End of the road for development agency?

The East of England Development Agency is often criticised for a lack of impact on the region's economy. In the week agency chief executive David Marlow announced his departure, Business editor Chris Starkie asks if it is time to call time on regional development agencies.

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Back in 1997 the idea of regional development agencies probably seemed like a good idea.

They were John Prescott's concept - an attempt to breathe fresh life into stagnant parts of the English economy.

For years there had been complaints that development agencies in Wales and Scotland had been attracting jobs and investment away from England.

The Welsh Development Agency, for instance, developed an uncanny knack of being able to persuade Japanese businessmen that the Rhondda Valley was a better location than say Dunstable or Milton Keynes, usually with the help of a big grant.

The solution seemed simple - give the English regions their own regional development agencies and it would be a fair fight for inward investment and regeneration cash.

Of course creating the agencies and their new boundaries caused its fair share of problems as England does not easily carve up into nine regions.

In the end the traditional counties of East Anglia - Norfolk, Suffolk and Cambridgeshire - were bolted to the home counties of Hertfordshire, Bedfordshire and Essex to create the east of England.

It was decision which appeared to have been taken with minimum consultation and was delivered as a fait accompli.

But it was a far from satisfactory solution.

There are few who would argue the present structure, which puts Milton Keynes in the south east region and Thurrock in the east of England, makes much sense.

Its proponents argue putting the six counties together gives them critical mass. That is an area with the population of 5.5 million acting together can pack a more powerful punch. It can be promoted on a global stage with a common message.

It's a compelling argument - to borrow an old Norwich Union advertising line - together we are stronger.

But is that actually the case? And does Norfolk and Suffolk get a better deal by being part of the east of England?

The answer seems to be no.

The idea behind creating regional development agencies was to give regions their own voice and heralded the start of a move to regional government.

But the trouble is that the east of England has been dealt the poorest hand.

Look at the figures. One North East - the north-east regional development agency - serves a population of 2.5 million, less than half of that of the east of England.

But its budget is twice that of Eeda's - £266m compared with £139m. The agency is so awash with cash it has reportedly spent more than £5m on a television advertising campaign.

It's not the only region getting a better deal.

Take Yorkshire Forward. It gets £325m even though it is a smaller region than the east with a population of 5 million - 500,000 less than the east.

Its neighbour the north-west region receives more than three times the funding of the eastern region, £452m, with a population less than twice the size, although finding out more information proved difficult as when I called the agency its entire press team was on an away day.

The reality is that the east gets a smaller budget than any of the regions and is able to do less.

Funding of the different agencies is calculated through a complicated formula, but essentially comes down to economic performance and levels of deprivation.

Norfolk and Suffolk both have higher than average levels of deprivation and economies below the national average, so should be entitled to a decent slice of the RDA cake (which is incidentally around £2.2bn a year).

But the addition of Cambridgeshire, Hertfordshire and Bedfordshire, improves the performance of the region's economy to such an extent that much of the cash heads elsewhere.

Eeda itself has been lobbying for a greater slice of the cake, although in public it says it is happy with its funding.

And in its defence Eeda has succeeded with other partners in securing some important projects for the region, most notably the East Port development at Yarmouth.

It has also invested the money it does get in a range of projects such as the Hethel Engineering Centre and the new creative industries hub in the former Anglia Television studios in Norwich.

Other projects have included initiatives in some of Norfolk's market towns and work to bring about the renewables centre at Lowestoft.

Eeda also points to work it has done with migrant workers and its plans to relaunch business support service Business Link as proof that it can make a difference despite its small budget.

A small budget it may be now - the signs are that the situation is likely to get worse.

The government's comprehensive spending review, which is now under way, is tipped to take more cash away from the east to give to other parts of the country.

And while the eastern region's economy is performing above the national average, it is in danger of slipping backwards, a situation sure to get worse if more cash is diverted elsewhere.

If Eeda is accused now of having a limited impact on the region, then with a smaller budget the situation is not likely to improve.

That political pugilist John Prescott may have given each region its own development agency and the chance to spar with each other, but the trouble is that Eeda is a lightweight up against some pretty heavyweight opposition.