Regional Government

HC Deb 16 June 2004 vol 422 cc236-59WH

2 pm

Ann Winterton (congleton) (Con)

After many weeks of applying for this debate, it is sod's law to have secured it while there is a debate in the main Chamber on EU finance; indeed, there was another one yesterday afternoon. That's life, but I am nevertheless delighted to open this debate, especially now that super Thursday is over. The next political event for my constituents and others in the north-west—which stretches from my constituency to the Scottish border—and for those who live in the north-east and in the Yorkshire and Humber region, is the regional assembly referendum.

I hope that the Minister will be able to lift the veil and tell us when these long-awaited referendums will take place. It is rumoured that they will now be held in early November, and we are waiting with bated breath to hear what the plans are. In such a short debate, I can touch on only the tip of the iceberg, so I shall concentrate on the financial side of regional policy and the implications of what might lie ahead.

First, we have to understand some of the past, which warrants a debate on its own. Regional government is not a new concept. There was a Labour manifesto commitment in 1929 to supporting the creation of separate legislative assemblies in Scotland, Wales and England. Regional policy emerged in response to unemployment between 1934 and 1937, and during the second world war We had nine civil defence regions. The Wilson Government set up regional economic planning councils, and a royal commission on the constitution was established in 1969. It reported in 1973, and that report was known as the Kilbrandon report. Further changes have continued to be made to the present day.

Contrary to what many believe, there is no unique European treaty obligation to have regions, but they have been introduced—bit by bit—with the objective of moving finance from richer to poorer areas on a Europe-wide basis until there is level pegging. Lady Thatcher's first Government were forced to maintain a basic regional policy in order to access European Community structural funds. In 1986, the Single European Act transformed regionalisation into a central policy of the European Community, formally established the European regional development fund and gave its objective a more precise definition: to help redress the principal regional balances in the Community, in regions where development is lagging behind and in declining industrial regions". In 1988 regional funding substantially increased. Interreg and PHARE—the programmes for temporary aid in a transitional period?began in 1989 and started cross-border schemes under unified operational control, bringing in regional and local authority involvement. The Maastricht treaty—I remember it well—which was ratified in 1992, created the Committee of the Regions. In 1994, regional government offices were created that took on the functions of the previously separate regional offices of the Departments of the Environment, Transport, Employment and Trade and Industry. Their remit was to manage regional programmes and to foster the development of policy areas, becoming the voice of the Government in the regions in order to apply for European Union structural funds. They were also permitted to raise loans.

The regional development agencies were created by legislation in 1998. They work with chambers, and many of those chambers have taken the title of "assembly", which causes confusion. They each have an allocation of £600,000 per annum to develop their capacity, specifically including their ability to undertake scrutiny of the RDAs. Most of the issues to be dealt with by the RDAs are core European Union legislative competencies.

Over a long period, various functions and responsibilities have been gradually removed from local government and given to quangos. There are 19 such quangos in the north-west, 21 in the north-east and 20 in Yorkshire and Humber. Those figures do not include Departments and agencies with regional or local offices in northern England, which are now proclaimed to require the so-called "democracy capping" of a regional assembly.

The Planning and Compulsory Purchase Act 2004 is one example of the removal of major planning powers from local authorities. Other proposed changes relate to tourism and transport, and they will also have major effects.

Matthew Green (Ludlow) (LD)

Does the hon. Lady share my dismay at the fact that Conservative peers in the House of Lords caved in to pressure by the Government and allowed those powers to be transferred—after several attempts at ping-pong—whereas the Liberal Democrats held firm in trying to prevent their being transferred?

Ann Winterton

The hon. Gentleman can probably read my mind on that matter. I do not want any powers to be transferred, as I have just indicated.

No doubt other Members will dwell on the apparent squandering of unlimited public funding on propaganda for the assemblies, but let us look at the contents of the "Your Say" booklet. A proposed regional assembly in the north-west would have "influence"—the phrase used in the booklet—over £1.6 billion. Some 61 per cent. of that influence would be allocated to the learning and skills councils. The proposed regional assembly would have two votes out of the maximum of 16 serving on the board of a learning and skills council. One is rather reminded of the "influence" that we are alleged to have by being at the heart of the European Union. If my arithmetic is correct, that influence currently stands at just 10 votes out of a total of 114, so one can see that there is little hope of changing anything of importance. Influence is one thing, but control is quite another.

Mr. Philip Hammond (Runnymede and Weybridge) (Con)

My hon. Friend is absolutely right. I am sure that she will be aware that Ministers are currently fighting each other over the question of learning and skills councils. The Deputy Prime Minister says as he goes around the country that he will transfer powers relating to learning and skills councils to elected regional assemblies, and the Secretary of State for Education follows him around the country saying, "Over my dead body." We need to clear up such confusion within the Government, so that when my hon. Friend's constituents vote in October or November, they will have a clear picture of what they are voting for.

Ann Winterton:

My hon. Friend makes a very valid comment and we have been following those matters in the local newspapers. He highlights one of the problems facing people who will vote in the referendum—if one is eventually held. There is so much confusion about what might or might not happen that it switches people off; they like to know precisely where they stand.

The Government annual grant is £780 million for the north-west, £350 million for the north-east and £570 million for Yorkshire and Humber. That is, on average, only 11.5 per cent. of the central Government grant provided to local authorities, based on 2002–03 figures. I am sure that the Minister will agree that no guarantee could be given as to what a regional assembly might receive. In yesterday's debate, the Minister for Industry and the Regions said that the level of domestic regional funding might have to be reassessed.

Of those figures, the following amounts come from European Union funding: £250 million for the northwest, £88 million for the north-east and £185 million for Yorkshire and Humber. The UK pays £1 into the EU budget, and gets back approximately 50p—or €1.6. On top of that, we have to match-fund a further 40 to 60 per cent. There are strict criteria governing how, and on what, that funding is to be spent, which often produces no end-product, such as wealth creation. All too often, projects are left high and dry when the funding ceases. However, the Government have given a financial guarantee for that level of funding, which is to be based on certain European Union reforms that they believe fall within the terms of the current EU treaties.

It is important to know from the Minister how the process is progressing, whether the reforms that the Government support will be achieved and whether the financial guarantee will be honoured. If so, from which public funding source or Department will the money come? Will the Government stick to their proposal of a 1 per cent. contribution to the EU budget, rather than the 1.24 per cent. requested by the Commission, to meet the needs of the enlarged Union? If the Government are successful, but have already budgeted for 1.24 per cent., will they use the difference to give assistance to areas in the United Kingdom, subject to the state aid rules by which we are bound? I understand that yet another consultation is to take place on the Commission's newest proposals on regional state aid rules. If the reforms fail, the amounts available, which are mentioned in the booklet, will be substantially reduced.

I hope that I get a better reply than I got when I asked the Prime Minister on 11 February whether the Government intended to supplement the shortfall in respect of the £3 billion in regional funding between 2007 and 2013 that the United Kingdom is set to lose. Indeed, the Minister for Industry and the Regions touched on that subject yesterday.

The reason for the difficulty is enlargement. It is fair to say that the House of Commons has supported enlargement of the European Union across the board, but the consequences mean that from 2007 we will lose objective 1 funding for Merseyside and south Yorkshire of €893 million and €785 million respectively, in addition to reduced objective 2 and 3 funding, based on the 2000–2006 figures. I hope that the Minister will use this opportunity to update us on EU regional funding post-2006, because agreement to it will require unanimity. That is not an easy task when 25 member states are involved.

There is no doubting the priority of the Department of Trade and Industry when it states that spending on regional policy will be targeted on areas of high unemployment, just as it was 60 years ago. However, today we are interwoven with EU regional policy and have to contend with EU state aid in competition rules; the UK is no longer a free agent. It is also fair to say that EU regional policy plays an important role in the function of the euro, as regions in the eurozone have a one-size-fits-all interest rate.

The system in the regions of the European Union is triangular, operating between the Commission, the region and national Government. If England is ever burdened with regional assemblies, I foresee a constant battle between the Office of the Deputy Prime Minister and the Commission, because the ODPM intends to retain the Government offices for the regions. However, I would put my money on the Commission winning, as it has the final say. So Westminster will, as usual, lose out and will once again be sidelined.

Over time, the proposed 35 assembly members for the north-west will progressively deal directly with the Commission, leaving out Westminster and thereby leaving the north-west's 76 Members of Parliament in isolation. What kind of local representation or democracy is that, given that the rural areas especially will be overshadowed by the great cities?

To those who say that United Kingdom local government by regional assemblies has no European Union involvement, my reply is that the answer lies in the Department of Trade and Industry document entitled "A Modern Regional Policy for the United Kingdom", which states: There is an important European Union dimension to regional policy. It continues: These EU regional policy objectives clearly complement the UK Government's regional policy goal. The latter quote should surely be the other way round, as the Government's regional policy is determined by European Union policy, and Westminster continues to lose control and to have its powers eroded. It could be described as rapidly becoming a middle tier of management, complying with orders from Brussels. How often do we hear the word "flexibility"? The desire is often expressed to have devolved regional policy to ensure the necessary flexible environment at national, regional and local levels. However, as Parliament has relinquished so many of its responsibilities, what the Government ideally might like is not what they can necessarily have within the constraints of current EU policy.

No doubt the issue of subsidiarity will be thrown into the debate. However, it is clear from the Amsterdam treaty that the subsidiarity principle will not be allowed to bring about any devolution of powers from Brussels, even in those sectors in which national or local authorities could perfectly well act on their own. Instead, there will be a constant one-way centralisation of authority. Those who control the direction of finance control virtually everything. One of the major problems with the EU is its rigidity, which can be changed only through a unanimous vote.

Why do we need regional assemblies, which are being foisted on us? Why should additional money for the proposed assemblies come from a precept on the council tax and be left to local authorities to collect? Sixty years ago, regional policy was entirely and rightly focused on alleviating problem, in some of the most disadvantaged areas in the United Kingdom. Regional policy now operates on a Europe-wide basis, and our country and its people will be disadvantaged by the movement of resources from the west to the east. Although successive Governments have tried to airbrush the EU out of its pivotal role in regional policy, the truth should be told. There is no doubt that regionalisation is a device for furthering political integration. [Interruption.] The Minister and his Parliamentary Private Secretary laugh, but it is no laughing matter.

The Minister for Local and Regional Government (Mr. Nick Raynsford)

We are laughing at the hon. Lady's proposition.

Ann Winterton

Well, the Minister and his PPS may laugh at my proposition, but in due course people in this country may laugh at the Minister and the Government for leading them down that path. I rust that the people of the three regions involved in the referendums—the north-west, the north-east, and Yorkshire and Humber—will decisively vote no and reject regional government, with all its adverse financial repercussions.

2.18 pm

Mr. Michael Foster (Worcester) (Lab)

I attended the debate intending to make only a brief contribution. I hoped that many hon. Members from all parties would be present to talk about the financial implications of regional government. I did not realise that we were here to talk more about its European dimension. The hon. Member for Congleton (Ann Winterton) has very anti-European views.

Ann Winterton

They are all fact.

Mr. Foster

I have no reason to dispute that one way or the other. I am here to talk about the financial implications of regional government.

Mr. Deputy Speaker(Mr. John McWilliam)

Order. Sedentary interventions are not helpful in debate. For the guidance of the hon. Gentleman, I point out that we are debating that the sitting be adjourned, so the debate can be quite wide ranging.

Mr. Foster

Thank you, Mr. Deputy Speaker.

I represent a region that will not have a referendum and where there is perhaps not the strongest affinity with the idea of a regional assembly, although that may change over time. One aspect of the financial implications of regional government that I want to consider is the nature of local government under the regional government umbrella. I understand that, if an area agrees in a referendum to have a regional government, it must cease to have two tiers of local government. Substantial savings could therefore result from regional government. I say to the Minister that the Government should not exclude areas that do not vote for a regional assembly. They, too, could consider the financial implications of having two tiers of local government.

I shall explain the situation in Worcestershire, which forms part of the west midlands region. There is a county council, six district councils and a considerable number of parish councils, which are predominantly in the shire parts of the county. Those district councils each have a chief executive, a treasurer, a solicitor and a host of teams that duplicate service provision in a relatively small area, with a population of about 100,000 in each district.

The district where I live and that I represent is governed by City of Worcester council. It has 35 councillors, who together are responsible for a budget of about £11 million. Responsibility for council housing has been transferred to a housing authority. The nine county councillors who are elected to represent my constituents in Worcester are responsible for spending about £400 million. They are responsible for the major services supplied by local government such as education and social services. I am concerned that, if the Government limit the change in the structure of local government to those areas that have a regional assembly, they will miss an opportunity to make considerable financial savings in local government.

Mr. Graham Stringer (Manchester, Blackley) (Lab)

I am following my hon. Friend's argument in favour of unitary authorities with interest. I come from an area that has the benefit of a unitary local authority and, by and large, I agree with him. Does he accept that, were his area to achieve the status of a unitary authority, to impose an elected regional assembly would create an extra tier of local government? It would spend what was originally local government finance —the hon. Member for Congleton (Ann Winterton) mentioned the figure of £1.6 billion. Therefore, all the current inefficiencies that he describes in local government would be recreated.

Mr. Foster

I fully understand my hon. Friend's arguments about the imposition of regional government on the west midlands. My argument is that the structure of local government should change, with or without a referendum on the question of a regional assembly in the west midlands.

Apart from financial savings that can be made, the important issue of democratic accountability, which should not be underestimated, is also at stake. The bulk of my constituents probably do not have the foggiest idea which local authority delivers which service. At local elections, many vote for the party that they have always supported and they do not necessarily take into account the delivery of service by the relevant local authority. If we are serious about improving local government and the services that it provides, having a direct democratic link is important, so that, by their vote, people can reward, or penalise, elected members who have delivered, or failed to deliver, improvements in public services. To have that enhanced democratic accountability with a backdrop of substantial cost savings represents the right way forward.

There is further evidence of the tendency to drift towards unitary authorities in Worcestershire. With some local government services, the question of who is providing the services is already being blurred. In effect, local authorities are realising that two-tier systems do not work for them, so partnerships are being created between district councils and county councils. For example, the City of Worcester transportation partnership helps to deliver a county council service under the remit of city council officers. Although that is a great concept for taking democratic accountability to a smaller level, it still does not enable voters to make the distinction between who provides the cash and who provides the service. The Government should recognise that and take a leading role in speeding up the movement towards a unitary authority.

Matthew Green

I am following the hon. Gentleman's train of thought and I agree. Does he agree that, if Worcestershire were to move to a unitary authority, one could achieve the same effect through area committees? One would obtain the saving that he talks about, but still have the local democracy taking decisions for Worcester.

Mr. Foster

I agree. I have two parish councils in my constituency, even though it is an urban constituency, which provide a forum for a very local democratic role. One of the election pledges of the Worcester Labour party at the local elections last Thursday was to create area forums as a way of enhancing the local role in decision making in the city for areas without parish councils. I am delighted to let hon. Members know how pleased we were with our local election results. We held our seats and the Conservatives lost one to the Liberal Democrats.

Mr. Hammond

I am pleased to tell the hon. Gentleman that to compensate for whatever happened in Worcester the Conservatives won one of the only four Labour seats on the council in Runnymede. Before the hon. Member for Ludlow (Matthew Green) intervened, he seemed to be urging the Minister to take powers for the greater use of unitary authorities. Is he aware that the Government have those powers within existing primary legislation? It is within the Minister's gift. Is he urging the Minister to use his powers under Local Government Acts to accede to requests from local authorities for reorganisation along unitary lines?

Mr. Foster

Since 1997, I have increasingly held the view as a Member of Parliament that two-tier local authority systems do not deliver the best possible service to the electorate. Where there is agreement over the nature of the unitary authority to replace the two tiers, I am looking for the Government to facilitate movement in that direction as soon as possible.

Mr. Hammond

Is the hon. Gentleman aware of research by Professor Michael Chisholm at Cambridge university that suggests that the one-off costs of reorganisation would be about £90 per capita in two-tier areas, were they to be reorganised into unitary structures, and that the long-term savings from unitary local government are clear only where unitary local government is organised on a county-wide basis?

Mr. Foster

I am not aware of the research to which the hon. Gentleman refers. I make no judgment about the nature of the unitary authority that I wish to see replace the two-tier system in the county, be it a unitary Worcestershire or a north and south Worcestershire authority. I make no judgment about what would be best. We are considering the cost savings as part of any decision made. Democratic accountability for the delivery of service and the clear relationship between the voter and those who are elected to manage the service are also important.

Another example of the blurring of the two-tier system is the crime and safety partnerships. Initially, a partnership was set up for Worcester city—the Worcester safer partnership. That was not progressing as quickly as those who worked in the system wanted, so there was a new creation—the South Worcestershire safer communities partnership, which covers the city of Worcester and the Malvern Hills and Wychaven districts. That exactly mirrors the West Mercia constabulary's division of the police. It makes for a sensible organisation of resources.

Other agencies that are showing the lead in the movement away from a two-tier system include the South Worcestershire primary care trust, which covers the three districts I mentioned, the Worcestershire Acute Hospitals NHS Trust, which covers the whole county, Hereford and Worcester combined fire authority, which the Minister knows all too well, and the West Mercia constabulary. All those agencies believe that there are economies to be gained from the service covering a greater population. I agree that cost savings could be made.

While I have the Minister's attention, it would be remiss of me not to mention that local government funding will have to be examined clearly. He will know of my desire for the area cost adjustment—the three magic words for Worcestershire—to be reconsidered, as it is a long-running problem for my county. If we move to a regional dimension, that will have financial implications for the services that are delivered.

The important point that I make in conclusion is that I want the Government to be more proactive in engaging with local government and encouraging it to move towards unitary authority status where two tiers exist—with or without regional referendums and regional assemblies—as a way of delivering better services for constituents and cost-savings for taxpayers as a whole.

2.32 pm

Mr. Gordon Prentice (Pendle) (Lab)

Like my hon. Friend the Member for Worcester (Mr. Foster), I had not intended to make a contribution, but I am driven to make one to put my views on the record. I think that we need regional government like we need a hole in the head. We just do not need it; it is a distraction.

I am not sure whether the referendums at the end of October will be held as promised. I say candidly to my colleagues in the parliamentary Labour party that there is no guarantee whatsoever that, if we hold the referendums in the three northern regions at the end of October, we will win them. There is a real possibility that we would lose all three. I do not think that the ground has been adequately prepared for those advocates of regionalism. There are advocates, but the work has not been done.

My plea to the Minister, to my hon. Friend the Member for Worcester, to the Prime Minister and to others is to put the issue on the back burner. Those who proselytise for regionalism should spend more time speaking to people and winning them over to their point of view, rather that pressing ahead with referendums that we could well lose.

I am fed up with constant reorganisations, whether it is local government reorganisation—the last of which, under the Conservative Government, cost £450 million—or the endless reorganisations of the national health service. As I recall, 18 such reorganisations were listed in the Health Committee report on the issue. If we asked people on the street, "Has all that reorganisation delivered a better service?", I am not sure that they would say yes.

There is a tremendous pressure to reorganise. A kind of Maoism has infected the Government. They believe that to persuade people that things are changing for the better, they just have to change. There is no guarantee that a huge reorganisation, under the mantle of regional government, which is itself a misnomer, is going to produce beneficial change. Why do I say that the term "regional government" is a misnomer? A year or two ago, my right hon. Friend the Secretary of State for Wales described the Welsh Assembly as local government on stilts. A regional assembly would be local government on stilts. It would not have any powers to raise taxes. Many important services, such as health, would not fall within the remit of the regional assemblies; they would have some responsibilities for public health, but that would be all.

How can people be motivated to go out and vote for a tier of government that does not have any real powers? It has powers on planning and infrastructure, but it does not have the kinds of powers that touch people in their everyday lives.

Mr. Hammond

I largely agree with the hon. Gentleman's powerful point on powers, but I would not like him to leave the Chamber with the impression that elected regional assemblies will have no power of taxation because they will have a power of precept with regard to the hard-pressed council tax payer. That is another factor that weeds to be taken into account.

Mr. Prentice

Of course I understand that there will be that precept power but there will not be a regional income tax, for example, which would connect the regional assembly with the elector in the regions.

> Some people—including people on my own political side—say that regional assemblies will make a huge difference. However we know that the areas that vote for a regional assembly will not get any more money than other regions of England—the Government have made that clear. It is disingenuous to give lots of nods and winks, and to hint that if people vote for a regional assembly their housing and their environment will be transformed overnight, because it will not be like that. During a referendum campaign, when Labour MPs like me speak out against the policy advocated by their own Government, it will become as plain as a pikestaff that those benefits of regional assemblies are alleged, not real.

My hon. Friend the Member for Worcester mentioned democratic is accountability. If there are these regional assemblies and a move to unitary local authorities, there will be a huge reduction in the number of councillors. The Electoral Commission has pronounced on the reorganisation of local government in my area. There are 14 district councils in Lancashire, and there is Lancashire county council. The commission's preferred option, which voters can vote on at the end of October if we have the referendums, is for Lancashire county council to be the unitary authority. The second option would be for Pendle council to join with Burnley council, Rossendale council and Ribble valley. That would make a unitary authority for about 250,000 people. That is not very local. A lot of local councillors under the present system will lose their jobs.

Ann Winterton

The hon. Gentleman has been describing how he hates reorganisations and how they cost so much money, and I agree with him. He has also touched on the number of councillors who will no longer represent their people. Has he given a thought to council staff? Because of all this uncertainty about regional assemblies, many good people have left their posts and moved on because they cannot see what the future might hold for them. If we are going to have good local government, we need to have good local government staff. Not much thought has been directed towards them—towards how they are feeling and coping with this situation.

Mr. Prentice

I would respond to that by saying I am against reorganisation for the sake of reorganisation. The case for it must be compelling. It must be set out, and we must be able to convince people that moving to unitary local government from the present two tiers would bring a measurable increase in service levels. I am not entirely sure about that.

I used to be a big fan of unitary local government. To be perfectly honest, I think that I have changed my view on this subject a number of times. [Interruption.] Is that an unusual admission? I do not think so.

I share the frustrations that many people have about two-tier local government where the buck can be passed so easily. Lancashire county council is Labour-controlled and now there is a Liberal Democrat-controlled Pendle borough council—that grieves me, but I just have to live with it for the next few years. Huge amounts of responsibility will be passing via the Liberal Democrats and that is frustrating—[Interruption.] I can see that Conservative Members are agreeing, because they are nodding vigorously. It is our responsibility to educate the electorate about which tier of government is responsible for what. The county council is responsible for education, which is not difficult to remember, is it? It is responsible for social services and for care homes, which was a big issue in Lancashire a year or two ago, and that is not too difficult to remember. Therefore, the responsibility falls on people, such as myself, who want a system of local government that is based on two tiers to continue, to make that point.

Mr.Michael Foster

What would my hon. Friend say to a constituent in Worcester about the provision of youth services? That is a statutory county council provision, but a discretionary one that is made by the district council. The two bodies work together and the buck passing goes on with considerable gusto.

Mr. Prentice

Well, there are these bear traps—youth services and so on—are there not? We do not fall out of bed in the morning just thinking about where responsibility for local services lies. People do not need to know the minutiae, but they must have an understanding that housing is a district council responsibility and that education is a county one. When people voted in the European elections just a few days ago, they probably did not have the foggiest idea that a huge number of decisions that used to be made in Westminster are now made in Brussels and Strasbourg. What is our response to that? It should be, "Let's educate the public." That is our job as politicians.

I have spoken for longer than I intended, but let me finish on this matter. Our resources should go to frontline services. People in my part of north-east Lancashire are fed up living in rotten, decaying housing that should have been torn down a generation ago. There are 2,000 empty and abandoned properties in my constituency; in neighbouring Burnley, there are 4,500 empty, abandoned, rotten, decaying houses. That needs to be tackled and my right hon. Friend the Minister knows about it, because he is an expert on housing issues. That is what people want to see addressed; they do not want a lot of energy to go into the creation of a regional assembly that will not deliver.

The balkanisation of Britain —the setting up of regional assemblies—will have a damaging effect on service levels across the country, because the whole rationale of regionalism must be to allow services to develop differently in different regions; otherwise, what is the point? If we were to transfer something that is crucially important, such as the health service, to regional assemblies, it would grieve me if in 10 or 15 years' time there were different standards—different service levels—of health provision in the north-west and north-east, which is your area, Mr. Deputy Speaker. I do not want to see that divergence. I want money to go into front-line services across the nation that will benefit all equally.

2.44 pm

Matthew Green (Ludlow) (LD)

I start by congratulating the hon. Member for Congleton (Ann Winterton) on securing the debate. I thought that we were going to hear a little more about the cost of regional government and the possible savings, but there we are. I will stick more firmly to the title of the debate, although I appreciate that it is an Adjournment debate, Mr. Deputy Speaker.

I agreed with virtually everything that the hon. Member for Worcester (Mr. Foster) said. It is a delight to speak in a debate on regions and for once have someone from the same region as me in the Chamber. That is probably a first. I was pleased to hear what he had to say, and I might touch on a couple of his points.

One problem with any reorganisation is that it is easy to see the costs of it. When a level of government is set up—local, regional or national level—there are running costs, and it is easy to trot them out. I acknowledge that there will be costs; inevitably the structure to support regional government will cost something. However, there are also savings; it is fallacious to argue that there are only costs.

Those savings can come from two areas. The first, as we heard from the hon. Member for Worcester, is from the reorganisation of local government. I have some figures, which I am sure the Conservatives would claim are biased, from the Yes4theNorthEast campaign. It has produced some figures, which I am sure are based on good information. The Minister may be able to provide more information. The campaign estimates that changing to a unitary government would save about £21 million a year in Durham, and £8 million a year in Northumberland. There is a saving of £29 million. The estimated annual costs of an elected north-east assembly are £25 million. Clearly, there is a potential saving. We can argue about whether the figures are accurate, but there is a case that savings can be made as a result of change.

Mr. Hammond

The hon. Gentleman has just tried to make the case, as did the hon. Member for Worcester, that the reorganisation of local government to a unitary structure may produce savings. That is contentious, but it has absolutely nothing to do with the case for elected regional assemblies.

Matthew Green

I agree; the reorganisation of local government does not have to have anything to do with regional assemblies, and could be done anyway. Nevertheless, the Government have chosen to do the two things at the same time and are linking them. Whether that is the route that I would have chosen or not, the two are happening together and I am raising the issue. I would happily have a unitary Shropshire tomorrow, as would the Conservatives and Labour. All three main parties in Shropshire want a unitary Shropshire. I have been asking the Minister about that since I have been in Parliament, and he keeps saying, "Wait until you have an elected regional assembly." I do not want to wait that long.

The fact is that there are cost savings to be made from the change in local government. As the hon. Member for Worcester has already said, in Shropshire there are five districts or boroughs and a county council. There are six chief executives, and merely getting down to one chief executive and the attendant secretaries would save well over £1 million a year for Shropshire, which is quite a small county.

I want to talk about the other main area for savings, where the Government could do more. They are going at regional government a little too gently; they are not trying hard enough. In doing so, they are in danger of throwing the baby out with the bath water. The Minister will know that Liberal Democrat support for regional government in the forthcoming referendums in the north is based on the fact that we see that as a starting block, certainly not the finishing point. If it were the finishing point, it would be a poor point to be campaigning for. The savings would come from the devolution of power and services from Westminster to regional government.

Mr. Hammond

Which?

Matthew Green

I will come to exactly which ones we would like to be devolved. If the hon. Gentleman had listened to earlier debates on regional government, he would have heard us speak about that before.

The Minister still has a chance to convince his colleagues; perhaps the Deputy Prime Minister will win his arguments with his Cabinet colleagues. As the Minister knows, there are areas that we would like to be pushed down more. The hon. Member for Congleton was right to point out that the learning and skills councils are not truly devolved to the elected regional assemblies—they should be. On transport, the ability to decide on the priorities is to be devolved to elected regional assemblies but the funding will still come from central Government. The North West regional assembly, for example. could decide that its priorities are 1, 2, 3, 4 and 5 but the Department for Transport could agree to fund only No. 5. The Minister will say that that will not happen, but he cannot be sure that there will be a Labour Government forever—he might not be the Minister and there may not be a favourable Minister in the Department for Transport. The system must be set up so such things cannot happen and we get proper decision making at a regional level.

Mr. Hammond

I said a moment ago that responsibilities for learning and skills councils will not truly be devolved to elected regional assemblies. In a written answer to my hon. Friend the Member for North Essex (Mr. Jenkin), the Minister for Lifelong Learning, Further and Higher Education put it more starkly. When asked: what plans he has to transfer powers and responsibilities held by Learning and Skills Councils to elected regional assemblies where they are introduced"—[Official Report, 3 February 2004; Vol. 417, c. 763W.] he replied:

None.

Matthew Green

That is even more helpful to my case, because they should be devolved. If the Minister took regional government seriously and believed in it, he would seek to devolve more functions, and Departments in Westminster could be abolished because they would no longer be necessary. The Department of Trade and Industry is an obvious candidate for abolition. At a regional level it acts is a dead hand; it restricts the ability of regional development agencies to exercise their function. Too often they are told that they cannot fund a project because it does not fit the DTI's tick boxes. Allowing funding to decrease but getting rid of the DTI would make considerable national cost savings and would enable effective regional economic regeneration.

If we achieve regional government throughout England—I will come to how that should happen—there would not be much need for the Office of the Deputy Prime Minister. It would be a brave Minister who abolished his own job, but that should be the Minister's priority. If I were in his shoes, I would be seeking to create the conditions to abolish the job. Much of the ODPM's functions can be sent down to the regions. Such devolution of power allows considerable cost savings at the centre and can lead to considerable savings overall.

I do not want hon Members to think that I would like the system to be rolled out along the current boundaries, because there are difficulties. For elected regions to work, the public must believe that they belong to a region. People in the north-east believe that they belong to the north-east. The Yorkshire and Humber assembly effectively recreates Yorkshire—the people believe that they are in Yorkshire.

Mr. Hammond

When did the hon. Gentleman last visit Humberside to see whether that is the view there?

Matthew Green

I realise that part of Humberside was historically Lincolnshire, but that is not as significant a problem as the hon. Gentleman would like to pretend.

In the north-west, there is a reasonable sense of regional identity, although there are differences. [Interruption.] There is not the same degree of support among Labour Members in the north-west as in other regions—perhaps that was too dangerous a course to go down. I knew that it would spark a reaction, so I will not go into too much detail on the north-west.

Mr. Prentice

Will the hon. Gentleman give way?

Matthew Green

Go on then.

Mr. Prentice

Part of my constituency—West Craven—used to be in Yorkshire, and many people still feel a great affinity to Yorkshire. However, are there any divisions among the Liberal Democrats about this plan for regionalism? Will he tell the Chamber what Lord Greaves thinks about the proposals?

Matthew Green

Lord Greaves is not actively backing the yes campaign for the main reason that not enough powers are to be devolved to the regional assemblies. Where I disagree with Lord Greaves is that I think that the proposals are a starting block. We support the campaign so that we can build on it whereas he thinks that it is not worth supporting be cause not enough powers are to be devolved. I hope that he is persuaded otherwise if the draft Bill proposes more powers.

I want to deal with the rest of England. The Minister has an opportunity, when the three referendums in the north are out of the way, to look long and hard at a boundary review of the remaining regions. The current boundaries were set up by the Conservatives for the administrative purposes of Westminster, not to reflect where people feel that they belong. I am firmly of the view that Shropshire, Herefordshire, Worcestershire and Gloucestershire, which is currently in the south-west, should form a marches region, as we did historically. We were a region and we share a lot of commonality with West Mercia. The area is about the same size as the north-east, so if that region is viable, we must be too. Such a region would command a huge amount of support among local people.

Mr. Michael Foster

May I say how delighted I am for the hon. Gentleman that he is present it for a debate with Members from the same region? He is of course the only elected Liberal Democrat in the region of the west midlands.

Matthew Green

Hereford.

Mr. Foster

Has he had any discussions with local government representatives in the west midlands on whether Shropshire, Gloucestershire and Worcestershire should form a marches region? Has he discussed that with constituents in the north of Worcestershire, who see no distinction between themselves and people in Birmingham, because the boundary is not clear and, indeed, moves occasionally as a result of local government reorganisation?

Matthew Green

I have certainly not done the latter. It would be a huge task to travel round the region that I have proposed asking people that. We may have to do that if there is a boundary review. I hope that we can consider the proposal and that the hon. Gentleman is not ruling out the possibility, because I believe that there is support for it. I have discussed the matter with councillors and officers in at least one Worcestershire council—Malvern Hills—and in Shropshire and Herefordshire, and there is broad support for it. I have even done some survey work in Shropshire showing that the public overwhelming back that idea in preference to a west midlands region.

The point is that to win referendums in other parts of the country and to get to the position where we can make cost savings by abolishing Departments as a result of having elected regional assemblies, such assemblies are needed throughout Britain. In order to do that, they must be based on areas that the public would support. There is no reason, for instance, why Kent could not be its own region. It is large enough; its population is bigger than that of the north-east. That would solve many of the problems of Conservative councillors in Kent. If they discovered that they could have an elected regional assembly, referendums might be much more likely to be won. Huge savings can be made.

Ann Winterton

The hon. Gentleman has built so much of his case on cost savings. Having lived through a local government reorganisation in 1974 and seen the establishment of the Scottish Parliament, and so on, I am not so sure that there will be any cost savings at all. If he can cite one such case, I should be delighted to learn about it, because usually savings are soaked up by new, expensive offices and equipment, and the money just goes.

Matthew Green

I suspect that whatever I said, I would not convince the hon. Lady. I thought that I had given some examples of where savings can be made.

Many local government reorganisations have been botched. Let us take Shropshire, which was reorganised under the Conservative Government. After the county had made it clear that it wanted to retain two-tier government, the Government said, "No, we do not like that answer; do the exercise again." They then came back, took Telford and made it a unitary council, leaving the rest of Shropshire virtually unviable, as a much smaller two-tier area. That was a botched reorganisation, and it is botched reorganisations under the Conservative Government that have cost money. If they had done things properly and offered us two unitaries, there would have been a lot more support for their proposals, and cost savings, too.

Finally, I return to a theme that the hon. Member for Worcester mentioned: democratic accountability. One major reason why we should have regional government is that we have it at the moment. The most powerful person in my constituency in terms of getting a chequebook out and allocating money to something is not anyone on the district, county or town council, or the local MP or MEP; it is the chief executive of the regional development agency Advantage West Midlands, John Edwards. I believe that he is able to support a scheme to the tune of £3 million without seeking broad approval. He does an excellent job, and I have no qualms at all about his work; but he is essentially accountable only to Ministers in London—

Mr. Hammond

Who are accountable to Parliament.

Matthew Green

Yes, but in a very long-winded, involved way.

The present tier of regional government was largely set up by the Conservatives; they set up Government offices. The result is that we now need accountability at that level, and democracy costs money.

Ann Winterton

Will the hon. Gentleman give way?

Matthew Green

No, not any more, because I am sure that the Conservative Front-Bench spokesman would like to speak.

Democracy can cost money, but the argument for not having a democratic tier when powers are already exercised at that level is an argument for doing away with MPs. People might say that it must cost a lot to have MPs in Westminster. It is also an argument for doing away with councillors. One might say, "Let the officers run councils; it's far cheaper if we get rid of all the councillors." That is the argument being deployed. There could be much greater cost savings if only the Government were really enthusiastic about regional government and used it to its full potential, instead of making their rather half-hearted efforts. The case is that regional government can save money. However, for the sake of democratic accountability, it should go ahead even if it is cost-neutral.

3.2 pm

Mr. Philip Hammond (Runnymede and Weybridge) (Con)

I congratulate my hon. Friend the Member for Congleton (Ann Winterton) on securing this important debate. She is right to raise these issues. There are deep concerns about the Government's intentions as regards regional government. Conservative Members certainly recognise the particular needs of those regions that have suffered from major structural economic change. My hon. Friend dealt with some of the real regional issues relating to funding. She talked about the European Union funding available and issues that impact directly on the lives and success of people in the regions.

I want to focus on the direct financial implications of the Government's plans—that is, to the extent that we know about them —and focus Members' attention on the large and unacceptable degree of uncertainty that still surrounds a project that, unless something has changed, is to be put to the electorate in just a few months.

There is a widespread and growing feeling in all three northern regions, particularly in Yorkshire and Humber and the north-west region, that the imposition of an extra tier of government is simply not the answer to the region's problems. The Government's preferred option reflects Labour's rather tired approach, which is that more government equals better government, and that constant change equals progress. It also reflects Labour's disillusionment with local government, which will be the big loser from the imposition of elected regional assemblies, as powers will be sucked from local government and will go to the regional tier.

The needs of the regions, particularly the three northern regions, are for economic regeneration, investment, skills and—in some cases—a change to a more entrepreneurial culture that will allow businesses to flourish and that will attract investment and lead to reform of the public services. Public services provide a larger percentage of total employment and economic activity in the northern regions than in other regions. Some of those issues are being addressed by the regional development agencies in the three northern regions, but I can tell the Minister and the hon. Member for Ludlow (Matthew Green) that the last thing that the regions want—someone who is not a Government figure would say this privately— is for their business-led focus to be diluted by being subordinated to a politically motivated regional assembly. The truth is that elected regional assemblies will not deliver on any of the key issues for the three northern regions. My hon. Friend the Member for Congleton is quite right to draw attention to the issue.

I want to talk about the financial implications of imposing an additional tier. I will focus on elected regional assemblies, but I do not want the Chamber to miss the point that he Deputy Prime Minister's agenda for regionalisation has already kicked in, with or without elected assemblies. Additional costs are already being imposed. In the fire service, there are regional management boards, and fire authorities up and down the country tell me that the boards are already out of control in terms of the costs that they are incurring. There is the Learning and Skills Council, in which we can see the creation of a regional structure in response to a clear steer from central Government. There is also the cost of the unelected regional chambers.

Interestingly, while this trend is developing in response to a steer from central Government, English Heritage, which is a quango answerable to the Minister's Department, has just scrapped its regional structure because it found it too bureaucratic and inefficient. It has returned to a different structure and has moved away from having nine regional directors.

I come to the financial implications of elected regional assemblies. We ought not to be having this debate. We ought to be quite relaxed about the issue because hon. Members will remember that, in 1997, the Labour party manifesto pledged that the establishment of regional assemblies would require confirmation by independent auditors that no additional public expenditure overall would be involved. I do not know whether the Minister is prepared to repeat the manifesto pledge that no elected regional assembly will be created unless an independent auditor has certified that no additional public expenditure overall will be involved. I suspect that he is not prepared to do so, therefore we must look at the costs that we believe will be involved.

So far, the Government have spent more than £5 million on what they laughingly call an information campaign: that is to say, on propaganda for the yes campaign in the three regions. The referendums themselves will cost £16 million to conduct. The Government estimate that, if elected regional assemblies go ahead in the three regions, they will cost £30 million in each region simply to set up. We are talking about the one-off start-up cost. That means a cost of more than £120 million, including the referendums, the information campaign and the start-up costs in the three northern regions. That is before taking into account the direct and indirect costs of local government reorganisation.

My hon. Friend the Member for Congleton has already referred to one of the important indirect costs, which arises from the uncertainty that has been introduced into the local government community and the additional difficulty that that creates in recruiting and retaining good quality staff to carry out the main function of local authorities, and what should be main purpose of elected politicians: the delivery of ever-improving public services.

There are also direct costs. As I have already explained, Professor Michael Chisholm of Cambridge university has estimated the one-off costs to be more than £90 per head. That is £350 million for the three northern regions, if all the two-tier authorities are transformed into unitaries. Contrary to what the hon. Member for Worcester (Mr. Foster) has asserted, the evidence suggests that, except where unitary counties are created, there will be few if any ongoing savings from unitary structures.

All that is before we look at the running costs. The Government estimate that each elected regional assembly will cost £25 million per annum to run. However, working on the basis of the one elected regional assembly that we have as an example—the London assembly—and extrapolating on the cost per capita, it is likely that the regional assemblies would cost three times the Government's estimate. If anybody doubts that it is possible for the Government to get their estimate of the cost of regional government so wrong, they need only look at the estimate; for the cost of the Scottish Parliament's new building at Holyrood. The overrun is standing at 12 times the original estimate. We cannot even begin to quantify the potential cost if all these elected regional assemblies were to embark upon such a folie de grandeur as the Scottish Parliament in Edinburgh.

Mr. Raynsford

As always, the hon. Gentleman is selective in his choice of examples. Would he like to tell the Chamber about the Greater London authority headquarters building, City hall, which was delivered on time and in budget? It is an extremely good value-for-money procurement.

Mr. Hammond

I would like to tell the Chamber that the Government's estimate of the impact on London council taxpayers of the Greater London authority—[Interruption.] That was not the right hon. Gentleman's question, but if he wants to accuse me of selective quoting, I must draw attention to the facts that he wants to ignore: the massive cost of the elected regional government in London that is in excess of what the Government told us it would be when it pushed through the Greater London Authority Act 1999.

Significant indirect costs are already occurring. An article from The Guardian yesterday tells us that, in Ribble Valley, one of the reasons for turning down a PFI project was the uncertainty over the district council's future. Already, local authorities' activities are being blighted in areas where referendums will be held.

Where will the money for all these costs come from? Some of it will come in the form of central Government grants—more wasted taxpayers' money—but regional assemblies will also have the power to impose a precept to raise additional funds, which will be an additional burden on the already hard-pressed council taxpayer. The White Paper makes it clear that they will be expected to make a contribution to their administrative costs through a precept on the council tax. We do not know whether the Government propose to impose any limits on the powers of elected regional assemblies to set a precept. Perhaps the Minister will clarify that.

The publicity campaign, the referendums, the reorganisation of local government, the administration cost of elected assemblies and the buildings are all going to cost us hundreds of millions of pounds, and for what? For the answer, I turn to the Minister's colleague in the other place, Lord Rooker, the Minister responsible for matters involving the Office of the Deputy Prime Minister. He assured the other House that there would be no new money and no new powers for elected regional assemblies. From what we have seen so far, it is clear that the powers that elected regional assemblies will have will largely be taken from local government: fire, planning, housing and so on.

Our problem with scrutinising cost is that we simply do not know the extent of the assemblies' powers and functions, and thus the cost that will be imposed. The White Paper set out the powers that the Government propose to give elected regional assemblies. The Deputy Prime Minister has then run around the country talking up those powers, telling a closed meeting in the northwest that an elected regional assembly will be an opportunity to reopen the Barnett formula, and telling others that transport, the police and learning and skills councils will be transferred to elected regional assemblies—all in a desperate attempt to shore up a rather flagging Government policy agenda.

Tony Flynn, the ousted leader of Newcastle city council, asserted that the closure of the Swan Hunter yard would never have happened if there had been an elected regional assembly. We were also told a few weeks ago that the trans-Pennine rail link would be safe if only there were an elected regional assembly.

Conservative Members have serious concerns about the time scale involved. The Government have reluctantly indicated that they will try to publish a draft Bill setting out the powers of regional assemblies before the referendums. That is an absolute requirement, and I hope that the Minister will be able to tell us in more detail today when that Bill will be published and how much detail it will contain. It will be of no use to anyone if it simply contains enabling powers that provide for Ministers to set out the powers in secondary legislation later.

When my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) was a shadow Secretary of State, he wrote to the Deputy Prime Minister—

Mr. Raynsford

A wise man.

Mr. Hammond

Indeed. My right hon. Friend set out our concerns and asked the Deputy Prime Minister for the assurance that the Bill would be published in draft form so that we would know precisely what the powers would be. Eventually, a couple of months later, my hon. Friend the Member for Meriden (Mrs. Spelman), being a persistent sort of a person, managed to get a reply from the Under-Secretary in the Office of the Deputy Prime Minister who said: We have already published the White Paper, Your Region, Your Choice. This set out the powers that the Government intends for elected regional assemblies … The draft Bill will reflect the proposals outlined in the White Paper. That is pretty clear. We put out a press release saying that the ODPM confirms that there will be no additional powers for elected regional assemblies.

The ODPM countered with its own press release in which the Deputy Prime Minister's spokeswoman, an official in the Department in which the Under-Secretary resides, said that the Government had already added to the powers originally set out in the White Paper and that discussions on other issues were continuing. In other words, the official spokeswoman directly contradicted what the Under-Secretary said in his letter to my hon. Friend. Ministers are fighting like ferrets in a sack over what powers will be transferred to these elected regional assemblies.

The hon. Member for Pendle (Mr. Prentice) is absolutely right about the nods and winks. We know exactly what is going on. We know exactly why the Minister and the ODPM were so coy about the precise powers that elected regional assemblies would have until after last Thursday. The Deputy Prime Minister, probably even now, is in Downing street warning the Prime Minister that unless he gives more powers to the elected regional assemblies, he faces another rout in October on the scale of the rout he suffered last Thursday.

I do not know who will win that battle within the Government, but I know that the people of the three northern regions when they go to the ballot box in October—if the Minister will confirm that these referendums are still on—have a right to know what powers they are being asked to vote for the assembly to be given so that they can calculate the precise costs and benefits of going down the Government's preferred route. It is simply not acceptable to ask the electorate to vote for a pig in a poke.

I will not be quite as ambitious as the hon. Member for Pendle who asked the Minister to confirm that the whole thing was off the agenda and would not be going ahead. I will simply ask the Minister this: if it is going ahead in October, will he at least give us the assurance that a draft Bill, clearly setting out the powers that elected regional assemblies will have, will be published before the summer recess and that Parliament will be given an opportunity to debate it so that we can tease out the questions that will undoubtedly arise before the people of those throe northern regions go to the polls?

3.18 pm

The Minister for Local and Regional Government (Mr. Nick Raynsford)

This has been a curious and in some ways intriguing debate on an important subject. I congratulate the hon. Member for Congleton (Ann Winterton) on securing this opportunity to discuss regional government. As hon. Members know, the Government are committed to a far-reaching and radical programme of constitutional change and devolution, transforming what was one of the most highly centralised countries in the western world in 1997 into one in which there is far greater and more appropriate devolution of powers to different levels.

We are taking substantial steps to reverse the trend of excessive centralisation that characterised the Conservatives in government. They now seem to be trying to distance themselves from their record. Our record, by contrast, is strong and demonstrates how seriously we have addressed the need for devolution of power from Westminster and Whitehall. We have devolved power to Scotland and Wales and restored city-wide government it in London; now, we are offering the English regions the chance of devolved power.

That poses a problem for the Conservatives. They are trying to present themselves in a new light, and not as the ultra-centralists who took power away from local authorities and at abolished whole tiers of devolved government, such as the Greater London council and various county councils. They present themselves as the friends of the county councils, yet they seem to forget that they abolished Berkshire when they were in government. Instead, they are trying to present themselves as the party of devolution.

The problem is that the Conservatives cannot bring themselves to follow this devolutionary logic. They have put themselves in the absurd position of opposing devolution to Scotland, Wales and London, and now to the English regions Despite mouthing the rhetoric of devolution, in practice they have vehemently opposed it whenever they have had the opportunity to do so in the past seven years.

There is one notable exception to that trend, and he was referred to by the hon. Member for Runnymede and Weybridge (Mr. Hammond). I am very happy to pay tribute to the right hon. Member for Skipton and Ripon (Mr. Curry), and I would like to quote what he said on this subject less than three years ago: There is actually a case for regional devolution, and it is silly to pretend that that case does not exist. There are two arguments in favour of regional devolution. One is that there is a serious problem with representative democracy in Britain today. We have passed power out of the hands of people who are accountable."—[Official Report, 26 November 2002; Vol. 395, c. 218.] That is a fair criticism, and it has been echoed by my hon. Friend the Member for Worcester (Mr. Foster), the hon. Member for Ludlow (Matthew Green) and many other Members who recognise that the extension of regional government under the previous Conservative Government—the hon. Member for Congleton referred to it—involved devolution of power to non-elected bodies and unrepresentative quangos, or to the government offices that were created.

Ann Winterton

Can the Minister answer a simple question? Why did the then Government act in that way? If he recalls what I said, he will have the answer to hand.

Mr. Raynsford

I do recall why they did it, and the right hon. Member for Suffolk, Coastal (Mr. Gummer)—the then Secretary of State with responsibility for such matters—frequently talked about it. It was recognised that an increasing number of Government issues needed to he handled at regional level, and that there had to be greater coherence among different Government Departments which had been acting separately. That was a perfectly logical and sensible approach, and the only criticism that I make is that it did not take account of the democratic deficit that the right hon. Member for Skipton and Ripon rightly highlighted.

I must tell the hon. Member for Congleton that the right hon. Member for Suffolk, Coastal does not share her Eurosceptic views about the origins of regional government in Britain. It did not owe its origins to Brussels, as she likes to assume, any more than our proposals do. It resulted from a proper analysis of the importance of good, efficient administration, and from ensuring the pulling together of different strands out of their separate silos, which I entirely endorse as an objective.

Ann Winterton

The Minister can stop calling me a Eurosceptic because I am a Euro-realist, and there are a growing number of Euro-realists in this country. I suggest that the Minister goes back a bit further in my speech. Most of the provisions introduced by the Conservative Government and the current Government are based on the European Union. It is about time that we recognised that fact and stopped trying to fool the British people about the origins of matters such as regionalisation.

Mr. Raynsford

Well, we can tell that the hon. Lady is a bit rattled by the success of the United Kingdom Independence party in her constituency in the recent elections. However, there is no substance to her allegations that our proposals for elected regional government in the English regions are the product of Brussels. They are not, and I can tell her that with some authority because I have been involved in this right from the beginning. In 1997, I was the Minister responsible for developing proposals for the Greater London Authority, which was the first of the English regions to have a devolved governmental structure. And since 2001, when I took up my current post, I have been involved in the development of proposals for the devolution of power to the English regions.

Those proposals and developments have been worked up here in London by the British Government. Obviously, we have taken advice from people overseas—in America, Australia and Asia, as well as in Europeߞand we have looked at overseas examples; that is proper, and any sensible and prudent Government would do so. However, we have developed our own proposals for the benefit of the English regions. They are not beholden to Brussels, and it is a monstrous travesty of the truth to suggest otherwise.

With the honourable exception of the right hon. Member for Skipton and Ripon, the Conservatives have been totally misguided on the issue of the regions. They were wrong on Scotland. They voted against regional government there, but had to change their minds and accept it. They were wrong on Wales, and had to change their minds and accept it. They were wrong on London, and had to change their minds and accept it. They will be wrong on the English regions, too, and they will have to change their minds and grovel once again. Sadly, they fail to learn any lessons from history. As I commented in a previous debate. their inability to learn reminds me of the Bourbons. So let us have a few facts from them, rather than scaremongering and nonsense.

This debate is about costs, and it is important to know the reality of those costs. The set-up costs for elected regional assemblies will be about £30 million in each region, as we have made clear. The expected running costs will be about £25 million a year, because the authorities will be small and streamlined, with 25 to 35 members. When we produced our initial proposals for London and the English regions, many people criticised us and said that there would not be enough councillors. Now, most people recognise that this is a sensible provision that provides adequate representation to ensure that we focus on the matters that must be handled at regional level, without excessive proliferation and certainly without duplicating the work of local government.

We recognise that there will be some initial local government reorganisation costs, but there is also the potential for significant savings down the line. We have received the report from the boundary committee and its final recommendations. It would not be right for me to comment on the recommendations at this stage, as Members will understand, but it is perfectly fair to highlight their implications in terms of the costings set out by the committee.

Under the recommendations, the number of local authorities in the two-tier areas in the three northern regions would be reduced from the current figure of 50 to between seven and 19 unitary authorities. That would be very different from the reorganisation of local government by the Conservative party in the 1990s, when it simply turned existing district councils into unitaries. That created a lot of additional cost and achieved no savings. Our approach is entirely different, involving a significant reduction in the number of authorities and scope for substantial savings.

Mr. Hammond

Will the Minister confirm that electors will not be offered only the choice of county-wide unitaries?

Mr. Raynsford

As I said, there will be between seven and 19 councils in total in the three northern regions, rather than the existing 50. There will be seven if people vote for a wholly unitary county, and 19 if they opt for the more extensive arrangements. As my hon. Friend the Member for Worcester and the hon. Member for Ludlow pointed out, there will be significant scope for reductions in unnecessary administration. I am astonished that the Conservative party seems to be pooh-poohing attempts to achieve efficiency and better value for money in public services. We shall remember that in future debates on this subject.

Mr. Hammond

Will the Minister give way?

Mr. Raynsford

I cannot because time is short, as the hon. Gentleman will recognise.

The debate is about the implications of regional assemblies. Assemblies will exist to bring financial benefits to the regions. They are part of our framework for the continued improvement of regional economies. Their functions will be focused on the twin pillars of economic development and improving the quality of life. The way to address regional disparities is to give the regions the tools to improve their economic performance, rather than seeking to constrain growth in better performing regions. Economic development will be a prime function and responsibility of elected regional assemblies. They will also improve the coordination of policy and services by bringing together regional strategies on a range of issues—including planning, housing, transport, employment and training and skills—all of which support the economic development agenda.

Through elected assemblies, people will have control over how significant proportions of central Government money are spent in their region. According to figures for 2002–03, an assembly in the north-west would have direct responsibility for programmes to the value of more than £1 billion, and it would have an important influence on other budgets totalling a further £1.6 billion. Such an assembly would thus take, or be involved with, decisions on some £2.6 billion of funding.

For almost a century, there has been economic division between the regions of our country. Development and prosperity have been disproportionately focused in the south, while the northern regions have faced the severe problems of industrial decline, unemployment and disadvantage. The Government are committed to an agenda to promote economic success and prosperity in all our regions, and we have already taken important steps in that direction. Regional development agencies—the Opposition opposed them, too, before they were set up, but they have had to eat their words—are helping that process. The next stage is to allow the people in each of the northern regions the opportunity to have a greater say in the future of their regions through democratically elected assemblies.