REGIONAL DEVELOPMENT Agencies could be given the power to issue bonds to raise private finance for regeneration projects.
The move comes in response to concerns by the business sector that private finance will not be given a strong enough role in the agencies' operations. According to Confederation of British Industry deputy director general Peter Agar, regeneration minister Dick Caborn has been discussing the possibility while touring the country promoting RDAs .
Agar is quoted in this week's environment, transport and regional affairs select committee report saying: 'The minister (Caborn), in his tour round the regions, is talking about regional bonds . . . There is a very important debate to go on about the way in which we can leverage private finance into economic and infrastructure development.'
He also urged the Treasury to get more involved in the development of RDAs, as its current arrangements 'restrict the degree to which public corporations can go out into the commercial market and borrow'.
The use of bonds to raise finance for public sector projects has been pioneered in the US. Environment committee member, Labour MP Dr Alan Whitehead, is a leading proponent of the idea, claiming it is 'a method of getting investment into the agencies without the problems that are associated with more traditional ways of doing it, and without simply going down either the private or public route'.
The committee's report on the RDA agrees: 'The agencies need to have powers to raise private sector funds, such as regional development bonds. Government should urgently address this important matter'.
A spokeswoman for the DETR also confirmed that the idea of giving RDAs the powers to issue bonds was being studied as part of the government response to the select committee report.
Legislation aimed at creating the nine planned English RDAs is due to pass through Parliament this year. They will come into force during April 1999, immediately assuming control of the Single Regeneration Budget (worth over £1bn a year), as well as a number of other important policy levers (NCE 11 December 1997).
During the committee's investigation, Caborn clarified two important issues: RDAs are likely to be able to move funds between budgets, rather than have to stick to central government allocations; and RDAs could be given extra powers without further legislation. However, Environment Department Regional Policy Unit director Lindsay Bell denied there were plans to transfer local authority powers to the RDAs.