In search of a bigger splash

Regional development policies are back. And the South-west needs them. But will Labour - and the Lib Dems - allow it the strong coordinating body it requires, asks David Walker

The trademark white hills of central Cornwall, formed from the spoil of china clay workings, are being greened. Nowadays you can, just about, drive on dual-carriageway roads all the way to Land's End. The Camborne School of Mines, alma mater to generations of tin miners, has been rebadged as a campus of Exeter University.

But unemployment is stubbornly high - Cornish GDP per head is 71 per cent of the UK average. You can't eat the stones of Tintagel; tourist jobs tend to be seasonal. North and west Cornwall is a low-wage, low-skill economy. The old West Country staples - fish, defence and mining - no longer work. St Ives may have its Tate Gallery but it, Newquay, Redruth and St Austell also have the feel of depressed areas. They are badly enough off to qualify for both Whitehall and EC assistance.

It sounds like territory ripe for Labour's new regionalism. SuperJohn Prescott is set to come haring down the A30 bearing new constitutions, new agencies and maybe even new money. He and junior minister Richard Caborn have lately been criss-crossing the country, raising expectations, promising White Papers and bills. A regional development agency in every pot before Christmas and - somewhat more tentatively - a regional chamber or assembly in the new century.

Cornwall, north Devon and Plymouth, too, could be a lot more prosperous. The same could be said in spades about Sunderland, Workington and the Cumbria coast, Bootle, Sandwell, Barnsley... and Kingston upon Hull, one of whose MPs happens to be John Prescott. That is why regional economic development is back on the policy agenda, along with the growing anxiety that English regions may start to resent all the political attention being paid to the Scots and Welsh.

New Labour thoughts, so far, seem to be running in the direction of the old formula of more government - new regional development agencies, budgets and powers as yet unspecified, plus "chambers" nominated by councils which might eventually become fully fledged elected assemblies.

But more government is just what Cornwall does not need. Not long ago, a meeting was convened in Newquay for local players in the game of economic development. Representatives from 70 different organisations turned up. Most were from the state and quangoland: district councils, the county, English Partnerships (the land development body), the Rural Development Commission, the Government Office for the South-west (based in Bristol), training and enterprise councils, Business Links; the chambers of commerce and the variety of bodies spawned by the private sector, notably South West Enterprise, which is chaired by Sir John Banham, the former director- general of the CBI, and an energetic Cornwall booster.

So many voices make for cacophony. Thinking of investing in Cornwall? Where do you turn? What public money there is available for business development (a tidy sum in total) is split into penny packets. If a memorial were to be built to the follies of Thatcherism, this fragmentation of the public sector would be it. She came to power vowing to roll back the state. Instead she split it into a hundred pieces, rendering it ineffective without saving much money.

Prescott will fail unless he is prepared to do some drastic pruning in the West Country garden. The "South-west", the Standard Region as drawn in Whitehall's charts, stretches 230 miles from Swindon in Wiltshire down to the long, bony Lizard. This, 30 years on, is still the region created for the purposes of National Planning. It has no identity: the burghers of Bournemouth look to Southampton and London rather than Bristol, the region's nominal "capital"; Truro and Trowbridge have little in common.

A much more realistic "region" comprises the two counties of Devon and Cornwall, with headquarters in Plymouth. But before Mr Prescott gets down to redrawing the maps, he needs to ask just what it is these areas want and what, before central government gets into the picture, they can do for themselves. He needs to be convinced that the peripheral areas are doing all they can to maximise employment and opportunity. Do they have what John Banham calls "anger and ambition"?

Here's an anecdote from Plymouth, still struggling to come to terms with the rundown of Devonport naval dockyards. This summer, the Royal Shakespeare Company are in residence, quite a coup. But the troupe proposes to use a parrot and a dog live on stage. Agitation on the Labour-dominated city council benches. "Cruelty!" is the cry. The play must not go on.

The tale was told to me, with much shaking of the head, by one of the few bankers west of Bristol left with the kind of discretion to decide on business loans without referring to London. "There's no conception of what it takes to turn a city economy round."

The anecdote is about more than the pettiness of local politics. It shows that unless everyone in a region or area sings from the same sheet - and the message has to be "pro-jobs, pro-business" - no chopping or changing of the government machinery is going to make a difference. In Devon and Cornwall they complain about the money pumped into Scotland and Wales to subsidise investment there. They envy, too, the "one-stop shop" for inward investors offered by the dedicated development agencies in those countries. But they miss the fact there is a Scottish and a Welsh political will to provide a home for investors.

When global competition for footloose capital is so fierce, you cannot afford to be picky. When even the prosperous German region of Lower Saxony is willing to send its leader on gladhanding tours of the United States seeking new investment, English regions will have to fight hard.

But pick up the Western Morning News and read the letters column. The antagonism towards Europe shown by protesting Cornish fishermen seems widely shared - despite all those Lib Dem votes. You still hear talk about Francis Drake and the dago... hardly an appealing location for companies to trade from within the European Union.

The West Country has lots of retired people attracted by the mild climate and cheapish housing. The green-welly brigade is powerful, too, when it comes to objecting to roads across moorland or preventing the release of agricultural land for factories and warehousing. The parochialism factor is high and growth-friendly councillors are few. How else to explain, for example, why it is impossible to get container lorries into the otherwise excellent deep-water harbour at Falmouth. (Too many houses were built too close in and lorries cannot turn.)

It would be naive to imply that regions hold their own economic destinies in their own hands. Capitalism tends not to like geographical peripherality - though Ireland is a case everyone is studying hard these days. Decisions taken in far-off corporate boardrooms can hit hard locally. Earlier this year, British Airways suddenly switched flights to Plymouth from Heathrow to Gatwick - robbing the West Country of access to many international connections. It's a major event when capitalists imagine space in terms of proximity to hub airports.

A plausible and prosperous economic future can be imagined for the West Country, beyond tourism. Schools are good, crime is low. There is already a number of thrusting small to medium-sized firms. Some dynamic players are newly on the scene, among them Sir Geoffrey Holland, vice-chancellor of Exeter University and ex-Whitehall permanent secretary. Since leaving the civil service he has been a whirlwind of regional initiatives. He wants to deepen the regional pool of professional skills - a precondition of business development. A plan to found a branch university in Penzance is well ahead.

Big firms are few but there are high-tech firms in Torquay and Plymouth. Business movers and shakers, too, such as Mike Perry of pharmaceutical suppliers Stafford Miller, are full of enthusiasm. Ex-Navy officer turned developer Charles Howeson talks colourfully about Devonport's commercial future. Landowner Michael Galsworthy, friend of the Duke of Cornwall (Prince Charles) publishes a list of firms doing good business. "There are John Hall types to come out of woodwork," he says, referring to the North East's Mr Big. But Newlyn is the second most important seaport in England, yet Cornwall does very little seafood processing. (Lack of sites for plant and inadequate roads are among the reasons.)

So, if some ingredients are there, what can Prescott bring? One is administrative reorganisation, "a lot of squashing" is how Michael Galsworthy puts it. This will be bloody. It will mean getting councils out of economic development, rewriting their land-use plans, abolishing English Partnerships, and dismembering the Rural Development Commission. In their place would be established a one-stop shop: a powerful regional development agency with a budget of at least pounds 100 million. If it did not actually plan - economic planning is seriously out of fashion - it would have to "envision" - decide what kind of skills training should be provided for, and how the West Country should be marketed.

A regional agency would have to lobby Railtrack and the Department of Transport over infrastructure. Sir John Banham envisages it marshalling the regional contribution to welfare-to- work schemes and the provision of jobs for unemployed young people - provided (he adds) the receipts from the well-off regional utilities such as water and power are recycled in the region. But could such a powerful agency exist without democratic supervision, especially in the West Country where Liberal Democrat pieties about participation are strong? One thing is certain. In the South-west, the advent of regional councillors or assembly people would be the death of any serious effort to pick up an underperforming economy and population and kick-start them on the growth path.