The UK’s newly installed coalition government has invited business and local authorities to come forward with proposals for new local enterprise partnerships to replace the current regional bodies that look after economic development and investment promotion.

In its five-year policy document, detailing plans for its term of office, the Conservative-Liberal Democrat coalition stated: “We will support the creation of local enterprise partnerships – joint local authority-business bodies brought forward by local authorities themselves to promote local economic development – to replace regional development agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”

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The coalition, led by prime minister David Cameron, took office in May after elections resulted in a hung parliament.

Local support

Business secretary Vince Cable said that RDAs in the south of England were likely to get the axe but RDAs that had local support, such as Advantage West Midlands, One North East and Yorkshire Forward, were more likely to survive the changes in a revised form.

Although firm details are limited at this stage, London’s RDA will be ring-fenced if previous Conservative promises are adhered to – much to the annoyance of the regions.

“The [London Development Agency, or LDA] is different from other RDAs,” said a Conser­vative party statement released prior to the election. “It is funded centrally, but run by the elected mayor. For this reason we believe it is for the mayor and not Whitehall to determine the future of the LDA.”

In this same statement, the party called RDAs “the remains of [the previous government’s] failed experiment with regional government” and pledged to “end the counter-productive competition overseas between UK trade and investment and English RDAs”.

Responding to a question posed by fDi Magazine at a campaign stop at a London business park in April, Mr Cameron said of his intentions for the RDAs: “The RDAs have been completely overblown in recent years – they’ve been given housing powers, planning powers, transport powers – and we think those should be stripped away first of all.

“The second thing is we think it should be for the local area to decide: if the local councils want to come together to form their own enterprise partnerships based on regions that people identify with, rather than regions such as the south-east that no one really does, then they should be able to. But if those local councils should decide that – as in the north-east – they like the RDA and they want to keep it, then they should be able to do that.”

RDAs that survive will do so with drastically reduced budgets, as the government seeks to slash the UK’s budget deficit and make a promised £6bn ($8.75bn) spending cut. Chancellor George Osborne said RDAs will have to reduce so-called “lower-value spending” by £270m – but what that means in explicit term is not clear.

“We do not yet know which individual projects and areas of RDA work will be affected, but each RDA is likely to have to find a share of the overall reduction,” Harry Studholme, chair of the South West RDA, told local media. “We cannot rule out at this stage looking to delay or scale back on some projects to which we are already committed.”

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UK prime minister David Cameron (left) and business secretary Vince Cable