House of Commons North West Regional Committee

The impact of the current economic situation on the North West and the Government's response: the Government's reply to the Committee's First Report of Session 2008–09

First Special Report of Session 2008–09

Ordered by The House of Commons to be printed 11 November 2009

HC 675 Published on 19 November 2009 by authority of the House of Commons : The Stationery Office Limited £0.00

North West Regional Committee

The North West Regional Committee is appointed by the House of Commons to examine regional strategies and the work of regional bodies.

Current membership Mr David Crausby MP (Labour, Bolton North East) (Chairman) Rosie Cooper MP (Labour, West Lancashire) Tony Lloyd MP (Labour, Central) Mr Eric Martlew MP (Labour, Carlisle) Geraldine Smith MP (Labour, Morecambe and Lunesdale)

Powers The committee is one of the Regional Committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152F. These are available on the Internet via www.parliament.uk.

Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/parliamentary_committees/nw.cfm

Committee staff The current staff of the Committee are Gosia McBride (Clerk), Duma Langton (Inquiry Manager), Tamsin Wallwork (NAO Adviser), Emma Sawyer (Senior Committee Assistant), Ian Blair (Committee Assistant), Anna Browning (Committee Assistant) and Nick Davies (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the North West Regional Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 0654; the Committee’s email address is [email protected]

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First Special Report

On 31 July 2009 the North West Regional Committee published its First Report of Session 2008–09, The impact of the current economic situation on the North West and the Government’s response [HC 696]. On 1 October 2009 we received the Government’s response to this Report in the form of a memorandum from the for the North West. The memorandum is published as an Appendix to this Special Report.

Appendix: Government response

1. It is vital that the North West retains skills in order to ensure the region is well positioned for the upturn. We are encouraged that witnesses reported that companies seem to have learnt the lessons of previous recessions and do appear to be doing all they can to avoid redundancies and retain skills in their workforce. We recommend that the Regional Minister continues to monitor this situation. (Paragraph 1)

The Government agrees that actions aimed at avoiding redundancies and retaining skills within the region are important, and will remain a priority for the Regional Minister. Both the Joint Economic Commission for the North West, and the North West Regional Skills and Employment Board will continue to work to deliver initiatives to support individuals affected by the downturn through support for new skills and training. Apprenticeships are a key route to building the regional skills base, and the Government is committed to delivering significant growth in Apprenticeships for young people and adults across the region.

2. We conclude that Jobcentre Plus has, on the whole, dealt well with the challenges presented by the recession and has increased its staffing levels appropriately to meet the increased demand for its services. However, Jobcentre Plus must find a way to ensure that it is called in at an early stage when an employer is planning redundancies so that those affected can be given timely advice. We recommend that Jobcentre Plus and its partners continue to work with employers to achieve this. (Paragraph 24)

The Government welcomes the Committee’s recognition that JobCentre Plus has responded well to the challenges within the North West, and it will continue to offer support to employers to ensure early intervention when redundancies are being planned. It has taken significant steps to improve the Rapid Response Service (RRS) for those businesses declaring 20 or more potential redundancies to the Insolvency Service. There are dedicated RRS managers in place working with regional partners to offer both earlier intervention and a much broader range of help and support.

Advanced notification of redundancies are monitored weekly, alongside the monitoring of smaller scale redundancies. Collaboration with trade unions has also facilitated early access to employers and individuals in many redundancy cases. An Industrial Restructuring Group has been established in which NWDA, BLNW, JCP and LSC assess how the region

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is responding to redundancies and ensure the conduct of joint responses, working with employers to ensure a smooth and efficient service is provided.

3. It is unfortunate that the restructuring of the Learning and Skills Council is taking place in the middle of a recession. In these circumstances it is vital that the transition is planned as carefully as possible. We recommend that the Minister considers the benefits of linking the skills strategy for the Skills Funding Agency to the Regional Economic Strategy and writes to us about whether this is possible and desirable in the North West. We also recommend that in its response to this Report the Government sets out what lessons have been learned in the North West following the gross mismanagement by the LSC of the further education capital programme. (Paragraph 30)

The Government accepts there have been difficulties around the further education capital programme, particularly where successes led to an increase in demand for funding. The Government has accepted all the recommendations made in the Foster Review. In taking the recommendations forward, a dedicated project management group across both the LSC and the Department has been established. This has led to a new needs-based system which after an open and transparent prioritisation process, in consultation with the sector, has allowed the most urgent projects to begin this autumn.

The Chancellor announced in the Budget an additional £330 million of capital funding which has allowed the LSC to give approval to a limited number of projects starting this autumn, and has also announced a continuation of the Further Education capital investment programme in future years. In the North West approval has been given to 4 colleges: West Cheshire, Furness, Wythenshawe and St Helens. The LSC hope to be able to announce that a project at the Manchester College will also be able to proceed following further discussions.

The Government recognises the need to ensure a smooth transition for restructuring of the Learning and Skills Council. The current economic climate means that it is more important than ever that the skills system is able to respond quickly and effectively to the needs of employers and individuals. The Government is therefore actively considering the simplification of the skills landscape at the regional level.

To this end, it is considering making the Regional Development Agencies the single body with responsibility for producing the regional skills strategy and acting as champion and advocate for skills at the regional level. The regional skills strategy, which would constitute an investment plan, would be integrated within the single Regional Strategy (which will replace the Regional Economic Strategy). Under this scenario, the Skills Funding Agency (which will replace the Learning and Skills Council from April 2010) would be responsible for allocating funds and managing the relationship with colleges and providers.

4. We conclude that the North West Regional Development Agency, Jobcentre Plus and the Learning and Skills Council appear to have developed a good working relationship in the region. We welcome this close relationship and recommend that these, and any successor, bodies continue to work closely together in the future to ensure the region is not disadvantaged by significant skills gaps in the future. (Paragraph 36)

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The Government welcomes acknowledgment that its regional agencies are working effectively together. It will ensure that this close partnership continues through successor bodies to deliver strong regional outcomes on the skills agenda. This will be delivered through the Regional Employability Group, a sub group to the Regional Skills and Employment Board.

The recent decision by the for BIS that RDAs will lead on strategic skills matters will provide the NWDA with the direct opportunity to address the skills demand in the region. Through the Regional Employment and Skills Board a Commissioning Plan will be developed which will be delivered by the Skills Funding Agency. The NWDA will ensure that the Regional Skills Strategy is fully aligned and integrated into the integrated Regional Strategy (RS2010).

5. We welcome the use of the Rapid Response Service and the Response to Redundancy Programme across the region where needed. However we are concerned that the effectiveness of the Rapid Response Scheme does not appear to be being monitored. We recommend that an exercise be undertaken to evaluate the programme in terms of outcomes for participants. We would also like to hear more from the Learning and Skills Council about the impact of the Response to Redundancy Programme in the North West once the programme is underway. (Paragraph 40)

The Government does not accept that it would provide value for money to evaluate the Rapid Response Service (RRS) programme in terms of outcomes for participants. The RRS offers support for employers and individuals affected by redundancy, rather than as a programme for people looking for work. Jobcentre Plus at both a regional and local level monitors the take up (and decline) of support from employers. Systematic evaluation is therefore not straightforward.

Firstly, the creation of a tracking system for individuals would be complex and highly labour intensive as many of the individuals who make use of the RRS do not need to access mainstream Jobcentre Plus activity. They find work without actually becoming unemployed. Currently JCP are unable to monitor what happens to these individuals because it keeps no specific record. In addition, RRS connects people to existing products, support and delivery systems which are themselves evaluated.

In the North West, since October 08 over 490 employers have been assisted through RRS with support offered to over 32,000 individuals. JCP is not in a position to create a tracking system for all individuals seen by the RRS as its focus is on ensuring it can deploy help quickly. This approach, however, will be kept under review in circumstances of large-scale redundancies.

In the NW JCP has developed and are in the process of putting in place a tracking system to evaluate the impact of the Job Focused Training support funded through RRS. This process is reliant on individuals providing information relating to employment following access to redundancy support, as some individuals may not register for welfare benefits.

The Response to Redundancy programme is currently delivered through a network of 25 Learning and Skills Council (LSC) providers in the region. LSC and JCP have worked together to ensure the Response to Redundancy offer and the JCP Rapid Response funding complement each other. A provider directory has been produced to detail provision,

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location of provision and provider contact details, and has been issued to JCP, NextStep, Business Link advisers and other partners to facilitate an activist approach between partners and providers. A performance review exercise is currently underway to ensure both regional and national targets are achieved.

6. We consider increasing skills in the North West to be of the highest importance and we welcome the work that the LSC and partners have done to engage regional businesses in skills training. Train to Gain is providing an invaluable service in the North West and funding must be secured to ensure it can continue. We ask the Government to update us on progress with bidding for additional funding for the scheme in the North West. (Paragraph 45)

The Government can confirm that an additional £4.7 million has been agreed for the Train to Gain (TtG) programme over the original allocation for the North West, increasing the financial year budget for 2009–10 to £113 million. The LSC is also in the process of allocating £14 million of European Social Fund expenditure to eligible providers to purchase additional TtG provision, and intends to go out to competitive tender for up to an additional £8 million of provision in November to help meet demand for the programme from North West employers. NWDA will continue to work to further integrate TtG with the activity of Business Link North West.

7. We believe it is crucial that young people who have begun apprenticeships are able to complete them. The Government and its regional agencies have set up schemes to protect apprentices affected by the recession, but these do not appear to have been promoted enough within the region. We ask the Regional Minister to coordinate with companies, the further education sector and Jobcentre Plus to ensure that apprentices affected by the recession are made aware of what assistance is available to them. We also recommend that the Regional Minister takes the lead in ensuring that schemes to protect apprentices are promoted to all partners. (Paragraph 52)

The Government recognises the importance of supporting apprenticeships during the current economic downturn, but does not agree that schemes to protect apprentices have been insufficiently promoted within the region. In the North West, the National Apprenticeship Service (NAS) continue to pilot a range of initiatives targeted at regional and sectoral support, such as working with CSkills to invest up to £1 million in supporting out-of-work Apprentices from the construction industry. NAS have also developed ‘employer pool’ contracts with the Construction Industry Training Board and Economic Solutions, working closely with the North West Provider Network to pick up any learners being made redundant. To ensure that they are able to continue their training, they will be funded to remain in full-time off-job provision for up to six months, either to complete their apprenticeship or to allow time for alternative employment to be sought.

JCP managers engaged through the Rapid Response Service are signposting apprentices to the national apprenticeship vacancy matching system and NWDA has established its own bursary scheme to help to retain graduates in the region, which is promoted through the 14 HEIs in the region. To increase awareness of the support available, NAS will issue a fact- sheet newsletter in early October providing further information for employers and those interested in apprenticeships.

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8. We support the apprenticeships scheme launched in Building Britain’s Future and recommend that the Government sets out how it proposes to increase the number of apprenticeships available to young people in the North West within both the public and private sector. (Paragraph 53)

NAS is currently developing an employer engagement strategy which will identify the priority sectors to target for increased apprenticeship opportunities within the North West. Early indication suggests that the following sectors will be key: Retail, Nuclear, Hospitality and Catering, Public Sector, Engineering and Care. This will support the Government’s objectives to increase the total number of apprenticeships available to young people in the region.

Implementation will include sector-focused employer engagement events and key partner engagement with employers on the NWDA strategic sites. The North West Apprenticeship Ambassadors’ Network is being set-up, which links into the National Network. To date partnership working by the NAS has generated employer Apprenticeship vacancies numbering over 1,500 since April.

In the Public Sector, NAS are working with the North West Employers Organisation (NWEO) to engage with Local Authorities. Employer Services Managers have been allocated to work with specific Local Authorities to support their Apprenticeship development, and the NHS has provided 1,100 pledges for apprenticeships, via a joint initiative with the Strategic Health Authority.

9. We welcome the Future Jobs Fund as a means of supporting innovative bids to create new jobs for the North West. We recommend that the Regional Minister and the for the North West work with partners, including the trade unions, to ensure as many applications from the North West, particularly from young people, are as successful as possible. (Paragraph 57)

The Government can confirm that it has worked with partners through GONW to ensure that a number of high-quality and innovative bids were submitted to the Future Jobs Fund. As a result in round one, the North West saw the most successful set of bids outside of London. The funding that has been secured will potentially generate the greatest number of job opportunities of any region with around 9,268 jobs, as well as further opportunities from successful national bids. There is currently geographical coverage of around 80% of the region, and bids will be actively encouraged to cover remaining areas in the next two rounds. Unsuccessful round one bidders have been contacted in order to offer constructive feedback on how bids could be improved, and signposting to other partners to strengthen delivery.

10. We are encouraged that Jobcentre Plus, the Learning Skills Council and university careers services are working together to support graduates during the downturn. We ask Jobcentre Plus and the Learning Skills Council, or its successor bodies, to report back to us in six months time about the progress made in delivering these initiatives and whether any further support can be given to graduates in the region. (Paragraph 63)

The Government welcomes recognition of efforts by Jobcentre Plus, the Learning and Skills Council, and the North West Universities Association to work together to develop a

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coherent support package for graduates at risk of redundancy and new graduates unable to find employment. JCP and LSC agree to report back to the Committee in six months to set out progress made. In addition, the NWDA is working closely with the National Council for Graduate Entrepreneurship with a view to encouraging more students, and graduates to think seriously about starting a business, or becoming self-employed.

11. We are strongly in favour of promoting and protecting jobs in the North West. However, any support funded by the taxpayer should be able to demonstrate value for money in its approach. We recommend that the short-time working proposals put forward by the Federation of Small Businesses and the TUC are discussed at the next meeting of the Joint Economic Commission in order to canvas support for the measures compared to other available options. (Paragraph 67)

While the Government can agree to discuss the proposals put forward by the FSB and TUC at the next meeting of the Joint Economic Commission in order to canvas support, it can give no commitment to taking forward any proposals at this stage.

The Government has extensively examined the business case for a general UK wage support and has concluded that such support for all employers is not a feasible, cost effective or sustainable option. Experience of operating such schemes in the past shows they can act to create distortions and perverse incentives for other sectors and companies to “bargain” for subsidies. Such findings are supported by the OECD which concludes that wage subsidy schemes are extremely costly because of high deadweight costs where many eligible firms would in fact have retained workers without the subsidy.

The Government believes that business support is more effective and will bring permanent benefits to UK businesses and the economy. The packages of credit support that have recently been introduced, including the £10 billion Working Capital Scheme and an Enterprise Finance Guarantee Scheme, are designed to directly address the issues of access to finance. Additionally Train to Gain continues to provide effective and direct support to employers, helping them invest in the future productivity and profitability of their businesses by focusing on the training and skills of their employees.

12. Manufacturing is a vital part of the North West economy and also supports a large service sector. We welcome the efforts made by NWDA and the Manufacturing Advisory Service to support manufacturers in the region. However, we believe more could be done by the NWDA and the Government to make sure that the manufacturing base in the region remain a diverse and important sector in the North West. We recommend that the NWDA and the JEC make manufacturing a priority over the next twelve months. We further recommend that the Regional Minister works with the Department of Business, Innovation and Skills to accelerate the delivery of the Automotive Assistance Programme in the region. (Paragraph 74)

The Government agrees that manufacturing is vital to the North West economy, and confirms that it remains a priority. Advanced manufacturing has already been cited as a key sector within the Regional Strategy 2010 Principles and Issues Paper. The Joint Economic Commission will also continue to focus on identifying opportunities around manufacturing, for example to support issues such as the “green economy” or around energy.

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The Government, through NWDA, will officially launch its NW Manufacturing Strategy and Action Plan in October, which aims to improve the service to manufacturing businesses and raise the performance of the sector within the North West. This will include the establishment of an industry led manufacturing forum, led by the industry, to raise the profile of manufacturing and ensure that the needs of manufacturers are met. It will also include the deployment of a dedicated manufacturing portal to improve the sector’s image and provide manufacturers with key information on the services available.

The launch of the new Future Manufacturing Advisory Service by NWDA will in addition provide in the North West a total investment of £23.3 million over four years to specifically respond to the needs of manufacturing business. The aim is to deliver over £100 million of GVA and create over 2,000 jobs in the region.

Much effort has been and continues to be made by the Regional Minister, working with the Department of Business, Innovation and Skills and NWDA to encourage the effective use of the Automotive Assistance Programme by North West based automotive sector key players and the supply chain.

13. We welcome the work that the NWDA and Business Link have done to restructure Business Link. This had clearly led to improved perceptions of Business Link and encouraged businesses to seek advice and support from the service. However, the NWDA and Business Link could still do more to promote Business Link as a first point of call for early advice or a business health check and we recommend that it continues to work with banks, local authorities and other partners to improve signposting to the valuable services it provides. (Paragraph 79)

The Government welcomes recognition that Business Link (BLNW) is providing an effective service within the North West. It accepts, however, that work must continue to further raise the profile of the advice and support it can provide to the business in the region. A full programme of promotional and learning events is scheduled over the next quarter which will include joint road-shows with the banks, and a range of seminars with partners such as local authorities. This will particularly target groups who may not have previously been aware of the services offered by BLNW.

14. We agree with the NWDA that the failure to restore sufficient access to credit and confidence in the banks remains a major risk to the regional economy. We recommend that the Government continues to apply pressure upon the banks at a regional and a national level with regard to increasing lending to businesses in the region. We also ask the Regional Minister to examine the cost of borrowing in the North West and report to us on how this compares with the pattern nationally. (Paragraph 87)

The Government is providing real help now to protect businesses, jobs and homes along with the investments we are making to ensure the UK is well placed to seize opportunities presented by the recovery. In November’s Pre-Budget Report, the Government introduced a £20 billion package of measures (fiscal stimulus) to give the economy a shot in the arm, which included a one year cut in VAT and accelerating spending on infrastructure.

Action by the Bank of has supported the Government’s action. The Bank has reduced interest rates from 5 per cent to 0.5 per cent, and in September kept rates at 0.5 per cent at its monthly Monetary Policy Committee meeting. The Bank has also introduced

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£125 billion of quantitative easing, putting more money into the economy to boost spending. The Government has also taken decisive action to protect people’s savings, prevent the collapse of the banking sector and save millions of jobs.

The Government has acted to get the banking system working again, to clean it up and rebuild it so that it can support families and firms. The economy will not be fixed unless we fix the banks. Within the North West, the Regional Minister continues to meet with representatives of the leading regional banks to identify further actions to address the issue of access to finance. NWDA is also able to influence banks through bi-monthly meetings with regional business banking representatives as well as BusinessLink North West’s case by case activity to encourage increased lending to business.

On the issue of the cost of borrowing in the North West, the Government can find no evidence that the cost of borrowing from banks in the region differs from that provided elsewhere. Typically high street banks manage products on a national basis, and for small loans to SME’s a standard credit scoring system is used. In relation to loans above this level the cost of borrowing depends on the individual business and level of security, but no evidence can be found that North West businesses are being disadvantaged compared to other regions. Business Link Access to Finance brokers continue to help businesses in the region to look at a variety of funding options.

15. We support the joint work being done between Business Link, LloydsTSB and HBOS to increase the dialogue between businesses and bank staff. However, it is vital that the Government urges all major banks to educate their staff about the services Business Link provides. (Paragraph 88)

The Government agrees that it is vital for the major banks to educate their staff about the services which partners such as BusinessLink North West (BLNW) can provide. NWDA and BLNW are developing a specific programme for use with bank staff within the North West highlighting the range of Business Link initiatives and referral methods. The close working relationship between BLNW and the banks will also be used to encourage the banks to refer businesses to BLNW when they are unable to help, such as when refinancing/loan applications fail.

16. It is difficult to measure the success of the Enterprise Finance Guarantee Scheme at present because of the low awareness among banks and businesses. This is a serious flaw in a scheme that was intended to increase the level of lending from the banks to businesses. We recommend that Business Link continue their work to increase take up of the scheme. This should include every opportunity to engage with bank staff who are involved in delivering the scheme. We further recommend that the Joint Economic Commission monitor the take up of this scheme and report this information to us on a quarterly basis. (Paragraph 95)

Since the launch of the EFG, the Government continues to work closely with approved lenders and SME representative bodies to ensure that they are aware of EFG and any extensions there have been to its scope. As a result, the EFG has facilitated lending which would otherwise not be available. As of the 9th September, nationally 5,105 EFG loans have been offered to customers with a total value of over £512 million. That includes 530 offers

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made specifically in the North West to the value of £51.52 million. The Government agrees to provide returns on a quarterly basis to the Committee on take-up within the region.

Furthermore, the Government agrees that BLNW has a role at regional level to ensure bank staff understand the purpose of the Scheme and are able to promote it appropriately, as well as promoting the scheme themselves to encourage applicants to approach the banks. A programme of work planned with the banks will address this issue. BLNW will also look to deliver other communiqué to bank staff as appropriate to ensure better understanding of the support that is on offer from Government to business.

17. There is a demonstrable need for venture capital funding in the North West. It is important to ensure that innovative small and medium sized enterprises survive the recession, and are well placed to expand when the opportunity arises. It also provides a vital potential source of funding for new-starters. We recommend that the Regional Minister works with HM Treasury to clarify the status of the Venture Capital Fund and accelerate a decision as to its final delivery, and that he reports back to this Committee on the response from HM Treasury. (Paragraph 98)

The Government agrees that venture capital funding is important to support the development particularly of innovative SMEs. The Regional Minister has worked closed with the Treasury and others in accelerating decisions relating to the Venture Capital Loan Fund (VCLF). NWDA will continue to provide transitional loans and other financial support to companies as appropriate in the interim. The revised proposal for a North West Venture Capital Loan Fund (VCLF) was submitted to HM Treasury following acceptance of the North East Region proposed VCLF scheme in August. A decision is expected shortly. We agree to inform the Committee when a decision has been made.

18. Business Link and the NWDA have valuable experience of the needs of business in the region, and the detail of how projects are delivered on the front line. The Government should have engaged more with the Northwest Regional Development Agency before announcing initiatives that the NWDA had to implement. We recommend that in future the NWDA is involved in discussions about new initiatives in the region from the start. The Government should also consider how it disseminates information in the region to other partners, including banks, and review what it can do to make sure the delivery of initiatives does not become confused. (Paragraph 101)

The Government agrees that it is important that information on new initiatives is clear from the outset so that partners are able to effectively support delivery. It does not accept, however, that it did not engage its regional agencies sufficiently when determining the needs of businesses in the region.

The Department for Business, Innovation and Skills continues to work closely with the NWDA and BLNW on a number of key initiatives, with GONW providing support as appropriate. NWDA were actively involved in shaping the New Industry New Jobs agenda before specific proposals were announced, and are key players in implementing the Business Support Simplification Programme, as well as the regional enterprise strategy.

NWDA will also use their lead RDA role for the Department for Energy and Climate Change to ensure early engagement with policy announcements; and through their new responsibility around the skills agenda and developing relationship with the Skills Funding

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Agency (SFA) will seek to ensure that any announcements that may impact on the region are aligned with the Regional Employment and Skills Board policy and proposals.

As a general rule to ensure clear delivery within the region, GONW disseminates information and guidance to Local Authorities and other public sector partners, while NWDA leads on the dissemination of information to private sector organisations, including the banks, mainly via its Regional Banking Forum group.

19. We welcome the move by the JEC to make prompt payment an immediate priority. There are differing opinions as to performance of public sector in paying on the 10 day target and we agree with the NWDA that there should be an audit of public sector (central government, agencies and local government) performance in this regard. These results should be made public, the reasons why the 10 day target is not being met in some parts of the public sector should be identified and the JEC should work with the relevant partner organisations to improve the level of performance. (Paragraph 107)

The Government agrees that paying suppliers promptly is critical in helping small firms maintain their cash flow and survive in the current economic climate. The Regional Minister through the Joint Economic Commission has been active in ensuring that regional agencies make payment to contractors and suppliers promptly, and within 10 days in most cases.

This action is being monitored across the public sector, and good progress has been reported by regional government agencies, with all NHS and PCT establishments signed up to the Government’s Prompt Payment Code (PPC), making 10 day payments where possible. GONW, NWDA and BLNW have themselves signed up the PPC to demonstrate leadership at the regional level.

20. We are dismayed to find that larger firms are exploiting their strength at the expense of small businesses. The JEC should identify and make public the worst offenders among the private sector in the region, to borrow the Regional Ministers phrase, we should be ‘shining a light’ on those that do not pay on time. The Government should also take this message to the banks, regionally and nationally, that they have a major role to play in increasing the speed with which cash can move through supply chains and help reduce the need among business to withhold payment. (Paragraph 108).

The Government agrees that larger firms must be encouraged to make payments promptly, in order to ensure that SMEs are not disadvantaged during the current economic climate. The Department for Business, Innovation and Skills are working with major businesses to support the Prompt Payment Code (PPC). Within the North West, the Chief of NWDA has written to the main North West based private sector organisations to encourage their members to make payments within terms of no more than 30 days and to sign-up to the PPC. This has resulted in strong endorsement from the recipients particularly those representing smaller firms. On this basis we are now planning to raise the profile of prompt payment and will hold an event in the region where public agencies, local authorities and large private sector companies can publicly show their commitment to the PPC.

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21. We conclude that the NWDA refocused its priorities quickly and appropriately in response to the economic downturn. However, we are concerned about the impact budget cuts will have on Agency investments, particularly in 2010–11 when the transfer of funding to the Government’s Homebuy Direct Scheme will hit the NWDA’s budget hard. We recommend that the Government details the investment projects which the NWDA has had to cut or cancel as a result of this reduction in funding. We also ask the Government for a commitment that there will be no further cuts to the Agency’s budget over the 2008–2011 period. (Paragraph 126)

The refocused RDA budget enables them to continue to deliver important investment in programmes and projects focused on economic development, where the RDAs are key to the delivery of Government policy in these areas. The Government has also issued RDAs with indicative budgets for 2010–11 to inform planning for that year.

We expect key decisions about future RDA spending beyond 2010–11 to be made in the context of the next Spending Review and following consultation between RDAs and Government Departments. In the North West, the NWDA has recently established with HCA a joint statement of working which, in particular seeks to ensure joint investment planning so that the totality of NWDA and HCA investment has the maximum impact on the region and its sub regions. The Government agrees to write separately to the Committee to provide full details of the projects that may have been delayed or cancelled as a result of the recent reprioritisation the NWDA budget.

22. We welcome the enthusiasm with which the new Regional Minister has taken up his role. However, we also need to see action to be persuaded that the role carries real weight and influence at Westminster and that the Minister has time to commit to the role in addition to his other responsibilities. We are concerned that the Government Office for the North West (GONW) does not appear to be providing strong leadership in the region. Indeed it seems invisible to us as constituency MPs. We also remain to be convinced that the Joint Economic Commission (JEC) has played any greater role in the region than providing a forum for information sharing. We recommend that the Regional Minister and GONW brief us on actions agreed at the most recent JEC and then update us on progress delivering these actions on a quarterly basis. We also recommend that the Minister sets out what his intentions are for the future of the JEC. (Paragraph 146)

The Government does not agree that GONW and the JEC have failed to provide strong leadership in the region on the response to the economic downturn. GONW has provided support to the Regional Minister to engage effectively with regional stakeholders; help the Regional Minister identify priorities for work in the North West; and has ensured the Regional Minister is up to date on the key issues affecting the region, supporting engagement on areas where best value can be added.

Through its role leading for Whitehall on Local Area Agreements (LAAs) and Multi-Area Agreements (MAAs), GONW has brought together key delivery partners at the local and sub-regional levels to commit to stretching performance across a range of policy agendas. This includes working with Whitehall colleagues in brokering arrangements for agreeing LAAs with robust targets on issues such as reducing teenage conceptions and addressing all age/all cause mortality. As a result, additional contraception services are now in place

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across the St Helens and Halton Teenage Action Zones; while Halton PCT is developing a Quality Outcome Framework across high priority diseases such as diabetes and stroke.

In Cheshire there has been progress in Community engagement. GONW has brought together the councils and Criminal Justice Board to offer a better integrated approach. In Lancashire GONW has responded to a significant increase in serious acquisitive crime, a package of support for Burnley was negotiated and being delivered by the GONW community safety team. New ways of working have been trialled in Knowsley and welcomed by local authority colleagues. Close engagement with the Greater Manchester City Region pilot and Total Place Pilot also continues.

GONW has also played a lead role in ensuring that a number of high-quality and innovative bids were submitted to the Future Jobs Fund which has resulted in a high number of successful bids for the region as part of round one. This will potentially generate the greatest number of job opportunities of any region with around 9,268 jobs, as well as further opportunities from successful national bids.

GONW, with NWDA, has been instrumental in bringing partners together quickly through the JEC to mitigate the worst impacts of the economic downturn in the region, and developing a work-plan where partners can deliver action—including unblocking infrastructure projects, supporting the labour market and vulnerable communities, and identifying strategic opportunities for the upturn. Most recently JEC has examined regional support to tackle worklessness; how to use good procurement practice to support recovery; and to consider opportunities around energy efficiency and renewables.

However, the Government recognises the need to ensure continued leadership in the region. Both the Regional Minister and the Chair of the NWDA want to examine opportunities for recovery in the region, and ensure that future discussion at JEC includes a focus on a number of key issues and actions where partners can work together to identify effective and measurable outcomes. As a result, the next meeting in November will focus first on digital connectivity; a later meeting will look at the “green economy”, with the aim of identifying opportunities and barriers to realising the potential of these sectors for the North West. The Government agrees to provide updates on JEC actions to the Committee on a quarterly basis.

GONW are always happy to respond to MPs and since the beginning of 2009 it has dealt with over 200 letters. Staff also held a number of meetings with MPs. GONW welcome the views of the Committee and as a result MPs will be invited for a discussion hosted by GONW on key issues and activities in each sub region.

23. We conclude that the city region pilot scheme has potential to help the local authorities in the Manchester conurbation work together on areas of mutual benefit. However, the Government must ensure that other parts of the North West do not lose out as a result. We recommend that in its response to this Report the Government set out what assessment it has made on the impact of the pilot scheme for the rest of the region. (Paragraph 154)

The Government agrees that an assessment of the impact of Manchester city region plans on the wider North West need to be carried out. This will done by GONW in conjunction with other regional partners, including NWDA. We did not want to delay this response

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while the assessment is conducted and GONW agrees to write separately to the Committee before the end of November with further details.

24. We welcome the Minister’s confidence about the prospects for an economic recovery. It is vital to ensure that the region is prepared for an upturn and we place on the record now our intention to scrutinise the Single Regional Strategy in detail. We recommend that the North West Development Agency shares drafts of this document with us as soon as it becomes available. (Paragraph 159)

The Government welcome the interest that the Select Committee is taking in the development of the new integrated Regional Strategy, and notes the intention to scrutinise in detail. Members of the Committee will be included as key consultees when the document is circulated for consultation in late 2009/early 2010. In the interim the Government will ensure that Members are kept fully informed of drafts of the document as they are compiled in preparation for the formal consultation.