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Now RDAs are gone what is to be done with the physical assets?

"It is essential that there is a clear strategy to preserve and enhance the value of the physical assets created by the RDAs."


Colm Reilly
Guardian:public leaders network
10 March 2011

Since the agencies have been abolished it appears there is little awareness of the value of what they have left behind

Extensive physical assets created by the RDAs over the last decade include major technology and business parks.

The abolition of regional development agencies (RDAs) has prompted a welcome national discussion about how we can best build world-class capability in key industrial sectors. What has been less well discussed is what should be done with the extensive physical assets that have been created by the RDAs over the past decade.

These assets were created with public money and therefore remain in public ownership. Yet there is little awareness either of what these assets are, or of their value to the economy. They range from major business parks and technology development sites to regeneration projects on the sites of traditional businesses. These are all critical to renewing the UK's industrial capacity, but there appears to be no single model for understanding how these assets should be treated.

Historically, each RDA took a different approach to managing their investments and they now seem to be taking a different approach to their disposal. For example, the West Midlands RDA has declared its intention to dispose of over £400m of assets ahead of its closure. However, the major business parks in Antsy Park, Longbridge and Wolverhampton are to be kept in public ownership in order to generate new jobs, although it is unclear which body is to take them on.

Packaging these assets up and transferring them to other public sector bodies – perhaps local authorities, local enterprise partnerships or newer initiatives such as BIS local – can appear the simplest option. However, this may not always be straightforward because some of these organisations are at an early stage in their own development. They are still building up both capacity and capability and may not be in a good position to take on significant responsibilities for complex assets, some of which, such as business parks or regeneration sites, possess large liabilities.

Another option would be to develop these assets into technology innovation centres or national centres of excellence. However, again this has some potential complications and would need careful planning. Although the capital investment has already been made, the maintenance expenditure is significant and would be a burden to the body managing them, a particular challenge in the current economic climate.

A natural home for critical assets would be the Technology Strategy Board, which has specific responsibility for technology innovation centres and the development of the UK technology landscape. Alternatively, regeneration assets could go to the Homes and Community Association or research councils could play a role.

Another option is to explore models where these assets could be sold to the private sector. Any sale would need to be underpinned by a service level agreement that would support the national innovation system to some degree but also allow for market forces to shape future developments. This would involve a series of innovative deals. Commitments would need to be made to assure support for industry and the development of national clusters as opposed to simply managing an industrial park.

There are clearly a number of possibilities that could be successful but, at the moment, there is no clarity or focus on how to develop the best solutions for these assets.

There is also a real lack of recognition of their importance and the value they bring to the economy. They provide much of the infrastructure that attracts investment to the UK and they facilitate trade opportunities.

In many cases they are also providing essential support to innovation and entrepreneurship. Some have the potential to become critical elements in sub-national supply chains that support specific sectors. For example, it is possible to see the current entire supply chain of aerospace companies across the UK centred around specific centres of excellence, or a new cyber-security cluster in the UK centred on a variety of geographic centres.

Without a clear strategy for the divestment of these assets, we risk losing both current and future value to our economy. The Treasury now needs to step in, evaluate these assets in a national context, and determine where they should go, in what form and how. There will probably be different answers for different assets, not all should be divested to other government bodies, but it is essential that there is now a clear strategy to preserve and enhance their value.

Colm Reilly is head of the government practice at PA Consulting Group.

To see the full article online, please click here.

To visit PA's government pages, please click here.

To visit PA's technology pages, please click here.

To read about Colm's interview on BBC News, click here.

To read more of Colm's views in the Guardian, please click here

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