were carrying out the functions which subsequently were to be carried out by the RDAs set up by the Labour Government in 1997.

I am reminded of the work of the Regional Policy Commission, a non-political initiative established by, again, my noble friend Lord Prescott, and chaired by Bruce Millan, then European Commissioner for Regional Policy. The commission's recommendations helped steer us towards the regional structures that we subsequently created. Indeed, by the mid-1990s and the eve of the 1997 landslide Labour victory, there was widespread support from the CBI, the TUC, the chambers of commerce and all the political parties across the regions. All opinion across the regions in the north was for an ambitious regional strategy under regional development agencies, bringing in both domestic and European money to fund investment in skills, training and regeneration of physical decay, small business services, assistance to industry, innovation and inward investment initiatives more widely. That is what we delivered against this background of feverish debate in the 1980s and well into the 1990s. It is now all to be destroyed.

People throughout the north of England are worried about these developments. I know that we have some friends in there. It may well be that Vince Cable is more sympathetic to our position than he makes public. If he is, and if he is listening to this debate, let him realise that we can no longer rely on Mr Pickles. We want him to intervene and indeed, in many ways, perhaps undermine this strategy before it does damage in the region. If Mr Cable sympathises with our position, let him use the structures within BIS, in a way perhaps that the Government are not intending at this stage, to bring about at least some residual regional structure that can deliver. I say that this is all now at risk, and we appeal even at this late stage for the Government to reverse their position.

Lord Judd (Labour)

My Lords, I just wanted to follow my noble friend Lord Campbell-Savours because he has put so powerfully the case for the north, particularly with his origins in the north-west. He is, in every sense, a son of the north-west. He speaks with authority.

I simply say that there is a cultural dimension to all this. It has to be faced. There are many good people living in the south-east, the south and more prosperous parts of the Midlands who just have not seen for themselves the social reality of what happened in the north in the past. The noble Lord, Lord Greaves, and the noble Lord opposite have referred to Cumbria. Just come to Cumbria. I often speak about the inheritance and the beauties of the national park, but come to the west coast of Cumbria and see the physical and living evidence of what happened before. The communities are broken, disheartened and demoralised still.

The challenges are huge and, given the economic stringency that faces the nation, this is the very time that one needs strategic and powerful authorities to look after the interests of those who will find themselves in the toughest position, as economic policy takes effect. If we have any pretence of commitment to social justice, this is the very time that there should be strong voices speaking, not just tactically but strategically, for the people of a region. Those voices should look at the issues of communications and transport, and at the work that can be done with the universities in the north, to find ways of regenerating and building a new future.

Some will argue that in Cumbria we will have the one bright prospect of becoming the energy coast of Britain. If that is a prospect-and I fervently hope that we can make a contribution in that context-this is the time that we need a strategic authority speaking for us and making sure that the plan is developed to the full, not just thrown to the vagaries of the market.

What is sad about the Government having rushed into this ill considered Bill, with all its ill considered propositions that have not been properly researched, investigated and analysed, is that we might have had a case for coming up with a review of regional policy. I agree with the argument that there was a great deal of room for adjustments to the regional structure. I am not sure that my noble and very good friend Lord Campbell-Savours will agree with me on this, but I am a sceptic about whether Cumbria-particularly north Cumbria, where I live-is in the right region. It seems to me that the natural links of north Cumbria are with the north-east-up around the coast, through Carlisle and into Newcastle and the rest. We do not think of Manchester and Liverpool. We think of the north-east. Our health service is oriented in that direction. When I needed neurosurgery, I ended up, through the National Health Service, in Newcastle. When I turn on my television in the evening, I see Newcastle-based television.

There was therefore a case for a review to make sure that the regions, in their administration and structure, were best geared to meet the real social challenges that were out there. However, instead of going down that exciting route, this new Government, who pride themselves on being so radical and imaginative, just dodged all that and went for an ideological destruction of the regional development authorities at the very time that they were most needed. I know that the Minister listens. He is a sensitive man and has not only a social conscience but a feel for social issues and people. I urge him, even at this 11th hour plus, to plead with his colleagues and say, "This is a step too far. Think again".

Lord Empey (UUP)

My Lords, I have been listening to the debate, but the truth is that there is no single solution to economic development policy. There is no perfect model. There is a variety of models throughout the United Kingdom, some of which work better than others. However, the amendment is a fairly blunt instrument. The decision on the number of regional development agencies in England has to be taken in conjunction with the devolved regions. Until a few months ago, I had responsibility in Northern Ireland for certain aspects of economic development policy. Prior to that, I had responsibility for establishing Invest Northern Ireland, which at that time consisted of some 700 staff and had a budget of about £160 million.

However, the whole scene has changed. I listened carefully to the noble Lord, Lord Campbell-Savours, but what applies today is totally different from what applied in the 1980s. Europe has a big influence in this, because one of the big weapons that organisations in Scotland, Northern Ireland and elsewhere had was selective financial assistance. Since 1 January, that assistance has been largely reducing and by 2013 it will be virtually gone. Therefore, the model that we used for distributing it and the mechanism that we used for trying to bid for foreign direct investment are going to be denied us. All that will be left is soft assistance, with management plans and various other things, but the hardcore employment grants and capital grants that regions depended on to buy in business and investors will be denied us because of European regulations.

I can tell the Committee that a protocol exists within the United Kingdom to prevent all the different RDAs, the regional administrations and the national Government from bidding against each other. Foreign direct investors are not stupid. They knew that people in the regions were hungry and they went about their business going from one to the other. We had to establish protocols.

Lord Foulkes of Cumnock (Labour)

Is it not the case that the noble Lord in Northern Ireland, we in Scotland and colleagues in Wales will continue to have development agencies, so why is he denying them to the regions of England?

Lord Empey (UUP)

First, I have not denied anybody anything. I am just beginning to develop my argument. The fundamental point is that these organisations in the devolved regions are becoming systematically weaker. They have less ability to direct financial aid because the selective financial assistance, which was their principal weapon, is diminishing very rapidly and in a couple of years' time will be gone altogether. The whole emphasis is shifting on to the development of skills. We had a fantastic conference in the United States last September and October hosted by the State Department at which we were given the opportunity to put Northern Ireland's case. What was really interesting to potential investors was no longer grant aid; it was whether a region had a sufficient centre of gravity and critical mass of skilled people with the right skills in the right place to attract people. You can no longer buy in companies.

Sitting in the Chamber tonight is the noble Lord, Lord Ballyedmond, one of our premier entrepreneurs. I dealt with him and his colleagues on a number of occasions, and they were frustrated because the agencies and organisations could sometimes get in the way of business. Therefore, the question is: what is the right balance? Is it going to be possible to develop a national policy that will allow for the creation of the correct skill base? That will be far more important to foreign direct investment-and indeed, I believe, to indigenous investment-than financial aid in the future because the latter is going to be reduced and will be so small. I remember examples of £20,000 being offered per job created and perhaps even more. On average, it was £7,000, £8,000 or £10,000 per job created, but those days are gone and are not coming back. I certainly feel that this list of agencies is no longer sustainable but, at the same time, it is perfectly clear that you cannot create a complete vacuum.

Lord Campbell-Savours (Labour)

If the responsibility that the noble Lord is referring to in the case of Northern Ireland were transferred to London, does he believe that the centre in London could deliver?

Lord Empey (UUP)

I have always been a devolutionist and felt that there had to be a local dimension to most things. The noble Lord, Lord Judd, was asking whether people fully understood the social and other implications of what has been happening in this country over recent years. The answer for me is yes. I still have a constituency. It is largely an inner-city constituency in east Belfast. The people at my advice centres are queueing up, looking for help with DLA, housing benefit and how we can get them training, so I am very familiar with all of that. But having elaborate structures today, whether they be in Northern Ireland, in Scotland or anywhere else, is not the whole answer. There is another dimension.

The noble Lord, Lord Foulkes of Cumnock, will be well aware that we have another dimension in Northern Ireland, where we are up against the Republic, which has a very attractive corporation tax rate. At the end of the day, that was attracting more inward investment to that region than anything that any of our industrial development organisations could do.

Local government also has a role to play. There is no model that is absolutely applicable in every part of the UK. I would be very afraid to take a position on the north-east of England, about which a vast array of people seem to be extremely passionate. The noble Baroness, Lady Armstrong of Hill Top, made a powerful speech in respect of what she saw in her region and many other noble Lords, including the noble Lords, Lord Bates and Lord Greaves, spoke on it as well.

Lord Greaves (Liberal Democrat)

I actually spoke about the north-west and not the north-east, but I will back the north-east as well.

Lord Empey (UUP)

The noble Lord was saying at one stage, if I recall, that part of his region felt that it belonged to the north-east. The point is that there is a large pool of people who feel passionately that the north-east in particular has a critical mass and should have representation. I know that the noble Lord, Lord Prescott, attempted to offer regional government to that region and it did not want it at that stage. Otherwise, I dare say, it would have, just as Scotland and London and other places have, its own economic development unit, probably with a Minister working full-time on that area.

The question for us is whether this is going to be solved simply by structures or by a combination of structures and a policy involving close linkages with higher and further education and training. I am not convinced, having established one of these bodies in the past, that the model that we need to go forward for the next 10 or 20 years is necessarily the model that we have adopted in the past. I am not saying that everything that is being proposed by the Secretary of State is the right solution. Local people in those areas would have a better grasp of that than I would have from a distance. But I no longer put my faith in the structures. When you talk to businesspeople, they are very dismissive of bureaucracy. Their real interest is not in any grants that you can offer them; it is whether you have the people on the ground who can do the job. That is the thing that matters most.

There seems to be a new dimension opening up. I do not have all the answers and it is not entirely clear that the Secretary of State for Business has them either. But things have changed dramatically in the past few years, not least because of Europe and what it is now deciding. We have signed up to that. The ability of local organisations to take strategic decisions and effectively to buy in the businesses that come to invest has diminished. We have to be aware of what is happening in the rest of Europe. We feel that people in other parts of Europe do not apply the rules as strictly and rigorously as we do. I am sure that noble Lords from Scotland and elsewhere have had that repeated to them time and again. We play by the rules while others ignore them. That is one source of considerable concern to people in the regions, who feel that we are not necessarily playing on a level pitch.

When one is next door to a region where there is 12.5 per cent corporation tax versus what we have, that is what I call real competition. It is something to which no individual organisation, whether regionally based or otherwise, has a solution on its own. I am for regional solutions but I am no longer putting my faith simply in the structures that we develop. Those structures themselves sometimes get in the way of business; they frustrate businesspeople and, of course, they are very expensive. Whether we have the balance right remains to be seen and I have no doubt that there will be further debate to establish that.

Lord Whitty (Labour)

My aim is to speak to Amendment 56 which deals with the south-west region. It is not simply to convince the Committee that there are concerns on these Benches somewhat south of Watford, but as my noble friend Lord Knight spelt out before the break, the South-West Regional Development Agency has done a fantastic job in many respects, from projects such as the Eden project through to the Osprey Quay in his previous constituency where I was only a couple of weeks ago, through to the deals with the universities, science parks, and so forth. The majority of its interventions have been relatively small and, to respond to the noble Lord, Lord Empey, most of what the regional development agency has done has involved not large sums of money but soft policies, such as putting together patches of land, developing skills, getting people talking to each other who do not normally talk to each other, in the universities, professional associations, local government and small businesses.

The South-West Regional Development Agency may not have had the right geographical boundaries and it was probably not as universally loved as those in the north-east appear to be, but the prospect of its absence is causing deep and grave concern among small businesses and others within the region. Its replacement by the so-called LEPs is a shambles. It is a crazy situation. The Government who profess to want localism and to have industry-led alternatives to the agency have ended up with a situation where Whitehall is telling groups of business people and others who put their heads above the parapet what the basis to organise should be. On what basis is the man in Whitehall telling the putative LEPs in the M4 belt in Gloucester, Swindon and Wiltshire that that is not the appropriate sub-region? It seems a very appropriate sub-region to me and, more importantly, to them. Yet, they are being told that it is not the right region. People in Dorset-in Bournemouth and Poole-are being told to talk to Southampton and the Solent areas. Why? How is that allowing local businesses to decide on their own remits?

It is clear that the Government have set out on a process not on the basis of what is best for the regions or best individually for each of the English regions, but on the straightforward basis that they do not like RDAs and want to abolish them. What has happened in the south-west, which I suspect has happened in all regions, is that business men and women who some months ago were not particularly supportive of the RDA are now saying that with the abolition of the RDA in prospect, the government office for the region going and regional planning disappearing, they do not know who to talk to if they want to put together a deal, if they want to try to bring in public and private partnerships, if they want to make arrangements to develop the skills within the region that will achieve delivery of the ideas that they, as entrepreneurs, have. They are asking, "Who do we talk to?".

At the same time, the big potential investors are asking precisely the same question. The areas that miss out are going to be the more peripheral ones in the north and the west of the country and maybe in parts of East Anglia and the Midlands as well. In London, there is always somebody to talk to. In Wales and Scotland you have government-backed organisations but in these other regions you have not. It is not just a question of the industrial heartlands; we are talking about rural counties in the south-west. Indeed, it is not a question of the Labour heartlands, in case Members opposite feel that we are parti pris to this-these are the heartlands of the Liberal Democrats and many Tories as well. As the consequences of the disappearance of the RDA and the regional offices of government become clear, I imagine that many of the MPs in their parties are going to have deputations from businesses and from local government asking how to deal with this.

What has happened in the south-west and what people now fear in the south-west is that there is no point at which small businesses can talk to Government about their problems and there is no point at which outside investors can talk on a regional or sub-regional basis with some authority behind those discussions. What will they do? They will go elsewhere. It is true, of course, as the noble Lord, Lord Empey, says, that the interventions will not be so much financial in the future, although there will be some money there and there will be money in things such as the European Regional Development Fund and money from the agricultural side of this dimension. However, they will say it is easier to do this in France or Germany or Spain. It may be slightly easier to do it in London or Scotland or Wales but with nobody to talk to in dispersed regions such as the south-west the absence of the RDA will come to be a dreadful brake on developments which were beginning to see fruition.

I do not think that is what the political representatives of the south-west would wish to see. I do not therefore think it is what the coalition Government would wish to see. But by their own universal decree that RDAs are bad, that is likely to be the consequence.

Baroness Harris of Richmond (Liberal Democrat)

My Lords, before we remove RDAs entirely from our lexicon, I would like to put on record the really excellent work done by Yorkshire Forward. I make no apology for being parochial. It has helped nearly 30,000 businesses a year to improve performance, which is one in 12 of the region's business, with a typical turnover gain for each of those businesses of around £15,000 a year. About one in 30 people in the region's workforce are in a job because of Yorkshire Forward's work in the past five years. It has been one of the two most successful regional development agencies at turning investment into jobs.

Yorkshire Forward was created in 1999, and by 2000 it was already investing in business parks in small rural areas in my particular part of north Yorkshire, making a huge difference to those communities. Through its investment, it was to lever several millions of Objective 2 European funding into my local district, and transformational projects were initiated through the pilot Renaissance Market Towns programme. In my town of Richmond, money was granted to the award-winning Georgian Theatre Royal. One project that is dear to my heart and which we would have had great difficulty getting off the ground-I played a small fundraising role with our local MP-was the award-winning station development and the award-winning heritage partnership scheme. None of these would have taken place without the foresight and the funding of Yorkshire Forward.

Over the years, its investment helped to transform Richmond from an underperforming market town to Great Town of the Year in 2009. It is interesting to note that the Academy of Urbanism has awarded that national accolade to three Yorkshire towns-Richmond, Scarborough and Hebden Bridge-by a vote of its members over the five years for which it has been run. All those towns had strategic investment through Yorkshire Forward's Renaissance Market Towns programme. Because of the speed at which Yorkshire Forward has been disbanded, funding contracted to complete the Richmond heritage partnership scheme had to be withdrawn. It would have brought redundant property back into economic use and, at the same time, restored the character of that beautiful Georgian market town. That is indeed a most terrible shame.

The regional growth fund is about jobs, so it will almost certainly go to large companies, not to the SMEs that need it. Important though the large companies are, it is equally important to help and support the communities that need funding to keep small businesses from falling apart. Where, in future, will we get the money to keep our rural communities going, providing jobs for people and maintaining and improving the infrastructure?

Perhaps I may make a suggestion? I was talking earlier to one of the Lords' most sympathetic and thoughtful Members, who will remain anonymous. He suggested that it would be a good idea to offer tax breaks to individuals or companies that offered matched funding for a project. I commend that excellent idea to my noble friend and ask him to look carefully into that. We also need to look at the mountains of red tape surrounding applications for even small sums of funding. That, too, should be addressed. I hope that the Minister will carefully consider those suggestions.

Lord Hoyle (Labour)

This has been a very interesting debate on RDAs so far. I refer to some of the remarks of the noble Lord, Lord Empey, before I develop my theme. The noble Lord mentioned the difficulties faced by the Republic of Ireland because of its economic policies. As I understand it, it has been in a little difficulty recently, has it not? The noble Lord talks about Stormont, where power is devolved. I think he will understand that we want the best for our regions as well. I agree with him completely on one thing; this is about training. If that is left completely to industry, it might well, as it has in the past, go to the south-east rather than to the other regions. As has been said tonight, whether noble Lords have been speaking about the north-east, the north-west-as has the noble Lord, Lord Greaves-or other regions, such as the south-west, which my noble friend Lord Whitty spoke about, it is about ensuring that provision is spread more widely than the south-east, which, if it was left to the market, is where it would go. Because of that, I am totally against the Government's proposal and hope that, in the light of the debate and certain disquiet, as I sense it, from part of the coalition, they might just think again about their policy.

The noble Lord, Lord Greaves, raised this issue, but I want to speak a little more about what the Northwest Regional Development Agency has done and what successes it has had. In doing so, I pay tribute to the chairman, Robert Hough, and his colleagues, and the dedicated staff for their vision when they were led by Steve Broomhead, who until recently was the chief executive. I want to spell out more concretely for the Minister what the agency has done for the community. It has created or safeguarded just over 220,000 jobs; it has created 23,000 new businesses; it has reclaimed 4,000 hectares of brownfield land; and it has levered in £3.2 billion of private sector investment. This is quite a record in itself.

Data from the independent evaluation by PwC of the north-west's development activity over the period 2002-07 reported-and this is very important-that, for every £1 invested, the Northwest Regional Development Agency had achieved a £5.20 increase in GVA. Independent X-ray inspections by the NAO in 2007 showed that the NWDA was performing strongly. At the time, this was the top mark possible. A subsequent report in 2010-let us bring things more up to date-showed that the NWDA was strong on reprioritising to deal with the economic challenges of the recession. That will be lost to us. Recently, the NWDA moved into the IiP gold standard. The big thing about this in relation to development agencies generally and the north-west in particular is that they built on the region's heritage and strengths to provide the investment where it was needed-that is the important thing-and the leadership and support to ensure that the places, assets and industries of the north-west were best able to seize the opportunities for a sustainable future.

The Northwest Regional Development Agency supported the north-west in dealing with the tremors and shocks-particularly economic shocks-that can appear. They dealt with foot and mouth, which was very important in Cumbria in particular, and with the more recent flooding in Cumbria, getting practical support to businesses within four days of the floods. All that was very important indeed, especially in Cumbria. Could that be done by any other agency? I do not think so. The agency has also worked with partners to attract, host and develop a legacy from a wide range of events in the north-west, including the extremely successful Commonwealth Games-which everyone remembers-and Liverpool as the European capital of culture. This was largely based on the funds that came. The agency led the development of economic strategy in the region and produced the strategies needed. The important thing was that it brought together the regional agencies to develop the whole of the north-west economy, from Cheshire in the south to Cumbria in the north-west.

Let me go even further and develop in more detail how the agency played a part in the regeneration of Ancoats in east Manchester. In 2002, it undertook England's largest compulsory purchase order to regenerate Ancoats, revitalising historic cotton mills and ensuring the north-west's history as the birthplace of the industrial revolution, while bringing back derelict buildings for new economic use.

Let us talk a little about what they did in Liverpool. As Members here understand, the agency invested heavily in the regeneration of Liverpool's waterfront, particularly the world famous "Three Graces" and the Albert Dock. How will we do that in the future? It helped to secure the arena, the convention centre and the new museum. It reopened the Leeds-Liverpool Canal, as we know, and the Mann Island development. These investments have paved the way for a fully private sector-funded redevelopment of Liverpool's city centre. How will we do that without an agency that looks at the whole region?

I am sorry if I am going on a bit but, because we have been talking about development agencies, I want to put into context what has happened in the north-west. On businesses, the agency secured support for the nuclear industry, the supply chains, and the Nuclear Decommissioning Authority in west Cumbria. It also secured the national skills academy, the nuclear headquarters and the flagship energy facility in west Cumbria. We have talked a lot about west Cumbria because it is an area that could be forgotten. It has been said that it should perhaps have been with the north-east, but let us say what has actually been done. I notice my noble friend, who made a very powerful speech, nodding his head in agreement with what I am saying in relation to this.

Let us take Business Link Northwest. In 2007, the development agency launched a one-stop regional business link service to provide a primary access point for business support in 2008 and 2009. Over 92,000 businesses accepted the service, which was a 30 per cent increase on the previous subregional arrangements, with an 89 per cent customer satisfaction rate. What it has done is worth recalling. We talked earlier about skills. The noble Lord talked about the need for them. In Manchester, in 2004, the Victoria University of Manchester and UMIST combined to form a single university. The investment by the development agency helped to pave the way for integrating the two institutions and enabled the construction of new state of the art facilities. As a result of the help that it received, the University of Manchester is now Europe's largest single-campus university, with over 27,000 undergraduate students. It is steadily climbing in the rankings to one of the top universities in the world, not just in this country.

A bit nearer home to me in Warrington is the Daresbury Science and Innovation Campus. Investment and leadership from the agency to create a critical mass of research knowledge, expertise and capacity has resulted in extensive spillover with over 100 high-tech enterprises now located in the Daresbury Innovation Centre. They benefited from all the help they were given by the agency. Are we going to throw all that away?

The noble Lord talked about RDAs competing. Does he imagine that the local enterprise partnerships will not compete with each other? I do not know where he is coming from. The RDA was split into Cumbria, Greater Manchester, Liverpool city region, Cheshire and Warrington, plus-the noble Lord, Lord Greaves, mentioned one of them-possibly three overlapping supporting approaches for local enterprise partnerships in Lancashire. Indeed, as he said, a lot of work has been done in a territory that both of us know well: the Pendle area and Burnley. There is the Blackburn with Darwen Borough Council, and an approach is being made by Blackpool, Fylde and Wyre. All these can go together in relation to it. The question is whether that will be the powerful voice that the RDA has been in the past. I do not think so. The needs of the whole region will be neglected. I am afraid that the competition between the two cities of Manchester and Liverpool will be to the detriment of the rest of the region. That is what we are hoping to get away from. We hope to look at the north-west region as a whole. That is the way in which we should go, but I am sorry that the Government have taken this approach. They have taken the idea-

Lord Greaves (Liberal Democrat)

I wonder whether the noble Lord-as he says, both of us know the Pennines well-will agree that when a region such as the north-west finally gets a complete set of local enterprise partnerships, or LEPs, whatever pattern it is, what will happen-and it is already being discussed-is that at regional level all the LEPs will come together to form some sort of association or confederation of LEPs to recreate a structure at a regional level. However you look at it, this will be necessary.

Lord Hoyle (Labour)

I could not agree more with the noble Lord. Of course that is what is going to happen. Something is being tossed away needlessly by the Government in a very hasty decision, without due thought being given to either region. I certainly agree with him that these things will need to come together if the various regions throughout the country are to benefit. Unless we do that-unless we get them together-we have failed. I am so sorry that they are being split up in this way, only for them all to come together under another name, as the noble Lord, Lord Greaves, says. In view of the pleas that have been made from these Benches and from other Benches, particularly from the Benches within the coalition-they seem to sit a little bit apart at times-will the Government please think again before destroying the RDAs?

Lord McKenzie of Luton (Labour)

My Lords, I speak to Amendment 51, which opposes the abolition of the East of England Development Agency. I am perhaps a lonely voice for the east, although it is a region that I know the Minister knows well, so I look for some particular favour in his response tonight. I do not think that the east as a region has the innate identity that we have heard about tonight, particularly with the north-east and the passion that goes with that. We are probably a bit more like the south-west; we have grown to be a region. Before I develop my theme, I just say in response to the noble Baroness, Lady Harris, who I think was arguing for the benefits of some regional selective tax breaks, that selective tax breaks can be good for job creation, but mostly for accountants and lawyers. For me, it is a slippery slope and we need to think about it very hard.

I take this opportunity to reflect on the opportunities for the east, which EEDA has encapsulated in its Blueprint for Growth, and on why the fragmentation of the regional effort will diminish those opportunities. I caution that the replacement local enterprise partnerships are no substitute for the RDA. In any event, in the east some 27 per cent of the population and 26 per cent of the businesses will not be covered by a LEP.

My first encounter with the RDA was about a decade ago, as leader of the council, when we heard the news that the Vauxhall car plant was to close; in fact it was-would you believe?-heard over the radio while people were still working on the production line. I did my job as leader of the council in my office in Luton town hall; I sent off a fax to the chief executive of General Motors in Detroit demanding that it rescind this closure notice. I still await a reply. It was the RDA that sprung into action and convened a strong local partnership, which took action around skills training, supply chain diversification, job placement, investment and infrastructure. It was the RDA's efforts that made a significant difference to the local economy and to literally thousands of local people in Luton and the surrounding area.

EEDA has a clear mission to improve the economy of the east of England. It works across the six counties of Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk and Suffolk. The east of England is one of the fastest-growing regions in the UK in terms of population. It is a beautiful and diverse region, rich with cultural heritage and international trade links. It can be proud of its many achievements, but it faces many challenges, especially from intensifying global competition.

Despite the lack of homogeneity across the region, EEDA's efforts have been spread right across the area-in its impact in Bedfordshire borough, central Bedfordshire and Luton, for example. In the past 10 years, EEDA has invested more than £100 million in this sub-region. Some 6,000 jobs have been created or safeguarded, 13,000 people have improved skills, 1,000 businesses have been helped to start or grow, 2,300 people have been supported into employment and 43 hectares of brownfield land have been reclaimed. Funding of the UK Centre for Carnival Arts in Luton has created a national centre for carnival excellence, boosting the local economy and the cultural heritage.

In Norfolk over that period, EEDA similarly has created or safeguarded some 6,000 jobs, improved the skills of 22,000 people, helped 1,100 start-ups and reclaimed 72 hectares of land. It has also supported projects such as the Hethel technology park in its bid to be a globally recognised centre of excellence for low-carbon engineering and manufacturing. The Cambridge rural enterprise and mentoring initiative is encouraging start-ups in economically disadvantaged parts of the region.

The East of England Manufacturing Advisory Service has supported Vacuumatic, the world leader in paper counting technology, to implement lean manufacturing principles. Over the past 10 years, EEDA has invested £81 million directly in the Hertfordshire economy, helping some 22,600 businesses to start up. Highly skilled jobs for research companies are to be created as part of a £120 million expansion of the GlaxoSmithKline bioscience campus at Stevenage. Some £8 million has helped to support small life science companies and to protect jobs in the biopark in Welwyn Garden City. EEDA investment has regenerated Ipswich waterfront. EEDA has also invested in the Haven Gateway Partnership, the single most important cluster of ports in the UK. Everywhere you look in the region, it is possible to see the impact of the RDA.

Looking back is one thing, but what of the future? One in every nine UK businesses is based in the east of England-more than 430,000. Business investment in R&D is three times higher than the UK average. It has the most successful life sciences cluster outside the US. The world-renowned Cambridge technology cluster is in the region representing 1,400 companies and employing 43,000 people. The east of England has significant capability in both mature and developing high-value knowledge-based markets. It is already a major generator and supplier of energy, including leading the way in renewable energy generation, which makes it the centre of one of the world's largest markets for offshore wind energy and the UK's most dense area of offshore development between the Humber, the Greater Wash and the Thames estuary.

Despite these successes, the region requires a skills base that better suits its needs. There are disparities in economic performance within the region and areas such as Luton have high deprivation. The region suffers from an infrastructure deficit, with congestion on the transport network costing the UK more than £1 billion per annum. There is only one commercial broadband network in the east of England, which provides coverage to only around 60 per cent of the region.

It is at this time of huge opportunities but significant challenges that the Government choose to pull the plug on the agency that has been at the heart of the success of the east of England and best placed to address its challenges. In parallel, they are killing off regional spatial strategies. There is a continuing need for joined-up interventions in support of skills, infrastructure, business support and supply chain managers.

The focus that the RDA brought to the region is being scattered, as we heard from others, in all sorts of directions-the EU programme to DCLG and Defra, inward investment to UKTI, manufacturing support to BIS, and Business Link, eventually, to some national scheme. Other noble Lords have mentioned issues of asset disposal. One of the issues that need to be addressed, especially when regeneration funding is involved, is the potential for clawbacks, particularly for local authorities.

So much for localism. The local enterprise partnership does not cover the whole region; it covers parts of three old RDAs. By all accounts the process locally fits the Cable description of being,

"a little Maoist and chaotic".

As we have heard, LEPs have inadequate funding, there are no significant resources for their development and local authorities are going to be very hard pressed to fund even the secretarial support. It is not too late to draw back from the hasty and ill thought-through decision to abolish RDAs. The east of England will certainly be less well placed to realise its potential without the RDA. This is a loss not only for the region but for UK plc.

Lord Taylor of Holbeach (Conservative)

My Lords, I begin by thanking noble Lords for their contributions to this debate. It has been an excellent opportunity to consider the expertise that this House can provide on a subject covering all points of the United Kingdom. I understand the passion; I speak as a provincial myself. We are all in politics, to a lesser or greater extent, simply because we believe in where we come from and in the communities from which we originate and because we care about the people with whom we live and work. However, there may be other ways of dealing with the imbalances in the economy in the United Kingdom and I ask noble Lords to listen to the argument as to why the Government are proposing a changed approach. Given the breadth and detail of this debate, I regret that I am not likely to be able to respond to every point that has been raised, but I assure noble Lords that I will go through the record and seek to answer the points in a letter, which I will circulate to all noble Lords who have spoken this evening.

The Government's economic ambition is to create a fairer and better balanced economy. We wish to see business opportunities in a broad range of sectors balanced across the country and between businesses. The noble Lord, Lord Empey, spoke with experience and authority and indicated that the real challenge of building investment and providing job opportunities was probably outside the traditional structures represented by the RDAs. Our Local Growth White Paper sets out how we will put businesses and local communities in charge of their own futures, rather than having to rely on centrally imposed regional development agencies. If I may say so, I felt that some of the speeches confused the effectiveness of critical mass with the greater strength of coherence and real local empowerment and focus.

The amendments that we are debating as a group would preserve the regional development agencies as a whole, or those in specified individual regions. We believe that preserving all or any of them would be a retrograde step. In December, we placed in the Library of the House a short briefing paper, which sets out the reasons for abolishing the RDAs and gives a snapshot of the situation in each region. This has now been updated. Indeed, the number of LEPs has increased dramatically since that time. That update has been placed in the Library and I will build on this information in the course of my remarks.

We set out the rationale for our proposals in the Local Growth White Paper, which was published in October 2010. One key theme in the document is the need to shift power to local communities and businesses. We believe that localities should lead their own development and have the flexibility to tailor their approach to this and to their individual circumstances. If this is to work, they must own their own economic strategy; one imposed from regional or national level would not have this local ownership. For all the good work that they did, the RDAs did not really belong to the communities within the regions. Many of the policies and initiatives that they delivered were on behalf of national government and did not always recognise the varied needs and opportunities that individual places have.

The RDAs were also designed around administrative regions rather than real economic geography. While it would be possible to discuss this matter in the context of every one of the individual RDAs, I would like to discuss two specific examples now. My first example is the south-west region, stretching from Swindon in the east to Penzance in the west and covering an enormous geographical and economic range, from the prosperous and relatively well connected places in the upper Thames valley to relatively isolated and deprived areas in Cornwall. Bristol has many problems in common with our largest cities-those of economic success and of economic inclusion. The issues faced in rural parts of the region are quite different. Linkages, too, differ, with parts of the region having close ties to London, the south-east, the West Midlands and Wales, and others having no such link at all. The relevant policies in each case are quite different. RDAs sought to address that problem and to recognise the differences within their regions, but it makes no real sense to establish a single body to cover the entire region and to expect it somehow to understand and cope with that huge variety. It is far better for the local partners in Bristol to develop policies dealing with the specific issues that they face and for those in Cornwall to do likewise.

Lord Knight of Weymouth (Labour)

I do not want to delay the House, because I know that there is other business that we want to get done. The Minister is talking about the south-west, where the rivalries between Plymouth and Cornwall are well known; left to their own devices, the Tamar will remain the border between them and it will be difficult to persuade a LEP to form across that river. But I also think that it is very difficult to see in economic geography terms how you can develop parts of Cornwall and Devon without taking into account Plymouth and the city region approach. That relationship between a deprived rural county, Cornwall, and the only major city and centre of population needs to be thought through in terms of economic strategy, but the LEP approach will not do that.

Lord Taylor of Holbeach (Conservative)

I am grateful to the noble Lord for that intervention, because it gives me the opportunity to respond by saying that there is almost a mathematical relationship between size and the importance of the boundary that exists between different regions. One difficulty with regional boundaries is that they are frequently quite dramatic, although there may be a geographical coherence. I am a Fenman. The Fens are in the eastern region, about which the noble Lord, Lord McKenzie, spoke, but they are also in the east Midlands. Yet it makes sense for them to work together as a geographical whole. One great advantage of the LEP approach is that, when the models are smaller, the boundaries are slightly less severe and there is an opportunity for LEPs to work together. That is the whole point of the policy-to create greater flexibility in how the units of economic development can work together where they wish to. That supports the argument of One North East and the degree to which common policies across the north-east can work. I accept that it is possible to have a different point of view, but I am telling noble Lords how we see this. If we really want to address the regional imbalance in this country, we have not succeeded with RDAs.

Baroness Armstrong of Hill Top (Labour)

Does the Minister accept that the Government are out of step with virtually everyone in the north-east?

Lord Taylor of Holbeach (Conservative)

I take a great deal of comfort from my noble friend Lord Bates, who shares my view of the ability of the north-east to develop common policies where it wishes to do so. There are individual differences between Teeside, Tyneside and Wearside. You would not want to say you were in Newcastle when you were in Washington-I remember somebody getting into terrible trouble for doing so. Locality is very specific and the north-east has different characteristics. It is not homogenous and there are methods of getting economic development in the north-east which do not depend on having a single body to deliver it. A coalition of different bodies with a common policy may well be a much more effective method for doing so.

I gave way to my noble friend when I was talking about the West Country. If I might take Bristol as an example, it is far better for the local partners to develop policies for the specific issues it faces, and for Cornwall to do likewise. I strongly believe that any economies of scale that a regional approach may have are more than outweighed by an absence of local knowledge and commitment and the consequent loss of responsiveness to local circumstances. In response to the noble Lord, Lord Whitty, who asked why the Gloucester, Swindon and Wiltshire LEP was rejected, I would say that, although there was some business support for the proposal, other businesses in the area felt that a different geographical approach was right. Ministers have gone back and asked the partners to discuss their proposals again in order to develop an approach which takes the full range of local views into account. So the matter is not concluded; it is still under debate, and the Government await evidence on which to make their decision.

Lord Greaves (Liberal Democrat)

I will give my noble friend a slight rest. Does he not accept that, not only are the Government apparently out of step with what most people in the north-east think, but their thinking on regionalism is completely out of step with pretty well every other country in Europe of a similar size. It really risks England becoming the most centralised country in the whole of western Europe. While what he says about LEPS and putting the emphasis at a more local level might well be a perfectly acceptable way forward, the real problem is that the LEPs are being deprived of pretty well all the resources which the RDAs and regional bodies have at the moment. Therefore, unless they are lucky enough to get some of this relatively small amount of regional development fund money, they are going to be toothless.

Lord Taylor of Holbeach (Conservative)

I should remind the noble Lord that I do not consider £1.4 billion in the regional growth fund to be insignificant. I know noble Lords may well feel-and they clearly do-that it is better that the taxpayer should fund large redistributions through RDAs. There may be other ways where economic policy can be directed, as my noble friend Lady Harris of Richmond mentioned. She talked about tax incentives. Far be it for me, as a very lowly member of the Government, to challenge the Treasury on tax incentives, but there are different ways of doing these things other than handing out taxpayers' largesse. I emphasise that that is the way in which this Government are thinking.

Perhaps if I talk about the north-east, I might be steering into danger. I am not too frightened of doing so because we should recognise that the north-east does not have a single monolithic economy. The region has a varied economic geography, with significant economic poles, across the Rivers Tyne and Wear and the River Tees. Each place has a different industrial heritage and different strengths, opportunities and threats. The local authorities in Tees Valley have a strong track record in working together and were quick to put forward an application to form a local enterprise partnership. This argues that they recognise the benefits of these new arrangements. A partnership has now been established, covering the authorities in the rest of the region. As Vince Cable has made clear, this is not to say that some form of co-operative arrangement across the north-east is not justified if local partners want it. I said that at Second Reading and I have just said it again. However, I strongly question whether a regional development agency, with all its attendant complexity and bureaucracy, is necessary to achieve this.

The previous Government gave RDAs the task of narrowing the gap in growth rates between the prosperous region of the greater south-east and the rest of England, and provided them with significant resources over a sustained period to help them achieve this. However, it was a target that they failed to meet. Between 1990 and 1999, the real gross value added per head in the greater south-east grew by around 1.8 per cent in each year, compared with around 1.4 per cent in the other six regions-a gap of 0.4 of a percentage point. Between 1999 and 2009, annual growth in the greater south-east fell to 1.4 per cent, compared to 0.8 per cent in the other regions-a gap of 0.6 of a percentage point. Therefore, the gap in growth rates has widened by around 0.2 of a percentage point. It is time to try a new policy, even in the north-east.

As the White Paper makes clear, we are encouraging businesses, local authorities and their partners to develop local enterprise partnerships based on real economic areas, rather than artificial administrative regions. The new partnerships are based on where people live and work. Businesses and civic leaders will work together to drive sustainable economic growth and create the conditions for private sector job growth in their communities. Partners have responded to this invitation in an enthusiastic and innovative way. So far, 31 partnerships have been asked to form boards, covering 87 per cent of England's population and a similar proportion of businesses. We are actively engaged with partners in the remaining areas, helping them to develop proposals that will meet our broad criteria.

I reassure the noble Lord, Lord McKenzie of Luton, that five LEPs have been asked to establish their bases in areas that cover the east of England. I assure the noble Lord that there will be partnerships covering the entire region. There will be no businesses or parts of the population that are not covered by an LEP.

Baroness Whitaker (Labour)

What the noble Lord has to say about LEPs does not exactly fit the situation of Newhaven, where the LEP is just wrong for it.

Lord Taylor of Holbeach (Conservative)

I was coming to the whole business of Newhaven. I am grateful to the noble Baroness for mentioning earlier that she wanted to talk about Newhaven. As she will know, Newhaven is currently covered by the LEP for East Sussex, Kent and Essex. It is perfectly possible for Newhaven and the Lewes district to work with the Coast to Capital LEP as well. The whole point is that boundaries are not as important with LEPs as they are with RDAs. I hope that Newhaven's position will indeed be recognised by Lewes District Council in the way that it operates within the LEP framework. It is perfectly at liberty to do just that.

I come to a few other parts of the country; we have mentioned everywhere, I suspect. There is perhaps an example of cross-regional development that I should also draw your Lordships' attention to. The partnership in the south-east Midlands attempted to deal with an economic area in which the former regional boundaries were particularly irrational and obstructive-the area around Milton Keynes, which the noble Lord, Lord McKenzie of Luton, will know. To an extent, the RDAs recognised this but they were largely ineffective in responding because their structures hampered them from doing so. The local partners do recognise it fully, and they are basing their proposals around a practical response, and I regard this as progress.

The White Paper also described the regional growth fund, which, as I said, is worth £1.4 billion over three years. This is money to be spent outside the south-east of England. This complements the other measures that the Government are taking to support growth through investment and to provide support for education and skills. The noble Lord, Lord Empey, emphasised the role of skills, improvements in competition and support for research and innovation. These are the focus of the measures and will lead to real jobs and skills. Without a skills base, we have no opportunity of building the jobs and the industries that will provide employment in the future.

Lord Hoyle (Labour)

Will the Minister say why he thinks he will develop skills better than the RDAs have done?

Lord Taylor of Holbeach (Conservative)

The skills will be developed as part of the skills policy of the Government. My honourable friend in another place, the Minister, Mr John Hayes, has recently announced a skills strategy for the country. If we have not debated it in this House, it is because we have been very busy debating other things. However, it is a very important strategy, and it is part and parcel of the strategy for economic growth in this country.

Perhaps I may continue to describe the regional growth fund. It is intended to encourage private sector enterprise and create sustainable jobs. In particular, it is designed to help places currently reliant on the public sector to make the transition to private sector-led growth. I suspect that there is a feeling across the House that this is important. Once again we are encouraging proposals to come from the bottom up, responding to local circumstances. When the first round of bidding closed at the end of January, we had received nearly 450 proposals, showing that there is a significant appetite for an approach of this kind. My noble friend Lord Heseltine is chairing the panel which will be selecting the best of these proposals; and noble Lords have referred to my noble friend in contributions to this debate. Noble Lords will need no reminding that encouraging growth throughout the country is a cause dear to his heart.

Lord Greaves (Liberal Democrat)

I apologise for intervening again. The resources may be significant, as the Minister said, but they are considerably less than the resources available at the moment, either through RDA or through the regional housing pots and all the other resources, which are being either dramatically cut back or scrapped altogether. Is not the problem that many of these places that have put forward good, exciting schemes and want to get ahead will be denied a penny because they will not win the competition that the noble Lord, Lord Heseltine, is presiding over?

Lord Taylor of Holbeach (Conservative)

I cannot guarantee that all the 450 proposals will find funding. However, I can be sure that the ones for which funding is found will be successful and provide opportunities for the people in those areas.

Lord Beecham (Labour)

Can the Minister indicate in monetary terms the extent of the bids that have been made?

Lord Taylor of Holbeach (Conservative)

No, I do not have that information available, but we know the amount of money that is available for the fund, which I have stated.

Finally, noble Lords raised the question of what will happen to RDA assets and activities. There has been some concern that there might be a fire sale. That is not the case. These bodies will be run down, the relevant clauses of the Bill will become law, and the RDAs will finally be abolished. RDAs have been liaising with the relevant local authorities, local enterprise partnerships and other local partners. On 31 January, all RDAs submitted detailed plans for the disposal of their assets. They recognised that there will be a variety of destinations for these assets, depending on their nature and associated liabilities. These plans are currently being scrutinised by the Government. After scrutiny, each RDA management board will sign off its plan and begin implementation. RDA asset-disposal plans have been developed while taking into account the principles that we set out in the White Paper. These include maximising value for money from these assets, ensuring that liabilities follow assets and passing control down to local level where possible. Where this is not appropriate-where, for example, an asset is of national importance, such as that set up in the south-west and mentioned in the debate, and considerable resources are needed to run it-other options will be considered.

Similarly, co-ordination of some activities formerly undertaken by RDAs will be taken back to national level, and some activities, such as those of the England Rural Development Programme, will retain local accessible support. In some cases, such as managing the European Regional Development Fund and the England Rural Development Programme, we need to ensure compliance with our obligations to the European Union. In other cases, such as co-ordination of inward investment activity, we need to ensure that we can put over a coherent and effective message to potential investors. However, even in those cases, we are setting up mechanisms under which local partnerships have the opportunity to influence policy and help drive the decisions we make. For all these reasons, we do not believe that retaining all or any of the nine RDAs will help to achieve local growth. I therefore ask the noble Baroness to withdraw her amendment, and for noble Lords not to move theirs.

Baroness Royall of Blaisdon (Labour)

My Lords, I am grateful to the Minister for his response, which I will carefully consider, and I look forward to the letters that he has undertaken to write. All around the Chamber we would agree that regional development is key to the economic recovery of this country. RDAs have been, and for the moment are, excellent strategic catalysts for growth. I have to say that I am not confident that their replacement by LEPs will suffice. However, I will take into consideration what the noble Lord has said. At this juncture I beg leave to withdraw the amendment, but I reserve the right to bring something back at Report.

Amendment 49 withdrawn.

Amendments 50 to 58 not moved.

Amendment 59

Moved by Baroness Royall of Blaisdon

59: Schedule 1, page 17, line 23, leave out "Security Industry Authority."

Baroness Royall of Blaisdon (Labour)

My Lords, this amendment is on the abolition of the Security Industry Authority. I pay tribute to my noble friend Lady Henig, who has been its chair. My Government established the SIA in 2004 to reduce criminality in the security profession and to raise standards in the industry. This is exactly what the SIA has done and what I would like it to continue to do. The body has two main duties: the compulsory licensing of individuals undertaking designated activities within the private security industry, such as security guarding, door supervision, close protection, public space surveillance by CCTV, and protecting cash and valuables in transit; and to manage the voluntary approved-contractor scheme.

It is easy to understand why the police campaigned for the industry to be regulated, why they are content with the way in which the authority is working and why they do not want it to be abolished. Neither do I. It is not difficult to see why such an industry should have been regulated. You just have to think about how the actions of nightclub bouncers have, according to my children and their friends, improved exponentially over the past few years. You just have to think about the potential for people who wish to harm our society with acts of terrorism and how much easier it would be for them to find employment in an unregulated industry. You just have to think about the potential for employing people-perhaps illegal immigrants-at below the minimum wage. I realise that employers in the industry have a responsibility but I am sure that they are greatly assisted by the SIA.

Can the Minister confirm that the Home Secretary has decided that there will be no significant changes to the SIA until after the Olympics in 2012? If that is the case, it is certainly very telling. I suggest that our citizens should be able to enjoy a properly regulated security industry at any time, not just in the period leading up to and during the Olympics. I ask the Minister whether there are plans for a smooth transition to a self-regulated industry and whether the police are content with the transition. Finally, what reviews do the Government intend to carry out following the proposed changes to ensure that the public can continue to have confidence in the system? I simply do not understand why the Government wish to abolish this body and I look forward to hearing from the Minister.

Lord Whitty (Labour)

My Lords, I rise briefly to support this amendment. I do so partly because I was in on the beginning of the campaign to regulate the security industry when I still worked for my trade union, which organised the more respectable end of the security industry. However, 20 years ago, and indeed more recently, it was an industry with some very dodgy people in it. There was an element of criminality; there were occasional outbursts of violence; there was fraud; and there was a straightforward dereliction of duty to the businesses and individuals that employed so-called security companies. There was much in the industry that, to put it at its mildest, was short of customer service.

It was not a pleasant industry but in many respects it was one on which, because of the nature of our society and the value of the goods in which we trade, more and more businesses came to rely. They needed to be assured that the people they brought in to protect their premises, their transit arrangements, their valuables and, in many respects, their staff and customers knew what they were doing and did not have any record of transgression. That is what, after a long campaign, led to the setting up of the Security Industry Authority.

The Home Office has ummed and ahed about this for many years and has done absolutely nothing about it. The first time the authority's abolition was proposed, it was suggested that its responsibilities went back to the Home Office, but that would have been absolutely disastrous. Now, a degree of self-regulation for the industry is proposed. However, the problem with that is that the more respectable end of the industry will undoubtedly attempt very effectively to ensure a degree of quality of service and vetting of staff and individuals but the less respectable end will re-emerge and so-called security firms will spring up all over the place employing people who have not been through the vetting procedure. Therefore, any self-regulation is dependent on the majority of the industry participating in it and being able to exclude others.

There may have been criticisms of the SIA but most of those have probably been invalid. I feel that there should have been a mandatory system of approving companies, as well as individuals, but the authority, together with the police, undoubtedly helped to clean up the industry. Taking away this protection from businesses and individuals is a big risk for the Government to take. I hope that the Home Office will think again, because it cannot do this job itself. Those at the respectable end of the industry do not really want to be reduced to self-regulation. They will operate such a system if the Government insist on it but it will not be as effective as the development of the SIA. For that reason, and in the interests of protecting a lot of small and large businesses and public premises, I ask the Government to think again.

Baroness Henig (Labour)

My Lords, I declare an interest as the current chair of the Security Industry Authority and president of the Association of Police Authorities. In the speech I made at Second Reading I told the House about the enormous concern with which the Government's proposal to abolish the organisation and return to self-regulation of the industry was greeted, particularly by people in the industry and also by Scotland and Northern Ireland. Last week the chairman of Security Alliance said how the inclusion of the SIA on the list for abolition came as a great surprise to the industry. He said that since regulation was introduced, there had been a general acceptance in the industry that licensing had been a force for good. So that is clearly understood and agreed across the industry.

We know there has been a lot of criticism recently in the other place by the Public Administration Committee about the handling of the bonfire of the quangos. The committee said it was a rushed, botched job with no clear evidence of savings or concern for value for money or efficiency. More important for the SIA was the lack of consistency in applying the three questions and the issue of whether they were even the right questions to ask. I asked at Second Reading why the SIA was being abolished when the Gangmasters Licensing Authority was being spared-a question which has not yet been satisfactorily answered. The Public Administration Committee's report asked exactly the same question. The silence in response is deafening.

I asked another question to which there has been no response: why is it that the Government believe the industry is mature enough at this moment in time to regulate itself when the Scottish Government, the Northern Ireland Administration and even large parts of the industry disagree very strongly. Yet the Minister told us at Second Reading that there had been no major disagreements on the legislation between the Government and the Scottish Government. I do not think that is entirely an accurate description but obviously I defer to others on that.

The most serious issue I had with the Government on this matter was their lack of consultation with the industry. After all it was the BSIA and other bodies and individuals within the private security industry which consistently pressed for regulation of the industry in the 1980s and 1990s and they have supported it and for the most part paid for it. Surely, therefore, the views of the industry should have been sought before the policies were drawn up, not to mention the uncertainty caused to 350,000 individuals working in the industry, many of whom funded their own licence fee and invested in their training. Surely there should have been consultation with all these people. Certainly the view of the Public Administration Committee was that there should be consultation with all the bodies listed in this Bill, even at this late hour, and who can say that it is wrong?

In the case of the security industry, its leaders sensibly were not prepared to wait that long. Indeed, they made their opposition to the ending of regulation and the abolition of the SIA very clear. They wrote to the Home Secretary, the Prime Minister and the Deputy Prime Minister. They organised and they highlighted the tremendous risks inherent in the Government's proposals, forcing the Government to change their mind. Instead of abolition the Government agreed that there should be a phased transition to a new regulatory regime and that the SIA should no longer be an NDPB.

So there has been a change and therefore this Bill is already out of date in terms of regulation of the private security industry. In the exchange of views that took place between the Government and the industry, industry leaders made it clear that they were already discussing with the Security Industry Authority a blueprint for the evolution of regulation whereby the regulator and the industry would work together to produce smarter, more cost-effective regulation and would press the Government to introduce business registration alongside individual licensing so that we could move to a more efficient, effective and lighter-touch regulatory regime-"better for less", to use the Government's own phrase. That was certainly what the industry was working towards with the SIA. As the Public Administration Committee so rightly observed, the major issue at stake in relation to quangos should not be about their status or structure but about effectiveness and delivering value for money. Since last summer the SIA has been in discussion with the industry about precisely these matters.

The issue before us in this discussion on the Security Industry Authority is not a simple should it or should it not be abolished, but how best to facilitate a phased transition from the current regulatory regime to lighter touch, smarter regulation in which industry bodies and leaders play an increasingly active and important role alongside the SIA. There is no disagreement about that. The issue is that it is a process which will take time. It cannot be rushed. It has to include all sections of the industry that are currently regulated. While the recent emergence of the Security Alliance as a unified voice for the industry is to be welcomed as a very positive development, it is by no means fully established across the industry. So there is a lot of work to be done, and along the way the decisions made by the Home Office and the Government in relation to the extent of regulation-for example, that it should not include in-house security, or for the time being private investigators or security consultants-will undoubtedly be queried and challenged by many in the industry. If we are discussing the industry's future, people working in it want to raise many things.

Then there are the views of Scotland and Northern Ireland. I cannot speak with enormous knowledge about these areas but the licensing of private security has been a huge success both in Scotland and Northern Ireland. It has been in Scotland since 2007 but licensing in Northern Ireland is just a year old. The Northern Ireland Administration are in no rush to change it and we can understand why. They think that it has made a big difference. Both those areas have elections in the spring and we will have to wait to find out the views of the new Administrations and Governments that result. A lot is standing in the way of progress at the moment. As part of the phased transition process, the industry is strongly of the view that the Government should play their part by showing a willingness to bring in business registration in the industry, alongside the licensing of individuals. I hope that the Minister will be able to commit the Government to action in relation to business registration when she replies, as the industry is keen to see that.

We are working to move forward. We in the SIA are consulting a whole range of bodies, including the strategic consultation group, a Security Alliance industry panel, and so on, because it is important to have agreement with the industry and major stakeholders on key principles and milestones for the future, while being conscious, as was said, of the need to proceed cautiously before the Olympics in 2012. There are also the Commonwealth Games in Scotland in 2014 and we must not forget that. It is important to put on the record that many senior figures in the industry are urging caution. They do not believe that the industry is yet ready for self-regulation. I strongly support giving the industry more responsibility in terms of licensing and training, but I share its view that there is no evidence at present that it is sufficiently mature at this point for self-regulation. We have to move very gradually towards that goal. Substantial progress will have been made towards establishing a new regulatory regime by 2014 but there is the big issue of effective intelligence and enforcement operations. It is important that they continue and that the state continues to maintain a strong regulatory regime in respect of criminality; in respect of criminals and their associates; and in respect of those who continue to seek to undermine and weaken the regime. Everyone who works in the industry wants the regime to be effective in driving out and keeping out criminality and in upholding robust standards. That is extremely important because the credibility of the industry requires strong intelligence and enforcement activity, which has to continue in any new regime.

There is a considerable way to travel. Listing the SIA in Schedule 1 to the Bill was a misguided and inappropriate step for the Government to take. We are talking about Schedule 3 and changing the nature of the organisation and moving it to something different. The important thing is that we all want to build on and improve the regulation that has been introduced. It has been a great success and we want to continue it both with the industry and the devolved Administrations. We have to work with them at their pace, which I hope the Government will be supporting so that we can move forward together.

Baroness Meacher (Crossbench)

My Lords, I will speak very briefly in support of the comments of the noble Baroness, Lady Henig, the current chairman of the SIA. I should mention that I was the first chairman of the Security Industry Authority some years ago and in that capacity I came to respect very highly the considerable number of companies that control the vast majority of companies within the security industry. However, I was introduced to the industry prior to regulation and can certainly endorse the comments already made that the industry does attract a large number of highly unscrupulous individuals who, without very tight controls, are more than willing to take advantage of the unsuspecting, either employers or members of the public.

The two big achievements of the SIA, and a credit to its current chairman, have been the raising of the educational level of the 350,000 or so security officers and also, as others have mentioned, the protection of the public and employers from these unscrupulous security guards. I am sure the Minister would like to recognise the value of its work.

There is of course merit in the proposal to focus in future on the system of business registration, leaving the individual licensing largely in the hands of the industry. However, I too do not accept the Government's argument that none of the SIA functions needs to be carried out by a public body. In view of the extent of criminality within the industry, and the potential for far greater amounts of criminality, this just does not seem realistic. It is difficult to imagine that all aspects of the SIA can effectively be carried out by the industry itself.

The Government refer to employers in other industries taking responsibility for making appropriate recruitment decisions and suggest that this approach would be appropriate for the private security industry. My understanding is that the industry just is not ready. I do not think the Government have at all taken into account the degree of criminality in the industry. It must be quite alone-in fact I cannot think of any other industry that has comparable problems.

It is certainly most encouraging that Ministers have now agreed to the SIA's plan for evolution towards a new system based upon business registration. However, Ministers do not seem to be taking account at all of the degree of opposition to these changes both in Scotland and Northern Ireland. It seems the Government will need to move much more slowly if they are to have any hope at all of bringing the devolved Administrations with them. I hope the Minister will take very seriously the points already made by the noble Baroness, Lady Henig.

I want to mention one small but particularly threatening sector of the security industry-the security officers who control parking on private land. The Government are committed to ending the right to clamp vehicles on private land. I applaud this move wholeheartedly. However, there is no move to prevent, as I understand it, these operators charging unsuspecting members of the public extortionate fees for parking on private land. It is in this area that threats are made and extortionate quantities of money are demanded, increasing over time if people do not pay up quickly, that lead to people submitting to the fees charged. I hope the Government will be able to deal with that relatively small but really alarming sector of the security industry in the course of their deliberations about reform.

I was very pleased to note in the Government's briefing that any proposed changes will be subject to parliamentary approval. Perhaps I may take this opportunity to applaud the Minister, who told us in a meeting recently that he will be eliminating Clause 11 and Schedule 7 from the Bill. This does seem to me an enormous step forward and I imagine I am speaking on behalf of others too in saying that this is extremely welcome. That is at least an excellent piece of good news.

Finally, as others have said, the SIA regulatory system is self funding. There are no public spending implications in this reform. Perhaps the noble Baroness will explain to the House the motivation for a reform which seems to be opposed not only by the devolved Administrations but also by the industry which currently pays the bill for the Security Industry Authority. I look forward to the Minister's response.

Lord Foulkes of Cumnock (Labour)

I add my congratulations and thanks to my noble friend Lady Henig for the work she does as the chair of the authority. I have had a number of discussions with her over the past year or so about the situation in Scotland, and she has been most helpful. She carries out her work in a modest but very effective way. I also echo what my noble friend Lord Whitty said earlier: before the SIA was established, the industry was characterised by cowboys and gangsters. I remember it well-not that I was part of it in any way, but I remember how it operated. I remember its links with organised crime. It was also characterised by low pay, which created particular problems with bribery in the running of operations.

That did not all change through self-regulation. It changed because we legislated and because the Government took clear and decisive action to ensure that the industry was properly regulated.

My main point relates to Scotland. I see the noble and learned Lord, Lord Wallace, here. I think that he will confirm that there is no doubt what is the view of the Scottish Executive in relation to the future of the SIA. On 8 September, the Home Secretary wrote to the Scottish Government seeking their views on the UK Government's intention for the future of the Security Industry Authority. Kenny MacAskill, the Justice Minister in Scotland, in a reply to my colleague in the Scottish Parliament-he is not my noble friend yet-Richard Baker, stated on 11 November:

"I responded on behalf of the Scottish Government on 13 September 2010, setting out my concerns about the UK Government's proposals and strongly emphasising the need for continued regulation of the private security industry in Scotland. These views were also set out in a letter that I wrote to the Deputy Prime Minister on 24 September 2010 and in a further letter to the Home Secretary following my meeting with the Scottish security industry representatives on 13 October 2010".

There is no doubt about their view, which was made very clear to the Home Office and the Deputy Prime Minister. In another reply, also on 11 November, Kenny MacAskill stated:

"The Scottish Government does not support the decision of the UK Government. The Security Industry Authority has been working very well in Scotland, and the Scottish Government made a very strong case to the UK Government for its continuation as the independent body responsible for regulating the private security industry".

There is no doubt about the view of the Scottish Government. As my noble friend Lady Henig has heard directly, I can confirm that the shadow Justice Secretary, Richard Baker, who asked the Question, agrees. It is not often that he agrees with Kenny MacAskill, but on this occasion, he agrees 100 per cent with him.

So we have the two largest parties in the Scottish Parliament at one in wanting to keep the Security Industry Authority in operation. One might say, "It can continue to operate in Scotland", but it would be ridiculous for a United Kingdom industry-which it is, because Securicor and G4 security operate north and south of the border-to have completely different regulation, a completely different kind of supervision.

The issues for the industry are the same in Scotland as they are in England. There are other areas where things are different in Scotland, where we are proud of the differences, but in this area, there are no differences in the operation of the industry and there should not be any difference in the regulation of the industry.

As my noble friend Lord Whitty said in a robust way and as my noble friend Lady Henig said in her usual gentle way, I say to the Minister: think again about this. Have further discussions with the Scottish Executive to find out more about their concerns, have discussions with the Welsh Assembly Government and with Northern Ireland about their concerns to try to find something which is acceptable to all parts of the United Kingdom, and come back to this House and the other place with alternatives. The very co-operative way in which the Minister, the noble Lord, Lord Taylor of Holbeach, started off the discussion on the Bill at about 3 o'clock-all those hours ago-was very refreshing. I hope that, on this particular issue, the Minister will act similarly to the noble Lord, Lord Taylor, look at it positively, take account of the views that have been expressed and take the matter away, think again and come back with revised proposals.

Lord Ramsbotham (Crossbench)

My Lords, I add just one concern to what has already been said. That is in relation to the criminal justice system and the use of private security companies in it, coupled with my increasing concern about their involvement in the activities of the UK Border Agency. The Green Paper published by the Ministry of Justice, Breaking the Cycle, envisages increased use of private sector companies, for example in providing probation services. At present they are conducting a number of private sector prisons. Those are under supervision of the Inspectorate of Prisons but the training and the selection of staff has always caused concern.

As far as the UK Border Agency is concerned, the activities of the private sector in such activities as the deportation of people was drawn into high relief the other day with the death of someone who was put under restraint while being deported in an airplane from Heathrow. As a result, the activities of private sector guards have come under greater scrutiny rather than less. Therefore, with this increased activity, I have to admit that I am nervous at the thought of the SIA being removed from a role that it could have if raised to the stature of that work, in favour of self-regulation, which I do not believe is right in this particular area.

Lord Kennedy of Southwark (Labour)

My Lords, I rise to support my noble friend Lady Royall of Blaisdon. I am most surprised that the Government proposed the abolition of the Security Industry Authority in the first place and that they have not moved on this matter. The Security Industry Authority is a great success story. It has professionalised the private security industry, driven out criminality and ensured that people are safe when attending a variety of events in pubs, clubs and elsewhere. I am aware that they have their own licensing body. I was at a football match on Saturday and it was reassuring, walking around the ground, to see security professionals with accreditation on their arms. How different that was only a few years ago.

I read the Government's brief. It provides no reassurance on the position going forward. In the document, the Government say that Ministers decided that there is no evidence that the Security Industry Authority carried out a function that needed to be undertaken by a public body. Will the Minister expand on that in her response? Also, whatever is decided in the future, it must surely be inferior to what we have at present, if for no other reason than the fact, as my noble friend Lord Foulkes said, that different systems operate different authorities round the country. It is ridiculous.

I also ask, as my noble friend Lady Royall did, how the Government will ensure that criminality is kept out of the industry. I am pleased that the Government say in the briefing note that there will be little change this side of the Olympics in 2012-though, for me, that highlights the weakness of the proposals in the first place. I would like the Minister to comment on that in her response as well.

I agree with the comments of my noble friend Lord Whitty about the respectable and less respectable arms of the industry. I pay tribute to my noble friend Lady Henig for all the work that she has done. In conclusion, I hope that the Minister has something to say and is at least prepared to take away this proposal and come back with something on Report.

Baroness Neville-Jones (Conservative)

My Lords, I thank the noble Lords who have spoken in this debate and made some important points. Many of them I accept. In putting forward the Government's proposed measure, I hope to convince the Committee that many of the anxieties they have expressed will prove unfounded.

The Government intend to resist this amendment, which would remove the Security Industry Authority from the list of public bodies that Ministers will be able to abolish via secondary legislation. We will do so because we consider it unnecessary. I want to explain what the Government intend to do because I believe that many of the things that have been said on the Floor this evening perhaps represent a situation that no longer pertains.

Before I do that, I join other noble Lords in expressing my appreciation for the work done by the noble Baroness, Lady Henig, as chairman of the SIA. There is no doubt that under her guidance the authority has raised the standards of the industry, which is one of the things that give us confidence that we can move on to a different regime. I will come back to that in a moment. Many of the things that she said are points on which there is a very large measure of agreement between her, the Government and, I hope, other Members of your Lordships' House.

In looking at the SIA, the Government have applied a number of tests to retention in the public bodies review. We concluded that there was not compelling evidence that, given the standards that are now being reached, the SIA's functions need to continue to be performed by a public body. The SIA was established by the Private Security Industry Act 2001, as has been said, and it has succeeded, as was the intention, in reducing criminality in the security industry. It also set out to improve standards. The approval system has undoubtedly resulted in improvements in those standards and uses the compulsory licensing of individuals to achieve the reduction in criminality. It carries out criminality and identity checks in addition to confirming the training that has to be completed before issuing a licence.

The Government do not intend that any alternative regime should result in a lowering of these standards. Licensing began in 2004, and there are currently more than 350,000 licensed individuals. The SIA has done something else important, which is to raise standards through the voluntary approved contractor scheme that allows companies to demonstrate that they meet a wide range of standards and are therefore worthy of being accredited as approved providers of security industry services. That is also something that will continue. More than 650 companies employing about two-thirds of the industry now have the ACS standard. That is a record of achievement and I pay tribute to it.

On that basis, however, we believe that it is now right to move over time to a new regulatory regime. I stress that it will be a regulatory regime. The private security industry has matured under the aegis of the SIA since SIA regulation began, and there is evidence of increased standards in the industry. We believe that employers should now be given more responsibility for making safe and legal recruitment decisions in the same way as employers in other professions. In other words, they should not have normal responsibilities removed from them.

As was mentioned in the debate, the security industry has formed a so-called security alliance of trade bodies which by their own reckoning represent more than 80 per cent of the regulated security industry. This group recently wrote to the Parliamentary Under-Secretary responsible for equalities and criminal information, Miss Lynne Featherstone, and outlined its willingness to work with the Government. It has already been working with the SIA to shape the future regulation of its industry, as the noble Baroness, Lady Henig, mentioned. Indeed, we intend to build on the work that has already been done. There is no doubt that challenges still lie ahead for the industry, but I have a slightly different picture of the attitude of the industry and some of those who are affected by the changes that lie ahead. It is more positive than has been noted in discussions so far. There is no doubt that they are willing. They have shown considerable alacrity in stepping up to take responsibility. That should encourage noble Lords.

Baroness Meacher (Crossbench)

The Minister has repeatedly referred to the industry as though it was some uniform set of organisations. Does she accept that there is a tremendous divide between the reputable end of the industry and these highly dubious individuals and pairs of people who go about taking work in the security industry? You cannot refer to them in the same breath-and certainly not in the same phrase. Does she accept that?

Baroness Neville-Jones (Conservative)

I accept that this industry-I do not know what other term I can use: perhaps "this occupation"-has a wide spectrum of activities and individuals in it. I will come to that in a moment. I want to encourage your Lordships to have more confidence that those in this industry can be relied on and are willing to take further responsibility and be more accountable for their own actions in future. I understand that there is some concern that if the SIA is abolished there will be no effective regulation of the private security industry. I want to offer reassurance on that point. We are not going to do anything immediate. We have been convinced by those who have argued that that would be unwise and that it would not be sensible to do that. The regulation of the private security industry will continue in its present form. The SIA will not be abolished until the new regulatory regime has been fully established and is properly functioning.

Since the outcome of the public bodies review was announced by the Cabinet Office on 14 October, Home Office Ministers and officials have been in close contact with the SIA to discuss how to take this forward. The Parliamentary Under-Secretary of State for Equalities and Criminal Information, who is the lead Home Office Minister for the SIA, has met the SIA representatives. The Home Secretary herself has been in correspondence with the noble Baroness, Lady Henig, about the future.

Ministers have asked the SIA to work with the private security industry and key stakeholders to put together a detailed plan to achieve a phased transition to a new regulatory regime. We do not intend to do this in anything but careful detail. To inform the plan, the SIA started targeted consultations with stakeholders, including industry and law enforcement partners. The police were mentioned, and they are involved in the consultation process. A detail of the phased introduction of the new regulatory regime that will replace regulation by the SIA will be the product. The SIA started this work by hosting an initial meeting with a number of industry stakeholders on 28 October. I understand that this work is progressing well.

In the Second Reading debate on this Bill on 9 November, the noble Baroness, Lady Henig, stated that the SIA had already agreed with the industry,

"a blueprint for the next few years to move to greater industry involvement in the regulatory regime".-[Official Report, 9/11/10; col. 133]

She also quoted from a letter that she had had from the Home Secretary in which she very kindly said that she was happy to accede to the Home Secretary's wish to ensure that,

"any transition to a new regulatory regime is phased in smoothly and takes into account the needs of the industry as well as the priorities of the Government including the devolved Administrations".

To confirm the point made by the noble Baroness, Lady Royall, the Home Secretary has agreed that there should be no significant change prior to the Olympic Games in 2012. That is in line with a number of measures in other areas in which we are staying any kind of change until after the Olympic Games.

My point in all this is that the SIA itself is involved in the work to move towards something that is described as self-regulation by the private security industry but which is a pretty tough form of self-regulation. I will come back to some of the details in a moment. The SIA plan was presented to Home Office Ministers earlier this month for consideration, and on 16 February there was another meeting with Lynne Featherstone to discuss the plan further. We have now considered and agreed that this will form the basis for moving forward on phased transition. I hope I am reassuring the Committee that this process is being done in careful consultation with the SIA and the industry on the basis of trying to ensure, therefore, that we come out with a regime that offers the same degree of assurance of high standards that has already been established.

As a result of the consultation, we are now in a position to give a few more details of the shape of the new regulatory regime, although the Committee will understand that as we are still in discussion-the whole point of the discussions is to get an agreed format between the parties-not all the details have been decided. So far, the agreed proposals will ensure that responsibility for the private security industry is transferred to a new body for self-regulation as soon as that is sensible after 2012-not before it is sensible and not before the Olympics in 2012. No significant change will happen before that.

Primary legislation will then be needed to set up the new regulatory body that will succeed the SIA. We will ensure that provision is included in a future Home Office Bill. Full transition to the new regime should, we hope, be completed by the end of 2013. Again, this is not a rushed process.

Lord Foulkes of Cumnock (Labour)

Would that be a new regulatory body for England or for the United Kingdom? If only for England, what will the situation be in other parts of United Kingdom?

Baroness Neville-Jones (Conservative)

I will come to the noble Lord's point about the relationship with the devolved Administrations. I have it in mind.

The new regime will also see a significant shift of responsibility from individual workers to businesses. That is one of the changes in structure. We believe that that will be efficient and that it will also reduce regulatory costs and burdens. Instead of every single employee having to be registered separately at a cost of something like £250 each, it will be a business paying for the registration. In getting that registration, businesses will be required to show that they meet a comprehensive set of conditions set by the new body.

The industry itself has a strong interest in ensuring that the standards it sets are maintained and that they are high. Clearly, that has to be one of the really important parts of the new regime. Businesses that fail to meet these comprehensive conditions will have their rights to trade in private security removed. There is no reason to suppose that somehow a transition to another regime will by definition, and automatically, result in a lowering of standards. On the contrary, the industry will have a strong self-interest in ensuring that the cowboys are not allowed in and are not permitted to sully the reputation of an industry that is responsible for its regulation. There is a strong incentive actually to take this regime and make it work well.

It is obviously too early to give full details on costs, but we know that instead of more than 350,000 individuals paying £245 each for licences, much of which is currently paid for by the companies that employ them, the new regime will involve fewer than 5,000 companies having to register, giving considerable saving to the industry.

One of the other things that we are doing, however, is to ensure that the impact on smaller businesses is minimised by reflecting business size in the registration fees in the new regime, so that we do not get a situation in which small companies are paying a flat fee which is the same size as very large ones. They will be gradated. There will also be a sensibly phased transition to the new regime, the details of which are still to be worked out. We do not expect all businesses to move to the regime at the same time. Some of the big boys are clearly going to be ready to move at an early stage. Some of the smaller companies will not necessarily be so ready, and they will be given time to achieve the necessary transition. The big ones that have already met the high standards of the approved contractor scheme will be able and willing to move immediately, but we will maintain mechanisms to ensure that smaller companies, which may not be in the position immediately to transition to the new regime, can continue to trade.

Lord Kennedy of Southwark (Labour)

Does the Minister envisage, in the new regime, that the individuals themselves will undertake CRB checks?

Baroness Neville-Jones (Conservative)

Clearly, CRB checks will be relevant. I cannot immediately answer whether they have to be done by the individuals themselves or by their businesses to ensure that they are employing fit and proper people. I would have to write to the noble Lord. The registering of these individuals is another point that worried some noble Lords, who thought that this new method of regulation would somehow allow the bottom end of the industry to have free rein, if I can put it that way. This will not be permitted, because a registry of individuals will also be maintained by the new body to support the needs of the customer and the industry. That will do two things. First, it will ensure that named individuals are known to the regulatory body. Secondly, it will enable those individuals who are of fit and proper standing to move from one company to another with greater ease than would otherwise be the case. Any proposed changes will be subject to parliamentary approval. I thank the SIA for the help that they are giving in moving the industry along to the new regime. We have also asked the SIA if they will take forward the work necessary to ensure the full delivery. This Bill confers an ability to abolish the SIA, but this will be done only at an appropriate time in the transition to the regulatory regime.

Some noble Lords, particularly the noble Lord, Lord Foulkes, raised the issue of the response of the devolved Administrations. Since the correspondence to which he referred, and which I have seen, there have been further contacts with the devolved Administrations, and we are now in consultation with both the Scottish Government and the Northern Ireland Executive. Although it is the case that, on a voluntary basis, both the Scottish Government and the Northern Ireland Executive decided that they would accept the regulation of the SIA, the regulation of the private security industry is a policy decision for the devolved Administrations. It is a devolved matter, which we fully respect, and they will have the opportunity, if they choose to exercise it, to have a different regime. However, I agree with the noble Lord, that, given the nature of the industry, which operates across the country, it would be highly desirable if we could get agreement on a single regime.

Lord Empey (UUP)

I thank the Minister for giving way. The noble Lord, Lord Foulkes of Cumnock, raised this earlier. I declare an interest as a member of the justice committee of the Northern Ireland Executive. The reason why we have a particular issue must be fairly obvious to most Members. We have a lot of people who, sadly, have come from a background where they were, shall I put it, organised, and were able to bring intimidation and pressure and other things to bear. Consequently, we are not talking about precisely the same situation that would exist here, albeit that there are always criminal elements there. The noble Baroness, Lady Henig, asked whether the results of the election in May would make any difference. I think that they will not, because the circumstances that we have had to deal with have a long history and will take some further time yet to work their way out of the system. I do not anticipate any immediate change in the regime following the elections in May.

Baroness Neville-Jones (Conservative)

I understand entirely the point that the noble Lord makes. I would say two things about that. Clearly, it is desirable if the regulatory regime that operates throughout the United Kingdom makes it easy for companies to operate across all three Administrations. It does not follow from that that these regimes have to be identical. Certainly, the Home Office takes the view that if, for regional and local needs, variation is needed, we would want to accommodate that. The object is to get an effective regulatory regime that does not put obstacles in the way of companies operating across the country but permits local variation, if it is necessary.

Lord Foulkes of Cumnock (Labour)

I know that there are other topics that we need to discuss and I apologise for intervening, but it looks as if we are moving inevitably towards a separate regime, with a Scottish and a Northern Ireland Security Industry Authority operating as the Security Industry Authority in the UK does at present and a move to a completely different regulatory regime in England. Is that not absolutely daft? It will create huge problems for the security industry. Why are we doing it? Would it not be better to accept what the noble Baroness, Lady Henig, the Security Industry Authority, all the people in the security industry and the Scottish and Northern Irish Parliaments have said, and stick to the present arrangement? Why are the Government so determined to change, when no money is going to be saved and no advantage will be given? Also, I hope that at some point the Minister will answer the question asked by my noble friend Lord Kennedy. If it is so important to keep the authority going for the Olympics, does not that undermine the whole argument for changing at all?

Baroness Neville-Jones (Conservative)

To take the noble Lord's last point, I do not think that it follows that, because one decides not to make a change before a big event, there is no case for change at all. It does not follow at all. It is a sensible thing not to institute change immediately before a big event. However, it does not follow that no change is possible or desirable.

On the noble Lord's other point, I think that he is jumping to conclusions. It is not our impression that the attitude of the Scottish Government is as negative as he fears it may be. We are in consultation and I do not think that what I said indicated that we were suddenly leaping to entirely different regimes. We are going to have consultation; we believe that it will be possible to have a national regime. We may need, and it may be fitting, to have a certain amount of local variation. However, as I say, that is an area that is still being consulted about. We will work for a sensible outcome and we want one that fits the needs of all UK Administrations.

Some noble Lords raised the issue of wheel clamping. I should mention it briefly. As was rightly mentioned, the Government are taking measures to regulate this area, which include the abolition of the right to clamp and tow away on private land. This legislation will be put into effect through the Protection of Freedoms Bill. The ban will end the abuse by devious firms and their employees who prey on motorists with signage, excessive fees and unscrupulous towing. That regime is going to come to an end, which obviously means that the power does not need to be included in the new regulatory regime.

The noble Baroness asked whether we were also going to cover parking tickets. That is not an SIA issue. It is regulated by the Department for Transport and the DVLA, so it lies outside the scope of this piece of legislation.

The SIA had already proposed the move to a more self-regulatory model before the Government took this issue on. It is in the spirit of building on that that we want to proceed. If the amendment were accepted, it would create an administrative anomaly that would deliver, in our view, no benefits to the public, even after the SIA had successfully implemented its plans to transition to the new regulatory regime. We are endeavouring to work in close co-operation with the existing authority on a transition to a regime that we hope the authority itself will feel fulfils the job, so I hope that, on that basis, the noble Baroness will feel able to withdraw her amendment.

Lord Whitty (Labour)

My Lords, before my noble friend decides what to do with this amendment, I should like to ask a question. I understood the noble Baroness to say that, at the final stage of this, we will need further primary legislation. If that is the case, I do not understand her last point. Why do we need to include the SIA in this Bill if we are going to deal with it later in primary legislation?

Baroness Neville-Jones (Conservative)

Having removed the basis for the present regime, we obviously need to have a basis for the new regime.

Baroness Royall of Blaisdon (Labour)

My Lords, I am utterly perplexed at the end of this very good debate. We have a regime which was introduced seven years ago at the behest of the police and the industry itself-the good elements of the industry-as well as Parliamentarians. The Minister herself has said that standards have been raised as a consequence of this good regime; it is working well throughout the United Kingdom. Usually, when there are demands for a regulatory body to be disbanded, it is because the industry itself wants it to be disbanded or because of an exorbitant cost. It seems to me that there is no cost in this; the industry is very happy to meet the bills and is content with the present situation. It looks very much as though the Government are tinkering around the edges-forgive me if it sounds rude-and they are tinkering with a system which is working well and that everybody is content with. I simply do not understand why we are dealing with this issue now.

I recognise, as the noble Baroness has said, that the industry is content to have a phased transition, but it seems to be a complex way of going about things. I do not feel at all reassured by what she has said this evening. The point made by the noble Lord, Lord Ramsbotham, about the interaction between the security industry and the prison service- which, if I had thought about it, I would have been dismayed and concerned about-makes me even more concerned about the proposal before us today. The noble Baroness has talked about the need for transition and has said that consultation is already taking place. She has also said that primary legislation will be needed for a new body, so I am slightly perplexed as to what we are doing now. Notwithstanding that, I am content to withdraw my amendment now, but I will certainly bring back an amendment on Report.

Amendment 59 withdrawn.

Lord Judd (Labour)

My Lords, there are hazards in going away from London in the middle of a Bill. Rapid developments sometimes change the situation. I rise to move this amendment in the knowledge, which I should share with the House, that-

Baroness Royall of Blaisdon (Labour)

We were not planning on proceeding further tonight.

Lord Judd (Labour)

I am so sorry.

House resumed.