Blair accused of stifling knowledge economy

The development of the knowledge economy in some of Britain's poorest areas is being hampered by the very organisation which most wants it to happen: the government.

Business leaders around the country are blaming mismanagement and interference from central government for their lack of success in creating economically vibrant industries.

The Confederation of British Industry (CBI) released a damning report on Labour's flagship Regional Development Agencies (RDAs) this week, claiming that too many responsibilities and too little independence had left them ineffective.

England's nine agencies were set up by the Department of Trade and Industry in 1999 and 2000 to boost regional economies by improving planning, funding and competitiveness.

Richard Harvey, manager of the Tapton Park Innovation Centre in Derbyshire, told silicon.com the agencies are crippled by bureaucracy and paperwork.

"It's a highly skilled accountant's job to fill in some of their stuff. In theory high-tech companies should be better equipped to cope than most, but it doesn't work in practice.

"In general most companies are very cynical about government interference, especially since IR35," he added.

The CBI study also claimed budgets are "miniscule", citing the East Midlands which turns over a total of $49bn annually but has an RDA budget of just £81m - of which the agency can only spend £10m.

A recent study by left-wing think-tank Demos concluded that the DTI's approach to regional funding has damaged business spirit. It concluded that the government should promote 'business clusters' for high-tech firms, where innovation could be encouraged.

A spokesman for the DTI said steps had already been taken to strengthen the role of the RDAs by giving them increased budgets and increased flexibility in how they administer those budgets.

He added that the DTI would also increase business representation on their boards.

"In return we expect the RDAs to deliver against challenging outcome targets which will apply from April 2002. Their top priority must be providing strategic leadership to promote economic development, enterprise and investment in their regions," he said.