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Observatoire de la socit britannique

N102011

Empowering the English Regions: Assessing NewLabours Institutional Arsenal

Houari Mired

Abstract

The commitment to develop a bottom-up approach in terms of regionalpolicy management in the English regions under New Labour went handin hand with the introduction of decentralized institutions. Persistentintervention has not prevented the concentration of economic problems

within the same areas. However, it would be misleading to attribute this

uneven economic development mainly to economic factors. In fact,notwithstanding the negative consequences of the transformation ofproduction systems, other variables, notably indigenous governancepractices, should be emphasized. This has become a highly contentiousand much debated question. Relying on a case study approach with aparticular reference to the North East of England, this paper draws uponthe institutional changes adopted since 1999, while analyzing the impactof the initiatives that were deployed in the English regions with theintention of promoting innovative projects.

Key Words: Economic Development, New Labour, England, Devolution,

Governance, North East England. Single Regeneration Budget, Regional EconomicStrategy, New Regionalism.

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Introduction

Regional economic disparities in the UK have dogged successivegovernments for more than a century. The persistence of theseinequities has triggered a series of public interventions intended to alterthe impact of uneven economic development. As a heartland of theIndustrial Revolution, the UK has been particularly concerned with thisissue, because industrial decline left certain areas in a lagging position

which made it almost impossible for them to become economicallycompetitive.1 The persistent disparity between a well-off south, and aless-favoured north which has therefore remained highly dependent onpublic subsidies, has continued to sustain a regional divide which has

posed a problem for social equity in the UK.While this economic context has thrust the regional question to

the centre of the political debate, most successive governments, once inpower, did not show a genuine commitment to the creation of ahierarchical territorial framework in which the regions could have theirsay. This situation continued to fuel the debates over how best toorganize the territorial representation of the English regions and thedegree to which such framework would contribute to economicdevelopment.2 Even if the major political parties recognized thenecessity to provide the regions with an appropriate institutionalinfrastructure, the regions continued to lack institutional identity, leaving

the English question still unanswered.

It is worth noting that so far, New Labours regional agendaseemed the most ambitious, as it foreshadowed the allocation ofresources likely to provide the English regions with enough powers toinfluence decision-making. This article provides an analysis of how theEnglish regional question was dealt with between 1997 and 2010. Indoing so, the following sections investigate the institutional changesimplemented by New Labour and how they affected regionalgovernance. The functional decentralization operated by the Blairgovernment and the project to transfer substantial autonomy to the

English regions through a better role of the newly introduced regionalassemblies represented a novel step in the history of intergovernmentalrelationships. However, the effectiveness of the reforms seemsquestionable, as governance has remained contested. Overall, the mainaim is to shed light on the complexity of public policy-making in theEnglish regions and how the institutional innovations impacted on the

1 McCrone, G., 1969.2 Pike, A., Tomaney, J., 2009; Gertler, M. S., 2010.

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delivery of regional economic development, the appropriateness of thestrategies promoted and the role played bynew regionalism trend in

this process, with a particular focus on the North East of England.

The Legacy of the Past

New Labour inherited a tradition in which the idea of theregion as a territorial unit was relatively unfamiliar both in the UKinstitutional context and English imaginary. The establishedclassifications of shires and counties are still in operation. The region,as an administrative tier, was consolidated in the period following the

introduction of the Government Offices for the Regions (GOs) by theMajor government, an initiative that brought changes to theadministrative divisions in England by adding Cumbria to the North

West region and thus clarified the boundaries of the English regions.

Thatchers institutional legacy strengthened the dependence ofthe English regions on Whitehall departments in terms of economicdevelopment. In addition to adopting a radical approach in themanagement of regional policy throughout the 1980s, the Conservativesdecided to invest considerable resources in projects favouringentrepreneurship, and restricted the allocation of public subsidies toparticular sectors, mainly those involving the private sector. Similarly,

this era witnessed the introduction of a growing number of quasi non-governmental organizations (quangos), and ad hocagencies, to deal withregional development initiatives. This situation did not provide theregions with an importance that would have enabled them to influencedecision-making.

As Prime Minister, John Major recognized the importance ofintroducing a regional tier of government. The establishment of theGOs was intended to fill the institutional vacuum and represented anovel step which significantly altered the institutional landscape in theEnglish regions. This phenomenon was partly triggered by the growing

debate over the devolution of power to Scotland and Wales. At thesame time, the European Commission instructed the centralgovernment to create regional institutions for the governance of EUstructural funds. The creation of the GOs, according to the Majorgovernment, was intended to bring Whitehall closer to the regions andimprove their role.3 It is important to note that these institutionalinnovations led to the multiplication of collaborations between

3 Department of Environment, 1993.

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Whitehall and the English regions. This was in fact the first time thatthere was a recognition of the English regional question by the

Conservatives in power since 1979; a project which has been postponedindefinitely ever since. These changes led the GOs to emerge as the keyregional institutions in charge of the delivery of central governmentpolicy. This was the main factor in the continuing perception that they

were the regional arm of the central government and thus did notembody regional expectations.4

New Labours New Regional Plan

The 1997 Labour Party manifesto took up all the aspects ofregional issues in the UK and unveiled an enthusiastic plan for theEnglish regions. In addition to making regional issues a genuine priority,the Labour manifesto underlined the necessity to implement a bottom-up approach, thus encouraging civic engagement while criticizing theConservatives for creating a tier of regional government throughquangos and government regional offices.5 Gordon Browns economicadvisor, Ed Balls, insisted that New Labours regional policy wascompletely new and emphasised its bottom-up structure.6

In the mid 1990s, leading Labour leaders such as Jack Straw andJohn Prescott went up and down England and were very active in

advocating the Labour position.7 As a deputy Labour leader, JohnPrescott commissioned Bruce Millan, a former European Union (EU)regional policy commissioner, to chair the Labour Partys RegionalPolicy Commission (RPC). The conclusions of the RPC highlighted theneed to establish Regional Development Agencies (RDAs) in everyregion to promote regional economic development, and make theseagencies accountable to the newly established regional assemblies.8 Butbecause of the difference in regional attitudes towards this project, NewLabour suggested holding a consultation in the regions where popularconsent was most visible. The Major government showed hostility toLabour proposals and denounced their purely bureaucratic nature.

The first Blair government preferred to bring forward afunctional regionalization and introduced the RDAs in the Englishregions. It is worth noting that their establishment in 1999 did not solely

4 Tomaney, J., 2002.5 Labour Party, 1997, p. 34.6 Balls, Ed., 2000.7 Labour Party, 1995.8 Regional Policy Commission, 1996.

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reflect the will of the Blair government but was also a response to thepressures exerted by both some local authorities and the private sector.

The main role of the RDAs is to foster economic development,promote investment while working in close collaboration with a largenumber of partners, notably the private sector, local authorities, the

voluntary sector, unions and academics who have also been involved inthe management board.9

Another important mission that the RDAs were given was tochange in a radical way the regional administrative framework anddecrease the degree of fragmentation as well as duplication whichcharacterized public policy. That is why further changes consisted ofabsorbing the quangos and other bodies such as English Partnerships,Rural Development Commission, Regional Inward InvestmentOrganisations, Regional Supply Chain Offices, and other teams thatinitially operated within the Government Offices, namely the SingleRegeneration Budget and Innovation and Enterprise.

The RDAs began operation with a smaller range of powers. Thiswas mainly due to interdepartmental conflicts, as ministries werereluctant to transfer the prerogatives that were supposed to beincorporated in the RDAs functions. This put them in a position of aprovider of nationally-defined policies rather than a genuine regionalindigenous institution. The budget they were allocated was smallcompared with the initiatives they were expected to implement, and

investments in some projects needed government approval. In thisrespect, the limited financial resources as well as the lack of flexibility interms of spending made it difficult for some RDAs to meet governmentobjectives.

Because of these constraints, the government decided toincrease their budget, widen their financial autonomy and create a cross-departmental budget without enabling them to influence the regionalprogrammes they delivered.10Tony Blairs long-standing Chancellor ofthe Exchequer, Gordon Brown, believed firmly in the role of the RDAsin stimulating employment, enhancing the development of theknowledge-based economy and overarching the governance of the most

controversial initiative: the Regional Economic Strategy (RES). Whilethe significance of this measure and its instrumental value-addedrepresented the thorniest issue, the delivery of these two priorities wasintended to involve a wide range of regional partners in a newinstitutional landscape characterized by the adoption of newgovernance practices.

9 Department of the Environment, Transport and the Regions, 1997.10 Tomaney, J., 2000.

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Promoting Democratic Renewal in the English Regions

Deepening democratic renewal and consolidating partnershipwere the key objectives of TonyBlairs new regional policy. For thisreason, the most widely used conceptgovernancecame to describe anew way of conducting policy-making. Governance is above all atheoretical framework and like all such frameworks, it is subject tomultiple usages implying contentions, inconclusiveness andambivalence. Taking these together, I would link governance withpluralist approaches which highlight the necessity to involve variouspartners in decision-making. Nevertheless, the works of some scholars

have shed more light on the subject. Rhodes described governance as anew process of governing which consists of a shift in the rules of thegame in which the state plays a different role.11 Similarly, Pierre remarksthat, in addition to being a theoretical framework of coordination,governance alludes to the adaptation of the state to external changesthat affect the normal process of decision-making.12 Therefore, the actof governing is no longer a one-way traffic in which the stateautonomously shapes decision-making. In this respect, partnershiprepresents the guiding philosophy and has become the principle for thedelivery of good governance.

It should be pointed out that a form of governance has, to acertain extent, been in operation in the English regions following theadministrative regionalization promoted by the Major government. Infact, despite the initial malfunctioning of the GOs, due to issues mainlylinked to their close identification with their managing authority13 and toa lack of coordination between the different ministries, the tendecentralized institutions started to collaborate with the local authoritiesand other organizations involved in local and regional projects.14

The newly introduced initiative the Single RegenerationBudget (SRB) was to be managed by various ministries, notably theDepartment of Environment, the Department of Trade and Industry

(DTI), the Department of Work and Pensions (DWP), the Home Officeand the Department for Education and Skills (DfES) along with theparticipation of a wide range of partners, represented an important step

11 Rhodes, R. A. W., 1997.12 Pierre, J., 2000.13 Performance and Innovation Unit (PIU), 2000.14 House of Commons Environment Select Committee, 1995; Department of

Environment, 1996.

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towards the opening up of the decision-making process. While theRDAs had to take a leading role in this institutional landscape15 and

were, according to the DTIs White Paper on Enterprise, Skills andInnovation, expected to have an active role in realizing the governmentsindustrial policy,16 initial accounts highlighted the strong dependence ofthe RDAs on the centre17 and their inability to manage projectsautonomously, along with a lack of resources.18

Tomaney identified tensions between Graham Hall, thechairman of Yorkshire Forward, and the central government. GrahamHall raised the challenges linked to financial accountability arrangementsand criticized the control culture of the civil service which was counter-productive and less likely to enable the RDAs to meet the anticipatedtargets.19 The Labour government aimed to consolidate their capacity todeal with economic problems by increasing flexibility and committingministries to consult and collaborate extensively with one another. JohnPrescott and Gordon Brown played an instrumental role in introducingnew changes that sought to leapfrog the bureaucratic obstacles hithertoidentified while granting them greater accountability and reducing

Whitehalls interference in their work. Although Gordon Brownclarified his vision and made a pledge to encourage local accountabilityto contribute to the prospects and the active role of the RDAs,20 hedistanced himself from engaging in the debate about the elected regionalassemblies, leaving John Prescott as the main spokesman.

In terms of regional policy, TonyBlairs first term was devotedto the implementation of functional regionalization. The ElectedRegional Assemblies (ERAs) project was the following step. TheRegional Development Agencies Act 1998 made the regionalassemblies, initially introduced in the English regions on voluntary basis,directly accountable to Parliament and the RDAs should consult themin formulating the RES. These changes raised the prospect of a morepromising future for the English question, as the assemblies embodiedthe deep-rootedness of democratic renewal that New Labour seemed tobe aiming for and to which the English regions aspired. Whether thebacking for this project was genuine remains a separate question.

The introduction of regional assemblies was the most importantof governments proposals, because these institutions were intended to

15 Morgan, K., 1999; Harding, A., Wilks-Hegg, S., Hutchens, M., 1999.16 DTI, 2001 (a).17 Jones, M., 2001; Benneworth, P., 2001.18 HM Treasury, 2000.19 Tomaney, J., 2002, p.724.20 HM Treasury, 2004.

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enable the participation of regional and local actors in the delivery ofpublic policy. The region of Yorkshire and Humberside pioneered the

implementation of this process through the creation of the Yorkshireand Humberside Regional Assembly (YHRA) in 1996. This assemblyencouraged the formation of alliances by involving a large number ofpartners to tackle the programme set out in its agenda.21 However, soonafter the introduction of this assembly, its managing director RichardPenn highlighted its inability to influence decision-making. In itsscrutiny of the governments proposals, the Constitution Unitwashighly critical of what appeared to be the wholly top-down approach tothe introduction of the regional assemblies and recommended acomplete rethinking of the nature of the future relationship betweenthese assemblies and the local authorities as well as the funding scheme.

The White Paper Your Region, Your Choice, published in 2002,anticipated that the regional assemblies would be empowered throughtheir involvement in the management of key policies, notably economicdevelopment, housing, transport, art and culture, health, ruraldevelopment, planning and the environment.22 Despite highexpectations, these announcements were relatively modest, and notreally new, since they had previously been unveiled in formerproposals.23 When these assemblies were actually in place, they graduallybecame involved in the programmes initiated by the RDAs;24 however,they found it difficult to influence decision-making insofar as theirrelationship with the RDAs was rather passive. Their role consisted offollowing the agenda that the RDAs had to apply. However, theassemblies multiplied their partnerships with a wide range oforganizations such as the Confederation of British Industry (CBI),

Trades Union Congress (TUC), Chambers of commerce, the voluntarysector and many other associations.

Building upon this relatively modest success of the assemblies,the Blair government, during its second mandate, planned to extendtheir powers. Despite a rather disadvantageous position, the assembliesdid foster networking and collaboration, and played a constructive rolein working with the GOs and the RDAs to influence and monitor the

achievement of collective regional goals. However, collective executivepowers gave rise to tensions and ambiguities over their responsibilities.The architect of this project, TonyBlairs Deputy Prime Minister,John

21 Yorkshire and Humber Regional Assembly, 1998; Government Office for Yorkshireand the Humber, 2004.

22 Cabinet Office/Department of Transport, Local Government and the Regions,2002.

23 Jeffery, C., Mawson, J., 2002.24 Pearce, G., Ayres, S., 2007.

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Prescott, drew up new responsibilities which enabled the assemblies toparticipate gradually in sub-national policy-making. Meanwhile, Gordon

Brown provided them with the funding of 15 million spread over fiveyears. While the assemblies were expected to have more power if votersspoke out for this project, the resounding no vote received in thereferendum held in the North East put an end to the march ofregionalism in the English regions.25

In What Sense Indigenous Governance in the North East?

When New Labour created the RDAs, the management of the

SRB launched participation among a wide range of actors at the regionallevel. The RDA for the North East of England, One NorthEast and theGovernment Office for the North East (GONE) brought on board

various partners, notably the local authorities and the private sector andmade it clear that the orientations of the SRB would be in line with localand regional expectations. It is important to recognize, however, thatthis region had a particular history and a specific political tradition26

which meant that a great deal of effort would be required from GONEto build trust. The relationships between this region and the centralgovernment remained poor because of the fragmentation of publicpolicy-making. In this respect, the SRB represented a good opportunity

for GONE to appear as an institution that embodied regionalexpectations.

Given the high level of unemployment and worklessness affecting particularly the category of the unemployed who can neverexpect to have a job in the North East, the principal aim of the SRB

was to improve employment prospects, tackle social exclusion andpromote economic growth. From 2001, One NorthEast, along with theother RDAs, was given more flexibility in the delivery of this project.

This prompted some GOs to adapt their practices to those of theRDAs, particularly in the governance of Objective 2 of the EUstructural funds granted to the North East for the programming period

2000-2006. Similarly, GONE was keen to align processes and systems tothe requirements of One NorthEast, as a senior official within theinstitution acknowledged.27

25 Sandford, M., Hetherington, P., 2005.26 Anderson, J. J., 1992; Lancaster, B., 2007.27 Interview with Peter Smith, Team Leader Strategy and Communications, European

Programme, Government Office for the North East, Newcastle upon Tyne,February 24, 2005.

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In fact, despite some initial problems,28 GONE, together withOne NorthEast, the City Councils, the private sector and other partners,

managed to build a consensus as to the sectors and the projects thatshould be funded. To a significant extent, the SRB enabled thetransparency and the flexibility that came to characterize public policy-making in the English regions as well as a rapid recognition of local andregional needs thanks to a diagnosis built upon cooperation andconsensus. However, the management of the SRB was criticized forcreating competition that some localities were unable to manage29.Moreover, the regional initiatives had to fit within the requirementsdefined by the DTI and GONE, and while some localities were at anadvantage, others were discouraged from applying for funding,particularly those who found it difficult to put up with the frequent

changes of the SRB requirements.30

In this case, it is important todifferentiate between two types of partnership, the first one beingautonomous and regionally rooted and the second being stronglyinfluenced by the central government. Most of the partnerships in theNorth East were of the latter type, which calls into question theostensible opening up of decision-making. The promotion ofgovernance practices seem therefore contested.

The key responsibility of the RDAs was to draw up a RegionalEconomic Strategy (RES) and identify the projects to be put forward.One NorthEast mapped out a RES which prioritized support to theknowledge-based economy. Considerable resources were invested inprogrammes favouring business incubation and clustering. Thisorientation was mainly encouraged by EU support to innovation, as asubstantial share of the European Regional Development Fund (ERDF)

was allocated to this sector. Investments in biotechnology and thepharmaceutical industry were employed to help innovation to take rootin the North East. An important network comprising the Small BusinessService (SBS), One NorthEast, GONE, Business Links, UK BusinessIncubation (UKBI) and a number of local authorities, notably theNewcastle City Council, was created to promote entrepreneurship andinnovation. This orientation, adopted by One North East when it wascreated, was expressed through the RES Unlocking Our Potential31

which aimed to strengthen the regions ability to innovate and competenationally and internationally, and build a diversified knowledge-driveneconomy. Certain innovative Small and Medium Enterprises (SMEs)

28 House of Commons Environment Select Committee, 1995.29 Mawson, J., Tilson, B., 1997.30 Rhodes, J., Tyler, P., Brennan, A.,2003.31 One NorthEast, 1999.

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were given special funding by the Treasury which also providedpathways to apply directly for funding to the ERDF.

It is worth noting that none of the decentralised institutionswere elected or really had any grass root representation. For this reason,their legitimacy in the representation of local and regional priorities wasoften challenged. The decision of One NorthEast to prioritise thefunding of innovation was not made entirely independently, but wasclearly hand in glove with the government orientations. The DTIadopted innovation as the central term in its program for economicgrowth in the English regions.32 All the material produced by OneNorthEast for the RES consistently echoed this centrally-driventerminology. For this reason, during this period, increasing debate arose,reflecting a growing concern about the appropriateness of the RES, thusquestioning the legitimacy of the initiatives carried out. In response tothese problems, the government published a White Paper on Enterprise,Skills and Innovation33that emphasized the governments commitment topromote an integrated innovation policy while widening the shares ofintervention, as well as increasing the budget of the RDAs.34

As further consultations were carried out, One NorthEastdecided to update its RES. The new strategyRealising Our Potentialclaimed to be more integrated and built upon cooperation and trust. 35

The new RES continued to emphasize the need to promote anentrepreneurial culture and to provide businesses with skilled workforce.

The key initiative that emerged from this new willingness ofmobilization and networking was the Northern Way which broughttogether partners, namely Yorkshire Forward (the RDA for Yorkshireand Humber), the North West Development Agency and OneNorthEast to launch common actions intended to promote innovationand technology. The aim of the programmes funded by this initiative

was to support market-led innovation across the North by investingextensively in research areas such as regenerative medicine andmolecular engineering.36

The result of these initiatives in combination has been asubstantial restructuring of the regional economy and the image of the

North East, particularly through numerous ambitious and innovativeprogrammes that contributed to the growth of SMEs and business start-ups. Newly established business incubators, notably those set up in the

32 DTI, 1998.33 DTI, 2001 (b).34 HM Treasury, 2000.35 One NorthEast, 2002.36 Moving Forward, The Northern Way, 2004; One NorthEast, 2005.

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former mining localities such as Ashington and Hartlepool gave theopportunity to young entrepreneurs to take advantage of the favourable

conditions and the facilities. Despite all these successes, a question arisesas to the extent to which these projects contribute to make the NorthEast the capital of innovation given its relatively poor economicperformance compared with the rest of the UK regions.

An appraisal of the limited prospects of this restructuring by theOECD raised serious doubts about the appropriateness of the strategiesdeployed by the decentralised institutions. The dependency of the NorthEast on traditional sectors such as manufacturing and the chemicalindustry has remained largely unchanged and thesesectors are as vital toits development today as they were half a century ago. This assessmenthas been confirmed by studies that concluded that the aspirations of theNorth East, as they have been set out in successive RESs, were unlikelyto be reached.37

The orientation adopted in terms of public policy in the NorthEast was far from unanimous, and One NorthEast was consistentlycriticized for its lack of responsiveness. This institution did not seem toencourage a calm climate of governance to which local and regionalactors could contribute. The aforementioned OECD review devoted tothe North East recommended that:

The debate on economic development strategies needs tobe informed by critical assessment of the regions existingstrategies, in light of robust analysis of the outcomes beingachieved, and a good understanding of the dynamics of theregional economy. The regions economic developmentstrategies need to be strongly grounded in current realities.38

Despite excellent research programmes which have sought toexpand the base of production through active collaboration betweenregional industries and universities,39 the region is still highly dependent

on the traditional chemical industry as its major cluster strength.

40

Despite the rapid development of the service sector and the investmentsin R&D, the traditional industries still represent up to a third of theregional economy (see map1).

37 OECD, 2006.38Ibid., p.171.39 Benneworth, P., Charles, D., 2005.40 OECD, 2008.

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Map 1: Industrial Production in the UK (GDP per Region)

Source: HM Treasury, Productivity in the UK The Regional Dimension, London: HerMajestys Treasury, 2001, p. 20.

One of the more questionable aspects of the successive RESs, as

set out by One NorthEast, was its consistent reflection of thegovernments orientation which claimed to promote the development ofthe knowledge-based economy when in fact a survey of spending inR&D reveals the governments low investment in the North East (seefigure 1).

Whatever the outcome of these projects, the decentralizedinstitutions clearly played an instrumental role in attracting subsidies, butultimately failed to achieve their larger targets. While the actions ofdecentralized institutions in the post-devolution era have often beenpresented as exemplifying the new regionalism trend, one may

wonder whether this form of regionalism has, in any sense,fundamentally altered the regional dynamic, at least in the North East.

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Figure 1: R&D Spending in the UK, 2000

Source: HM Treasury, Productivity in the UKThe Regional Dimension, London: Her

Majestys Treasury, 2001, p. 23.

From Old to New Regionalism: Discursive or Real Change?

The manifestation of regionalism was long linked to theworsening of economic conditions in the deprived regions. Whileeconomic hardship contributed markedly to the outbreak of historicstrikes up to the early 1980s, which characterized the old regionalistmovement, a different regionalist trend, known as new regionalism,emerged during the 1990s. Mainly focused on economic concerns, new

regionalism highlights above all the adaptation of the regions both toglobal economic conditions and to the political agenda emanating fromthe centre.41 In this new orientation, the peripheral regions, particularlyless favoured ones such as the North East, represented by decentralizedinstitutions, no longer consistently oppose the governments initiatives.Instead, they have adapted their discursive practices and taken on thegovernments orientations, thus reducing regionalism to a merelyeconomic phenomenon and bearing out Christopher Harvies famousdescription of English regionalism as the dog that never barked.42

Most RDAs, notably One North East, insisted on the value theirprojects added to the restructuring of their regions, thus, repeatedlyhighlighting their contribution to endogenous investment andunderlining their adaptation to international competition. Discursively,then, the RDAs have, without doubt, embodied the new regionalismtrend which tends to give the regions an image of dynamism regardlessthe reality. One of the guiding assumptions of the RDAs was that theyprovided the English regions with an exposure both at the national and

41 Lovering, J., 1999.42 Harvie, C., 1991.

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the international level, but a comparison of the discursive representationof their activities with the actual value-added to economic development

raises serious doubts.The North East development agency, One NorthEast, has

placed a consistent emphasis in its communication of the knowledge-based economy to the restructuring of the regions economy. A widerange of regional plans have emphasized the impact of businessincubation, clustering and biotechnology on economic growth and onjob creation in the North East.43 While the aim of these strategies,particularly as part of the larger Northern Way, was to bridge theeconomic divide between the North and the other English regions, theNorth East was found to be unable to reach the targets set out in itssuccessive RESs. The hard-hitting OECD review revealed the obstaclesthat this region was confronted with and highlighted the importance ofthe traditional industries as well as the limited capacities of the region torespond to the orientations set out in the RESs.44

During the launch of the OECD review in Newcastle, JonathanKings, one of the leaders of the review, made it clear that:

ICT and Biotech sectors do not feel appropriate for thissort of economy, but the manufacturing sector is still animportant part of the economy, and we think there is an

enormous productivity gained from the manufacturingsector, and that this should be a priority to buildeconomic development.45

In many respects, the institutional discourse about regionalismand economic development is undermined, if not contradicted by thereality. Moreover, the endless multiplication of regional action plans didnot help these institutions to promote long-term economic strategies.

The discourse of new regionalism, then, seems to have created at leastas many problems for governance and economic development as it has

solved and overall, serious doubts have arisen over its legitimacy andeffectiveness.

43 ODPM, 2003 (a), 2003 (b), 2006; One NorthEast, 2006.44 OECD, 2006.45 Speech made by Jonathan Kings, OECD Consultant, at the launch ofOECD Report

into Newcastle and the North Easts Regional Economic Prospects held in Newcastle, July21, 2006, comments recorded and transcribed by the author.

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Conclusion

This paper has framed the importance of indigenous governancefor the delivery of an effective regional economic development policy.By acknowledging that the less favoured regions required more publicsubsidies, this paper highlights that a myriad of experiments and novelmethods intended to improve the economic aspects were deployed so asto put the region at the core of competition and trigger endogenousgrowth. Substantial budgets have been devoted to the promotion ofknowledge-based economy projects that led to the creation of businessincubators and clusters in the North East. But longstanding interventionhas not reached the anticipated targets and failed to reduce the

persistent uneven economic development within the lagging areas.Yet, this paper also shows that there has been a temptation to

suggest that the support to the knowledge-based economy willineluctably lead to the restructuring of the regions. Whether this hascontributed to a long process of change has to be proved, as evidenceshows that the accuracy of this emphasis is confronted with thepersistent lagging position of the less favoured regions. In the same

vein, rhetorical commitments powered bynew regionalist trends arechallenged by the economic record of these areas. This poorperformance poses a significant challenge to the discourse of newregionalism and its enthusiastic rhetorical claims.

Nonetheless, the debate on the English question gainedconsiderable momentum during the second half of the 1990s andprompted New Labour to introduce a new institutional landscape. Butbecause of the manner of their implementation, these long-anticipatedreforms in fact disconcerted the regional players while ultimately failedto bridge the economic divide. These political missteps left theinstitutional landscape of the English regions relatively unchanged fromthe pre-devolution setting. Only the former quangos were able to carveout a stronger position within a new administrative framework.

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