Executive Board Meeting
10am, Friday 6 th December 2013 Conference Room, East Midlands Councils, Phoenix House, Nottingham Road, Melton Mowbray
AGENDA Page No. 1. Apologies
2. Declarations of Interest
3. Minutes of the Executive Board Meeting 27 th September 2013 1
Items for Decision
4. Reports of EMC Management Group a) Update on EMC Performance, Audit Control and Governance 9 b) Draft Statement of Accounts (Certification Office) presented by Leicestershire County Council 12 c) The Review of East Midlands Councils 36 d) Accountable Body Arrangements for EMC 40
5. Welfare Reform 46
6. An Update on HS2 66
7. EU Structural Funding; Current and Future Programme 79
Items for Information
8. Board Reports a) Report of Regional Employers’ Board 130 b) Report of East Midlands Strategic Migration Partnership Board 137 c) Report of Improvement and Transformation Board 144
9. Any Other Business Item 3
EAST MIDLANDS COUNCILS EXECUTIVE BOARD MINUTES OF THE MEETING HELD ON 27 TH SEPTEMBER 2013 AT EAST MIDLANDS COUNCILS OFFICES
Present: Cllr Jon Collins (Chair) – Nottingham City Council Cllr Martin Hill OBE (Vice-Chair) – Lincolnshire County Council Cllr Neil Clarke (Vice Chair) – Rushcliffe Borough Council Cllr Tom Beattie – Corby Borough Council Cllr Roger Begy OBE – Rutland County Council Mayor Tony Egginton – EMC Independent Group Cllr Jim Harker OBE - Northamptonshire County Council Cllr Paul Kenny – Boston Borough Council Cllr Chris Millar – Daventry District Council Cllr Robert Parker- EMC Labour Group Cllr Alan Rhodes – Nottinghamshire County Council Cllr Lewis Rose OBE – Derbyshire Dales District Council Cllr Nick Rushton – Leicestershire CC Cllr David Slater – Charnwood Borough Council Cllr Anne Western – Derbyshire County Council
Steve Atkinson – Chief Executive, Hinckley & Bosworth Borough Council John Sinnott – Chief Executive, Leicestershire County Council Mark Edgell – LGA Principal Adviser Keri Usherwood – Nottingham City Council
Stuart Young – East Midlands Councils Alison Neal – East Midlands Councils Andrew Pritchard – East Midlands Councils Sam Maher – East Midlands Councils Sarah Short – East Midlands Councils Lisa Hopkins – East Midlands Councils (Minutes)
Apologies: Cllr Paul Bayliss – Derby City Council Mark Carroll – DCLG Ian Curryer – Chief Executive, Nottingham City Council Cllr Fiona Martin – EMC Liberal Democrat Group Cllr Rory Palmer – Leicester City Council Cllr Linda Neal – South Kesteven District Council
1
Item 3
ACTION 1. Apologies and Introductions
1.1 Apologies were received as noted above.
2. Declarations of Interest
2.1 None.
3. Minutes of Executive Board Meeting held on 14 th June 2013
3.1 The minutes were agreed as a true and accurate record.
4. European Funding in the East Midlands (2014-2020)
4.1 Stuart Young, Executive Director East Midlands Councils, introduced this paper and highlighted the future programme.
4.2 Andrew Pritchard stated that the current ERDF programme has not performed as well as was expected and there is a strong possibility that money will be ‘de- committed’ from the programme. He stated that the larger projects have tended to perform better and this is a potential learning point for the future programme.
4.3 A draft socio-economic framework has been developed by EMC in consultation with Local Authorities and partners using PA3 Technical Assistance.
4.4 The report highlighted challenges and solutions on how best to deliver future programmes.
4.5 Members highlighted the following issues for consideration in both the current and future programme:
There should be a proportion of over-programming so there are some ‘on the shelf’ projects available. The role of EMC in a coordinating the future programme needs to be decided. Smaller number of very large schemes, however, not to the detriment of rural and smaller urban areas. Overlapping of LEP areas highlights the need for co-ordination. Laps working across the region on skills match funding. Members felt that skills, SME growth and low carbon should all be
2
Item 3
ACTION delivered on a regional level. EMC needs to be able to identify the case for doing something different on skills compared with the national approach, e.g. for the construction industry SY
4.6 Cllr Jon Collins suggested as a way forward to hold a joint conference with LEPs in the region with councils and other key partners.
4.7 A range of views relating to the performance of LEPs were highlighted by Members.
4.8 Resolution:
Members of the Executive Board: Noted the emerging priorities and management arrangements for the use of EU Structural Funds for the period 2014-2020. Welcomed progress to date on EMC’s Technical Assistance Project. Commented on the draft socio economic framework contained in Appendix 4(a), in particular the proposals for LEP collaboration and for mitigating delivery challenges, and highlighted any further support councils can give to LEPs.
5. Supporting Economic Growth and Building More Effective Relationships with LEPs 5.1 Andrew Pritchard, Director of Policy and Infrastructure East Midlands Councils, introduced this paper and updated members on the delivery of infrastructure within the East Midlands.
5.2 EMC is working with Network Rail in relation to connectivity issues with the proposed HS2 Hub Station. EMC, with financial support from a number of local transport authorities, has contracted with Arup to explore the potential for a direct link between Midland Mainline and HS2 to increase connectivity to the north and west midlands. There will be a joint EMC/TCPA seminar of 25 th November 2013 to explore the wider potential of HS2 in the East Midlands, and attendance is encouraged.
5.3 Andrew Pritchard commented on the joint working with LEPs and also the link with the East Midlands MPs.
5.4 Questions/Comments
5.5 Cllr Neil Clarke stated that it is important that dialogue takes place with LEPs to
3
Item 3
ACTION ensure Local Authorities have input into infrastructure projects.
5.6 Andrew Pritchard confirmed that the two projects identified previously by the Board to focus upon are progressing well: specifically Castle Line (Lincoln-Newark Nottingham) and A5 Corridor (Northamptonshire – Staffordshire).
5.7 Resolution:
Members of the Executive Board: Welcomed progress on agreed infrastructure priorities. Agreed to promote senior local government representation at the joint EMC/TCPA HS2 Seminar on 25 th November 2013. Considered and endorsed the opportunities for joint work with LEPs in promoting economic growth in local economies in the East Midlands. Noted the rest of the report. 6. The Impact and Response to Migration Patterns in the East Midlands
6.1 Cllr Paul Kenny, Chair Strategic Migration Partnership Board, introduced this report and highlighted the recent research into migration trends.
6.2 Members noted the uneven trends of migration growth across the region.
6.3 He further updated members on discussions from the Migration Partnership Board meeting that focused on:
Promoting access to English as a Second Language courses (ESOL). There may be a need to use European funding to ensure integration happens effectively. Consideration of the need to increase or extend dispersal areas for asylum seekers.
6.4 Migration is a key issue and there is a need to ensure the issues of the East Midlands are known and understood within the Home Office.
6.5 Members agreed to further work to be undertaken to fully understand migration trends and their impact in the East Midlands.
6.7 Resolution:
Members of the Executive Board: Noted the report and endorsed the priority areas identified as the basis
4
Item 3
ACTION for further work and agreed to further work to report back to the Executive Board. Agreed to consider their response to the request for assistance for locally engaged Afghan staff.
7. Report of the EMC Management Group
7a) Review of East Midlands Councils
7.1 Stuart Young, Executive Director East Midlands Councils, introduced this paper and provided background information to members in respect of the review.
7.2 Cllr Jon Collins stated that he is keen that the Executive Board agrees on an option which can then go to all member authorities for comment. In relation to the liability issue, Cllr Collins suggested seeking independent advice who can discuss with Upper tier authorities. He therefore proposed that Appendix 1(a) was not discussed. Members agreed to this approach.
7.3 Mark Edgell informed members that he has been asked to provide independent advice into the review and made the following comments:
Need clear articulation why EMC meets and what objectives are. Need to move away from ‘Business as usual’. More sustainable options and without reliance upon reserves.
7.4 Stuart Young informed members that Leicestershire County Council has given notice to withdraw as EMC’s accountable body and he will be writing to all member authorities asking if they wish to take on this role. SY
7.5 Cllr Jon Collins stated important factors for an organisation moving forward are:
Organisation effective in lobbying. Important East Midlands has an identity. Areas of expertise. Successful lobbying (e.g. Midland mainline and A46)
7.6 Members held a discussion around this paper and the following points were noted:
Important members are consulted on the review. Statement should be included in the review as to why East Midlands Councils should continue/exist.
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Item 3
ACTION If there is no regional organisation, there would lack a partnership to coordinate local activity. There is a need to market and better ‘market’ the organisation’s message. Needs to be clear about added value. Future working in partnership with other bodies.
7.7 Cllr Jon Collins stated that the review should include:
The benefits of working collectively at the regional level. Moving to an all member organisation. Examples of what has been done well and areas working on in the future. Clear why EMC exists and what will do prior to looking too much into budgets and sustainability.
7.8 Members agreed for a consultation period between now and the next Executive Board meeting on 6 th December 2013.
7.9 Accountable body role and liability issues to be discussed at the next meeting. SY/AN
7.10 Resolution
Members of the Executive Board noted the issues considered by Management Group, specifically: EMC Management Accounts 1 st April 2013 to 31 st July 2013. Performance against the Business Plan 2013/14. EMC Employees – summary of Terms and Conditions. Review of East Midlands Councils.
Members of the Executive Board: Considered the draft review of East Midlands Councils. Considered options and agreed for a consultation period between now and the Board meeting on 6 th December 2013, with the support of an SY independent advisor.
8. Executive Board Forward Programme – Issues for Consideration
8.1 Stuart Young, Executive Director East Midlands Councils, introduced this report.
Members considered and discussed the issues that the organisation should focus on
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Item 3
ACTION in the delivery of a forward programme.
Resolution
Members of the Executive Board agreed a forward programme of agenda items for future meetings to include: Welfare reform Adult social care funding Economic growth Infrastructure and levels of public funding LEPs European structural funds Migration
9. Regional Employers’ Board – Pay, Terms and Conditions, Councillor Development 9.1 Cllr Tom Beattie, Chair Regional Employers’ Board, introduced this report.
9.2 He updated members on an EU-funded seminar he recently attended in Copenhagen organised by CEEP UK which represents the interests of the public sector employers at European level. The conference was particularly useful, with youth employment being one of the topic areas and how social partners could work more effectively.
9.3 The main issue considered by the recent Regional Joint Council was pay and concerns regarding the future of national bargaining, following a letter from the LGA regarding the move from national towards more localised negotiation on terms and conditions other than pay.
9.4 Cllr Beattie informed the Board of Unison’s consultation document to its branches, relating to a pay claim for 2014. This consisted of two options, both linked with the living wage which would increase the local government wage bill by 15% and 8%, according to the LGA’s calculations.
Resolution
Members of the Executive Board:
Noted the report. Provided comments and feedback on the key employment issues identified to inform EMC’s input to future meetings of the Employers’ Board and NARE.
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Item 3
ACTION 10. East Midlands Improvement and Efficiency Partnership Board – Sector led Improvement and Transformation
10.1 Cllr Roger Begy, Chair East Midlands Improvement and Efficiency Partnership Board, introduced this report. In particular, he highlighted to members the approach of the Board in supporting Improvement and Transformation activity in the region.
10.2 Resolution
Members of the Executive Board noted the information contained within the report.
11. Any Other Business (previously notified to the Chair)
11.1 None.
13. Date of Next Meeting - Friday 6th December 2013, 10.00am, East Midlands Councils Offices, Phoenix House, Melton Mowbray.
8
Item 4 (a)
Executive Board Meeting 6th December 2013
Update on East Midlands Councils Performance, Audit Control and Governance
Summary
EMC Management Group met on 22 nd November 2013. The following report summarises the issues that relate to the organisational performance, audit control and governance of EMC. The review of EMC and the transfer of accountable body are detailed in separate reports 4 (c) and 4 (d).
All papers are available on the EMC website or on request to the Executive Director or Corporate Governance Manager.
Recommendations
Members of the Executive Board are invited to note the issues considered by Management Group, specifically:
EMC Management Accounts 1 st April 2013 to 31 st October 2013. Performance against the Business Plan 2013/14. Audit Requirements of Certification Officer
9 Item 4 (a)
1. EMC Management Accounts – 1 st April 2013 to 31 st October 2013
1.1 Members considered a report that detailed the financial position for the period ending 31 st July 2013.
1.2 The year end trading position is now forecast to be in surplus by £145,000, a slight increase on the original budgeted surplus of £130,000. This forecast has been reduced slightly to take into account any anticipated costs relating to the production of the Statement of Accounts as required by the Certification Officer. Any surpluses would, at year end, be transferred to reserves.
1.3 Members noted that reserves stand at £546,500 as at 1 st April 2013.
2. Performance against Business Plan 2013/14 (April to September 2014)
2.1 Members noted this report with specific reference to those KPIs that were underperforming as at the end of the first quarter: a) Increasing attendance (year on year) at meetings of EMC and associated Boards from 2012/13 levels
2.2 Attendance for the first quarter of 2013/14 against this KPI is not on-target due to attendance levels for the Executive and RIEP Boards being below 2012/13 levels.
2.3 All other KPIs were reported as being on target.
3. Audit Requirements of the Certification Officer
3.1 Members considered a report that outlined the audit requirements of the Certification Office in relation to East Midlands Councils role as an Employers Association as delegated under the Trade Union and Labour Relations (Consolidation) Act 1992.
3.2 Members noted that a Statement of Accounts would be produced by Leicestershire County Council and audited by their auditors Price Waterhouse Coopers in order for EMC to comply with its statutory requirements.
3.3 These draft accounts are to be presented by Leicestershire County Council under item 4 (b).
10 Item 4 (a)
4. Recommendation
4.1 Members of the Executive Board are invited to note the issues considered by Management Group.
Stuart Young Executive Director
Alison Neal Corporate Governance Manager
11 Item 4 (b)
Executive Board Meeting 6th December 2013
Report of the Treasurer (Leicestershire County Council) Draft Statement of Accounts 2012/13
Summary
The purpose of this report is to:
Present the draft 2012/13 Statement of Accounts attached as appendix (i) to this report for information, and To inform the Board of the main areas of the accounts.
Recommendation
Members of Executive Board are invited to:
Approve the draft 2012/13 statement of accounts that are subject to external audit. Approve the Treasurer in consultation with the Chairman and Executive Director to make any amendments following the audit.
12 Item 4 (b)
1. Background
1.1 East Midlands Councils (EMC) acts as the designated regional employers organisation and point of contact for employers and recognised trade unions in relation to local government services.
1.2 Under the Trade Union and Labour Relations (Consolidation) Act 1992 EMC are required to submit an audited annual return of its affairs to the Certification Officer. The return is in the form of the annual return form 27 (AR27). The return requires financial statements to be included. AR27 returns are required for the financial years 2010/11, 2011/12 and 2012/13.
1.3 EMC’s Statement of Accounts are an extract of balances from the accounts of Leicestershire County Council (LCC) who are the accountable body and servicing authority for EMC. EMC are included in the LCC accounts to save the cost of administering separate accounts, systems, taxation and audit requirements.
1.4 The draft 2012/13 accounts, including comparatives for 2010/11 and 2011/12, have been submitted to the external auditors, PricewaterhouseCoopers (PwC), for approval. Once approved the AR27 return will be completed and audit opinion signed by the external auditor. The auditor is working to a completion date of 13 December subject to results of their testing.
1.5 The Statement of Accounts is prepared under the International Financial Reporting Standards.
2. Statement of Accounts
2.1 The main areas of the financial statements are set out below: a) Statement of Income and Expenditure (SoIE)
2.1 The classification within the SoIE is presented in line with the Chartered Institute of Public Finance and Accountancy (CIPFA) Service Reporting Code of Practice standard subjective headings and may differ to the format of the management accounts.
2.2 It should also be noted that the SoIE cannot be directly compared to the outturn position reported to the Board. This is because the statement of accounts complies with various accounting standards whereas the management accounts are compiled on a slightly different basis. The key differences relate to the way depreciation, liabilities for outstanding annual leave and reserves are reported.
13 Item 4 (b)
2.3 The SoIE shows a deficit of £127,000 for 2012/13 (£232,000 deficit 2011/12) whereas the management accounts show a surplus. The deficit has been funded by contributions from the revenue reserve. It is important that the Board is aware that EMC is currently (2013/14) operating with a deficit funded from previously received non recurring income, RIEP contributions.
2.4 Overall, income has fallen to £1.48m (£2.07m 2011/12) mainly representing a reduction in partnership and government income – see note 7 to the accounts. Expenditure has also fallen to £1.61m (£2.29m) mainly as a result of a reduction in supplies and services and reduction in staff costs. b) Statement of Financial Position (Balance Sheet)
2.5 The Balance Sheet shows net liabilities of £363,000 compared with net liabilities of £62,000 in 2011/12. The principal reason is the increase in the estimated net pension liability.
2.6 EMC participates in the Local Government Pension Scheme (LGPS) for employees administered locally by LCC. EMC staff are incorporated into the LGPS as Leicestershire County Council employees. As a result it is not possible to ascertain a separate EMC actuarial position for the net pension deficit without additional actuarial work which will be both time consuming and incur additional costs. An estimate has instead been included in the accounts based on a pro rata of the total Leicestershire LGPS position based on EMC membership numbers. This should not be considered to be the same as an assessment of the actual value of the liabilities for EMC. If this was required a specific actuarial assessment would be required.
2.7 The revenue reserve represents the uncommitted balance of EMC funds. The balance on the reserve is £639,000 as at 31 March 2013 compared with £766,000 at 31 March 2012. The reduction relates to the use of the reserve to fund the in year deficit on the SoIE. Reserves are one off sums of funding built up from surplus on the SoIE and can only be used once. The balance on the reserve is held in line with EMC’s reserves policy that includes meeting the costs associated with any closure of EMC. The reserve is estimated to be £546,000 at the end of 2013/14 after in year transfers to SoIE.
14 Item 4 (b) c) Statement of Cash Flows
2.8 The Statement shows the changes in Cash balances of EMC during the reporting period. These are notional cashflows as the cash balances of EMC are included with the accounts of LCC. d) Statement of Changes in Equity
2.10 This statement shows the balance and movement in year on the revenue reserve held by EMC. The detailed movements to and from the reserve during the years are shown in note 4 to the accounts. The balance on the reserve is £639,000 at 31 March 2013 as mentioned earlier in the report.
3. Resource Implications
3.1 The estimated costs of producing the Statement of Accounts and audit of the AR27 return are between £20,000 and £30,000, i.e. a higher figure than reported to the Board in the report, Item 7. This includes the cost of the External Auditors and work undertaken by the servicing authority.
4. Recommendation
4 The Board are recommended to:
4.1 Approve the draft 2012/13 statement of accounts that are subject to external audit.
4.2 Approve the Treasurer in consultation with the Chairman and Executive Director to make any amendments following the audit.
Brian Roberts, Director of Corporate Resources, Leicestershire County Council Tel: 0116 305 7830 E-mail: [email protected]
Judith Spence, Head of Corporate Finance, Leicestershire County Council Tel: 0116 305 5998 E-mail: [email protected]
15 Item 4 (b), Appendix (i)
Contents
East Midlands Council 2012/13 Financial Statements
Page
Explanatory Foreword 2
Primary Statements Statement of Income and Expenditure 3 Statement of Financial Position 4 Statement of Cash Flows 5 Statement of Changes in Equity 6
Notes to the Accounts 7
Audit Opinion 20
16 Item 4, (b), Appendix (i)
Explanatory Foreword East Midlands Council East Midlands Councils (EMC) is a voluntary, membership based partnership of local government. It comprises of 98 Members who are representatives of the region’s local authorities, fire, police and parish and town councils.
EMC’s main roles and purposes are:
A consultative forum for local government in the East Midlands. Represents the interest of local councils to national government and other organisations Acts as the designated Regional Employers Organisation and point of contact for employers and recognised trade unions in relation to local government services. Enables local councils to work together on key issues of common concern Supports the improvement and development of local councils and their workforce Brings together political group leaders Makes appointments to national and regional bodies Provides a reporting and governance mechanism for regional local government Partnerships e.g. Regional Improvement and Efficiency Partnership (RIEP) Establishes and maintains an effective relationship with the national Local Government Association (LGA) From April 2011 to administer a programme of regional improvement and efficiency work on behalf of the East Midlands Improvement and Efficiency Partnership (EMIEP), total £3.4m. The programme of works include improvement, efficiency, productivity, climate change and procurement. At the end of 2012/13 a balance of £0.9m was remaining which is included as receipts in advance on the Statement of Financial Position.
Leicestershire County Council is the servicing authority and accountable body for EMC. In March 2013 Leicestershire County Council submitted notice to withdraw from these roles with effect from 31 March 2014. EMC are currently seeking new arrangements to take effect from this date.
Summary of Income and Expenditure
2010/11 2011/12 2012/13 £000 £000 £000
Income (2,798) (2,071) (1,480) Transfer (from) / to Reserve 21 (232) (127) Expenditure 2,777 2,303 1,607
(Surplus)/Deficit 0 0 0
Date of Authorisation of Accounts
The accounts were authorised for issue on the 12 November 2013, by the Director of East Midlands Councils. This was the last date when events after the Balance Sheet date have been considered.
S YOUNG DIRECTOR OF EAST MIDLANDS COUNCILS 17
Item 4, (b), Appendix (i)
Date: 13 November 2013 Statement of Income and Expenditure as at 31 March 2013 East Midlands Council
2010/11 2011/12 2012/13 Net Net Note Gross Income Net Exp Exp Exp Exp
£000 £000 £000 £000 £000 Income (1,150) (847) Partnership Contributions (872) (1,418) (839) Other Government Contributions (320) (226) (377) Other Income (283) Expenditure 1,386 1,044 Staffing Expenses 916 123 42 Other Indirect Staffing Expenses 13 117 77 Property Expenses 69 53 48 Transport Expenses 39 1,040 1,044 Supplies and Services 545 52 31 Other Recharges 25
NET OPERATING (23) 223 (SURPLUS)/DEFICIT 1,607 (1,475) 132 0 17 Other Operating Expenditure 0 0 0
Financing and Investment Income 2 (8) 3 0 (5) (5) and Expenditure
(21) 232 (SURPLUS)/ DEFICIT FOR THE YEAR 127
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East Midlands Council Item 4, (b), Appendix (i)
Statement of Financial Position as at 31 March 2013
31 March 31 March 2011 2012 31 March 2013 £000 £000 Note £000 NON-CURRENT ASSETS 14 12 Equipment 10 10
14 12 Total Non-Current Assets 10
CURRENT ASSETS 25 5 122 Short Term Debtors 11 168 1,2 54 3,0 34 Cash and Cash Equivalents 1,6 45
1,509 3,156 Total Current Assets 1,813
CURRENT LIABILITIES (205 ) (5 19 ) Short Term Creditors 12 (203 ) (311) (1,019) Short Term Grants Receipts in Advance 12 (981)
(516) (1,538) Total Current Liabilities (1,184)
NON CURRENT LIABILITIES (584) (828) Net P ensions Liability 9 (1,002) (9) 0 Deferred Liabilities 15 0 0 (864) Long Term Grants Receipts in Advance 0
(593) (1,692) Total Non Current Liabilities (1,002)
414 (62) Net Assets (363)
FINANCED BY 998 766 Revenue Reserves 4 639 (584) (828) Pension Reserve 9 (1,002)
414 (62) Total Equity (363)
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East Midlands Council Item 4, (b), Appendix (i)
Statement of Cash Flows as at 31 March 2013
2011/12 2012/13
£000 Note £000 £000
223 Net Operating (Surplus) / Deficit 132 (3) Depreciation (2) (1 ,886 ) Change in Creditors 1,218 (123) Change in Debtors 46
(1,789) Total movement from Net Operating Profit 1,394
(8) Net cash flows from Operating Activities- Interest 5 (5) Received
17 Net cash flows from Investing Activities- 6 0 Profit/Loss on disposal of equipment
(1,780) Net (Increase)/Decrease in Cash and Cash 1,389 Equivalents
(1,254) Cash and Cash Equivalents at the Beginning of (3,034) the Reporting Period
(3,034) Cash and Cash Equivalents at the End of the (1,645) Reporting Period
20
East Midlands Council Item 4, (b), Appendix (i)
Statement of Changes in Equity as at 31 March 2013
Earmarked Total Usable Reserves Reserves £000 £000 Note
Balance at 31 March 2011 998 998 4
Net Operating Surplus/(Deficit) (223) (223)
Other Comprehensive Expenditure and Income (9) (9)
Total Comprehensive Expenditure and Income (232) (232)
Increase/ (Decrease) in Year (232) (232)
Balance at 31 March 4 2012 carried forward 766 766
Net Operating Surplus/(Deficit) (132) (132)
Other Comprehensive Expenditure and Income 5 5
Total Comprehensive Expenditure and Income (127) (127)
Increase/ (Decrease) in (127) (127) Year
Balance at 31 March 2013 carried forward 639 639 4
21
East Midlands Council Item 4, (b), Appendix (i)
Notes to the Accounts
1. Statement of Accounting Policies
The accounts have been prepared on an International Financial Reporting Standards basis (IFRS) issued by the International Accounting Standards Board. These Accounts are principally maintained on an historical cost basis.
The Accounts are maintained on an accruals basis. Thus, sums due to or amounts owing by the Council in respect of goods and services rendered but not paid for at 31 March are included in the accounts.
The Revenue Recognition policy covers the sale of goods (produced by the organisation for the purpose of sale or purchased for resale), the rendering of services (excluding services directly related to construction contracts), interest and where previously a liability had been recognised (i.e. creditor) on satisfying the revenue recognition criteria. Revenue is recognised and measured at the fair value of the consideration receivable. However, if payment is on deferred terms, the consideration receivable is recognised initially at the cash price equivalent. The difference between this amount and the total payments received is recognised as interest revenue in the Net Operating Surplus or Deficit. Short duration receivables with no stated interest rate are measured at original invoice amount where the effect of discounting is immaterial.
Non-Current Assets are accounted for in line with IAS 16, IAS 36 and IAS 38. All expenditure on the acquisition of Plant and Equipment is capitalised on an accruals basis provided that these assets yield a benefit to the organisation for a period of more than one year and is above a de-minimis limit of £1,000 for individual items. The organisation doesn’t own any land or buildings or any other categories of Non- Current Assets. Plant and Equipment valuation is based on depreciated historical cost and is depreciated on a straight line basis over 5 years. Additions below the de- minimus level are recognised in the Statement of Income and Expenditure as revenue expenditure.
The Revenue Reserve is made up of excess income and grants from previous years with no conditions for repayment are outstanding. This funding can be used for all types of expenditure during future years.
Cash and Cash Equivalents are represented by cash in hand, deposits with financial institutions repayable without penalty with a notice of 24 hours or less and investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Grants are accounted for in accordance with IAS 20. Revenue grants that have met any conditions attached have been credited to the appropriate service lines within the Statement of Income and Expenditure. Conditions are stipulations that specify how the funding must be utilised by the recipient otherwise the funding must be returned. Where conditions have not been met, the grants will be held as creditors on the Statement of Financial Position.
22
East Midlands Council Item 4, (b), Appendix (i)
Employee Benefits are accounted for in accordance with IAS 19.
Short Term Benefits
Outstanding annual leave, flexi leave and Time Off in Lieu carried forward by employees is accounted as an accrual to represent the cost of when the leave is earned rather than when it is actually exercised. The accrual is charged to the Statement of Income and Expenditure within Staffing Expenses.
Termination Benefits
Redundancy and termination costs are recognised immediately in the Statement of Income and Expenditure. A liability and an expense is recognised when EMC is demonstrably committed to a detailed formal plan without realistic possibility of withdrawal.
Pension Schemes
Employees, subject to certain qualifying criteria, are eligible to join the Local Government Pension Scheme. This is a funded scheme with employees and employers paying contributions into the fund calculated at a level intended to balance liabilities with investment assets.
In accordance with IAS 19, quoted securities held as assets in the defined benefit pension scheme are valued at bid price.
Note : The Local Government Pension Scheme is administered by Leicestershire County Council and the Pension Fund accounts are included within their Statement of Accounts which can be found at http://www.leics.gov.uk/index/your_council/budget/statement_of_accounts.htm
VAT incorporated in the income and expenditure account is limited to irrecoverable sums.
2. Critical Judgements in Applying Accounting Policies
In applying the accounting policies set out in Note 1, the organisation has had to make certain judgements about complex transactions or those involving uncertainty about future events.
EMC’s accounts presented in these statements are an extract of balances from the accounts of Leicestershire County Council who are the accountable body for EMC. As a result two areas of the accounts have been estimated from the amounts shown in the accounts of Leicestershire County Council. The critical judgements made in the Statement of Accounts are:
Pensions Deficit. EMC participates in the Local Government Pension Scheme (LGPS) for employees, administered locally by Leicestershire County Council – this is a funded defined benefit final salary scheme. EMC staff are incorporated into the LGPS as Leicestershire County Council employees. As a result it is not possible to ascertain a separate EMC actuarial position for the net pension deficit. An estimate has instead been included in the accounts based on a pro rata of the total Leicestershire LGPS position based on EMC membership numbers.
23
East Midlands Council Item 4, (b), Appendix (i)
The Cash and Cash Equivalents figure included within the Balance Sheet is not held separately by the Organisation as their cash balances are held within Leicestershire County Council’s Bank Account. Due to this, the Cash and Cash Equivalents figure is a balancing figure for the Balance Sheet as all other items within the Balance Sheet have been calculated.
3. Assumptions Made about the Future and Other Major Sources of Estimation Uncertainty
The Statement of Accounts contains estimated figures that are based on assumptions made by the Organisation about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.
The item in the Balance Sheet at 31 March 2013 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows.
Pensions Estimation of the net liability to pay The effects on the net pensions Liability pensions depends on a number of liability of changes in individual complex judgements relating to the assumptions can be measured. For discount rate used, the rate at which instance, a 0.5% decrease in the salaries are projected to increase, discount rate assumption would result changes in retirement ages, mortality in an increase in the pension liability of rates and expected returns on pension £0.265m. A one year increase in fund assets. An independent firm of member life expectancy compared consulting actuaries is engaged to with the assumption used would provide the County Council with expert increase the liabilities by £81,000. advice about the assumptions to be applied, although ultimate responsibility However, the assumptions interact in for forming these assumptions remain complex ways. During 2012/13, the with the County Council. pension fund actuaries advised that the net pensions liability had The carrying value of the Pension decreased by £0.114m as a result of Liability at 31 March 2013 is £1.002m estimates being corrected as a result of experience and increased by £0.173m attributable to updating of the assumptions.
24
East Midlands Council Item 4, (b), Appendix (i)
4. Reserves
Balance Transfers Balance Transfers Balance at at at 31 From To 31 From To 31 March March March 2011 Revenue 2012 Revenue 2013 £000 £000 £000 £000 £000 £000 £000 General Reserve 998 285 (517) 766 189 (316) 639
TOTAL 998 285 (517) 766 189 (316) 639
5. Other Operating Expenditure
2010/11 2011/12 2012/13 £000 £000 £000 Profit/Loss on disposal of finance lease 0 17 0 Total 0 17 0
6. Financing and Investment Income and Expenditure
2010/11 2011/12 2012/13 £000 £000 £000 Finance Lease Interest Payable 6 0 0 Interest receivable and similar income (4) (8) (5) Total 2 (8) (5)
7. Partnership and Government Income
2010/11 2011/12 2012/13 £000 £000 £000
Leicestershire County Council 10 10 37 Derby City Council 317 304 94 Derbyshire County Council 87 13 42 Leicester City Council 48 57 22 Lincolnshire County Council 19 23 12 Northamptonshire County Council 41 15 91 Nottingham City Council 20 13 36 Nottinghamshire County Council 15 12 61 Rutland County Council 10 14 11 Amber Valley Borough Council 22 27 29 Ashfield District Council 20 19 15 Bassettlaw District Council 58 8 8 Erewash Borough Council 21 9 8 Harborough District Council 10 9 34 25
East Midlands Council Item 4, (b), Appendix (i)
Hinckley & Bosworth Borough Council 12 7 20 Kettering Borough Council 43 38 53 Melton Borough Council 45 10 11 Gateshead Council 5 40 Total Other Partnership Contributions 352 254 248
Total Partnership Contributions 1,150 847 872
RIEP 203 164 84 Home Office 48 195 75 DEFRA 78 45 0 Dept of Health 20 105 0 DCLG 928 0 0 Improvement & Development Agency 0 131 8 Environmental Agency 0 0 79 UK Border Agency 0 0 30 NHS Nottingham City 35 62 0 Total Other Government Contributions 106 137 44
Total Government Contributions 1,418 839 320
Total 2,568 1,686 1,192
8. Partnership and Government Payments
2010/11 2011/12 2012/13 £000 £000 £000
Borough Council of Wellingborough 25 0 0 Daventry District Council 44 0 0 Derby City Council 50 0 18 East Lindsey District Council 75 0 0 Erewash Borough Council 66 0 0 Gedling Borough Council 22 0 11 Mansfield District Council 25 0 0 Melton Borough Council 107 58 59 Nottingham City Council 0 155 0
Total Other Partnership and Government Payments 92 5 27
Total 506 218 115
26
East Midlands Council Item 4, (b), Appendix (i)
9. Pensions- Revenue Costs
a) Local Government Pension Scheme – A defined benefit scheme
As part of the terms and conditions of employment of its officers, EMC makes contributions towards the cost of post employment benefits. Although these benefits will not actually be payable until employees retire, EMC has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement.
EMC participates in the Local Government Pension Scheme (LGPS) for employees, administered locally by Leicestershire County Council – this is a funded defined benefit final salary scheme, meaning that EMC and employees pay contributions into a fund, calculated at a level intended to balance the pension liabilities with investment assets.
EMC recognises the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions.
The Statement of Financial Position shows a pension fund deficit of £1m as assessed on an IAS 19 basis. As EMC staff are incorporated into the LGPS as Leicestershire County Council employees It is not possible to ascertain EMC’s actual Pension deficit. The deficit shown is a pro rata of the total Leicestershire LGPS position based on EMC membership numbers.
The balance sheet position as at 31 st March 2013 has deteriorated since last year principally because financial assumptions as at 31 st March 2013 are less favourable than they were at 31 st March 2012. The main reason is a reduction in the discount rate used to value pension fund benefits due to a fall in bond yields. All else being equal this serves to increase the value of the liabilities and have a negative impact on the IAS 19 position. This was somewhat mitigated by investment returns being higher than expected which has had a positive impact on the actual value of the County Council’s pension assets. Overall the notional net EMC liability on the fund has increased to £1m (31 March 2012, £0.83m). The total Leicestershire fund liability is £497.6m (31 March 2012, £438.8m).
b) Pension Assets and Liabilities in Relation to Post Employment Benefits
EMC’s share of the total Leicestershire LGPS liabilities (present value) and assets (fair value) are shown below:
2011/12 2012/13 £000 £000
Liabilities As at 1 April (1,965) (2,301) Movement in Year (336) (403) As at 31 March (2,301) (2,704)
Assets As at 1 April 1,381 1,473 Movement in Year 92 229 As at 31 March 1,473 1,702
27
East Midlands Council Item 4, (b), Appendix (i)
The present value of the overall liabilities of the LGPS for Leicestershire County Council at 31 March is as follows:
2010/11 2011/12 2012/13 £000 £000 £000
As at 1 April (1,427.6) (1,110.6) (1219.1)
Current service cost (37.7) (32.1) (28.8) Interest Cost (72.5) (60.8) (56.3) Contributions by scheme participants (12.6) (11.8) (9.8) Actuarial (Losses) / Gains 236.2 (62.8) (142.1) Benefits paid 82.8 47.1 45.8 Past service costs 122.4 0.0 (0.3) Entity combinations 0.0 0.0 0.0 (Losses) / Gains on curtailments (1.6) (3.1) (2.7) (Losses) / Gains on settlements 0.0 15.0 70.2
As at 31 March (1,110.6) (1,219.1) (1,343.1) The fair value of the overall LGPS assets for Leicestershire County Council at 31 March is as follows:
2010/11 2011/12 2012/13 £000 £000 £000
As at 1 April 773.3 780.5 780.3
Expected rate of return 55.3 55.3 41.2 Actuarial Gains / (Losses) (16.1) (51.5) 56.3 Employer contributions 35.2 34.8 30.8 Contributions by scheme participants 12.6 11.8 9.8 Benefits paid (82.8) (47.1) (45.8) Contributions in respect of unfunded benefits 3.0 3.2 3.2 (Losses) / Gains on settlements 0.0 (6.7) (30.3)
As at 31 March 780.5 780.3 845.5
Basis for estimating assets and liabilities
Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependant on assumptions about mortality rates, salary levels, etc. The County Council’s Pension fund liabilities have been assessed by Hymans Robertson LLP, an independent firm of actuaries, estimates for the County Council fund being based on the latest full valuation of the Pension Fund as at 31st March 2010.
28
East Midlands Council Item 4, (b), Appendix (i)
The principal assumptions used by the actuary have been:
31 March 31 March 31 March 2011 2012 2013
Long-term expected rate of return on assets: Equity investments 7.5% 6.2% 4.5% Bonds 4.9% 3.9% 4.5% Property 5.5% 4.4% 4.5% Cash 4.6% 3.5% 4.5%
Mortality assumptions (in years): Longevity at 65 for current pensioners: Men 20.9 20.9 20.9 Women 23.3 23.3 23.3
Longevity at 65 for future pensioners: Men 23.3 23.3 23.3 Women 25.6 25.6 25.6
Rate of inflation 2.8% 2.5% 2.8%
Rate of increases in salaries 5.1% 4.8% 5.1%
Rate of increase in pensions 2.8% 2.5% 2.8%
Rate for discounting scheme liabilities 5.5% 4.8% 4.5% Proportion of employees opting to commute part of their annual pension to a retirement lump sum: Pre April 2008 Service 50.0% 50.0% 50.0% Post April 2008 Service 75.0% 75.0% 75.0%
The Local Government Pension Scheme’s assets consist of the following categories, by proportion of the total assets held:
31 March 31 March 31 March 2011 2012 2013
Equity investments 82% 65% 65%
Bonds 7% 16% 26%
Property 11% 11% 9%
Cash 0% 8% 0%
29
East Midlands Council Item 4, (b), Appendix (i)
c) History of experience gains and losses
These are events that have not coincided with actuarial assumptions. Experience gains and losses, are a component of the annual actuarial gain or loss calculated by the actuary.
The experienced gains/losses identified as movements on the Pensions Reserve for the last five years are analysed into the following categories, measured as a percentage of assets or liabilities.
2008/09 2009/10 2010/11 2011/12 2012/13 % % % % % Difference between the expected and actual return on asset (46.5) 22.0 (2.1) (6.6) 7.0
Experience gains and (losses) on liabilities 0.1 (0.1) 4.0 (1.4) 0.0
10. Plant and Equipment
Plant Furniture & Equipment
£000 Net book value as at 31 March 2011 14
Additions 12 Derecognition- Disposals (14) Impairment Book value as at 31 March 2012 12 Depreciation / Amortisation 0 Less: Writing down leased assets 0 Net book value as at 31 March 2012 12 Additions 0 Derecognition- Disposals 0 Impairment 0 Book value as at 31 March 2013 12 Depreciation / Amortisation (2) Less: Writing down
leased assets 0 Net book value as at 31 March 2013 10
30
East Midlands Council Item 4, (b), Appendix (i)
11. Short-Term Debtors
Short – Term Debtors 31 March 31 March 31 March 2011 2012 2013 £000 £000 £000
Partnership Contributions 112 99 143
Other Government Bodies 103 5 20
NHS Bodies 0 9 0
Other Entities and Individuals 40 9 5
Total 255 122 168
12. Short-Term Creditors
Short – Term 31 March 2011 31 March 2012 31 March 2013 Creditors Creditors Receipts Total Creditors Receipts Total Creditors Receipts Total in in in Advance Advance Advance £000 £000 £000 £000 £000 £000 £000 £000 £000 Partnership Organisations 56 203 259 87 125 212 80 76 156 Other Government Bodies 70 108 178 84 885 969 99 876 975
NHS Bodies 0 0 0 0 9 9 0 10 10 Other Entities and Individuals 79 0 79 348 0 348 24 19 43
Total 205 311 516 519 1,019 1,538 203 981 1,184
31
East Midlands Council Item 4, (b), Appendix (i)
13. Related Party Transactions
Details of partnership contributions and other Government grants received are shown in Note 7. The employers’ contribution paid to the Pension Fund is shown in Note 9.
EMC is required to disclose material transactions with related parties, bodies or individuals that have the potential to exert control, or be controlled or influenced by EMC.
Governance
EMC is a member-led partnership representing local government in the East Midlands. The full membership of EMC meets twice a year. The Management Group provides political leadership and advice to the organisation and is responsible for financial and non-financial performance, risk and audit matters. The Executive Board is the strategic decision making body of East Midlands Councils on issues of interest and relevance to Local Authorities at the regional level.
Central Government
Significant sources of income including programme and project funding comes from Central Government Bodies.
Local Government
A significant proportion of funds EMC receives comes from its membership contributions. Although no one contribution is a significant proportion of overall funding, the total funding from Local Government is a significant amount.
Leicestershire County Council is the servicing authority and accountable body for EMC and includes the relevant expenditure and income within their Statement of Accounts. In March 2013 Leicestershire County Council submitted notice to withdraw from being the servicing authority and accountable body with effect from 31 March 2014.
Members
The executive board and management group of EMC has control over the organisation’s financial and operating polices. The total of members’ allowances paid in 2012/13 is £21k (2011/12 £24k, 2010/11 £70k).
During 2012/13 EMC made payments to member authorities who are represented on the executive board totalling £22k.
There are other members who represent their authority at full EMC meetings. The total payments to all membership authorities during 2012/13 are shown in note 8, £0.1m (2011/12, £0.2m, 2010/11, £0.5m).
In all instances, the payments were made with proper consideration of declarations of interest. Details of all these transactions are recorded in the Register of Members’ Interest , which is available for public inspection from East Midlands Councils.
Officers
There were no interests declared by senior officers of EMC.
32
East Midlands Council Item 4, (b), Appendix (i)
14. Officers’ Remuneration
The Director of EMC controls the major activities of the Organisation. Details of the Director’s Remuneration are shown below;
Compen- Post Holder Information Salary sation for Benefits Remuneration Remuneration (Post Title) Loss of in Kind Excluding Employers Including Office Employers Pension Employers Pension Contributions Pension Contribution Contribution £000 £000 £000 £000 £000 £000 2012/13
Director 89 0 1 90 16 106
Total 2011/12
Director (N1) 96 0 1 97 17 114
Total
N1 – During 2011/12, the Director was seconded to the LGA on a full time basis. A reimbursement of £99k was received.
33
East Midlands Council Item 4, (b), Appendix (i)
15. Leases a) Amounts Paid to Lessors There were no finance lease rentals paid to lessors in 2012/13 (2011/12 nil, 2010/11 £11k). Lease rentals paid to lessors during the year in respect of operating leases for vehicles and equipment totalled £28k (2011/12 £28k, 2010/11 £23k). b) Leased Assets The organisation has a liability to make payments for the following leases during 2013/14 and beyond and the comparators in 2011/12 for 2012/13 and beyond are as follows: 2010/11 2011/12 2012/13 Finance Finance Finance Operating Operating Operating Lease Cost Leases Leases Leases Leases Principal Total (NPV) £000 £000 £000 £000 £000 £000 Lease Payments due: Within 1 year 4 7 11 28 28 28 2 to 5 years 5 18 23 56 28 0 Over 5 years 0 0 0 0 0 0
Total 9 25 34 84 56 28
Finance Leased Assets had a carrying value within Property, Plant and Equipment of £14k as at 31 March 2011 but were sold for £17k in 2011/12.
34
East Midlands Council Item 4, (b), Appendix (i)
Audit Opinion
35
East Midlands Council Item 4(c)
Executive Board 6th December 2013
East Midlands Councils Review
Summary
The following report provides Members with an update on progress in completing the organisational review of East Midlands Councils.
Recommendation
Members of the Executive Board are invited to:
Consider the information contained within this report.
Consider and discuss the report as completed by the independent advisor.
Agree on the implementation of a new approach, in accordance with the approach outlined in this report and informed by the independent advisor, for communication with the wider membership of EMC.
36 Item 4(c)
1. Introduction
1.1 In March 2013, the Executive Board of East Midlands Councils agreed that a review of EMC should be undertaken, led by the Management Group, into the future roles and responsibilities of EMC.
1.2 The draft report was considered by the Executive Board at its meeting in September 2013.
2. New Approach
2.1 Executive Board were supportive of EMC in continuing to work on behalf of its membership. Members agreed that as part of the review and future approach, EMC should: Provide an effective and audible platform for councillors’ leadership. Deliver value-added for its membership councils. Focus on a more limited set of issues with a clear set of priorities. Engage more councillors, not a sole focus on leaders and portfolio holders. Adapt to a changing environment; legislation, policy, LEPs and funding. Move to a more sustainable funding model. Meet the range of needs and priorities that arise from a city, county and district council membership base.
2.2 Under this new approach it was agreed that there should be more collective work and lobbying. The identification of practical solutions and policy responses should link campaigning to the collective work of member councils, specifically in conjunction with the work of the All-Party Parliamentary Group of MPs (East Midlands) and LEPs.
2.3 This new approach should also be supported by improved communication with the membership and outside partners to better promote the identity and profile of the region alongside the value of the organisation. While aware of the political sensitivities of the ‘region’, there is nevertheless the potential to better promote this region and to support better joint working (as exists in other regions). The concern is that a failure to do so will do nothing to stop the region continuing to lose out in securing resources and wider investment.
2.4 A number of issues were identified as areas where EMC could take a leading role over the next six months including: European funding Adult social care Welfare reform Working with LEPs in securing economic growth Getting a better funding deal for the region and working better with MPs
37 Item 4(c)
Planning and Transport – including HS2, Midland Mainline and East Coast Mainline Migration
2.5 Ultimately, the value to member councils, individual frontline councillors and leading members, which would be offered by the refocused model includes: A single, inclusive partnership structure that that credibly reflects both tiers of local government in the East Midlands. Effective engagement with Government bodies at the sub-national level. Councillor and officer development support, briefings and advice. Project work across local authority and LEP boundaries. Collective policy response to Government. Services and support tailored to the needs of the membership base
2.6 EMC Executive Board endorsed the recommendation of Management Group that if the organisation is to demonstrate its value-added to members, then a staged approach should be adopted; firstly implementing the refocused approach, developing and delivering a ‘prospectus’ of work in the lead up to the 2014 AGM; and secondly, developing a more sustainable funding model.
2.7 An important part of this review was the agreed consultation with the 2,000 councillors in the East Midlands in order to understand their views and aspirations for a new and refocused EMC.
2.8 A letter and supporting information was sent to all councillors in the East Midlands highlighting the new approach agreed by the Executive Board and seeking their views.
3. Recent Progress
3.1 While agreeing a preferred option, the Executive Board noted that the review has been constrained by agreed timescales and it was agreed that the review process would benefit from the organisation ‘taking stock’ through wider political soundings.
3.2 It is agreed that the review would benefit from additional independent input in order to ‘sense’ check the proposals, support discussion with partners and provide additional advice in addressing any outstanding liability/pension concerns.
3.3 Executive Board endorsed the recommendation of Management Group that this additional support be commissioned from a partner(s) with sufficient background knowledge and expertise to undertake these soundings on behalf of the Board.
38 Item 4(c)
3.4 Independent support was secured in October. In line with agreed timings, a final report has been completed in time for its consideration by the Executive Board.
3.5 The independent report will follow under separate cover in advance of the Board meeting. Jane Todd, who led the review, will attend the Board meeting in order to discuss with Board members the report’s findings and recommendations.
4. Recommendation
Members of the Executive Board are invited to:
4.1 Consider the information contained within this report.
4.2 Consider and discuss the report as completed by the independent advisor.
4.3 Agree on the implementation of a new approach, in accordance with the approach outlined in this report and informed by the independent advisor, for communication with the wider membership of EMC.
Stuart Young Executive Director
39 Item 4(d)
Executive Board 6th December 2013
Transfer of Accountable Body Arrangements
Summary
Leicestershire County Council is currently the accountable body for East Midlands Councils. In their letter dated 27 th March 2013, Leicestershire County Council gave notice of its intention to cease to undertake these responsibilities with effect from 1 st April 2014.
Consequently, East Midlands Councils is required to put in place alternative accountable body arrangements. The following report updates Members on current options and invites their endorsement on the proposed way forward and, in particular, delegated authority for the Management Group to expedite this matter.
Recommendation
Members of the Executive Board are invited to:
Note the expressions of interest submitted by Boston Borough Council and Nottingham City Council in providing future accountable body arrangements for EMC.
Note the provision of information to both councils that have submitted an expression of interest and the corresponding request that they provide EMC with information that will support our consideration of proposed arrangements.
Note progress on financial, legal and employment matters in anticipation of transferring accountable body arrangements to a new authority.
In order to expedite this matter, give delegated authority to the Management Group to act on its behalf, as proposed in section 6 of this report.
40 Item 4(d)
1. Background
1.1 Members of the Management Group are reminded that Leicestershire County Council has, since 2006, been the accountable body for EMC and predecessor organisations. Leicestershire County Council, as the accountable body, is also the employing body for the staff of EMC.
1.2 In March 2013, Leicestershire County Council gave notice of its intention to cease to undertake these responsibilities with effect from 1 st April 2014.
1.3 The accountable body is responsible for contractual arrangements, property including leasehold arrangements, insurance, health and safety, employment issues and other legal responsibilities. For information, the roles and responsibilities of an accountable body (as defined by CIPFA) are detailed in Item 4 (d) Appendix (i).
1.4 Before alternative accountable body arrangements could be explored, it was agreed that the EMC organisational review should be considered by the Executive Board at its meeting on 27 th September 2013 in order to set the overall scope for the organisation in the future.
1.5 Following this meeting, EMC Executive Director wrote to all Chief Executives of councils in membership inviting the submission of any expressions of interest in providing this accountable body role.
2. Expressions of Interest Received
2.1 Two councils have submitted an expression of interest in providing the accountable body arrangements for East Midlands Councils; Boston Borough Council and Nottingham City Council.
2.2 Initial discussions have been held with the Chief Executives of both these councils to confirm their expression of interest and to offer all relevant financial, legal and employment information to support any initial due diligence work each council may wish to undertake.
2.3 This, of course, will need to be concluded to each council’s satisfaction before any party reaches the stage where any formal agreement may be proposed and entered into.
3. Next Steps
3.1 The transfer of accountable body arrangements involves three important considerations; legal, financial and employment matters.
41 Item 4(d)
3.2 In anticipation of transfer, the following arrangements have been made:
a) Legal
3.3 All contracts/legal liabilities that are required to be novated over to the new accountable body have been identified. These contractual liabilities (e.g. annual contracts) total approximately £5000.
3.4 There are also grant/externally funded projects that could entail some element of clawback if the projects are not delivered in accordance with agreed grant provisions. The total value of these contracts is approximately £250,000.
b) Financial
3.5 All relevant financial information has been collated and supporting arrangements have been made to facilitate ease of transfer once a host authority is confirmed.
3.6 In anticipation of this, meetings have been held and discussions continue between officers of EMC and Leicestershire County Council.
3.7 Leicestershire County Council is undertaking an actuarial assessment of the net position of the pension fund in anticipation of transferring the pension over to a new host authority/pension fund. Not only is this required before transfer, it will also provide a clear understanding of the overall pension liability of EMC underwritten by the 9 upper-tier councils in membership.
c) Employment
3.8 Leicestershire County Council is currently the employing authority for EMC staff. The new accountable body arrangements will therefore involve the transfer of staff from Leicestershire County Council to the new employing council, via the Transfer of Undertakings (Protection of Employment) Regulations (TUPE arrangements).
3.9 In anticipation of this, the management of EMC has met with HR representatives of Leicestershire County Council (LCC) and subsequent informal consultation has been undertaken with staff, with support from LCC HR. The relevant Trades Union (Unison) has been informed of current proposals by LCC.
4. Timings
4.1 In accordance with the notice given by Leicestershire County Council, the transfer to alternative accountable body arrangements is required to be completed by 31 st March 2014.
42 Item 4(d)
4.2 While the process may be completed in advance of this, 31 st March 2014 provides a convenient transfer date in terms for financial and legal matters. The over-riding consideration is, of course, to ensure the process is undertaken appropriately rather than to aim for any earlier resolution prior to April 2014.
5. Costs
5.1 Aside from officer time, in progressing alternative arrangements a number of costs are likely to be incurred. The principal cost identified to date is an estimated £5000 - £10,000 required in undertaking an actuarial assessment of the net position of the pension fund in anticipation of transferring the pension over to a new host authority.
5.2 It is advised that further provisions are made for up to £10,000 in order to meet any additional sundry costs associated with transfer.
5.3 It is proposed that these costs are met from reserves.
6. Decision Process
6.1 The Management Group is responsible for, “all matters relating to corporate governance and make recommendations to the Executive Board and full meetings of EMC, as appropriate” 1.
6.2 Members are therefore advised that it is the responsibility of the Management Group to consider and recommend options for future hosting arrangements. However, transfer arrangements are not sufficiently advanced to enable any recommendation to the Executive Board at this time.
6.3 In anticipation of both expressions of interest being formalised; Executive Board are advised that both councils have been invited to provide EMC with information that will support our consideration of proposed arrangements. This includes the following: Organisational capacity and meeting specific requirements of EMC. The ability to meet the requirements of EMC, including financial, legal and employment matters. Proposed service level agreements costs and charges. Organisational experience of acting as accountable body for an independent public sector partnership. Their approach to fulfilling the accountable body role.
1 As stated in the Management Group Terms of Reference, adopted as part of EMC Constitution (July 2012).
43 Item 4(d)
6.4 In the circumstances and in order to avoid delays caused by the quarterly cycle of meetings, it is suggested that Executive Board delegates authority to the Management Group to act on its behalf in this matter.
6.5 Management Group will hold an additional meeting on 17 th December to consider proposed arrangements once these become clearer. Management Group’s recommendation will then be subsequently shared with Executive Board members for comment and endorsement via written procedures.
7. Recommendation
Members of the Executive Board are invited to:
7.1 Note the expressions of interest submitted by Boston Borough Council and Nottingham City Council in providing future accountable body arrangements for EMC.
7.2 Note the provision of information to both councils that have submitted an expression of interest and the corresponding request that they provide EMC with information that will support our consideration of proposed arrangements.
7.3 Note progress on financial, legal and employment matters in anticipation of transferring accountable body arrangements to a new authority.
7.4 In order to expedite this matter, delegate authority to the Management Group to act on its behalf in this matter, as proposed in section 6 of this report.
Stuart Young Executive Director
44 Item 4 (d), Appendix (i)
The Role and Responsibilities of an Accountable Body1
1. Definition
1.1 An accountable body is a legal entity nominated to act on behalf of a partnership to take responsibility primarily for the receipt and use of grant funding.
1.2 Management responsibility is usually delegated to the partnership and does not lie with the accountable body, and as such the accountable body should remain independent of the partnership.
1.3 Accountable bodies may, in some cases charge an appropriate fee for the services provided, generally part of a service level agreement (SLA).
2. Governance
2.1 The accountable body must ensure appropriate robust governance arrangements are in place and remain independent of delivery of activity. In its day to day activity, the accountable body will scrutinise governance arrangements and provide critical challenge to decisions and the decision making processes.
3. Risk
3.1 The accountable body must identify and manage risks as they are exposed to risk due to the possibility of grant clawback. An accountable body must therefore be financially viable and in a position to take on the risk.
3.2 The accountable body must ensure that the partnership complies with all grant conditions.
4 Audit Requirements
4.1 The accountable body will perform audit monitoring and verification at both strategic and operational levels, this may include internal audit performing a strategic audit of the risks, controls and governance arrangements.
1 source CIPFA
45 Item 5
Executive Board 6th December 2013
WELFARE REFORM – IMPLICATIONS FOR LOCAL AUTHORITIES AND EMC ACTION
Summary
This report updates the Executive Board on the impact of the welfare reforms to date and on the recent work by East Midlands Councils and the Welfare Reform Steering Group.
This paper reviews evidence and data from local authorities on the impact of the introduction of local council tax support and housing reforms in particular.
Recommendation Members of the Executive Board are invited to:
Note the developments on welfare reform as highlighted in this report.
Consider and agree the key issues for welfare reform and how it impacts on communities and local councils in the East Midlands.
Endorse the approach for supporting wider councillor engagement on this issue, as detailed in section 12 of this report.
Consider further lobbying via the LGA in particular to call for the timetable for Universal Credit to be shared; explore the potential for the pooling of Discretionary Hardship payments if Authorities wish to and the issues of the Emergency fund payments.
46 Item 5
1. Introduction
1.1 The Executive Board last considered a report on the welfare reform agenda at its meeting in December 2012 that set out the wider welfare reform agenda in four parts; changes to the current system; the introduction of Universal Credit; the localisation of council tax benefit; and welfare assistance. For each, the paper identified the impact of citizens, on councils and any key issues for East Midlands Councils.
1.2 The purpose of this paper is to highlight the work of EMC since March and the impact of welfare reform on councils in the East Midlands.
1.3 A short summary of the main reforms and their initial impacts is given below.
2. Activity December 2012 – November 2013. a) East Midlands Welfare Reform Steering Group
2.1 The Welfare Reform Steering group has met four times in 2013. The main agenda topics have included:
Impact of the introduction of localised Council Tax Schemes. The extent of properties affected by the under occupancy provisions. The impact of the benefit cap. The introduction of local welfare assistance schemes. Implications for revenues and benefits staff of the introduction of Universal Credit. Consideration of a community budget model in respect of the Local Support Services Framework. Preparation for the introduction of the Local Support Services Framework; Credit union partnership. Progress and updates from the Universal Credit pilots.
2.2 In addition the Chair of the group wrote to DWP in July highlighting the need for greater involvement of local authorities in the introduction of welfare assistance schemes. Intelligence gathered by the steering group has been shared with the LGA to assist them in lobbying DCLG and DWP.
2.3 A sub group has been established to analyse the impact of the introduction of welfare assistance schemes.
2.4 A key area of work has been the collection and analysis of data. The data collection is ongoing and initial findings are included within the appendices to this report.
47 Item 5
2.5 To provide for a full understanding it is suggested that the Executive Board encourages all councils across the East Midlands to participate in this project. b) East Midlands Councillor Development Low Cost CPD Event on Welfare Reform 20 th November.
2.6 Forty two Councillors attended the recent member development event on welfare reform. Participants included East Midlands Councils, the LGA, pilot local authorities, representatives of both unitary and borough councils and from the voluntary sector.
2.7 Members considered their initial response to the reforms to date. The key messages were: Engagement with those affected by the reforms is unlikely to happen until the changes are implemented. Housing stock availability is a key issue as is the impact of changes to tax credits. Local government will be central to the delivery of Universal Credit. The National Debt Service could be located in local government. Local authorities should have a bigger role in delivering the work programme. There are opportunities for local government to be actively involved with Local Support Services Framework (LSSF). An announcement on the LSSF is expected imminently. Other broader issues discussed were the impact on local economies of the reduction of benefits, the housing revenue account borrowing cap, the troubled families agenda and the health impact of the reforms. There are emerging issues regarding the use of Discretionary Housing Payments which should be monitored at a regional level. Consideration could be given to pooling budgets to balance areas of high need and high demand on funds with those of low need that run the risk of claw back in future years.
2.8 The Department of Communities and Local Government has requested a meeting with senior officers in the region to gather views from across the East Midlands. This will take place on 23 January 2014.
3. Universal Credit a) Background
3.1 Universal credit affects those claiming out-of-work benefits and those claiming Tax credits and Child Tax Credits. It replaces Income Support, income-based Jobseeker’s Allowance, income-related Employment and
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Support Allowance, Housing Benefit, Child Tax Credit, and Working Tax Credit.
3.2 Payments are monthly in arrears as a single payment per household. To receive Universal Credit claimants are required to sign a new Claimant Commitment. Most claimants will be expected to budget for housing and living costs from their Universal Credit payment.
3.3 The inclusion of Child Tax Credits and Working Tax Credits means that UC will inevitably affect many low-income working families. Universal Credit will also changes the way benefits are claimed in the early stages of self- employment.
3.4 The roll out of Universal Credit has been delayed. Four pathfinder areas in the North West are administering Universal Credit to new claimants and, in October, Hammersmith and Fulham were added. DWP have stated that the project is still on course to be rolled out to all claimants by 2017. b) East Midlands Pilots
3.5 In the East Midlands there are three local authorities included in the universal credit pilots; Melton Borough Council, Rushcliffe Borough Council and West Lindsey District Council.
3.6 Melton Borough Council is supporting the most vulnerable and complex customers to become ‘work ready’ through employment and skills project. They are also supporting their customers in the move to accessing benefits online and away from previous traditional methods.
3.7 Rushcliffe Borough Council have been working to move claimants to online services, developing closer working relationships with key partners to integrate or co-locate services and seeking to identify the support required for the most vulnerable members of the community.
3.8 The West Lindsey pilot is focused on how the introduction of Universal Credit will impact claimants. This falls mainly into the two categories of Digital Inclusion, with claims to be made and maintained online; and Financial Inclusion, with benefit payments to be made monthly as one household payment and all payments direct to the claimant. West Lindsey are also evaluating the impact of the introduction of these reforms in a very rural area.
3.9 All of the East Midlands pilot authorities have hosted engagement events. One hundred and twenty delegates have attended these events which is a success story for the East Midlands.
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c) Impact in the East Midlands
Impact on Citizens Impact on Councils
Modal shift to online claims will Move to monthly payments may require support for some people further increase rent and Council Tax Lack of access to online due to arrears. There is evidence of increased infrastructure in rural areas or social collection costs and increasing arrears mobility issues-a focus of the West following the introduction of reforms Lindsey pilot. to date. Since the monthly payments will not Whilst it has been acknowledged that be itemised, citizens will need to local government is the preferred budget and plan themselves for delivery partner for Universal Credit elements such as rent, child support the extent of that role and therefore etc staffing requirements is still unclear. Required change of behaviour to There is a need for greater freedom manage housing costs. and flexibility for councils to deliver Whilst the positive impact should be strong local economies and support greater incentives to work some people into employment agencies and some authorities have The is a need for local knowledge and expressed concern that there may be discretion in supporting people with unintended consequences in terms of particular needs or vulnerabilities both increased property crime. with claiming Universal Credit and managing / mitigating the impact of the reforms – Community Budgets approach
4. Council Tax Support
4.1 As of April 2013 the administration of council tax benefits will be administered at a local rather than national level. Each local authority has now set up their own localised benefit support scheme. The change in the way Council Tax is administered has been accompanied by a 10% reduction in council tax support.
50 Item 5 a) Impact on the East Midlands
Impact on citizens Impact on Councils
Local schemes will reduce support to Cost and risk transfer to major certain groups, potentially low income precepting authorities working families, those in part time Cost of collection is increasing work or zero hours contracts A reduction in collection rates has the potential to impact upon cash flow of collection funds Risk of increase in unforeseen demand The benefit claimant count in the East Midlands has increased or remains static which is contrary to the DWP position nationally that benefit count should be falling due lower rates of unemployment. The reason for the East Midlands profile may be due to many claimants in part time work or on zero hours contracts Implications of other benefit changes are also impacting on low paid working families-Tax Credits Collection rates vary between an increase of 0.59 in one district to a fall of 1.25% in another. 89% of respondents report a fall in collection Cost of recovery is increasing with local authorities having work harder to collect receipts. Initial rates of recovery are falling further down the year as more people are finding it harder to pay
5. Household Benefit Cap a) Background
5.1 The benefits cap restricts the income from non-work related benefits. It is intended to endure that workless households do not receive more in benefits than the average working household earns. Restricting single people to £350 per week and £500 per week for couples and families.
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5.2 National roll out was managed over a 10 week period, split into two tranches completed by 30th September 2013. b) Impact on the East Midlands
Impact on citizens Impact on Councils
The DWP expected that around Numbers in the East Midlands are 56,000 households UK-wide to be less than original estimates as data impacted by the overall benefit has become more reliable cap. This number has reduced as Councils have been working closely more accurate data has become with households identified as likely available. to be capped aiming at getting as 678 households are reported at many as possible back to work in the end of September to have partnership with Job Centre Plus. been affected the majority being It is yet to be determined if councils in urban and coastal areas. It in London are sourcing affordable should be noted that this is not a accommodation in other areas. complete set of data The costs of managing increases in It is likely that households will fall homelessness, increased into rent arrears and be at risk of requirement for temporary eviction. Furthermore, where accommodation and subsidising rent affected households already live in costs is likely to be a significant temporary accommodation, a extra financial burden for local shortfall in their rent is likely to fall authorities. to the local authority to make up.
6. Under Occupation in the Social Sector a) Background
6.1 In April 2013 housing benefit recipients within the social sector will receive their housing benefit based on household size. For those deemed to be under-occupying their homes they will receive a reduction in their benefits dependent on how many spare rooms they have. If a recipient is under- occupying by one bedroom then they will receive a 14% reduction. If they are under occupying be two or more rooms then they will receive a 25% reduction in their housing benefit. b) Impact in the East Midlands
6.2 There are currently 17,872 cases affected by the social sector size criteria. 14,599 with one spare bedroom and 3273 with two or more spare rooms.
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Impact on Citizens Impact on Councils
From data gathered from social housing Profile of local housing stock-smaller providers across the East M idlands properties are not readily available households moving stating the under There is a need for greater local occupancy criteria are minimal freedom and flexibility for councils to address the under-supply of af fordable housing Implications for rent arrears-current figures from across the region seem are suggesting a small rise in rent arrears between June and September 2013. Those affected by the benefit cap do not appear to be disproportionately affected. Need to profile DHP budgets Thought could be given to how the DHP criteria is drawn up in individual local authorities to support vulnerable people
7. Discretionary Housing Payments a) Background
7.1 Local authorities are allocated funding each year to support people who qualify for housing benefit (or similar help under universal credit) but are experiencing difficulties in either paying their rent or the start-up costs of a tenancy.
7.2 The DHP pot is limited and when the funding for the year runs out, no more payments can be made. The local authority decides who should be given the payments, how much and how often they are paid. Discretionary housing payments (DHP) may be paid weekly or can be a lump sum. They can also be backdated.
7.3 The government has increased the amount of money available to help some people to adjust to the reduction in housing benefits in recent years.
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Impact on Citizens Impact on Councils
Once plausible responses by Councils have reported a sharp tenants are taken into account increase in applications for DHPs would cover just £1 in every discretionary housing payments £7 of the impact of housing (DHPs) in April 2013, following the reforms on tenants. (Centre for introduction of household size Economic and Social Exclusion criteria Research) Concern that any underspend on DHP budgets will be clawed back. CESI estimate that in their central Local authorities could lobby for scenario 23% of the total additional funding in respect of households impacted by the key DHPs housing benefit reforms may be Consideration should be given to the successful in taking steps to profiling of DHP budgets. mitigate the impacts of reform Potential for local authorities to work through a housing or employment as a consortium providing support route particularly for smaller authorities
8. Local Housing Allowance a) Background
8.1 LHA is the method by which Housing Benefit is calculated for private sector tenants. In April 2011 a number of changes were made, as set out below:
a) The maximum payable rate has been lowered from the 50 th percentile to the 30 th percentile.
b) Maximum weekly payable rate: For a one bedroom property it is £250 per week. For a two bedroom property it is £290 per week. For a three bedroom property it is £340 per week. For a four bedroom property it is £400 per week. Four bedroom rate is now the maximum payable.
Impact on Citizens Impact on Councils
Around one in ten working age The reforms to the Local Housing households will be impacted by Allowance (LHA) element of Housing one or more of the Housing Benefit impact most on the areas Benefit reforms, with an average where the private rented sector loss of £1,215 per year - or £23 accounts for a high proportion of per week. (If you exclude households and where rent levels are
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London, the average loss per highest. household falls to £940 per Unsurprisingly, the biggest impact of year). this reform falls on London, and in The changes to Local Housing particular on boroughs such as Allowance will largely impact on Westminster and Kensington and households where no one works Chelsea where rents are (around 65 per cent of exceptionally high. households affected). A number of seaside towns are also Impacts per household are hit hard. significantly greater in southern They too have large numbers in England – reflecting the high private rented housing. Some of this costs of housing in these areas. comprises former guest houses that have been subdivided into small flats and draw in low income and out-of- work households from surrounding areas and further afield. Britain’s older industrial areas, hit hard by many of the other welfare changes, are less acutely affected by the LHA reforms because a higher proportion of their low-income Households live in the social rented sector (council and housing association) or in lower-price owner- occupied property. Looking at the impacts on Local authorities, inevitably the impacts on claimant households are greatest in areas with the highest rental costs – with overwhelmingly the largest impacts in London (where affected households are impacted by on average £2,680 per year) and the south east. However, in many of these areas there are often below average numbers of households claiming Housing Benefit – so it is important also to look at the share of all working age households impacted by Local Housing Allowance reforms. Overall, Sheffield Hallam University estimate that on average 7 per cent of working age households are impacted by reforms to the Local Housing Allowance.
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There will also be a need for local authorities to increase their local focus on the working poor
9. Welfare Assistance Schemes a) Background
9.1 Welfare Assistance Schemes are to replace community care grants and crisis loans for general living expenses. Prior to April, community care grants were available to support people who need support to live independently in the community. Crisis loans were available to provide help with short term needs in a crisis.
9.2 These two forms of support for general living expenses were abolished from 1 April. New local provision of these will be administered by local authorities in England and the devolved administrations in Scotland and Wales.
9.3 The funding provided for establishing local welfare assistance schemes has been provided on a non-ringfenced basis, which has resulted in local authorities across the country establishing different schemes of provision.
Impact on Citizens Impact on Councils
Schemes in the East Midlands have Early issues in administration with largely moved away from cash to DWP seem to have largely been benefits in kind resolved Indications are that local delivery has been more efficient and that funds ar e reaching those most in need of support Lack of ring-fencing Most schemes have been reviewed. One authority has proposed to withdraw the scheme in 2014/15
10. Summary of East Midlands Research
10.1 The key points highlighted by the research highlighted above are:
The static or slight increases in council tax benefit claimants. The impact of Discretionary Housing Payments and the implications for authorities who have over or underspent their budgets. The minimal impact of the size criteria and benefit cap to date.
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Evidence that there has been an increase in the cost of collection and that there has been a slight increase in arrears. Evidence that there has been a slight increase in social housing rent arrears. Local Housing Allowance changes have impacted in high rent arrears and have had an impact in coastal areas. There are specific concerns about the availability of suitable housing stock particularly smaller properties and one bedroom accommodation.
10.2 The East Midlands data by individual local authority can be viewed in appendices 5(a-f) of this report.
10.3 The information collected to date is showing in appendix 5(a) that the council tax and housing benefit caseload across local authorities in the East Midlands is static or increasing. This is contrary to the DWP view that claimant rates should be falling due to lower unemployment. The conclusion drawn from these results is that many of the claimants will be those in low paid work or those on irregular hours or zero hours contracts.
10.4 Appendix 5(b) shows the numbers affected by the benefit cap. Numbers in the East Midlands have fallen since original estimates were made. This is in part due to improved data accuracy.
10.5 Appendix 5(c) shows local housing allowance caseloads. Generally caseloads are falling but cities have seen a more marked decline in LHA caseload.
10.6 Appendices 5(d), 5(e) and 5(f) focus on under occupancy. The picture is of a declining impact in the region. Some of this maybe attributable to better accuracy of data, shifts in behaviour and reclassification of properties. Further information collected by East Midlands Councils has noted increases in rent arrears for social housing tenants. However, it is not possible to make a direct correlation between the rent arrears information and those with one or more extra bedrooms. Further analysis of twelve months data will provide a more accurate picture. a) Further research
10.7 EMC are continuing to gather and analyse data based on the welfare reforms and all member authorities have been asked to contribute to this data collection exercise. Information currently being collected includes: Homelessness presentations. Empty residential properties. Social Housing Rent arrears. Advice and guidance services requests.
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10.8 Information and analysis for future reposts will include this information.
11. Overall Conclusions
11.1 There is currently a mixed picture of the impact with some reforms including under occupation and the benefit cap that, whilst receiving widespread media coverage, have not as yet had the predicted impact in the region.
11.2 However impacts may be being masked by the way data is gathered and a more accurate picture may not emerge until after the end of the financial year.
11.3 What does seem to be emerging is that those in low paid employment seem to have been most impacted by the reforms to date. This is particularly evident when the impact of changes to the tax credits system are also taken into consideration.
11.4 There are particular issues for certain types of authority and location. Coastal towns have been particularly affected by the local housing allowance reforms due to higher rents. Applications for Discretionary Housing Benefit and Council tax support schemes have increased in urban areas.
11.5 The emerging key messages for local authorities in the region are:
There is a need for greater local freedom and flexibility for councils to address the under-supply of affordable housing. There is a need for greater freedom and flexibility for councils to deliver strong local economies and support people into employment. The is a need for local knowledge and discretion in supporting people with particular needs or vulnerabilities both with claiming Universal Credit and managing / mitigating the impact of the reforms – Community Budgets approach. All of the above must be adequately and appropriately funded.
12. Next Steps
12.1 The current work on welfare reform offers an ideal opportunity to implement the new approach for increasing member engagement in East Midlands Councils.
12.2 Through its research, the welfare reform steering group have highlighted a number of issues of direct relevance to local councils in the East Midlands. The preliminary findings of this research were presented and discussed with councillors at the recent welfare reform councillor briefing event on 21 st
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November 2013. This has provided the basis for the development of any subsequent EMC position.
12.3 Informed by discussions at the Executive Board, a summary document will highlight, for example, the specific impact on councils and how the implementation of reforms may be better supported, in order to offer a positive contribution to the delivery of welfare reforms in the region.
12.4 This consultation will be managed by ‘traditional’ means as well as through ‘we-inars’ and the website, offering every councillor the opportunity to influence the work through an interactive approach, as well as being able to view and respond to the comments of other councillors.
12.5 Informed by this, a final report will be presented to the March meeting of the Executive Board that will include: Further information on the specific impact of the reforms on councils and communities in the East Midlands. Examples of good practice of local councils in the implementing the reforms. Recommendations for the sector on how the reforms may be better implemented, and how communities may be better supported, learning from good practice in this region and elsewhere. Recommendations for other partners/organisations, including national Government. This will form the basis for lobbying points in conjunction with the EM APPG.
13. Recommendations
Members of the Executive Board are invited to:
13.1 Note the developments on welfare reform as highlighted in this report.
13.2 Consider and agree the key issues for welfare reform and how it impacts on communities and local councils in the East Midlands.
13.3 Endorse the approach for supporting wider councillor engagement on this issue, as detailed in section 12 of this report.
13.4 Consider further lobbying via the LGA in particular to call for the timetable for Universal Credit to be shared; explore the potential for the pooling of Discretionary Hardship payments if Authorities wish to and the issues of the Emergency fund payments. Allen Graham Chief Executive, Rushcliffe Borough Council Sarah Short HR & Development Manager
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Total Caseloads for Housing Benefit and Council Tax Benefit
90000
80000
70000
60000
Mar-10 50000 Mar-11 Mar-12 40000 Sep-12 Mar-13
30000
20000
10000
0 Amber ValleyAmber Ashfield Bassetlaw Blaby Bolsover Boston Broxtowe Charnwood Chesterfield Corby Daventry Derby DalesDerbyshire LindseyEast NorthantsEast BoroughErewash Gedling Harborough PeakHigh Bosworth& Hinckley Kettering Leicester Lincoln Mansfield Melton Sherwood& Newark DerbyshireNE KestevenNorth LeicestershireNW Nottingham Wigston& Oadby Rushcliffe Rutland DerbyshireSouth HollandSouth KestevenSouth NorthantsSouth Wellingborough LindseyWest
60 Item 5, Appendix (b)
Numbers Affected by Benefit Cap
400
375
350
325
300
275
250
225 Sep-12 200 Mar-13 Sep-13 175
150
125
100
75
50
25
0 Amber ValleyAmber Ashfield Bassetlaw Blaby Bolsover Boston Broxtowe Charnwood Chesterfield Corby Daventry Derby DalesDerbyshire LindseyEast NorthantsEast Erewash Gedling Harborough PeakHigh Bosworth& Hinckley Kettering Leicester Lincoln Mansfield Melton Sherwood& Newark DerbyshireNE KestevenNorth LeicestershireNW Nottingham Wigston& Oadby Rutland Rushcliffe DerbyshireSouth HollandSouth KestevenSouth NorthantsSouth Wellingborough LindseyWest
61 Item5, Appendix (c)
LHA Caseloads
50000
45000
40000
35000
30000
Sep-12 25000 Mar-13 Sep-13
20000
15000
10000
5000
0 Amber ValleyAmber Ashfield Bassetlaw Blaby Bolsover Boston Broxtowe Charnwood Chesterfield Corby Daventry Derby DerbyshireDales LindseyEast NorthantsEast Erewash Gedling Harborough HighPeak HinckleyBosworth& Kettering Leicester Lincoln Mansfield Melton NewarkSherwood& NEDerbyshire KestevenNorth NWLeicestershire Nottingham Wigston&Oadby Rutland Rushcliffe SouthDerbyshire SouthHolland SouthKesteven SouthNorthants Wellingborough Lindsey West
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Under Occupancy - households with one extra bedroom
6000
5000
4000
Sep-12 Mar-13 Sep-13 3000
2000
1000
0 l y lle a V r e b m A ld fie h s A w tla se s a B y b la B r e v o ls o B n to s o B e w to x ro B d o o w rn a h C ld rfie ste e h C y rb o C try n e v a D y rb e D ire h ys rb e D y se d in L t s a E ts n a rth o N t s a E sh a w re E g lin d e G h g u ro o rb a H k a e P h ig H rth o sw o B & y kle c in H g rin tte e K r te s e ic e L ln o c in L ld sfie n a M n lto e M d o o rw e h S & rk a w e N ire h ys rb e D E N n e v ste e K rth o N ire rsh te s e ic e L W N m a h g ttin o N n sto ig W & y b d a O d n tla u R liffe c h s u R ire h ys rb e D th u o S d n lla o H th u o S n e v ste e K th u o S ts n a rth o N th u o S h g u ro o b g llin e W y e s d in L t s e W
63 Item 5, Appendix (e)
Under occupancy - households with twos extra bedroom
2000
1800
1600
1400
1200
Sep-12 1000 Mar-13 Sep-13
800
600
400
200
0 l y lle a V r e b m A ld ie f h s A w la t e s s a B y b la B r e v o ls o B n o t s o B e w o t x o r B d o o w n r a h C ld ie f r e t s e h C y b r o C y r t n e v a D y b r e D e ir h s y b r e D y e s d in L t s a s t E n a h t r o N t s a E h s a w e r E g lin d e G h g u o r o b r a H k a e h t P r h o w ig s H o B & y le k c in H g in r e t t e K r e t s e ic e L ln o c in L ld ie f s n a M d n o o o lt e w r M e h S & k r a w e eN ir h s y b r e D E n e N v e t s e K h e t ir r h o s N r e t s e ic e L W N m a h g in n t t o t o s N ig W & y b d a O d n la t u R e f lif c h e s ir u h R s y b r e D h t u o S d n lla o H h t u n o e S v e t s e K h t u s t o n S a h t r o N h t u o hS g u o r o b g llin e W y e s d in L t s e W
64 Item 5, Appendix (f)
Total - under occupancy households
8000
7000
6000
5000
Total number for September 2012 4000 Total number for March 2013 Total number for September 2013
3000
2000
1000
0 l y lle a V r e b m A ld fie sh A w tla e ss a B y b la B r ve lso o B n sto o B e w xto ro B d o o w rn a h C ld rfie ste e h C y rb o C try n ve a D y rb e D s le a D ire ysh rb e D y se d in L st a E ts n a rth o N st a E sh a w re E g lin d e G h g u ro o rb a H k a e P h ig H rth o sw o B & y ckle in H g rin tte e K r te s ice e L ln co in L ld sfie n a M n lto e M d o o rw e h S & rk a w e N ire h ys rb e D E N n ve ste e K rth o N ire rsh te s ice e L W N m a h g ttin o N n sto ig W & y b d a O d n tla u R liffe c sh u R ire sh y rb e D th u o S d n lla o H th u o S n ve ste e K th u o S ts n a rth o N th u o S h g u ro o b g llin e W y e s d in L st e W
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Executive Board Meeting 6th December 2013
An Update on HS2
Summary
The report updates Members on recent developments relating to HS2.
The report further proposes that EMC responds to the current consultation on Phase 2 of HS2 (including the section from Birmingham to Leeds through the East Midlands with a Hub Station at Toton), that closes at the end of January 2014, and suggest the basis for this response.
Recommendations
Members of Executive Board are invited to:
Agree to submit a response to the consultation on Phase 2 of HS2 based on the draft contained in Appendix 6(a) of this report, subject to any agreed amendments.
Note the rest of this report.
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1. Background
1.1 The Government remains committed to the delivery of HS2, as does the Opposition front bench (subject to costs being appropriately controlled). For the scheme to be fully implemented as currently proposed, it will be necessary for at least the Conservative and Labour front benches (whether in Government or Opposition) to remain supportive of HS2 in the next Parliament.
1.2 The Government introduced the first ‘hybrid bill’ for the route between London and Birmingham (including the section through South Northamptonshire) on the 25 th November 2013, slightly earlier than anticipated. The Government will seek to get royal assent for the Bill (which will effectively give Phase 1 of the scheme planning permission, although some matters of detail will be for relevant local councils to resolve) by the end this Parliament (early 2015).
1.3 On the 17 th July 2013 Government formally launched a consultation on Phase 2 of HS2, including the route from Birmingham to Leeds through the East Midlands, with an East Midlands Hub station at Toton. The closing date for responses is the 31 st January 2014. If the Government decides to progress Phase 2 of HS2, a second hybrid bill will be introduced in the next Parliament (2015-2020).
1.4 It is possible that Phase 1 and/or Phase 2 of HS2 will not progress as proposed for a variety of reasons. However if constructed, the impact of both the line of route and the Hub Station on the economic, social and environmental geography of the East Midlands will be profound. As a result, the construction of HS2 must be actively planned for by councils, LEPs and other relevant organisations across the East Midlands.
1.5 In terms of EMC’s position, the key conditions from the consultation response on the principle of HS2 agreed by the Executive Board in June 2011 have provided the basis for constructive engagement with the project to date:
At least 10 high speed trains per hour from the East Midlands to destinations including London, Birmingham, South Yorkshire, Leeds and Newcastle (via a link to the ECML) at very substantially reduced journey times compared with current services. Effective use of capacity released from the ‘classic rail’ network by HS2 to improve services from existing stations across the East Midlands. Good connectivity from Derby, Leicester, Nottingham and surrounding rural hinterlands to a new HS2 station (with potential for so-called hybrid trains).
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The ability to maximise the economic benefits and minimise and mitigate adverse environmental impacts of the new station and line of route. The ability maintain investment in other key transport infrastructure across the East Midlands during the development and construction of HS2.
2. Further Developments & Additional Information
2.1 Further detail on recent developments and additional information which has been used to inform the draft consultation response set out in Appendix 6 (a), is summarised below.
a) Visit of Lord Deighton to the East Midlands (15 th November2013)
2.2 EMC hosted a visit from Lord Deighton, Commercial Secretary to the Treasury, and Chair of the HS2 Taskforce charged with maximising the wider economic benefits of HS2, on the 15 th November 2013. Lord Deighton first visited students at Loughborough University working to apply aerospace technology to train design. Lord Deighton, along with other members of the task force then met with a range of local stakeholders, (including Cllr Paul Bayliss and the Chief Executive of Broxtowe Borough Council) at Loughborough Town Hall. The discussion highlighted the importance of effective local connectivity to the Hub Station, the need to simplify procurement procedures to help local firms secure contracts, and to ensure that there will be enough people in the UK with the skills to design and build the new line and rolling stock. In relation to this, the idea of an East Midlands based ‘HS2 Skills Academy’ was highlighted.
b) Joint EMC/TCPA Seminar (25 th November 2013)
2.3 EMC and the Town and Country Planning Association (TCPA) held joint seminar to discuss ways to make maximise the benefits of HS2 in the East Midlands, again at Loughborough Town Hall, on the 25 th November. The seminar was chaired by Sir Brian Briscoe, a TCPA Trustee and formally Chief Executive of the LGA and Chair of HS2 Ltd. Speakers included HS2 Ltd, Network Rail, the Derbyshire and Nottinghamshire Chamber of Commerce. Over 60 delegates attended – a mix of senior local councillors and council officers and business representatives. The discussion again highlighted the importance of local connectivity to the Hub Station, as well as the need for excellent design and for an effective local strategic planning framework for the development of the Hub Station and its integration into local transport networks and surrounding urban areas.
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c) HS2 ‘Roadshow’ Long Eaton (15 th /16 th November 2013)
2.4 At the invitation of HS2 Ltd, EMC co-ordinated a local council presence at the HS2 consultation road show at Long Eaton, the closest such event to the proposed Hub Station at Toton. Similar arrangements for councils have been put in place at the road shows in Leeds, Sheffield and Manchester. Officers from EMC, Nottingham City Council and Derbyshire Council maintained a presence over both days of the exhibition to hear the views of local people. Despite concerns relating to local impacts and connectivity (the details of which have yet to be determined), the mood of the event was generally positive. On the second day the Secretary of State for Transport, Patrick McLoughlin MP, and the Chief Executive of HS2 Ltd, Alison Munro, also attended.
d) Network Rail’s Released Capacity Study
2.5 A key potential benefit of HS2 for the wider East Midlands is the capacity released from the existing classic network that could be used to improve services to existing stations (for example improving the Lincoln to London service via the East Coast Main Line). There has been some public concern that the migration of long distance patronage to HS2 will make some existing classic services to smaller ‘intermediate’ stations unviable. However, recent analysis published as part of Network Rail’s long term planning process indicates that the scale of passenger growth the rail industry has seen over the last 20 years (and throughout the recent economic downturn) is likely to continue under a range of economic scenarios into the future.
2.6 Network Rail have now published and initial assessment of the released capacity potential resulting from HS2 and options for how it could be used, available here . The report concludes that there is no case for reducing the number of existing train paths on the Midland Mainline post HS2. Instead there is potential to increase train lengths and to re-configure some services to improve connectivity to the north and to better serve intermediate stations, without undermining direct connectivity to London from Leicester. In relation to the East Coast and West Coast main lines, the report concludes that there is significant potential to introduce new services to stations not directly connected to HS2.
e) Connectivity between HS2 and the ‘classic’ rail network
2.7 A key opportunity of HS2 would be to allow improved services between stations in the East Midlands and destinations to the north through trains running on both classic and HS2 rail lines – using so called ‘classic compatible’ trains. For example, direct services between Nottingham and Birmingham, Leicester and
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Leeds and Derby and Leeds – all journeys that are currently very difficult to make by train but for which analysis suggests there is strong latent demand.
2.8 However, the Government’s initial proposition does not include a physical link between HS2 and an electrified Midland Main Line – despite the availability of train paths on the northern parts of the ‘Y’ network. In order to make the case for such a link through the consultation process, EMC with support from a number of Local Transport Authorities, commissioned Arup to undertake a technical and economic assessment of the potential options.
2.9 The Arup study has demonstrated the scale of latent demand between cities across the midlands and north, in particular between Nottingham and Birmingham, and has concluded that a number of such linkages are not only feasible, but would add to the overall business case for HS2. The most straight forward option is to build linkages at the Hub Station, where the HS2 and MML tracks run in parallel and in close proximity. This would allow direct connectivity from Derby, Leicester and Nottingham to Leeds and the north east of England, giving journey time between Leicester and Leeds of less than 50 minutes, and between both Derby and Nottingham and Leeds of less then 40 minutes. The cost of such linkages would be marginal if built into the final design of the Hub Station.
2.10 The addition of the southward facing chord linking the MML and HS2, either to the south of the Hub-Station or to the north near Trowell, would allow direct connectivity between Nottingham and Birmingham with a journey time of less than 30 minutes. It would also significantly increase connectivity between Lincoln, Newark and Birmingham. Both chord options would require a heavy engineering solution and neither would be cheap. However the scale of latent demand for such journeys is such that the long terms economic benefits are likely to significantly out-weigh the costs, and consequently one of the chord options should be taken forward into the final HS2 proposition.
2.11 Finally, the study indicates there is potential for a linkage at Killamarsh (south of Sheffield) at modest cost which would improve connectivity from both Derby and Chesterfield, and this should be actively considered as part of the final HS2 proposition.
3. Recommendations
Members of the Executive Board are invite to:
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3.1 Agree to submit a response to the consultation on Phase 2 of HS2 based on the draft contained in Appendix (a) of this report, subject to any agreed amendments and;
3.2 Note the rest of this report.
Andrew Pritchard Director of Policy & Infrastructure
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HS2 Consultation Response from East Midlands Councils: December 2013
Key Principles
The decision to proceed with the development of HS2 can only be made by Parliament in the national interest, based on the most robust and up to date assessments of cost, value for money, economic and environmental impacts. It is noted that a final decision to proceed with the eastern leg of HS2 will be made in the next Parliament through a hybrid bill process.
Assuming the next Parliament does decide to proceed with the Eastern leg of HS2, including a new East Midlands Hub station at Toton, then the following principles should be applied to its development to ensure that the economic potential of the scheme for both the East Midlands and the country as a whole is fully realised:
Nil detriment to existing plans to upgrade and electrify the Midland Main Line, including enhancements at Derby, Leicester & Market Harborough; Use of existing rail capacity released by HS2 to improve services at stations across the East Midlands; Adverse environmental impacts of the line and new Hub Station should be avoided where possible, or minimised and mitigated through excellent design; Full compensation for people and businesses who are adversely effected by the new line and Hub Station at the earliest opportunity; Development of high quality 'classic rail' services between the new Hub Station and the city centres of Derby, Leicester & Nottingham; Effective connectivity between HS2 and existing rail lines, including the option to run ‘classic compatible’ trains from Derby, Nottingham and Leicester on HS2; Maximum access to the new Hub Station by tram, bus, walking and cycling; Minimum impact of the new Hub Station on local and strategic roads; Ensuring that rail engineering and construction companies based in the East Midlands have a fair opportunity to win contracts to build the new line and rolling stock; and Ensuring that local people have the skills to access the full range of design, engineering and construction jobs that will be created during the delivery of the project.
These principles have used to inform the detailed responses to the questions set out in the consultation document relevant to the East Midlands.
Regardless of the decision on HS2, East Midlands Councils strongly supports the expansion of the inter-city rail network to meet the projected demand for long distance rail travel (which has doubled over the last 15 years) and to promote
72 Item 6, Appendix (a) local economic growth as part of a balanced approach to national and local transport investment.
Q4: The Route & Supporting information
Do you agree with the Government’s proposed route between West Midlands and Leeds?
The proposed route through the East Midlands follows for the most part the established transport corridors of the M42/A42 and the M1, which will help to limit adverse impacts on local communities and environmental assets.
The decision to extend the tunnel under East Midlands Airport, to enable the proposed inter-model freight terminal (known as the Roxhill development) to proceed if it secures development consent through the national infrastructure planning regime, is strongly supported.
However, there will still be adverse impacts along the proposed route that will need to be avoided, or minimised and mitigated through the detailed design process.
Underpinning the approach to route and station development should be a commitment to excellent design and community consultation. It is vital to its success that HS2 in the East Midlands seen as an exemplar major infrastructure scheme both locally and nationally. The East Midlands architecture centre, OPUN, has an excellent track record of working with councils, developers and communities to deliver sympathetically designed new development and could play a valuable role in achieving this objective.
In terms of the potential impact on communities, noise and severance are the major concerns.
Whilst it is accepted that the line will be built to a significantly higher engineering standards than the existing Victorian network, the trains will also be running much faster. The detailed design of the route must therefore utilise all available noise abatement technologies, including noise barriers and improvements to train aerodynamics and electric transmission, to minimise the impact on both homeowners and businesses and on the tranquillity of the countryside.
Long Eaton is already subject to severance from the Midland Main Line, and there are several level crossings within the town. The addition of HS2 should be used as an opportunity to address existing severance problems and to create safe routes across both lines for vehicles, cyclists and pedestrians.
There are also particular challenges in the Chesterfield area, where the proposed
73 Item 6, Appendix (a) line of route has the potential to impact on a number of regeneration opportunities and the re-instatement of stretches of the Chesterfield Canal. Further ongoing dialogue will be required with relevant councils and business to ensure that the final route maximises the potential for regeneration and job growth.
Elsewhere, individual councils are well placed to highlight other locations where the proposed line cuts across local roads, bridleways and footpaths used by communities to access services, move livestock and farm produce or for recreational purposes. Extensive consultation with councils and communities will be required to understand local patterns of movement and to develop mitigating solutions acceptable to local people.
As highlighted in the Appraisal of Sustainability, there will be natural and heritage assets placed at risk of damage by the proposed route. The Government should ensure that these risks are avoided where possible, or failing that minimised and mitigated, and that the new line is integrated as far as possible into the landscape through the use of sympathetically designed cuttings and tunnels.
This will be particularly important in the Bolsover area of Derbyshire where the line of route, like the M1, runs close to the Grade 1 listed Hardwick Hall and the associated Grade 1 listed Registered Park & Garden. The route is likely to have a detrimental impact on the setting of these assets without appropriate mitigation.
Whilst most of the route in the East Midlands will be at or below ground level (either in cuttings or tunnels), there will be bridges, stretches of embankment and where the line crosses the flood plains of the River Soar & River Trent, the track will be raised onto long viaducts. These viaducts in particular have the potential to be highly visually intrusive and detrimental to landscape character, but could also be iconic structures if well designed and sympathetically integrated into the landscape.
Experience from other major infrastructure schemes, including HS1, indicates that there is potential for environmental enhancements through planting, landscaping and habitat creation. Opportunities should be taken to improve local biodiversity over and above the current situation in line with local and national habitat management and re-creation objectives, rather than just replacing what has been lost. The Government should also work with landowners to ‘pre- mitigate’ where possible, through implementing landscaping and planting schemes that will have time to mature before the line is constructed.
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Q5: Proposals for Stations c: Do you agree with the Government’s proposals for an East Midlands station to be located at Toton as described in Chapter 8?
Analysis undertaken by HS2 Ltd indicates that a Hub Station at Toton (with both HS2 & classic rail access) is capable of serving a larger population than any single city centre station location in the East Midlands.
Research commissioned by Nottingham City Council, Broxtowe Borough Council and Derbyshire and Nottinghamshire County Councils and undertaken by Voltera Ltd has indicated that there is potential for significant local economic benefits resulting from the development of the Hub Station. This analysis is consistent with the conclusions of the HS2 Ltd commissioned KPMG Study on the wider economic benefits of HS2, which indicated that the Derby-Nottingham area could see a rise in GVA of between £1.1 and £2.2. billion per year (depending on the size of the national economy at any given time).
However, in order for the passenger and economic benefits of the Hub Station to be fully realised, it must be of an excellent design standard and fully integrated into the public transport and road network. In particular, the following conditions must be met:
Effective direct heavy rail access to the city centre stations at Derby, Leicester and Nottingham. It would unacceptable to serve the Hub Station by diverting existing cross county rail services (such as the Liverpool-Norwich service), which will lead to overcrowding, delays and poor passenger experience. Ongoing research led by Network Rail has indicated a range of alternative options for how the Hub Station could be served by heavy rail. This work should be used a basis for further engagement with councils, the rail industry and other stakeholders.
Potential to run ‘classic compatible’ trains on both HS2 and the Midland Main Line . This would widen connectivity between existing stations in the East Midlands and the north and west of England (making use of spare capacity on HS2 north of the junction at Water Orton) and enable the development of a ‘regional high speed network’ to complement the London services. This would radically improve a range of journeys that are currently very difficult to make by rail, but for which Network Rail’s Long Distance Market Study indicates there is strong latent demand. For such movements to be possible there must be a direct link between the Midland Main Line and HS2, allowing some trains to run on both lines.
EMC with support from a number of Local Transport Authorities commissioned Arup to undertake a technical and economic assessment of a number of options to link HS2 with the MML . The study has demonstrated
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the scale of latent demand between cities across the midlands and north, in particular between Nottingham and Birmingham, and has concluded that a number of such linkages are not only feasible, but would add to the overall business case for HS2. The most straight forward option is to build linkages at the Hub Station, where the HS2 and MML tracks run in parallel and in close proximity. This would allow direct connectivity from Derby, Leicester and Nottingham to Leeds and the north east of England, giving journey time between Leicester and Leeds of less than 50 minutes, and between both Derby and Nottingham and Leeds of less then 40 minutes. The cost of such linkages would be marginal if built into the final design of the Hub Station.
The addition of the southward facing chord linking the MML and HS2, either to the south of the Hub-Station or to the north near Trowell, would allow direct connectivity between Nottingham and Birmingham with a journey time of less than 30 minutes. It would also significantly increase connectivity between Lincoln, Newark and Birmingham. Both chord options would require a heavy engineering solution and neither would be cheap. However the scale of latent demand for such journeys is such that the long terms economic benefits are likely to significantly out-weigh the costs, and consequently one of the chord options should be taken forward into the final HS2 proposition.
Finally, the Arup study indicates there is potential for a linkage at Killamarsh (south of Sheffield) at modest cost which would improve connectivity from both Derby and Chesterfield, and this should be actively considered as part of the final HS2 proposition.
Effective access to the Hub Station from the A52. There have been a number of proposals for major developments on the Toton site over the last 20 years, including an inter-modal freight terminal. However, access from the A52 has never been resolved to the satisfaction of the Highways Agency. It will be important to develop a credible scheme at an early stage which is also acceptable to local people, relevant councils as well as the Highways Agency. The Arup study indicated that the addition of direct connectivity between HS2 and the MML has the potential to reduce the scale of highway improvements required to serve the Hub Station.
Effective access to the Hub Station by tram . The Government is already planning to extend Phase 2 of the Nottingham Express Transit (NET) to terminate at the proposed Hub Station. There is also the potential to extend NET into Long Eaton, giving high quality public transport access to the Hub Station for the people and businesses of the town. Whilst this further extension would be up to local partners to fund if a sufficient business case can be demonstrated, the terminus at the Hub Station should be designed in such a way as to make a further extension technically feasible. In practice, this would mean terminating NET above the station, with escalators and lifts
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to enable passenger to descend to the HS2 platforms, similar to the arrangement currently under construction at Nottingham Station.
Effective local access to the Hub Station . In addition to NET access to the Hub Station, there must be provision for appropriate local road access for local busses and taxis and for cyclists and pedestrians in the immediate localities of Toton, Stapleford and Long Eaton. Although the Hub Station will be a regional facility it will have very significant local impacts and it is vital that it is fully integrated into the existing urban fabric, rather than functioning as an alien structure unrelated to surrounding communities.
Q7:Appraisal of Sustainability
Please let us know your comments on the Appraisal of Sustainability (as reported in the Sustainability Statement) of the Government’s proposed Phase Two route, including the alternatives to the proposed route as described in Chapter 9
The Appraisal of Sustainability is a high level document which has been primarily used to inform consideration of alternative lines of route. As such it is generally of an appropriate standard of detail and scope.
However, in developing and refining the proposed line of route to a level required by a future hybrid bill, much more detailed information and analysis will be required, working closely with councils, local communities and amenity groups. Experience from other similar projects suggests that the quality of the outcome will be dependent on the level and quality of such engagement.
Q 8: Freed Capacity
Please let us know your comments on how the capacity that would be freed up on the existing rail network by the introduction of the proposed Phase Two route could be used as described on Chapter 10.
The single biggest potential transport benefit from the development of HS2 in the East Midlands is the ability to re-allocate capacity from the increasingly overcrowded classic rail network to better serve existing stations.
Long distance rail travel has doubled over the last 15 years and has continued to grow despite recent adverse economic conditions and above inflation fare increases.
The Long Distance, Freight and Regional Market Studies produced by Network
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Rail have all indicated that rapid passenger and freight growth will continue over the next 30 years under all foreseeable economic scenarios.
The Network Rail commissioned study on released capacity ( Better Connections: Opportunities for the Integration of HS2 ) sets out a range of different approaches for how it could be allocated. In relation to the Midland Main Line, the study concluded that there was no case for reducing the number of train paths to London post HS2. In relation to both the East Coast and West Coast Main Lines, the study concluded that there were significant opportunities to reallocate services to better serve intermediate stations.
From an EMC perspective:
capacity released from the Midland Main Line must enable further improvements to connectivity between Derby, Leicester and Nottingham and the northern ‘core cities’, and enhanced services for Chesterfield, Loughborough, Market Harborough, Corby, Kettering and Wellingborough;
capacity released from the East Coast Main line must enable enhanced services for Retford, Newark, Grantham and Lincoln;
capacity released from the West Coast Main Line must enable enhanced services for Northampton to both Birmingham and London;
The role of Leicester on the Midland Main Line will be particularly important post HS2. At the moment, the fastest train to London is 69 minutes and the services are in two bunches: at 25 and 33 minutes past each hour and at 55 and 57 minutes past the hour. Current and proposed improvements to the Midland Main Line (including electrification) should enable journey times to London to be reduced to below 60 minutes by 2019. The addition of HS2 should be used as an opportunity to re-orientate MML services around Leicester, resulting in an even ‘clock-face’ service, which would also benefit other stations along the line including Derby and Nottingham.
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Executive Board Meeting 6th December 2013
European Funding in the East Midlands (2014-2020)
Summary
This report updates Members on:
Emerging priorities and management arrangements for the use of EU Structural Funds for the period 2014-2020. Progress on EMC’s Technical Assistance (PA3) project to help councils and LEPs prepare for the next programme.
Members are invited to endorse the final draft of the ‘socio-economic framework’ produced as part of the PA3 Project and proposals for the next stage of Technical Assistance Project.
Recommendation
Members of Executive Board are invited to:
Note the emerging priorities and management arrangements for the use of EU Structural Funds for the period 2014-2020. Endorse the socio-economic framework contained in Appendix 7(a). Endorse proposals for the next stage of EMC’s Technical Assistance Project set out under section 5 of this report.
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1. Background
1.1 This report updates Members on emerging priorities and management arrangements for the use of EU Structural Funds for the period 2014-2020, progress on EMC’s Technical Assistance (PA3) project to help councils and LEPs prepare for the next programme,
1.2 This project has been undertaken against the background poor performance in the current regional ERDF programme, which has resulted in a likely loss of funds from the East Midlands. Efforts have been made to highlight lessons from this experience, in particular the benefits of developing strategic scale projects that will maximise investment power and reduce administrative costs.
2. Current ERDF Programme
2.1 The value of the current ERDF programme is £224.7m. Since the beginning of the programme in 2007, the overall programme value has increased by 24.7% due to exchange rate gains. Value of ERDF grant spent to date is £106.9m (48% of total). The value of commitments is now at 83.4% (£187.5m) of the total programme value. The value of projects progressing through pipeline is currently 17% (£38.3m). The Programme cannot commit more than 100%.
2.2 The Programme is forecast to not achieve the 2013 expenditure (N+2) target - £131.9m. This is the minimum cumulative spend that must be declared to the European Commission by the end of December each year. The current deficit estimate is £5.9m.
2.3 The DCLG team and partners are making every effort to minimise this deficit in advance of the end-December deadline. Failure to achieve the target will result in the ‘de-commitment of the deficit from the programme’ (loss of funding) and inevitably an associated de-commitment of ERDF from projects in delivery that failed to achieve their spend profile for 2013.
2.4 Four agreed outputs have already met their target; ‘Number of Businesses assisted to improve performance’ , ‘People Assisted to Start a Business’, ‘Square Metres Upgraded’ and Brownfield Land Reclaimed. Two outputs; ‘GVA from Businesses Improving Performance’ and ‘Graduates Placed in SMEs’ do not have enough projects in delivery or pipeline to meet their targets.
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3. Emerging National Priorities & Guidance for 2014-20
3.1 The UK Government and the European Commission are working to prepare for the next round of EU Structural Funding, due to cover the period 2014-2020. The Government proposition is based around the following:
A single governance framework at the national level for most structural funds (including all ERDF & ESF) to be known as the ‘EU Growth Programme’. Within this framework, Local Enterprises Partnerships (LEPs) will have responsibility for developing local ‘EU Investment Strategies’. Each LEP will be given a ‘nominal allocation’ of national EU funding to prioritise against its investment strategy (although the cash will be held centrally by Government), which will be reviewed against performance on an annual basis from 2017 onwards.
3.2 Government announced proposed notional allocations for all LEPs at the end of June 2013. For those LEPs covering the East Midlands the proposed allocations are as follows:
D2N2: €249.7m Greater Cambridgeshire & Greater Peterborough LEP: €75.5m Greater Lincoln LEP: €133.5m Leicester & Leicestershire LEP: €126.3m Northamptonshire Enterprise Partnership: €55.0m Sheffield City Region: €203.4m South East Midlands LEP: €88.3m
3.3 In July 2013 the Government announced provisional details of a UK funded ‘Local Growth Fund’, which will be available to LEPs from 2015 onwards and could potentially be seen as match funding for EU Structural funds. Although proposed LEP allocations have yet to be determined, at a national level the fund will be made up of the following elements:
New Homes Bonus £400m LA Major Transport Schemes £819m Local Sustainable Transport Fund £100m Integrated Transport Block £200m Further Education Capital Fund £330m ESF Skills Match Funding £170m
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3.4 Supplementary guidance on the development of EU Local Investment Strategies was issued to LEPs by Government on the 19 th July 2013 (available here ). In line with the guidance, all LEPs had until 7 th October 2013 to submit draft investment strategies, with final versions to be completed by the end of January 2014.
3.5 The Government is anticipating that the next EU Programme will become operational in mid 2014. All 39 LEP Investment Plans were have been discussed by the Government’s National Growth Board and feedback has been made available to individual LEPs. A common element of the feedback has been the need for LEPs to develop a clearer approach to collaborative activity.
4. Action by East Midlands Councils
4.1 To support LEPs and councils in preparing for these new arrangements, EMC, with encouragement from DCLG, is undertaking a Technical Assistance (TA) Project under the current East Midlands ERDF program to produce a ‘socio- economic framework’ as an input to the Government’s EU Growth Programme and relevant LEP investment strategies.
4.2 The final draft socio-economic framework is attached as Appendix 7(a) of this report. It is split into five main sections.
Section 1: Introduction Section 2: Economic Context Section 3: Investment Case Section 4: Delivery Challenges and Solutions Section 5: Statistical Annex
4.3 The final draft has been informed by the outcomes of six consultation events which took place in July 2013, economic analysis undertaken by Nottingham Trent University’s Business School, and some of the work that underpinned EMC’s ‘Investing in Opportunity’ prospectus published in February 2013. An initial version was discussed with senior officials from BIS and DCLG on the 6 th September 2013, and then by the Executive Board on the 27 th September 2013. The draft was then subject to a period of consultation with partners that resulted in a small number of technical amendments.
4.4 The final draft document in Appendix 7(a) tells the economic story of the local economies that make up the East Midlands, sets out a number of key investment opportunities highlighted during consultation, and gives some practical advice for LEPs and others about how to make the most of future EU funding, learning from past experience. In particular, it highlights a number of sectors and themes
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where LEPs could take a collaborative approach to deliver strategic scale initiatives that maximise investment power and reduce administrative costs. Key opportunities include:
Sectors: Transport Equipment High Performance Engineering Energy Generation & Supply Food Technology
Themes: Access to SME Finance Access to Business Support & Training Services Support for the Visitor Economy Improving Low Skill Levels
4.5 Finally the document highlights a number of challenges which LEPs will need to overcome ensure effective delivery of future programmes, along with potential solutions. These are summarised below.
Challenge Solutions Securing match Using central Government match funding to deliver locally funding agreed enhanced outcomes - which will also help to ensure spend targets are met in the period up to the 2017 review.
Using the LEP Local Growth Fund post 2015 as match funding, particularly to support skills & training initiatives.
Risk & Complexity Investment in EU funding expertise by LEPs and project sponsors, including ‘out-reach’ officers to provide advice project sponsors at a formative stage
Fully integrated Government Growth Teams with appropriate representation by BIS, DCLG, Defra and DWP
Learning from best practice in other parts of England through case studies of common project ‘types’
Using project indicators that are measurable and achievable - particularly important as future payments will be much more dependant on results.
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Fragmentation Establishing minimum grant levels for certain kinds of projects to encourage larger more strategic initiatives.
Maximising the potential for cross LEP collaboration
Establishment of robust partnership arrangements between institutions to deliver strategic scale initiatives
5. Next Steps
5.1 Following agreement of the final socio-economic framework by Members, it is proposed to use the time and resources remaining to the technical assistance project to take forward some of the key measures it advocates to reflect the priorities highlighted by members at the Executive Board meeting on 27 th September 2013. In particular, it is proposed to:
Work with BIS, DCLG and relevant LEPs to facilitate up to four workshops to stimulate the development of strategic scale initiatives in the following key sectors: transport equipment, high performance engineering, energy generation & supply, and food technology. The outcomes of each workshop will be summarised in a written report.
Work with ONE East Midlands to produce a ‘lessons learned’ document, based on experience from the current programmes (although not limited to the East Midlands), to help improve performance in the 2014-20 Programmes.
5.2 It is proposed to complete both tasks by the end of June 2013.
6. Recommendations
Members of the Executive Board are invited to:
6.1 Note the emerging priorities and management arrangements for the use of EU Structural Funds for the period 2014-2020.
6.2 Endorse the socio-economic framework contained in Appendix 7(a).
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6.3 Endorse proposals for the next stage of EMCs Technical Assistance Project set out under section 5 of this report.
Andrew Pritchard Director of Policy & Infrastructure
EMC is leading a Technical Assistance (TA) Project under the East Midlands ERDF programme to produce a ‘socio-economic framework’ as an input to the Government’s EU Growth Programme and relevant LEP investment strategies
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Meeting Need Realising Opportunity
A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
December 2013
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Executive Summary 3-4
Section 1: Introduction
1.1 Background 5 1.2 Proposed Arrangements for EU Funding (2014-20) 5 1.3 Consultation to date 8
Section 2: Economic Context
2.1 Economic Growth 9 2.2 Employment 11 2.3 SME Competitiveness 13 2.4 Innovation 15 2.5 Low Carbon 18 2.6 Skills 19 2.7 Deprivation and Inclusion 21 2.8 Summary of Common Challenges of Opportunities 22
Section 3: Investment Case
3.1 Strategic Economic Case 23 3.2 Potential Interventions: SME Growth & Competitiveness 25 3.3 Potential Interventions: Low Carbon Economy 26 3.4 Potential Interventions: Skills & Employment 27 3.5 Potential Interventions: Collaborative Activity 28
Section 4: Delivery Challenges & Solutions
4.1 Securing Match Funding 30 4.2 Reducing Risk & Complexity 30 4.3 Countering Fragmentation 31 4.4 Addressing Cross Cutting Issues 31
Section 5: Statistical Annex 33
1 87 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Opportunities for Collaborative Activity
4
1 3
4
2
Employment in high and medium-high technology industry (%) Above / below national average East Midlands Region 0.8 to 3.1 (36) 3.1 to 15.0 (59)
1 Transport Equipment (Automotive, Rail & Aerospace) 2 High Performance Automotive/ Motorsports 3 Food Technology 4 Energy Generation & Supply
Contains Ordance Survey data © Crown copyright and database right, 2013.
Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012’. From NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220.
2 88 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Executive Summary
This document has been produced as part of an EU funded Technical Assistance project led by East Midlands Councils, with support from Nottingham Trent University and Climate East Midlands, to inform the development of the 2014-2020 EU Structural Fund Programme. It tells the economic story of the local economies that make up the East Midlands, sets out a number of key investment opportunities highlighted during six well attended consultation events, and gives some practical advice for LEPs and others about how to make the most of future EU funding, learning from past experience.
The East Midlands has some significant economic challenges, but also a number of key strengths with huge potential to contribute to national growth. EU funding can help to realise this potential, helping businesses to grow and innovate and giving local people the skills and knowledge needed to succeed in their working lives.
To make the most of these opportunities LEPs need to be bold, set out clear local growth priorities grounded in evidence and prioritise their investment accordingly.
But LEPs must also be open to the ‘bigger picture’ and in particular to opportunities for collaboration that could deliver strategic scale initiatives, some of which have the potential to be of national significance. Key opportunities include the following sectors (also illustrated in the diagram on previous page) and themes:
Sectors: • Transport Equipment • High Performance Engineering • Energy Generation & Supply • Food Technology
Themes: • Access to SME Finance • Access to Business Support & Training Services • Support for the Visitor Economy • Improving Low Skill Levels
The document also highlights a number of delivery challenges based on experience of current programmes, along with potential mitigating solutions that LEPs, Government and potential projects sponsors should consider.
3 89 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Securing Match Funding • Using central Government match funding to deliver locally agreed enhanced outcomes - which will also help to ensure spend targets are met in the period up to the 2017 review. • Using the LEP Local Growth Fund post 2015 as match funding, particularly to support skills & training initiatives.
Reducing Risk & Complexity • Investment in EU funding expertise by LEPs and project sponsors, including ‘out- reach’ officers to provide advice project sponsors at a formative stage and giving active consideration to the establishment of a ‘Joint European Team’. • Fully integrated Government Growth Teams with appropriate representation by BIS, DCLG, Defra and DWP. • Learning from best practice in other parts of England through case studies of common project ‘types’. • Using project indicators that are measurable and achievable - particularly important as future payments will be much more dependant on results.
Countering Fragmentation • Establishing minimum grant levels for certain kinds of projects to encourage larger more strategic initiatives. • Maximising the potential for cross LEP collaboration on key sectors and themes. • Establishment of robust partnership arrangements between institutions (such as universities) to deliver strategic scale initiatives.
EU Funding offers a significant financial boost to our local economies at a time when other forms of public investment are under pressure. It is an opportunity that must be grasped and cannot be wasted.
4 90 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
1: Background
1.1 Background be known as the ‘EU Growth Programme’. • Within this framework, Local Enterprises Partnerships 1.1.1 East Midlands Councils (EMC), with support from (LEPs) will have responsibility for developing local ‘EU Nottingham Trent University and Climate East Midlands, Investment Strategies’. has been part-funded through ERDF technical assistance • Each LEP will be given a ‘notional allocation’ (PA3) to develop a ‘Socio-Economic Framework’ to inform of national EU funding to prioritise against its the development of the 2014-2020 EU Structural Fund investment strategy (although the cash will be held Programme. The Framework has two main objectives: centrally by Government as the managing authority). These allocations will be reviewed on an annual basis • To provide a strategic context within which LEPs against performance from 2017 onwards. across the East Midlands can develop and finalise local EU Investment Plans by January 2014; and 1.2.2 The Government is consulting separately on the scope of • To support the case made by LEPs to secure and retain the next Rural Development Programme for England later proposed ‘notional’ allocations of EU funding for the in 2013, but it is likely that a least a proportion of rural period 2014-20. funding will feature in the UK Growth Programme.
1.1.2 The Framework identifies investment opportunities 1.2.3 The Government has made the following EU wide at both sub-regional and regional level that will help objectives ‘top priorities’ for the UK’s EU Growth maximise the economic impact of European investment Programme: across the East Midlands. It aims to ensure that a future structural fund programme reflects the needs of the local • Innovation and research & development: with a economies of the East Midlands, with strong alignment particular focus on promoting greater private sector between the activities of local partners and objectives investment. of the programme. Ultimately, success will be measured • Support for small & medium enterprises: to by the effective delivery of a future structural fund improve rates of business start-up, survival and programme. growth.
• Information & Communications Technology (ICT): 1.1.3 An Interim Report was published on the 2nd August to improve speeds and levels of access. 2013, available at http://www.emcouncils.gov.uk/write/ PA3-Draft-Report-Final.pdf, which summarised emerging • Low carbon economy: with a particular focus on evidence and the outcomes of six consultation events led promoting energy efficiency and business growth. by EMC which took place during July 2013. • Education, skills & life long learning: creating a better educated more flexible workforce. 1.2 Proposed Arrangements for EU • Promoting employment and labour mobility: with a funding (2014-2020) particular focus on reducing workless households and youth unemployment.
1.2.1 The Government proposition for the next period of EU • Promoting social inclusion & combating poverty: funding is based around the following: with a particular focus on individuals and families facing multiple disadvantages. • A single governance framework at the national level for most structural funds (including all ERDF & ESF) to
5 91 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
1.2.4 The remaining EU wide objectives will be of a lesser 1.2.7 There are four LEPs composed of Districts and Unitary priority for the UK Government: Authorities that are either entirely (D2N2, Leicester & Leicestershire and Northamptonshire Enterprise) or • Climate Change almost entirely within the East Midlands region (Greater • Environmental Protection Lincolnshire). These LEPs are shown in Map 1. • Sustainable Transport • Institutional Capacity Map 1: LEPs within the East Midlands
1.2.5 The level of spend on each priority is also influenced the level of GDP relative to the EU average in a given ‘NUTS2’ (sub-national) area. Most of the East Midlands is classed as ‘more developed’ (90-100% of EU average GDP). The exception is Lincolnshire, which is classed as a ‘transition area’ (75-90% of EU average GDP). A diagram summarising required spend against priorities is set out below (UK Government priorities in bold). Whilst individual LEPs can deviate from this profile, collective spend must be consistent when measured at the national level.
Innovation SME Competitiveness ICT 60%+ of ERDF (45%+ in transition areas) East Midlands Region Greater Lincolnshire LEP Employment Climate Change Leicester and Leicestershire LEP Skills Environment Northamptonshire Enterprise LEP Social Inclusion* Sustainable D2N2 LEP 80%+ of ESF Transport (70%+ in transition Contains Ordance Survey data © Crown copyright and database right, 2013. No Minimum spend areas)
1.2.8 A further three LEPs overlap significantly with areas Low Carbon within the East Midlands: Economy 20% + of ERDF • The Sheffield City Region LEP includes four districts (15%+ in transition areas) that are also covered by the D2N2 LEP; • The South East Midlands LEP shares five districts in
* Minimum 20% of spend. south Northamptonshire with the Northamptonshire Enterprise LEP; and • The Greater Cambridge and Greater Peterborough LEP 1.2.6 In addition, all Investment Strategies must consider the covers the Unitary Authority of Rutland, within the East following cross-cutting priorities: Midlands region but not covered by any other LEP.
• Gender equality, equal opportunities, and 1.2.9 Following feedback from the LEP consultation events non-discrimination. in July and August 2013, the scope of this study was • Sustainable Development. extended to a further four LEP areas. These areas were added on the basis of a history of collaboration
6 92 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
with organisations and partnerships within the East 1.2.11 Government announced proposed notional allocations for Midlands: all LEPs at the end of June 2013. For those LEPs covering • The Humber LEP covers the two north Lincolnshire the East Midlands the proposed allocations are as follows: Unitary Authorities that are also included within the Greater Lincolnshire LEP; D2N2 €249.7m • Greater Manchester shares a border with D2N2, Greater Cambridgeshire & although the two LEP areas do not overlap; Greater Peterborough LEP €75.5m • New Anglia overlaps the Greater Cambridge & Greater Peterborough LEP and shares a border with Greater Lincoln LEP €133.5m Greater Lincolnshire; and Leicester & Leicestershire LEP €126.3m • The Coventry & Warwickshire LEP in the West Midlands shares borders with the Leicester & Northamptonshire Leicestershire and Northamptonshire Enterprise Enterprise Partnership €55.0m LEPs, although it does not overlap either of these Sheffield City Region €203.4m two East Midlands LEPs. South East Midlands LEP €88.3m 1.2.10 Map 2 shows the seven LEPs that either overlap 1.2.12 In July 2013 the Government announced provisional with areas within the East Midlands or are strategic details of a UK funded ‘Local Growth Fund’, which will neighbours of the four LEPs within the East Midlands. be available to LEPs from 2015 onwards and could potentially be seen as match funding for EU Structural Map 2: LEPs Overlapping or Neighbouring funds. Although proposed LEP allocations have yet to be the East Midlands determined, at a national level the fund will be made up of the following elements:
New Homes Bonus £400m LA Major Transport Schemes £819m Local Sustainable Transport Fund £100m Integrated Transport Block £200m Further Education Capital Fund £330m ESF Skills Match Funding £170M
1.2.13 Supplementary guidance on the development of EU Local Investment Strategies was issued to LEPs by Government on the 19th July 2013 (available here -https://www.gov. uk/government/publications/european-structural-and- investment-funds-strategies-supplementary-guidance- to-local-enterprise-partnerships). The guidance confirms that LEPs will have until 7 October 2013 to submit draft Investment Strategies, with final versions to be East Midlands Region completed by the end of January 2014. Where relevant, Sheffield City Region LEP the Government is keen to see clear linkages between EU Greater Manchester LEP Local Investment Strategies and City Deal Strategies. The South East Midlands LEP Government is anticipating that the next EU Programme Greater Cambridge and Greater Peterborough LEP will become operational in mid 2014. New Anglia LEP Coventry and Warwickshire LEP 1.2.14 The supplementary guidance allows for LEPs to ‘opt in’ to The Humber LEP a number of national programmes, using EU money to Contains Ordance Survey data © Crown copyright and database right, 2013. deliver enhanced outcomes. The following organisations/ programmes have made offers to LEPs at this stage:
7 93 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
• UK Trade and Investment 1.3.3 Delegate invite lists for the LEP events were agreed with • The Manufacturing Advisory Service each LEP secretariat, and efforts were made to ensure a • Growth Accelerator range of interests were represented, including from the • The Skills Funding Agency public, private and third sectors. Participants for the two • European Investment Bank (for social housing retrofit) roundtable events were selected by EMC in consultation • The Big Lottery Fund (for social inclusion) with regional stakeholders on the basis of acknowledged • Department of Work & Pensions expertise on relevant issues. • Prince’s Trust 1.3.4 Each of the LEP events used a similar format, starting with 1.2.15 One East Midlands, the collective body for third sector an introductory presentation followed by Nottingham organisations in the East Midlands, has produced a Trent University (NTU) outlining the emerging economic very clear briefing note aimed at readers without a evidence base. Copies of all the presentations are background in EU funding. ‘LEPs and their role in the available on the EMC web-site (http://www.emcouncils. 2014-20 EU Funding Programme’, is available here. (http:// gov.uk/European-Investment-Plan). After a period for www.oneeastmidlands.org.uk/sites/default/files/library/ questions, a series of table based workshops took place LEP%20briefing%20revised%20July%202013_0.pdf) on specific questions agreed in advance with each LEP. The raw written feedback was made available to each LEP secretariat, and is summarised in the Interim Report. 1.3 Consultation to date (http://www.emcouncils.gov.uk/write/PA3-Draft-Report- Final.pdf) D2N2 also used its event to formally launch a 1.3.1 Initial discussions were held with all 7 East Midlands public consultation on emerging EU investment priorities, LEP secretariats between the 15th-27th March 2013 to available here (http://www.d2n2lep.org/EUFunding). discuss how the project could best support their work and to agree practical working arrangements over the 1.3.5 For the two roundtable events, presentations from EMC following months. and NTU were followed by a structured discussion around four key challenges which were considered for around 1.3.2 During July 2013 EMC delivered four half-day LEP 20 minutes each. A note of the event was made and based consultation events and two half-day technical circulated to participants. roundtable events: 1.3.6 In total, 279 people attended the six events. Of those Event Date Venue Attendees that completed the feed back forms, 87% considered the events to be either ‘good’, ‘very good’ or ‘excellent’. Greater Bishop Comments made included: Lincolnshire LEP 1st July Grosseteste 49 (with GC&GP LEP in University, Lincoln attendance) Leicester & Curve Theatre, “Very good event, thanks” 5th July 77 Leicestershire LEP Leicester Northamptonshire “Very well facilitated and chaired” Northampton Enterprise 16th July Saints Rugby 41 Partnership & Ground “It was awesome. Well organized and SEMLEP informative – keep it up!” D2N2 (with SCR in Notts County 22nd July 73 attendance) Football Club SME Phoenix House, Competitiveness 9th July 17 Melton Mowbray Roundtable Green Economy Phoenix House, 25th July 22 Roundtable Melton Mowbray
8 94 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2: Economic Context
This section provides summary analysis of key social and economic data in order to highlight possible priorities for investment and opportunities for collaboration between LEP areas within and adjoining the East Midlands.
The evidence on where collaborative action can build on LEPs’ shared strengths or common challenges are summarized in the table at the end of this section (see 2.8: Common Challenges and Opportunities).
Detailed tables relating to the charts, maps and analysis are provided in Section 5: Statistical Annex, at the end of this report, and are signposted in this section where relevant.
2.1 Economic Growth Berkshire, Buckinghamshire & Oxfordshire, Herefordshire, Worcestershire & Warwickshire and Lincolnshire increased 2.1.1 The UK economy contracted significantly from the onset relative to the UK average. of recession in the second quarter of 2008. Between the first quarter of 2008 and the second quarter of 2.1.4 This is broadly consistent with a picture of widening 2009, real GDP fell by 7.2% (ONS, 2013). This is similar disparities between sub-regions observed across the to the extent of output lost in the Great Depression of UK. Many sub-regions that had lower levels of output the 1930s, and significantly exceeds the contraction per head prior to the recession, such as Derbyshire & experienced in the recessions of the 1970s, 80s and 90s. Nottinghamshire, have experienced greater than average Despite recent indicators of a strengthening recovery, losses of output. GVA per head in the Derbyshire & including the preliminary estimate for the 3rd quarter of Nottinghamshire NUTS2 area fell from 85.6% to 84.1% of 2013 suggesting growth of 0.8%, the UK economy has the UK average between 2008 and 2011. still yet to experience a recovery comparable to those that followed earlier recessions, including the 1930s, with 2.1.5 Within the D2N2 area, most NUTS3 sub-areas also output remaining below the pre-recession peak. experienced a greater fall in GVA than in the UK overall – particularly the area with the highest output per capita, 2.1.2 The trend in the economic output, as measured by Gross Nottingham City, which fell from 125% to 119.3% of the Value Added (GVA) per head,1 has varied significantly UK average. Output in Derby City, North Nottingham between LEP areas. Chart 1 illustrates a north-south and South Nottingham also contracted more significantly divide across the LEP areas included in this project (in this than the UK average – whilst East Derbyshire appeared case, represented by NUTS2 sub-regions). The estimates more resilient, with output per capita increasing relative for 2008 and 2011 are included for all eleven LEP areas in to the UK average, from 68.5% to 70.7% (whilst South Table 1 of the Statistical Annex. & West Derbyshire remained around 73-74% of the UK average). To the north-west of the East Midlands, output 2.1.3 With the exception of Bedfordshire and Hertfordshire, per head in Greater Manchester also fell at a significantly output has decreased more than average in the NUTS2 faster rate than in the UK overall, from 88.7% to 86.8% of areas to the north of the East Midlands between 2008 the UK average. and 2011 (particularly Derbyshire & Nottinghamshire, Greater Manchester and South Yorkshire). Economies to the south and east of the region appear to have been more resilient. GVA per head in the NUTS2 areas of
9 1 GVA measures the total value of goods and services produced at a sub-national95 level. Gross Domestic Product (GDP) is equal to GVA plus taxes less subsidies. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.1.6 Conversely, the Leicestershire, Rutland and 2.1.8 Chart 2 shows the share of total workplace-based Northamptonshire NUTS2 area remained at 95% of UK employment in the East Midlands region compared to GVA per head in both 2008 and 2011 – significantly the UK average in each of the broad Standard Industrial above the average for the East Midlands region (87%). Classification (SIC) groups. This shows the very significant Within this area, NUTS3 data indicates that West regional over-representation in Manufacturing (explored Northamptonshire has remained consistently higher than in more detail in Chart 8, Section 3 of this report), a sector the UK average (109-110%) between 2008 and 2011, but that was heavily affected in the initial period of recession North Northamptonshire has a significantly lower output in 2008-2009. Chart 2 also shows the relative regional per head – although this has increased slightly relative to importance of sectors related to retail, wholesale and the UK average, from 84.9% to 85.4%. In all, this indicates distribution – which have been affected by the decline in a relatively resilient economy – with the well-connected demand from consumers, associated with the on-going west of Northamptonshire in particular outperforming squeeze on household incomes. Conversely, the chart other parts of the UK. also demonstrates the relative under-representation of sectors that have experienced a strong recovery in output Chart 1: Headline GVA per head indices and employment in the UK overall, particularly business (UK=100) NUTS2, 2011 and professional services (including financial services).
2008 2.1.9 Table 2 in the Statistical Annex illustrates how the 2011 sectoral structure of employment varies across the 11 140 LEP areas included in this study. This shows the relative 130 importance of the Construction sector to a range of LEP 120 areas. Employment in Construction is comparatively 110 over-represented in the D2N2, Greater Lincolnshire, 100 Humber, New Anglia and Sheffield City Region LEP areas. 90 Although this sector does not account for the largest 80 share of employment in any of these areas, it is important 70 strategically and often cited as a barometer of the wider 60 health of local economies, given it is usually one of the 50 first sectors to be affected by a decline in economic activity and business and consumer confidence. 40 Employment and output in Construction fell significantly in the initial period of recession, and has only recently started to recover. In the East Midlands as a whole, the East Anglia Lincolnshire Warwickshire East Midlands & Oxfordshire share of total employment in Construction fell from 5.6% East Yorkshire & East Yorkshire South Yorkshire in 2009 to 4.4% in 2012. Northamptonshire Greater Manchester Greater Northern Lincolnshire
Leicestershire, Rutland & Leicestershire, 2.1.10 Construction is also an enabling sector for a range of Herefordshire, Worchester & Worchester Herefordshire, Berkshire, Buckinghamshire Berkshire, Bedfordshire & Hertfordshire Bedfordshire other activities that may be prioritised within Investment Derbyshire & Nottinghamshire Derbyshire Strategies (such as the improvement or expansion of Source: ONS Crown Copyright, 2012. ‘Regional Gross Value Added, 2011’. business premises and transport infrastructure networks), and also relates to opportunities in the development and adoption of low carbon technologies and climate 2.1.7 An assessment of sectoral structure is important to change adaptation. Associated with the good transport understand some of the reasons for the varying impacts links across the East Midlands, Transport and Storage of the recession across the areas covered in this report. (i.e. distribution) is also highly over-represented in some LEP areas – notably Northamptonshire Enterprise, where it accounts for 8.4% of workplace-based employment compared to 4.5% in Great Britain overall.
10 96 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Chart 2: Employment by Broad SIC, 2012
East Midlands Great Britain % 16 14 12 10 8 6 4 2 0 & fishing (A) & fishing & defence (O) & defence 17 : Health (Q) & technical (M) & technical 12 : Property (L) 10 : Information 10 : Information 7 : Retail G) (Part (incl postage) (H) 16 : Education (P) 16 : Education & food services& food (I) recreation & other recreation & utilities (B, D & E) & utilities (B, 4 : Construction (F) 9 : Accommodation 2 : Mining, quarrying2 : Mining, & communication (J)& communication 3 : Manufactoring (C) 6 : Wholesale (Part G) (Part Wholesale 6 : & support services (N) 8 : Transport & storage & storage Transport 8 : 1 : Agriculture, forestry 1 : Agriculture, 5 : Motartrades G) (Part 18 : Arts, entertainment, 15 : Public administration 15 : Public 13 : Professional, scientific 13 : Professional, 14 : Business administration 11 : Financial & insurance (K) & insurance 11 : Financial
Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012’. From NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220. 2.2 Employment level. According to the latest Labour Force Survey estimates, 2.47 million adults are unemployed across the 2.2.1 Alongside the depth of contraction and relative weakness UK. This is equivalent to 7.6% of the economically active of recovery in output, the other key feature of the recent population – which compares to around 5% prior to the recession has been the comparative stability of the UK recession. Of these, 1.3 million have been unemployed labour market. Overall employment has fallen, and for over 6 months. These headline estimates also hide unemployment has risen, by far less than in previous a number of other issues of concern, such as relatively recessions. high levels of youth unemployment (with 21% of 16 to 24 year olds defined as unemployed) and record levels of 2.2.2 However, it is important to note that national ‘under-employment’ – indicated by those in employment unemployment remains well above its pre-recession or self-employment who are working part-time because they have been unable to find full-time work.2
11 2 ONS Crown Copyright, 2013. ‘Labour Market Statistics, November 2013’. London: TSO. 97 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.2.3 Headline labour market indicators for the East Midlands Chart 3: Employment Rate (% working age region as a whole have followed the national trend, with residents) 2008-2012 a slightly steeper fall in employment compared to the 2008 UK. This means that the East Midlands has gone from 2012 having higher than average rates of employment prior to 80 the recession to being broadly in line with the national 78 average according to the latest estimates. 76 74 2.2.4 Despite the relatively stable headline picture nationally and regionally, Labour Force Survey data suggests that 72 sub-regional disparities have increased significantly. 70 Generally speaking, areas that experienced the largest 68 falls in employment after the recession began in 2008 66 tended to be those areas that already had higher levels 64 of unemployment prior to the recession. Chart 3 shows 62 the change in employment rates for the eleven LEP areas 60
between 2008 and 2012, whilst Chart 4 shows the change UK
in unemployment rates over the same period.3 Sheffield D2N2 City Region, Greater Manchester, D2N2 and Greater Humber New Anglia
Lincolnshire all experienced significant falls in rates of East Midlands employment and significant increases in unemployment, Northamptonshire Greater Manchester Greater Greater Lincolnshire Greater South East Midlands Sheffield CitySheffield Region Greater Cambridge & Cambridge Greater
whilst the Humber experienced a particularly significant Peterborough Greater Coventry Coventry & Warwickshire increase in unemployment (but employment rates fell by & Leicestershire Leicester a relatively small amount): Source: ONS Crown Copyright, 2013. ‘Annual Population Survey’, January- December 2008 and January-December 2012. From NOMIS [accessed 12th September, 2013]. • Employment in D2N2 and Greater Lincolnshire fell by 2.2 and 2.9 percentage points respectively, in both cases going from above the UK average in 2008 to LEP, to the south east of the East Midlands, increased by 2 below it in 2012; percentage points over the period, from 73.8% to 75.8%, whilst the unemployment rates increased very slightly, • Unemployment increased significantly in both by only 0.9 percentage points between 2008 and 2012. these LEP areas, by 2.9 and 2.4 percentage points Northamptonshire also only experienced a small increase respectively; and in the rate of unemployment (by 0.7 percentage points). • Sheffield City Region and the Humber both experienced very significant increases in the rates 2.2.6 The outcome of these differing local experiences is clearly of unemployment between 2008 and 2012, from illustrated in Chart 4, illustrating the widening disparities 6.8% to 10.2% and from 6.1% to 10.7% respectively between sub-regions. (an increase of 3.4 and 4.6 percentage points respectively). 2.2.7 In 2008, there was only a 3 percentage point difference between the LEP area with the highest rate of unemployment (Greater Manchester) and the lowest 2.2.5 Conversely, a number of LEP areas to the south of (Greater Peterborough and Greater Cambridgeshire). By the East Midlands experienced less significant falls 2012 this gap had increased to 5.1 percentage points, in employment. In the Northamptonshire and the with the Humber experiencing the greatest increase Greater Cambridge and Greater Peterborough LEP areas, in unemployment, reaching a rate of 10.7%, whilst employment rates fell by 0.8 and 1.1 percentage points Northamptonshire remained relatively stable, with one of respectively between 2009 and 2012, but remained the smallest changes over the period and the lowest rate significantly higher than both the East Midlands and the in 2012 of 5.6%. UK averages. The employment rate in the New Anglia
3 See Tables 3 and 4 in the Statistical Annex for full LEP figures. 12 98 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.2.8 By 2012 therefore, there was a far clearer north-south most of Greater Manchester, and the former coalfield divide in labour market performance than in 2008. This is areas in D2N2) as well as the eastern coastal stretch also clear in Table 4 (in the Statistical Annex), where LEPs from the Humber, the Lincolnshire coast, and into New are ranked by unemployment rates (lowest to highest). Anglia, and the main urban centres (Hull, Sheffield and This shows that most of the LEPs that experienced the Rotherham, Nottingham, Derby, Lincoln, Coventry and greatest increase in unemployment rates between Leicester). 2008 and 2012 were also those that had the highest unemployment rates in 2008 - i.e. it was those areas 2.2.9 This suggests some common challenges and that had the most vulnerable labour markets prior to opportunities for collaborative action for the Humber, the recession that went on to experience the greatest Greater Manchester, Greater Lincolnshire, D2N2 and negative impacts. Map A2 in the Statistical Annex shows Sheffield City Region LEPs, although the underlying these disparities in more detail, clearly indicating the factors that have contributed to these developments significantly higher unemployment in areas to the north are likely to differ – both between LEP areas and within of the East Midlands (particularly Sheffield City Region, them. For example, increased unemployment in coastal Lincolnshire and some of the more rural parts Chart 4: Unemployment Rate of D2N2 (including the former coalfields areas), will (% economically active residents aged 16+), be exacerbated by poor connectivity and reliance on 2008- 2012 weak, seasonal labour markets, along with the on- 12 going legacies of de-industrialisation and the long- % term decline in agricultural employment. However, 11 increasing unemployment in the more urban areas of north Lincolnshire (around the Humber estuary) and 10 within the large conurbations of Greater Manchester, 9 Sheffield, Rotherham, Doncaster, Lincoln, Nottingham and Derby will have quite different contributory factors 8 – thus requiring different interventions set out in local Investment Strategies. 7
6 2.3 SME Competitiveness 5 2.3.1 EU Thematic Objective 3 advocates projects and 4 programmes that aim to support a competitive SME 3 base – resulting in increased levels of entrepreneurship, 2008 2009 2010 2011 2012 higher rates of business survival, and a greater proportion of businesses exporting, innovating and achieving high Northamptonshire United Kingdom growth - in employment, sales and turnover.
New Anglia Greater Lincolnshire 2.3.2 Evidence on the current state of the wider business Greater Cambridge & D2N2 Greater Peterborough environment is mixed, with some signs of improvement Coventry & Warwickshire Greater Manchester alongside evidence of persistent barriers and challenges. For example: South East Midlands Sheffield City Region
East Midlands Humber • Regional and national surveys suggest that export activity has increased significantly, in both the Leicester & Leicestershire production and service sectors, business confidence is improving, and that this is translating into increased Source: ONS Crown Copyright, 2013. ‘Annual Population Survey’, January- December 2008 to January-December 2012. From NOMIS [accessed12th recruitment activity; September, , 2013].
13 99 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
• The Derbyshire and Nottinghamshire Chambers of D2N2, the coastal districts of Greater Lincolnshire and Commerce ‘Quarterly Economic Survey’ (Quarter the East Riding of Yorkshire in the Humber LEP, as shown 3, 2013) reports that local firms have experienced in Map A1 in the Statistical Annex. Well-connected areas significant improvements in sales (both UK sales and in Leicester and Leicestershire, the South East Midlands exports) and cash flow for the last two quarters; and Northamptonshire, and areas in the south of D2N2 • However, in almost every quarter in the five years and Greater Lincolnshire, had the highest birth-rates – since the onset of recession, earnings growth in the particularly along the main transport networks (the A1, UK overall has been significantly lower than the rate M1 and the Midland Mainline) and/or areas proximate to of inflation. The latest estimate of total earnings large urban areas. growth was 0.7% between July-September 2012 and July-September 2013, compared to a rate of inflation 2.3.6 The business birth rate increased in most areas between for October of 2.2% (on the CPI – although this has 2009 and 2011. This reflects both a genuine increase fallen from 2.7% in September). This prolonged in the number of business births over the period, but squeeze on household incomes presents a significant also a decrease in the stock over the period. In the East threat to recovery, particularly in terms of consumer Midlands overall, the business birth-rate increased from spending; 9.4% to 10.3%, as the number of business births increased • Many smaller firms may have substituted relatively from 14,860 to 16,055 but also as the end-of-year count cheap labour (retaining staff on frozen or lower of enterprises fell from 158,120 to 155,270. This was wages) for investment, resulting in a loss of because the number of business deaths significantly productivity – both for the individual firms and for the exceeded the number of births in 2009 and 2010. UK economy in aggregate;4 • Lenders interviewed for the latest Bank of England’s Agents’ Report stated that the demand for credit from Chart 5: Business Births and Deaths (% of end- businesses remained low – with many businesses of-year count of active enterprises), 2011 concerned not to take on additional risk and to rebuild their cash reserves; and Birth Rate • However, businesses reported that, when they did Death Rate 14 need loans - for either working capital or to finance 12 growth - lenders remained overly risk averse and could be unwilling to provide credit.5 10 8 2.3.3 To reflect trends in entrepreneurship through the period 6 following the onset of recession, Chart 5 shows business 4 birth and death rates for the eleven LEP areas within or 2 6 neighbouring the East Midlands. 0 UK
2.3.4 With the exception of Greater Manchester, all LEPs in D2N2 the study area have a lower business birth rate (new Humber New Anglia
registrations for VAT and/or PAYE as a % of the total end- East Midlands of-year business stock) than the UK average. Greater Manchester Greater Greater Lincolnshire Greater South East Midlands Sheffield CitySheffield Region Greater Cambridge & Cambridge Greater Greater Peterborough Greater Coventry Coventry & Warwickshire 2.3.5 In contrast to the output and employment data, this & Leicestershire Leicester
indicator does not show a north-south divide. Instead, Northamptonshire Enterprise the distribution of entrepreneurial activity is more Source: ONS Crown Copyright, 2012. ‘Business Demography 2011 – spatially complex, and is highly affected by relative Enterprise Births, Deaths and Survivals.’ connectivity. For example, business birth rates are particularly low in the more remote rural areas of Greater Cambridge and Greater Peterborough, New Anglia and
4 Institute of Fiscal Studies (IFS), 2013. ‘Workers keep their jobs but one third faced nominal wage freezes or cuts’. URL:http://www.ifs.org.uk/pr/fs_june2013_launch_pr.pdf 14 5 Bank of England, September 2013. ‘Agents’ Report’. URL: http://www.bankofengland.co.uk/publications/Pages/agentssummary/default.aspx100 6 See Table 5 in the Statistical Annex for full LEP figures. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.3.7 There has been a significant decrease in the survival of 2.3.10 However, such companies are hard to identify before they new businesses – but the East Midlands and most of attain high growth, as they can be found across all sectors the LEP areas within the region have continued to out- of the economy, can be recent start-ups or established perform the UK average: companies, can be large or small employers, and can be located in urban or rural areas. The one characteristic • The proportion of businesses ‘born’ in 2006 that these firms share is that they are innovative, and have the survived two years (to 2008) was 81.2% in the East following common needs: Midlands and 80.7% in the UK; • With the onset of recession this rate decreased. The • Access to finance for growth; proportion of businesses ‘born’ in 2009 that were still • A skilled workforce; trading 2011 fell to 75.1% in the East Midlands and • Infrastructure that enables the flow of ideas (i.e. 73.8% in the UK; and physical and electronic communications infrastructure • Leicester and Leicestershire, Northamptonshire and – including fast broadband connectivity); and Greater Lincolnshire all had higher survival rates • A demand for innovative products and processes, than the East Midlands average (before and after stimulated through supply-chain and public sector the recession), whilst survival rates in D2N2 and procurement activities. Sheffield City Region were lower. 2.3.11 Therefore, although it may not be possible for Investment 2.3.8 Increasing business start-up and survival rates are not Strategies to target high growth businesses per se, they the only objectives that local Investment Strategies can target those factors that are necessary for businesses should include for interventions aimed at the SME to enter and maintain high growth – factors that are also environment. supportive for a healthy business base more widely.
2.3.9 In order to achieve a portfolio of projects and programmes that support private-sector job growth, 2.4 Innovation EU investment also needs to support a greater number of businesses attaining ‘high growth’ (defined as an 2.4.1 Innovation is strongly emphasised in the European average employment growth of 20% per annum over a 3 Commission’s Cohesion Strategy for 2014-2020, year period). Research suggests that although firms that underpinning the objective for nations and regions to are experiencing such growth only account for 7% of achieve a sustainable, innovation-led recovery. the business stock in the UK overall and across most LEP areas, they were responsible for around 50% of all new 2.4.2 Of direct relevance to local Investment Strategies, is 7 jobs generated between 2002 and 2008. the cross-cutting policy of ‘smart specialisation’, where local areas are encouraged to identify unique clusters or
15 7 NESTA, ‘Vital Growth: The importance of high growth businesses to the recovery’,101 March 2011. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
sectors of comparative advantage – in terms of product Chart 6: Innovation inputs: Business excellence, innovation and knowledge transfer – and Enterprise Investment in R&D (as a % of develop projects and programmes that link these assets total workplace GVA), 1999 and 2009 to complementary strengths in other areas, building and diversifying on these assets. 1999 2009 2.4.3 From published data on innovation inputs and outputs, 4.0 and employment within the sectors associated with 3.5 higher than average levels of innovative activity, it is 3.0 clear that the East Midlands has a number of strengths 2.5 – and a number of complementarities between LEPs. 2.0 These include Advanced Manufacturing – concentrated 1.5 in D2N2 and Leicester and Leicestershire (and also 1.0 in Coventry and Warwickshire to the west of the 0.5 East Midlands, and the motorsports sub-sector in 0 Northamptonshire). This does not just include the transport equipment sub-sector (aerospace, rail and
automotive) that is strongly established in Derby London North East South East North West and South Derbyshire with Toyota, Rolls Royce and South West East Midlands West Midlands West East of England
Bombardier, but also includes the manufacturing KingdomUnited of power generation equipment (including the
development, manufacture and installation of energy Humber The & Yorkshire efficient turbine technology), electronics and a range Source: Department for Business, Innovation and Skills, 2012. ‘Regional of other manufacturing specialisms (such as medical Economic Performance Indicators – Live Tables’. devices in Nottingham, Leicester and Loughborough). These assets are complemented by clusters in Lincoln 2.4.5 The Manufacturing sector as a whole is strongly (with Alstom and Siemens in innovative power represented in the East Midlands, and in most of its generation equipment) and also Daventry (Cummins, constituent and neighbouring LEPs. Table 6 in the again a manufacturer of power generation equipment). Statistical Annex shows that, in 2012, the East Midlands These sectoral linkages between areas are illustrated in had the highest proportion of workplace employment Map 5 in section 3. in manufacturing of the nine English regions, and that this proportion had increased slightly since 2009 – 2.4.4 Chart 6 shows that, in terms of investment in Research suggesting a recovery in manufacturing jobs since the and Development (as a % of total GVA), the East Midlands onset of recession. Table 7 shows that a number of LEPs is in line with the UK average, having previously been have particularly high concentrations of manufacturing significantly higher. There is a particular concentration of employment, including the Humber (15.6%), Greater private sector R&D investment in the South East and the Lincolnshire (14.4%), Leicester and Leicestershire (14.1%) East of England (the Oxford-Cambridge arc), which skews and D2N2 (13.8%). the national average. The decline in R&D investment in East Midlands may have been affected by the loss of a 2.4.6 Chart 7 and Map 3 illustrate an employment based number of important R&D assets, such as Astra Zenica measure of innovation –‘employment in High and in Loughborough. Measures of innovation inputs and Medium-High Technology Industries‘ – a sub-set of the outputs by sector show the dominance of manufacturing wider Manufacturing sector8, based on activities that sub-sectors in R&D, both regionally and nationally. This are associated with the use of advanced technologies demonstrates that relative advantages in R&D intensive and are likely to be associated with high levels of R&D manufacturing can be relatively easily lost – given the investment.9 Chart 7 shows that the East Midlands (4.2%) costs and risks inherent in investment in innovation. and all but two of the eleven LEP areas in this study have
8 This definitions encompasses the following manufacturing activities: chemicals; pharmaceuticals; computers, electronic and optical products; electrical equipment; motor vehicles; repair and installation of machinery and equipment; rail; aerospace; military equipment and vehicles; and manufacturing of 16 vehicles, machinery and equipment not elsewhere classified (which includes102 turbines, generators, cooling equipment and air conditioning, etc.). 9 See Table 8 in the Statistical Annex for full LEP figures. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
a proportion of workers employed in these sectors that 2.4.9 It is important to note, however, that the definition of exceeds the national average (3.1%), with employment ‘high and medium-high technology industries’ used in the D2N2, Humber, Greater Cambridge and Greater here (based on innovation activity by sector observed Peterborough and Coventry and Warwickshire LEP across the UK) does not include some sectors in the areas particularly high (at 4.8%, 4.8%, 4.9% and 5.3% East Midlands which are known to engage in highly respectively). innovative and specialised activity. For example, both leading international companies and niche SMEs in Chart 7: Employment in High and Medium- food and drink manufacturing, in Greater Lincolnshire, High Technology Industries (% work-based D2N2, Leicester & Leicestershire and Northamptonshire employment), 2012 Enterprise, invest significantly in product and process R&D, and collaborate with specialist centres in a number 7 of regional universities.10 6 5 Map 3: Employment in High and Medium- 4 High Technology Industries (% work-based employment), 2012 3 2 1 0 D2N2 Humber New Anglia Great Britain Great East Midlands Northamptonshire Greater Manchester Greater Greater Lincolnshire Greater South East Midlands Sheffield CitySheffield Region Greater Cambridge & Cambridge Greater Greater Peterborough Greater Coventry Coventry & Warwickshire Leicester & Leicestershire Leicester
Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012.’ Data accessed from NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220.
2.4.7 However, Map 3 shows just how spatially concentrated this employment is – with the largest proportions
clearly concentrated in South Derbyshire and Derby, East Midlands Region northern Leicestershire (particularly Charnwood and 11.6 to 14.3 (2) North West Leicestershire) and neighbouring districts 8.9 to 11.6 (2) in Coventry and Warwickshire, and also Daventry in 6.2 to 8.9 (11) Northamptonshire. 3.5 to 6.2 (32) 0.8 to 3.5 (32) 2.4.8 This represents clear opportunities for collaboration Contains Ordance Survey data © Crown copyright and database right, 2013. between D2N2, Leicester & Leicestershire, Coventry & Warwickshire and Northamptonshire LEPs on the basis Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012.’ Data accessed from NOMIS [accessed 5th November 2013] of the objectives set out in the EC’s ‘smart specialisation’ and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220. agenda.
17 10 Rose Regeneration and CMI International, on behalf of the Greater Lincolnshire LEP, 2012. ‘Opportunities for Innovation within the Greater Lincolnshire Traditional Industries’; and University of Lincoln and ADAS, on behalf of the103 Greater Lincolnshire LEP, 2012. ‘Opportunities for Greater Lincolnshire Supply Chains’. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.5 Low Carbon
2.5.1 ‘Low Carbon’ is prioritised in both the EU’s 11 stated aims for the 2014-2020 funding programme (Thematic Objective 4) and the UK Government in their guidance for local Investment Strategies. The Low Carbon Thematic Objective places sustainability aims within the context of activities designed to support innovation and business growth. This is separate, but complementary, to Thematic Objectives 5 and 6, ‘Climate Change’ and ‘Protecting the Environment and Promoting Resource Efficiency’, in that it positions environmental objectives as supportive of the EU’s wider sustainable, innovation- led growth agenda.
2.5.2 Therefore activities set out in local Investment Strategies to meet this Thematic Objective should emphasise the job and output-generating potential of low carbon, sustainable and energy efficient technologies, products, • The availability of appropriate skills amongst the local services and practices, and where local areas have workforce; particular strengths in these areas. • Information failures, risk and uncertainty. These include: lack of information on the benefits of the 2.5.3 The target in the Europe 2020 strategy is to reduce adoption or development of low carbon technologies greenhouse gas emissions by 20% on 1990 levels, or processes to SMEs and potential investors; time- increasing the share of total energy consumption from lags between up-front costs and future benefits; renewable sources, and increasing energy efficiency difficulties in accessing information on available on behalf of both firms and households. The UK support and local areas of excellence; and limited Government has developed its own targets for all of information on benefits amongst households or these areas, including the national objective of a 34% supply chain customers; decrease in emissions compared to 1990 levels. The • Difficulties in accessing finance for investment in UK Government believes that investment designed development, due to perceptions of risk on behalf of to meet this target will also lead to job creation in the investors; low carbon sector and supply chains (and increased • Weaknesses in local infrastructure, including demand for skills in sectors like Construction) alongside infrastructure for knowledge transfer; and opportunities to link R&D with adoption, deployment • Externalities (where some of the costs or benefits and overall cost reduction. Projects and programmes ‘spill-over’ to affect parties other than those involved could build on opportunities in domestic and in the original activity), which can disincentivize commercial building retrofit, heat and cooling networks, investment in all kinds of innovation (including in low transport design, community energy solutions, demand carbon technologies), as the party making the original management and climate change adaptation.11 investment may not be able to recoup a sufficient share of the benefits. Local Investment Strategies 2.5.4 There are several market failures and other challenges could identify interventions that could either reduce that, whilst affecting innovation more widely, act as the up-front costs to the business, or which could particular barriers for the development and adoption enable them to capture a larger share of the benefits. of low carbon technologies and processes, which local Investment Strategies can seek to address, including: 2.5.5 The Department for Business, Innovation and Skills commission annual studies of businesses engaged in the provision of products and services (including consultancy and training) related to the Low Carbon
11 HM Government, 2013. ‘Technical Annex: Preliminary guidance to Local Enterprise Partnerships on development of Structural & Investment Fund Strategies.’ 18 BIS: London. 104 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
agenda, providing regional estimates of the value of City, Blaby, and Ashfield and Bassetlaw. Assets include sales and the numbers employed in the ‘Low Carbon and the two co-firing stations of Cottam and West Burton Environmental Goods and Services’ (LCEGS) sector. This near Retford, the nationally important coal-fired site at analysis demonstrates the diversity of the low carbon Ratcliffe-on-Soar, and the E-ON offices in Nottingham and economy and differing strengths across regions: EDF energy offices in Retford, all in the D2N2 LEP area.
• LCEGS activities account for a relatively small share 2.5.7 Within manufacturing, there are also concentrations of employment across the nine English regions, of activity in the production of equipment for power at between 3 and 4% of total workplace-based generation (turbines, cooling systems, etc.) as noted employment in 2011; in section 2.4. A number of significant manufacturers • In the East Midlands, LCEGS sectors account for in the D2N2 area, and in Coventry and Warwickshire, 3.1% of total employment, compared to 3.3% in are international leaders in low carbon technologies, England overall.12 This is equivalent to approximately including Toyota and Rolls Royce in the development of 62,500 jobs in the East Midlands. It is important to low carbon vehicles and fuels. Rolls Royce is active in emphasise that, despite the relatively small number R&D in technologies to reduce aviation emissions and of individuals directly engaged in these activities, in the production of components for the civil nuclear they represent cross-cutting technologies, processes industry. A number of universities (Derby, Nottingham, and practices that can have wide applications across NTU and Loughborough) have interests in low carbon the economy – indirectly affecting many more technologies, whilst the British Geological Survey (BGS), individuals and businesses; in Keyworth (D2N2) is a globally recognised research • Of the LCEGS sub-sectors identified in the BIS centre. analysis, the East Midlands is over-represented in 2.5.8 These represent key opportunities for collaborative terms of ‘Renewable Energy’, which accounts for 34% activity between LEPs, building on existing areas of cross- of total LCEGS employment, compared to 29% in border activity. For example, the Energy Technologies England. Within the Renewable Energy sub-sector, Institute (ETI) is an East Midlands/West Midlands the East Midlands has particular strengths in wind collaboration between Nottingham, Birmingham and energy; and Loughborough Universities.14 • The ‘Low Carbon’ sub-sector accounts for the largest share of total LCEGS employment in both the East Midlands and England overall (49% and 2.6 Skills 50% respectively). Within this sub-sector, the East Midlands is comparatively over-represented 2.6.1 As discussed in sections 2.3 and 2.4 on SME in Alternative Fuels and Building Technologies – Competitiveness and Innovation, skills are not only associated with wider regional strengths in Advanced important to ensure that individuals can remain Manufacturing (especially automotive, rail and employable (accessing, retaining and progressing aerospace) and Construction. A detailed break- within employment), but are a key common need for down of regional employment by LCEGS sub-sector high growth, innovative businesses. Research indicates is provided in Table 13 and Chart A1 in the Statistical a ‘virtuous circle’ in the relationship between skills Annex.13 and innovation.15 Skills are an important perquisite for successful innovation. In turn, innovation further 2.5.6 Statistical evidence on LCEGS activity at a sub-regional increases a firm’s demand for skills in order to unlock the level is very limited. The largest relevant sub-sector benefits of product or process improvements. Skills are identifiable at local level in the Business Register and therefore an important focus of investment to support Employment Survey (BRES) is power-generation, in which both economic development objectives (innovation, there are concentrations of employment in the D2N2 and high growth businesses) and economic inclusion and Leicester and Leicestershire LEPs, notably in Leicester employment objectives.
12 See Table 12 in the Statistical Annex for figures for the nine English regions. 13 K Matrix, on behalf of BIS, 2012. ‘Low Carbon Environmental Goods and Services: Report for 2010/11’. BIS: London. 14 Pro Enviro, on behalf of emda, ‘Energy Technologies in the East Midlands’, 2011. EMDA: Nottingham. 19 15 Atherton, Andrew and Price, Liz, Gray, David and Bosworth, Gary, on behalf105 of the East Midlands Development Agency, 2010. ‘The relationship between rurality, skills and productivity in the East Midlands: final report.’ Nottingham: emda. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.6.2 However, the East Midlands region, and many of the LEP Map 4: Higher level qualifications (% areas included within it, exhibit characteristics indicative working-age residents with qualifications at of a ‘low pay, low skill equilibrium’. This describes a Level 4+) situation in which a lower demand for skills from many employers, due to the nature of the products or services they produce and their positioning within their markets (i.e. their ‘product market strategy’), is accompanied by a lower level of skills amongst the local workforce. This perpetuates a cycle, where companies may find it difficult to innovate (or to implement new or improved processes) due to a lack of workforce skills, whilst individuals may have limited incentive to invest in their skill development. Furthermore, highly skilled individuals are incentivised to migrate away from the local area or commute to work elsewhere.
2.6.3 This is demonstrated by the fact that all LEP areas included in this study, with the exception of Greater Cambridge and Greater Peterborough, had significantly lower than average proportions of resident adults East Midlands Region qualified to a first degree or higher in 2012 – with only 55.2 to 65.8 (1) 25.1% of residents in Greater Lincolnshire qualified to 44.5 to 55.2 (1) this level (compared to 34.2% in the UK overall).16 33.8 to 44.5 (26) 23.1 to 33.8 (52) 2.6.4 Map 4 illustrates the spatial variation in the proportion 12.4 to 23.1 (15) of adults qualified to a Level 4 (first degree) and Contains Ordance Survey data © Crown copyright and database right, 2013. above (%), as a proxy-measure of the higher level Source: ONS Crown Copyright, 2012. ‘Annual Population Survey’, January- skills required by high growth firms and innovative December 2012. From NOMIS [accessed 13th September, 2013]. businesses more generally. The map demonstrates a coastal concentration of lower skills from North East Lincolnshire, Boston and South Holland in Greater 2.6.6 Table 10 in the Statistical Annex indicates that a Lincolnshire, into Fenland in Greater Cambridge & number of LEPs within the East Midlands have distinct Greater Peterborough. This provides a case for possible strengths in higher-intermediate skills (indicated by collaboration to address the factors that drive low levels qualifications equivalent to an NVQ Level 3 – such of skills in coastal areas. as an Advanced Apprenticeship), associated with ‘technician’ jobs in Manufacturing, Construction and 2.6.5 Conversely, the highest skill levels are to the south the Services (e.g. laboratory technicians, electrical and of the study area (in the Leicester and Leicestershire, electronic technicians, IT support officers, paramedics, South East Midlands and Greater Cambridge and dispensing opticians, pharmaceutical, medical and Greater Peterborough LEPs) – i.e. the ‘commuter belt’ as dental technicians, youth and community workers, etc.). well as the ‘Oxford-Cambridge arc’. All these areas are In Greater Lincolnshire and Leicester and Leicestershire, likely to experience a level of ‘brain-drain’, given their 22.1% and 21.1% of adults were qualified to a Level 3 good connectivity and proximity to London and the respectively, compared to a national average of 18.9% in Greater South East – thus presenting opportunities for 2012. collaborative action to increase the demand for skills amongst local employers.
16 See Table 9 in the Statistical Annex for full LEP figures. 20 106 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.6.7 This local over-representation of intermediate concentrations of deprivation – especially in the main qualifications at Level 3 is consistent with the structure of urban centres in all LEP areas, the former coalfields in the employment by occupation, which suggests a stronger north of D2N2, and along the Lincolnshire coast.19 than average requirement for intermediate ‘technician’ skills in some LEP areas. The structure of employment 2.7.3 Some elements of these challenges have already been by occupational group (SOC 2010) is presented in Table discussed in the assessment of unemployment (see 11 in the Statistical Annex.17 Greater Lincolnshire has a Chart 4 and Map A2) and variations in skills (Map 4), but higher than average proportion of residents working in the ID 2010 includes a wider range of factors. Some of the Skilled Trades (12.4% compared to 10.6% in the UK), these are related to labour market conditions, whilst whilst Leicester and Leicestershire has a higher proportion others relate to more deep-seated historic, social and than the UK in the Skilled Trades (11.7%) and a higher physical characteristics (which in turn affect labour proportion than the East Midlands average working in market participation). The ID 2010 compares LSOAs on Associate Professional and Technical Occupations (13.7%). a combination of factors relevant to economic inclusion However, Table 11 also shows the lower than average such as: crime; poor health; housing quality; access demand for higher level skills (equivalent to Level 4+) to services; low skills and educational attainment and across many of the LEPs within the East Midlands, with the participation; and measures of employment and income. Northamptonshire Enterprise and Greater Lincolnshire This identifies other common challenges for LEPs in LEP areas having particularly low proportions of residents addition to those targeted in projects and programmes working as Managers or Professionals. that may be aimed at job generation and skills development.
2.7.4 Map A3 in the Statistical Annex shows LSOAs in the 2.7 Deprivation and Inclusion East Midlands by rank of overall deprivation. LSOAs in Mansfield, Nottingham, Leicester, Lincoln, Bassetlaw, 2.7.1 Alongside Thematic Objective 10, ‘Investing in education, Corby and West Lindsey are amongst the most deprived skills and lifelong learning’, which emphasises action in the region. When compared to Map A2, which shows in education and skills to improve the performance unemployment rates at a district level, Map A3 shows of an area’s business base, the EC have set out two the local concentration of deprivation in far greater additional and related priorities around social inclusion detail. This is particularly evident along the Lincolnshire and access to employment: Thematic Objectives 8 coast, where relative deprivation on this wider measure and 9, ‘Promoting employment and supporting labour contrasts with other areas more starkly than through an mobility’ and ‘Promoting social inclusion and combating analysis of unemployment rates alone. This indicates that poverty’. In the UK, Thematic Objectives 8, 9 and 10 areas along the Lincolnshire coast are relatively deprived should collectively cover between 60 and 80% of the in a number of other areas, such as access to services, ESF allocation per programme depending on the status health, and educational attainment, and investment of the region where the investment is delivered (Less aimed at increasing participation in the labour market Developed, Transition or More Developed). ERDF needs to be combined with interventions addressing allocations can also count towards the total delivered these other issues. under Objective 9 ‘social inclusion’.
2.7.2 The East Midlands is one of the less deprived areas in England, with 6% of Lower Super Output Areas (LSOAs) ranked in the 10% most deprived nationally18, according to the 2010 Indices of Deprivation (ID 2010). This compares to 17% in Yorkshire and the Humber and 28% in the North West. However, there are significant local
17 The Standard Occupational Classification (SOC, 2010) is derived from Labour Force Survey responses on the activities that individuals do in their jobs based on skills specialisation (the types of skill used) and skill level. These correspond closely to the NVQ-equivalent levels of qualification supplied in the workforce, although an individual in a given occupation does not necessarily need to hold a formal qualification at the level suggested (e.g. owner- 21 managers of SMEs may not necessarily have a degree-level qualification, although their job is likely to require an equivalent level of skill). 18 Out of a total of 32,482 LSOAs in England. There are 533 in the East Midlands107 region. 19 Communities and Local Government, 2011. ‘The English Indices of Deprivation 2010 – Neighbourhoods Statistical Release.’ HM Government: London. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
2.8 Summary of Common Challenges & Opportunities
The table below summarises some of the key areas where there appears to be strong evidence of synergies, linkages and common challenges across the LEPs within and adjoining the East Midlands.
Common Challenges and Opportunities
Innovation Employment, Skills and SME Competitiveness (and Low Carbon) Social Inclusion
D2N2, Sheffield City Region and D2N2, Leicester & Leicestershire, Sheffield City Region, the Humber, Greater Lincolnshire: Greater Lincolnshire, Greater Manchester, Greater Common challenges related to Northamptonshire (and Coventry Lincolnshire and D2N2: the impact of recession on the and Warwickshire): Increased unemployment in both SME environment: seen in (greater The cluster of Advanced urban and rural areas (and increased than average) falls in output and Manufacturing in the north of disparities with more resilient areas). productivity, lower business birth rates Leicester & Leicestershire and the and higher death rates. south of D2N2 – includes a range Local Investment Strategies need to of sub-sectors including, but not be cognisant of differing underlying For all LEPs: restricted to, Transport Equipment. factors between some areas (e.g. long Construction is important across the Important supply chain links and term legacy of de-industrialisation East Midlands, as both a key employer knowledge transfer relationships with in D2N2 and Sheffield City and an enabling sector for SME HE. Region, urban concentrations of Competitiveness and Innovation (and unemployment, and issues related to note opportunities raised in round- D2N2, Leicester & Leicestershire, remote rurality). table sessions related to maximising Northamptonshire and Greater the opportunities of the Green Lincolnshire: For all LEPs: Deal and other low carbon-related The development and manufacture Common issues contributing to investment programmes). of power generation equipment links worklessness of key groups – such as to key sources of demand for these young people – particularly low skills. technologies, especially in D2N2 (Radcliffe-on-Soar, Burton and West Greater Lincolnshire and Cottam power plants). Greater Cambridge and Greater Peterborough: Greater Lincolnshire, Leicester Common challenges around coastal & Leicestershire and Greater concentration of low skills and Cambridge & Greater Peterborough: deprivation. Innovative activities around food technology – although not covered Leicester and Leicestershire, South in the ‘high and medium high tech’ East Midlands, Northamptonshire definition, local research points and Greater Cambridge & Greater to significant opportunities for Peterborough: collaboration and maximisation of Common challenges around out- supply-chain linkages. migration of skilled workers and common risks of local under- employment (thus opportunities for collaboration on projects/programmes aimed at raising local demand for skills).
22 108 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
3: Investment Case
This section sets out a strategic economic case for investment in local economies across the East Midlands to deliver against EU and UK Government growth objectives, and highlights some key potential interventions that could overcome market failures and boost growth based on feedback from the six consultation events.
3.1 Strategic Economic Case Chart 8: Manufacturing as a proportion of work-place based Employment (2012) 3.1.1 Despite the challenges outlined above, local economies 2009 across the East Midlands remain well placed to deliver 2012 against EU policy objectives set out in ‘Europe 2020’ and 16 the UK Government’s ‘Plan for Growth’ and emerging 14 industrial strategy. 12 10 3.1.2 The East Midlands has the highest proportion of manufacturing employment in England and, as Chart 8 8 shows, this has increased slightly between 2009 and 2012 6 – indicating a recovery in manufacturing jobs since the 4 onset of recession. In 2012, manufacturing accounted 2 for 13.4% of total employment in workplaces within the 0 East Midlands – equivalent to over 260,000 jobs. This East compares to 8.4% of employment in manufacturing London North East South East Yorkshire & Yorkshire North West in Great Britain overall. The proportions of total South West The Humber The Great Britain Great East Midlands employment in manufacturing for each English region are Midlands West presented in Table 5 and for the eleven LEPs covered in Source: ONS Crown Copyright, 2013. ‘Business Register and Employment this study in Table 6 of the Statistical Annex. Survey, 2009 and 2012’. From NOMIS [accessed 5thNovember 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220.
3.1.3 Manufacturing gross value added (GVA) in the East 3.1.4 In addition, several sectors are significantly more Midlands was £13.2 billion20 – 16% of output, also a productive compared to the UK national average, higher proportion than in any other region in England. giving the East Midlands a competitive advantage: transport equipment manufacturing, food and drink manufacturing, and construction21. There is also significant growth potential in areas such as power generating machinery, life sciences, logistics, and low carbon goods and services. These strengths are consistent with the Government’s emerging industrial strategy and are critical to its delivery.
3.1.5 The local economies of the East Midlands are already a strong contributor to the UK balance of payments exporting around 20% of GVA, with power generating machinery and automotive equipment accounting for the largest exports over the period 2007-1122. The proportion
20 23 Regional, Sub-Regional and Local Gross Value Added, ONS, December 2012 21 Making the most of housing and growth in the East Midlands, Smith Institute,109 September 2012 22 Regional Trade Statistics (RTS) datasets www.uktradeinfo.com Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
of exports to Asia and Oceania is the highest in England, Construction and the East Midlands is less reliant on the EU as an 3.1.8 Construction is a key enabling sector for the economy, export destination than most other regions. and is around 10% more productive in the East Midlands than for England as a whole. The sector employs over Transport Equipment Manufacturing 60,000 people and generates around £5.9 billion GVA per 3.1.6 This sector includes aerospace, automotive and rail, and year. Construction is well represented across Derbyshire is 40% more productive in the East Midlands than for the and parts of North Nottinghamshire and Lincolnshire. UK as a whole. The sector employs over 26,000 people Key companies include Bowmer and Kirkland, Langley and generates around £2.4 billion of GVA per year. Holdings, North Midland, Bloor Homes Ltd and a large There is a world class motorsport and high performing number of more specialist smaller companies with strong engineering cluster based in Northamptonshire, linkages to local planning and design consultancies. including internationally recognised engine builders The sector has key education strengths with Derby, Cosworth and F1 constructors Mercedes GP Petronas Nottingham, Nottingham Trent, De Montford and Lincoln and Force India, with further growth potential at the Universities all having schools of Architecture and Design. Northampton Waterside Enterprise Zone. The area in and There is a growing emphasis on sustainable construction around Derby is home to globally significant companies and design, with strong links to the Energy Technologies such as Rolls Royce, Toyota, JCB Power Systems and Institute based at Loughborough University, and Lincoln Bombardier - which is also part of a nationally significant is a centre for building conservation skills. rail engineering cluster. In Leicestershire the automotive research centre at MIRA is now part of an Enterprise 3.1.9 Other related economic strengths include: Zone and Caterpillar UK Ltd is based in Leicester. The University of Leicester houses one of the foremost • Power generating machinery: Lincoln is home to a academic space science and instrumentation centres division of the world-class gas turbine manufacturers, in Europe with links to a number of local high tech Siemens and a new School of Engineering recently companies. opened at the University of Lincoln. • Life sciences: Alliance Boots plc has its head quarters Food & Drink Manufacturing just outside Nottingham as part of an Enterprise Zone. 3.1.7 This sector is closely related to the East Midlands Bio-City also hosts over 70 companies. 3M Healthcare agricultural strengths and is around 5% more productive Limited are based in Loughborough. Peakdale in the East Midlands than for the country as a whole. Molecular is based in Chapel-en-le-Frith. It employs over 57,000 people and generates around • Logistics: Leicestershire and Northamptonshire £3.6 billion of GVA per year. South Lincolnshire is home together with parts of Warwickshire form the ‘Golden to Bakkavor Food Ltd, part of a nationally significant Triangle’ – the hub of the UK logistics industry. Key agri-business sector worth £1 billion pa, serving the facilities include the Daventry International Freight major supermarket chains both in the UK and abroad, Terminal, Corby Eurohub, Magna Park near Market closely related to the abundance of highly productive Harborough and East Midlands Airport – the largest Grade 1 agricultural land. Elsewhere, Melton Mowbray is freight hub outside Heathrow. renowned for Stilton Cheese and the pork pie, Carlsberg • Low carbon goods & services: Northamptonshire and Weetabix are based in Northamptonshire, Newark is is a centre of excellence for specialised low carbon the national location for sugar refining and High Peak is technologies. Derby based Rolls Royce is active in home to Buxton Water. There is also a growing market for research to reduce aviation emissions and in the civil high value niche products across the rural East Midlands, nuclear industry, E.ON’s global R&D facility is based at closely related to the visitor economy and ‘food tourism’ Radcliffe-on-Soar in Nottinghamshire. in places such as the Peak District National Park. The National Centre for Food Manufacturing is based at • Visitor Economy: The Peak District National Park is a Lincoln University. visitor attraction of national significance as well a key environmental asset. Other major attractions include the Lincolnshire holiday coast, the National Forest, Sherwood Forest, and international sporting venues at Silverstone and Trent Bridge Cricket Ground.
24 110 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
3.2 Potential Interventions: SME Growth The combination of modern flexible workspace with good broadband connectivity along with dedicated on- & Competitiveness site business support was considered to be particularly
effective. There are a number of successful examples of 3.2.1 Improved Access to finance for SMEs. Access to managed workspace around the East Midlands which finance for SMEs was highlighted as a market failure by have been developed with ERDF support under current participants at all the consultation events. Numerous and previous programmes. However, there have been examples were given where companies with apparently challenges relating to the interpretation of State Aid rules good growth prospects that had been denied for such projects elsewhere in Europe that have yet to be commercial lending by the banks. At the same time, fully resolved, and which may limit delivery in the future. it was recognised that pressure placed on the banking sector by regulators to re-capitalise balance-sheets 3.2.3 More extensive broadband infrastructure with has resulted in more risk-adverse lending decisions, higher speeds. Access to high quality broadband was despite the Government’s ‘funding for lending’ initiative. highlighted as a pre-requisite for business growth in all Independent research jointly commissioned by five the consultation events, of similar importance to utilities LEPs in the East Midlands has indicated that there is a such as electricity and water supply. UK and international particular issue for local companies seeking investment studies have confirmed that increased broadband of between £50,000 and £750,00023. There is therefore penetration can have a significant (and quick) GVA uplift a clear opportunity for an EU funded initiative to fill through increasing business efficiencies and enhancing this gap and contribute to enhanced SME growth, if the trading opportunities. Based on this analysis, maximising delivery challenges of scale, complexity and risk can be broadband access across the East Midlands could boost overcome. GVA by up to 3.8% or £2.4 billion.24 Provision to support broadband infrastructure was originally omitted from 3.2.2 Managed workspace for new and growing businesses. the current regional ERDF operating programme but The provision of managed workspace was highlighted, was subsequently added in with the agreement of the particularly in the SME Competitiveness round table, as a Commission. There remain opportunities to add value to tried and tested approach to delivering business support. UK Government investment managed by BDUK, and to
25 23 Access to Finance Market Study, Mazzars (to be completed) 24 Data aggregated from ‘Social Study 2012, The Economic Impact of BT in the111 United Kingdom and the East Midlands (2012)’; Regeneris Consulting, 2012 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
extend the current Government rollout of super-fast fibre by SMEs to help drive productivity. However, there has optic broadband delivering up to 100 megabytes per been a perception that such support will only benefit second, which will currently only benefit Derby, to other ‘high tech’ companies. There is potential to expand urban areas in the East Midlands. the reach of such services to a wider range of SMEs which have traditionally had little or no links with HE 3.2.4 Accessible business advice & support relevant to institutions. This may well require a joint or federated both ‘high’ and ‘middle/low’ growth companies. approach involving a number of HE institutions, as well Attention was drawn to the existence of a number of as effective signposting and marketing to potential SMEs, national business growth initiatives supported by BIS perhaps as part of a wider business support initiative. such as Growth Accelerator, the Manufacturing Advisory Service and LEAN. There is significant potential to extend the scale and reach of such initiatives with ERDF 3.3 Potential Interventions: Low Carbon funding. However, these initiatives tend to be focussed Economy on a relatively small number of companies with high growth potential. A number of the consultation events 3.3.1 Business Resource Efficiency. Whilst the deployment highlighted the collective economic potential of relatively of new low carbon technology has the potential to small increases in productivity (particularly related to the save local companies energy and money (and generate use of IT) across a wider number of ‘ordinary’ businesses. business for local suppliers), it will be important to ensure The Government’s ‘growth voucher’ initiative was felt to that there are still business support services available that have partially filled this gap, but there was scope to use provide basic resource efficiency advice to SMEs, along ERDF to extend its reach more widely and/or to develop the lines of current ERDF funded local authority and smaller scale complementary measures. university projects. The consultation events highlighted some of the many low-cost and no-cost measures 3.2.5 Inward investment linked to supply chain growth. that can and should be taken to save energy prior to Although the focus of all the consultation events was on investment in technology in the first instance. Recent growing and developing indigenous businesses, it was Household Energy Statistics from ONS25 highlight that recognised that there remains a role for attracting inward the East Midlands has the highest consumption in the UK, investment, including foreign direct investment. There is particularly in Leicestershire and Rutland, and this may potential to use ERDF to develop an enhanced local offer provide additional justification for action. There is also from UKTI. However to be fully effective, this approach scope to support retrofitting of business and commercial needs to be complemented by initiatives that will help to property on a major scale. Initially this could focus on develop supply chain linkages between new companies local authority owned business units, where EU funding and local SMEs. could fill the gap to help invest in appropriate low carbon technology. 3.2.6 Community-led economic development in both urban and rural areas. The ‘Leader’ approach to local economic 3.3.2 Accelerating the deployment of carbon saving development has been widely seen as an effective way technologies. There is potential to support demonstrator of supporting small scale local economic development projects, benchmarking, good data and access to in isolated rural areas. There was considerable interest at independent advice to help SMEs invest in the most some of the consultation events in applying the principles appropriate technology. Participants highlighted the and mechanisms of Leader to a limited number of more importance of appropriate language, terminology (e.g. deprived urban communities. However, it was recognised efficiency can be more resonant than the sometimes that it may not be possible to use ERDF funding in the clunky language of sustainability) and methods of same way as RDPE support due to State Aid rules. engagement in any business-facing support project to ensure that technical concepts and benefits are properly 3.2.7 Developing more effective links between HE and a understood. It is also important that the business benefits wider range of SMEs. There have been a number of are communicated internally within the companies ERDF funded initiatives that have supported the use of receiving support and that there is some means to up- technical expertise within higher education institutions skill their employees accordingly. Financial incentives can
25 Household Energy Consumption in England & Wales, 2005-11, ONS 2013 26 112 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
also encourage uptake of technologies. There are already Agency investment into flood alleviation is being used some in place at UK level, including the Feed in Tariff and as a catalyst for a wider economic regeneration scheme. Renewable Heat Incentive, but EU funds could provide Where the development of low carbon energy generation extra incentives. These could enable shorter payback is hindered by market failures including lack of grid periods for building retrofit projects for instance, where capacity and access to the grid, EU investment could companies may be unwilling to commit to investments potentially be applied to address the situation, subject that repay over a long timescale. to State Aid rules. There is also scope to extend district heating schemes, which have already proved successful in 3.3.3 Stimulating local markets through direct investment. parts of Nottingham and Leicester. Building retrofit and public transport are both labour intensive and have wider economic and social benefits. 3.3.5 Links with the wider SME agenda. For companies to A number of investment streams were highlighted grow and become part of the growing low carbon and where there may be potential for EU project match green sector there are strong links with the wider small funding, including the Green Deal and Energy Company business agenda, particularly in relation to skills and Obligation. The proposed social housing retro-fit innovation. Some of the solutions that EU funding could financial instrument provides a major opportunity support are therefore partly generic; green businesses to stimulate local demand for low carbon goods and need to be innovative and have the right skills, and services. Where there are plans or projects in place for all businesses need to be more resource efficient and local energy parks (e.g. Northampton, Nottingham) resilient. Likewise there is scope for projects which tie all additional EU investment could accelerate development these issues together. For example, an integrated National and provide local exemplars of low carbon technology, Forest project which could incorporate training, tourism buildings and businesses. Adaptation to climate change and skills (visitor centre and training opportunities), and is highlighted within the Government’s National generating energy from biomass. Training in renewable Adaptation Programme as a new high growth sector with energy technology installation could form the basis good export potential for the UK. EU funds could provide of a possible ESF project and link to the DWP Work support to projects which help to future proof areas Programme. of economic activity or economic potential by helping reduce the risks associated with climate change. 3.4 Potential Interventions: Skills & 3.3.4 Enhanced Infrastructure. Environment Agency Employment investment in flood prevention or water company investment in supply or treatment infrastructure can 3.4.1 Development of training programmes clearly be used to secure additional or multiple benefits with linked to ERDF funded initiatives. One of the major ERDF support. One example given was the ‘Our City, opportunities presented by an integrated EU Growth Our River’ masterplan in Derby where Environment Programme is to establish much better links between
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ERDF investments and ESF funded training opportunities ‘work academies’ of similar initiatives linked to meeting that will assist local people to access the new skills requirements in particular sectors, for example the employment opportunities. To be successful, potential installation of carbon saving technologies into existing for such linkages should be built into projects at an buildings. It is important to acknowledge that potential early stage, rather then ‘retro-fitted’ at a later date. This projects must take some account of different sectors approach would also engage SMEs and individuals with and be sensitive to their needs, and may well have to be information about the benefits of training and skills delivered on a multi-LEP basis to be viable and effective. development. 3.4.6 Better information and signposting to services: 3.4.2 Measures to stimulate the take up of apprenticeships. Lack of information amongst both SMEs and potential Feedback from the consultation events indicated a beneficiaries about the range of potential skills training strong demand for apprenticeships, which has been opportunities available was highlighted as a key barrier to further enhanced by recent changes to the funding of participation, at a number of the consultation events. As higher education. Whilst the Government has taken well as taking steps to simplify and streamline the range steps to extend the numbers of apprenticeships available of support available (whilst ensuring sufficient flexibility at a national level, there is potential for further extending to meet local needs), a requirement to make consistent provision locally through the use of EU funding. This will information on the potential training offer more widely require close working between LEPs and local business available across LEP areas was identified. This could form leaders and the provision of clear information about the part of a wider ‘front end’ service for business support benefits to both SMEs and potential employees. initiatives.
3.4.3 Focus on work-readiness and basic IT skills for young people. The consultation events also confirmed a 3.5 Potential Interventions: Collaborative continuing requirement for so called ‘work readiness’ Activity and basic IT skills for young people (18-24) looking to participate in the labour market for the first time. This 3.5.1 Based on the economic analysis set out in Section 2 would address the need to uplift basic skills and create and feedback from the consultation events, there are a better links between education and employers. There number of opportunities for co-ordinated action across are clear linkages between this agenda and the priorities LEP boundaries which would bring together one or more of the Government’s Work Programme, and potential to of the interventions outlined above. Key opportunities extend this offer locally with the use of EU Funding. include the following sectors or clusters (also highlighted in map 5) - however the list is by no means exhaustive. 3.4.4 More extensive use of the third sector to engage ‘hard to reach’ groups. Both the Government and local • Advanced Manufacturing (Transport Equipment): partners recognise the potential of the third sector to There is strong cluster of transport equipment engage with groups of disadvantaged people that the companies across the south of Derbyshire, the north public and private sectors can find difficult to reach. and west of Leicestershire and stretching across to This will require partners to address the difficulties the West Midlands, which also has clear links to the experienced by the third sector in securing match emerging low carbon sector. There is considerable funding, especially given the likely focus on larger potential for LEPs in these areas to develop joint projects with a high level of minimum spend. There initiatives that will further boost investment, stimulate is potential to make extensive use of the BIG Lottery local supply chains and ensure that specialist skills are Fund social inclusion ‘Opt-In’ in this context, particularly developed and maintained. in the early years of the programme, if this can be made sufficiently flexible to meet the needs of local • Advanced Manufacturing (High Performance communities. Engineering): Northamptonshire is home to a world class motor sport and high performance engineering 3.4.5 Sector-based training initiatives linked to meeting cluster, which also stretches to Milton Keynes in the skills gaps within SMEs. The development of so-called
28 114 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
south (where F1 champions Red Bull are based) and Map 5: Opportunities for Collaborative into Warwickshire in the west. There are opportunities Activity for collaborative approaches between LEPs that will help to maintain and develop this specialised and highly competitive sector.
• Energy Generation & Supply: There is a strong and growing renewable energy sector based around the 4 Humber along with longstanding expertise in power generation and supply along the Trent Valley and 1 in Lincoln, and in parts of the southern Derbyshire, Leicestershire and the West Midlands. There is 3 considerable scope for LEPs to work together to support major investors, stimulate local supply chains 4 and develop better linkages between the low carbon and traditional energy generating sectors. 2 • Food Technology: Food production is a traditional strength for much of southern Lincolnshire, the Employment in high and medium-high technology industry (%) Rutland and Melton areas and large parts of the east Above / below national average of England. Although not generally viewed as an East Midlands Region innovative sector, there are strong links between 0.8 to 3.1 (36) food producers and both commercial and academic 3.1 to 15.0 (59) based research institutions which could be further 1 Transport Equipment (Automotive, Rail & Aerospace) enhanced by joint LEP action. There is also scope to 2 High Performance Automotive/ Motorsports develop synergies with the future Rural Development Food Technology Programme. 3 4 Energy Generation & Supply 3.5.2 In addition, there is potential for collaborative activity Contains Ordance Survey data © Crown copyright and database right, 2013.
more widely between LEPs on the following themes. Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012’. From NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220. • Access to SME Finance: Access to SME finance is a significant economic constraint across the East Midlands. Collaborative research undertaken by • Support for the Visitor Economy: Whilst there is no five LEPs has highlighted the scale and nature of appetite or justification for initiatives to develop the this market failure, along with the minimum size of visitor economy on an East Midlands basis, there is investment required to make any intervention viable. potential for cross LEP initiatives that reflect natural This will necessitate a multi-LEP approach to be geographies or markets – for example the Fens, the effective and deliverable. Peak District National Park or sectors such as farm tourism. • Access to Business Support and Training initiatives: As well as taking steps to simplify the complex • Improving Low Skill Levels: There is a swathe of ‘low landscape of business support and training initiatives skill’ areas stretching from Sheffield and the Humber that currently exists in many areas, there is scope for in the north, through to the former coalfields and joint LEP action to provide consistent information along the Lincolnshire and Norfolk coasts. There is on a co-ordinated basis for all relevant services in a scope for collaborative training activities (potentially particular sector or geographic area - particularly (but with a strong role for the third sector), along with not exclusively) where LEPs over-lap. initiatives to stimulate private sector demand for higher level skills.
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4: Delivery Challenges and Solutions
This section highlights potential challenges to effective programme delivery highlighted by the consultation events, along with potential mitigating solutions.
4.1 Securing Match Funding 4.2 Reducing Risk & Complexity
4.1.1 A major delivery challenge for all LEPs will be securing 4.2.1 There was widespread concern expressed by existing the levels of match-funding required to spend the project sponsors about the level of project audit and national allocations of EU resources. Recent and planned the way in which EU Regulations relating to eligible reductions in expenditure by local councils, traditionally expenditure and State Aid were now being applied. There major contributors to EU programmes, will place further is a perception that the level of administrative burden pressure on delivery, particularly in the run-up to the first and complexity is becoming an active deterrent to project review of notional LEP allocations in 2017. development and delivery.
4.1.2 However, there are some new sources of match-funding 4.2.2 It is recognised that the UK Managing Authorities have which can help LEPs to bridge the gap. little scope to influence the substance and application of such regulations, and that procedures had been • National opt-in proposals. The Government has tightened in recent years in response to a number of EU made available a significant amount of match funding external audits. As a result, there will need to be a greater centrally to support proposed opt-ins to a number emphasis on designing projects in ways that inherently of nationally managed schemes that will deliver an reduce the potential risk to both project sponsors and enhanced local offer (further details are set out under beneficiaries, learning from the experience of the current 1.2.8). It will clearly be very important for LEPs taking programmes. There are a number of ways in which this up such offers to secure clear economic outcomes could be achieved. consistent with local growth objectives and at a cost that represents value for money. However, accepting • Investment in EU Funding expertise. It will be some or all of the opt-in proposals has the potential important for both LEPs and potential project to substantially reduce the level of match funding sponsors to have sufficient in-house expertise to required and help to guarantee project spend, ensure that projects are robustly designed, assessed particularly in the early part of the programme prior and managed. This will require some up-front to the 2017 review. investment, although project management costs can count as eligible expenditure and there may • LEP Local Growth Fund. The Government has made be scope for LEPs to access Technical Assistance. proposals to establish a Local Growth Fund for LEPs There is potential for several LEPs to share expertise from 2015 onwards which could be used as match through the establishment of a ‘Joint European funding for EU projects (further details are set out Team’. Experience from previous programmes has under 1.2.9). On average, this could provide a pot of demonstrated the benefits of ‘out-reach’ officers around £50 million per LEP (actual figures will depend to provide technical information and assistance to on the distribution criteria adopted by Government). potential project sponsors at a formative stage. Although some of the individual budgets that make up the fund have yet to be confirmed and over half • Fully integrated Government Growth Teams. The the funding relates to transport (which is not an EU role of Government Growth Teams in supporting LEPs funding priority for the UK Government), there are and the delivery of the EU Growth Program locally elements which could be used to support EU skills will be crucial. To be effective, Growth Teams must and training initiatives.
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be adequately resourced and include representatives interventions meet local strategic needs identified by with appropriate expertise and seniority from all the LEPs. departments managing EU funds: BIS, DCLG, Defra and DWP. • Joint LEP Initiatives. As highlighted under Section 3.5, there is significant scope to develop projects that • Publicising Best Practice Examples. There is an will address some challenges on a cross or multi-LEP understandable reluctance on behalf of Government basis. This will help to reduce project transaction to publish exhaustive EU funding guidance notes. costs, maximise the strategic impact of investments, However, there is scope to support ‘peer to peer’ and simplify the experience for potential beneficiaries. learning by identifying individual projects that demonstrate best practice in terms of impact and • Development of partnership arrangements or management arrangements. Such exemplars might ‘specialist centres’. One obvious way of developing cover a range of different project types: such as larger more strategic interventions is to encourage a joint university business innovation scheme, a partnership working between project sponsors managed workspace development, or a community developing similar initiatives. For example, based training initiative run by a third sector collaboration between a number of universities to organisation. provide specialist innovation support to SMEs. Such • Using Appropriate Project Indicators. The arrangements must be robustly managed: lead Commission are likely to move towards a system of partners will need to replicate contractual conditions ‘payment by results’. This will mean that projects required by Government with local partners to that do not achieve expected outcomes may not be manage risk. Alternatively, a number of single fully funded, despite eligible expenditure having institutions could take a different specialist role on a been defrayed. It will therefore be vitally important wider basis and provide a service in a number of LEP for project sponsors to choose metrics that are both areas. achievable and easily measurable.
4.4 Addressing Cross Cutting Issues 4.3 Countering Fragmentation 4.4.1 A challenge under the current programmes has been to 4.3.1 There was key concern that under the current regional clearly demonstrate delivery against cross-cutting themes arrangements there has been a plethora of relatively as well as programme priorities. The next EU programme small projects which had struggled to demonstrate a will have two cross cutting themes relating to equal strategic impact and which have resulted in a complex opportunities and sustainable development, and the pattern of support that SMEs have found hard to engage indications are that the Commission will want to see clear with (so far 214 projects have been supported under evidence that projects are contributing to the delivery of the current ERDF programme with an average grant of both. £750,000). There was an acknowledged danger that a move to project prioritisation at a smaller spatial scale 4.4.2 There are a number of tools that could be used by LEPs could exacerbate this trend unless active steps are taken and project sponsors to demonstrate that these themes to secure a more strategic approach. are being addressed by projects recommended for approval. 4.3.2 There are a number of potential actions that could help to achieve this: • Embedding Social Inclusion: A framework to support LEP Investment Strategies for the 2014-20 • Minimum Project Size. LEPs could consider EU SIF Programme. This tool has been developed specifying a minimum grant level for different kinds of by One East Midlands for the National Council for initiatives to increase the scale and reach of projects Voluntary Organisations (NCVO) and is aimed at both and reduce transaction costs. This could be combined potential project sponsors and LEPs to help identify with a ‘commissioning approach’ to ensure that the contribution that social inclusion can make to
31 117 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
meeting growth objectives. For further information • Climate Change. There are a range of resources, visit: http://www.regionalvoices.org/node/148 toolkits and best practice examples to support climate change adaptation and mitigation and the transition • Community-led Local Development (CLLD). The to a low carbon economy available on the Climate UK NCVO has also published advice on applying the web-site at: http://climateuk.net/ principles of community-led local development in both urban and rural areas. For further information • ‘Health Gain’. Health Gain is an initiative developed visit: http://europeanfundingnetwork.eu/policy/ with EU support to provide information, methods cohesion-policy-2014-2020/CLLDfinal.pdf and suggestions on how to design Structural Fund investments that will also deliver health gains. For • Sustainable Development. There are a range further information visit: http://www.healthgain.eu/ of resources, tookits and best practice examples to support the mainstreaming of sustainable • Rural Proofing Toolkit (Defra). Defra have developed development principles into public policy and a rural proofing tool kit in order to ensure that the funding decisions available on the Defra website needs of rural areas are fully reflected in public policy at: http://sd.defra.gov.uk/advice/public/nsppp/ and funding decisions. For more information visit: prioritisation-tool/ https://www.gov.uk/rural-proofing-guidance
32 118 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
5: Statistical Annex
Tables of key statistics by LEP area.
Table 1: Sub-regional Economic Output – Table 3: Employment Rates relative to the UK average: (% residents aged 16-64), 2008 and 2012 Headline GVA per Head Indices (UK=100), 2008 and 2011
pp NUTS 2 Area 2008 2011 LEP Area 2008 2012 change
Lincolnshire 71.6 73.2 Greater Manchester 68.4 66.9 -1.5
South Yorkshire 75.4 74.1 Sheffield City Region 69.0 67.8 -1.2
East Yorkshire and Northern Lincolnshire 76.2 75.5 Humber 69.4 68.5 -0.9
Derbyshire and Nottinghamshire 85.6 84.1 D2N2 72.6 70.4 -2.2
East Midlands Region (NUTS1) 87.3 86.6 Greater Lincolnshire 73.3 70.4 -2.9
Greater Manchester 88.7 86.8 UK 72.1 70.6 -1.5 Herefordshire, Worcestershire and 86.0 87.4 Leicester and Leicestershire 72.6 70.9 -1.7 Warwickshire East Anglia 92.2 91.9 Coventry and Warwickshire 73.2 71.5 -1.7 Leicestershire, Rutland and 96.0 95.4 East Midlands 73.5 71.5 -2.0 Northamptonshire Bedfordshire and Hertfordshire 108.1 104.3 South East Midlands 77.3 74.7 -2.6
Berkshire, Buckinghamshire and Greater Cambridge and 76.1 75.0 -1.1 Oxfordshire 132.2 133.2 Greater Peterborough
New Anglia 73.8 75.8 2.0 Source: ONS Crown Copyright, 2012. ‘Regional Gross Value Added, 2011’.
Northamptonshire 77.2 76.4 -0.8
Source: ONS Crown Copyright, 2013. ‘Annual Population Survey’, January- December 2008 and January-December 2012. From NOMIS [accessed 12th September, 2013].
33 119 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 2: Employment by Industry Sector (SIC 2007 Broad Industry Groups) (% total employment), 2012
18: Arts, entertainment, recreation & other 4.1 4.2 4.1 3.6 3.8 3.8 3.7 4.3 4.2 4.6 4.2 4.8 4.5 services (R,S,T & U) 17: Health 13.1 11.7 14.3 11.3 14.6 13.7 15.2 11.9 13.1 11.3 16.6 10.9 13.1 (Q)
16: Education 9.6 11.3 10.2 10.3 9.6 9.1 9.4 9.6 8.7 8.1 11.3 8.9 9.1 (P) 15: Public admin & defence 4.3 3.8 4.9 3.9 3.6 4.6 6.4 4.3 4.5 3.5 5.2 4.6 4.8 (O) 14: Business admin & 8.3 8.1 8.8 9.4 7.8 9.4 6.8 8.0 8.3 8.8 6.3 9.2 8.1 support services (N) 13: Professional, scientific & technical 6.0 7.0 5.5 8.4 4.3 8.4 4.4 7.7 5.8 6.8 5.0 7.8 7.7 (M) 12: Property 1.1 1.7 1.2 1.7 1.1 2.2 1.0 1.1 1.5 1.0 1.0 1.5 1.8 (L)
11: Financial & insurance 1.8 3.1 1.5 2.3 1.1 4.0 1.0 2.0 3.3 3.0 2.3 2.8 3.8 (K) 10: Information & communication 1.9 3.7 2.4 3.9 1.2 3.2 1.7 1.7 2.2 1.7 2.7 3.3 3.8 (J) 9: Accommodation & food services 5.6 6.8 5.7 6.6 6.5 6.2 5.5 5.2 7.8 5.1 5.1 5.4 6.8 (I) 8: Transport & storage (inc postal) 5.1 6.2 3.9 4.9 5.6 4.8 6.0 6.4 5.2 8.4 4.8 6.7 4.5 (H) 7: Retail 10.3 9.2 10.9 9.9 11.7 10.2 10.8 9.5 11.3 9.1 10.7 9.8 10.2 (Part G)
6: Wholesale 5.2 5.1 4.3 4.4 4.8 4.8 3.6 5.5 3.9 7.7 4.0 6.1 4.0 (Part G)
5: Motor trades 2.3 2.9 2.2 2.2 2.6 1.6 2.0 2.1 2.3 2.6 2.1 2.8 1.8 (Part G)
4: Construction 4.4 4.2 4.8 4.5 5.2 4.6 5.4 4.1 5.5 4.1 5.0 4.5 4.6 (F)
3: Manufacturing 13.4 9.7 13.8 11.3 14.4 8.2 15.6 14.1 10.6 13.1 12 10.1 8.4 (C) 1 & 2: Agriculture & Mining, quarrying & utilities 3.5 1.5 1.6 1.3 2.0 1.2 1.5 2.4 1.7 1.0 1.5 0.9 3.0 (A, B, D, & E) City East D2N2 Region Greater Greater Humber Sheffield Midlands Midlands LEP Area South East South East Leicester & Leicester Coventry & & Coventry Manchester New Anglia Lincolnshire Great Britain Great Greater Cam- Greater Leicestershire Warwickshire Peterborough bridge & Greater Northamptonshire
Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2012’. From NOMIS [accessed 5th November 2013] and analysed under 34 Chancellor’s Notice Ref: NTC/BRES12-P0220. 120 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 4: Unemployment Rates (% economically active residents aged 16+), 2008 to 2012
LEP Area 2008 2009 2010 2011 2012 pp change
Northamptonshire 4.9 7.6 6.1 6.1 5.6 0.7
New Anglia 5.0 5.8 6.5 6.5 5.9 0.9
Greater Cambridge and Greater Peterborough 4.3 6.1 6.5 6.6 6.4 2.1
Coventry and Warwickshire 5.6 7.9 7.0 8.3 6.7 1.1
South East Midlands 4.9 7.0 6.6 6.5 6.8 1.9
East Midlands 5.9 7.3 7.5 8.1 7.8 1.9
Leicester and Leicestershire 7.2 7.2 8.0 8.6 7.8 0.6
United Kingdom 5.7 7.7 7.6 8.0 7.9 2.2
Greater Lincolnshire 6.1 7.3 6.9 7.3 8.5 2.4
D2N2 5.7 7.7 8.3 9.1 8.6 2.9
Greater Manchester 7.3 9.9 8.9 9.7 9.6 2.3
Sheffield City Region 6.8 9.2 8.6 10.6 10.2 3.4
Humber 6.1 9.5 9.5 9.2 10.7 4.6
Source: ONS Crown Copyright, 2013. ‘Annual Population Survey’, January-December 2008 and January-December 2012. From NOMIS [accessed 12th September, 2013].
35 121 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 5: Business Birth and Death Rates by Table 6: Employment in Manufacturing by LEP Area English region (number of business births/deaths as a % of (% total workplace employment), 2009 and total stock of active enterprises), 2011 2012
Birth Death LEP Area Rate Rate NUTS1 (GO) Region 2009 2012
New Anglia 9.1 9.6 London 2.7 2.5
D2N2 9.9 9.9 South East 7.0 6.5
Greater Cambridge & Greater Peterborough 9.9 9.2 Great Britain 8.7 8.4
East Midlands 10.3 9.8 East 8.8 9.0
Sheffield City Region 10.4 10.5 North West 10.9 9.5
Northamptonshire Enterprise 10.6 9.4 South West 9.4 9.5
Humber 10.7 10.6 North East 11.0 10.8
South East Midlands 10.7 9.5 Yorkshire and The Humber 11.0 11.4
Greater Lincolnshire 10.8 10.4 West Midlands 11.8 11.5
Coventry & Warwickshire 11.0 10.4 East Midlands 13.1 13.4
Leicester & Leicestershire 11.0 10.0 Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Survey, 2009 and 2012’. From NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220. UK 11.2 9.8
Greater Manchester 12.1 10.9
Source: ONS Crown Copyright, 2012. ‘Business Demography 2011 – Enterprise Births, Deaths and Survivals.’
36 122 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 7: Employment in Manufacturing by Table 8: Employment in High and Medium LEP area High Technology Manufacturing by LEP (% total workplace employment), 2009 and area, 2011 and 2012 2012
LEP Area 2009 2012 Employment Employment in High and in High and Medium-High Medium-High Greater Manchester 9.5 8.2 LEP Area Technology Technology Industries Industries Great Britain 8.7 8.4 (%) 2011 (%) 2012
Coventry and Warwickshire 10.5 9.7 Greater Manchester 3.2 2.4
South East Midlands 9.9 10.1 Sheffield City Region 2.7 3.0
New Anglia 10.5 10.6 Great Britain 3.1 3.1 Greater Cambridge and 11.0 11.3 Greater Lincolnshire 3.1 3.4 Greater Peterborough Sheffield City Region 11.6 12.0 New Anglia 3.4 3.6
Northamptonshire 12.8 13.1 Northamptonshire 3.7 3.9
East Midlands 13.1 13.4 South East Midlands 3.8 3.9 Leicester and D2N2 13.7 13.8 Leicestershire 3.8 3.9
Leicester and Leicestershire 13.6 14.1 East Midlands 3.9 4.2
Greater Lincolnshire 13.8 14.4 Humber 4.3 4.8
Humber 14.4 15.6 D2N2 4.4 4.8 Greater Cambridge and Source: ONS Crown Copyright, 2013. ‘Business Register and Employment Greater Peterborough 4.8 4.9 Survey, 2009 and 2012’. From NOMIS [accessed 5th November 2013] and analysed under Chancellor’s Notice Ref: NTC/BRES12-P0220. Coventry and Warwickshire 5.2 5.3
Source: ONS Crown Copyright, 2012. ‘Business Register and Employment Survey, 2011.’ Data accessed from NOMIS [18th November, 2013] and analysed under Chancellor’s Notice Ref NTC/BRES12-P0220.
37 123 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 9: Higher level qualifications (% Table 10: Intermediate qualifications working-age residents with qualifications at (% working-age residents with Level 4+) by LEP area qualifications at Level 3, Level 2 and Below Level 2)
LEP Area % with NVQ4+ % % % (16-64) with with with LEP Area Level 3 Level 2 Level 2 Greater Lincolnshire 25.1 (1-64) (1-64) (1-64)
Humber 25.7 Humber 20.1 21.9 32.4
Northamptonshire 27.5 Sheffield City Region 20.1 20.5 31.5
Sheffield City Region 27.9 Greater Lincolnshire 22.1 21.5 31.3
East Midlands 29.0 Greater Manchester 19.3 18.8 30.9
Leicester and Leicestershire 29.6 Northamptonshire 19.8 21.9 30.8
New Anglia 29.8 Coventry and Warwickshire 18.9 18.3 30.7
D2N2 29.9 Leicester and Leicestershire 21.1 19.1 30.3
Greater Manchester 31.0 East Midlands 21.0 20.0 30.0
Coventry and Warwickshire 32.1 D2N2 20.9 19.4 29.8
South East Midlands 32.8 New Anglia 19.6 21.1 29.4
United Kingdom 34.2 United Kingdom 18.9 18.6 28.3
Greater Cambridge and South East Midlands 18.9 20.1 28.1 Greater Peterborough 37.9 Greater Cambridge and Source: ONS Crown Copyright, 2012. ‘Annual Population Survey’, January- Greater Peterborough 17.5 17.2 27.3 December 2012. From NOMIS [accessed 13th September, 2013]. Source: ONS Crown Copyright, 2012. ‘Annual Population Survey’, January- December 2012. From NOMIS [accessed 13th September, 2013].
38 124 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Table 11: Employment by Occupation (SOC2010) (% of all employed adults), 2012
LEP Area 1: Managers, directors and senior officials 2: Professional occupations 3: & prof Associate occupations tech 4: and Admin secretarial 5: Skilled trades 6: leisure Caring, and other service occupations 7: Sales and service customer occupations 8: plant Process, and machine operatives 9: Elementary occupations Greater Manchester 8.5 18.6 13.6 11.6 9.3 9.2 9.8 7.3 11.3 Sheffield City Region 8.9 18.0 11.7 9.8 10.9 8.8 9.6 8.9 12.6
D2N2 9.5 17.1 13.0 10.4 11.1 9.6 7.8 8.7 12.5
New Anglia 9.6 17.0 13.8 10.5 12.5 8.8 8.5 7.2 11.7
Northamptonshire 9.6 15.3 14.6 11.8 9.9 10.9 6.8 7.8 13.2 Greater Lincolnshire 9.8 16.0 10.3 9.0 12.4 9.5 7.8 11.1 13.9 East Midlands 9.9 16.9 13.0 10.5 11.1 9.2 7.6 8.5 12.8
Humber 9.9 14.8 11.4 10.0 13.6 10.0 8.4 9.0 12.4
Coventry and Warwickshire 10.0 19.3 13.5 11.2 10.4 6.9 9.1 6.0 13.3
South East Midlands 10.0 18.4 14.3 11.8 10.7 9.0 7.7 6.9 10.8
United Kingdom 10.1 19.4 14.1 10.9 10.6 9.0 8.2 6.3 10.8
Leicester and Leicestershire 10.5 17.1 13.7 11.2 11.7 7.0 7.8 7.5 13.0 Greater Cambridge and Greater Peterborough 10.8 22.8 14.7 9.8 9.5 7.9 7.3 5.7 11.2
Source: ONS Crown Copyright, 2012. ‘Annual Population Survey’, January-December 2012. From NOMIS [accessed 13th September, 2013].
Chart A1: Employment in LCEGS Level 1 categories and Level 2 sub-categories (% of LCEGS total), 2011
East Midlands England % 25
20
15
10
5
0 Wind ontrol Hydro Vehicle Control C
Sources
Biomass Recycling Noise and Consulting Alternative Renewable Fuel and Storage Air Pollution Air Waste Water Waste Reclamation Photovoltaic Recovery and Geothermal Nuclear Power Environmental Wave and Tidal Wave lternative Fuels lternative Carbon Finance Carbon Carbon Capture Carbon Environemental Marine Pollution A Consultancy and Vibration Water Supply and Water Additional Energy Additional Contaminated Land Contaminated Waste Management Waste Energy Management Energy Building Technologies
Source: K Matrix, on behalf of BIS, 2012. ‘Low Carbon Environmental Goods and Services: Report for 2010/11’.BIS: London.
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Table 12: Number of Businesses and Table 13: Employment in LCEGS Level 1 Employment in Low Carbon and categories and Level 2 sub-categories (% of Environmental Goods and Services (LCEGS) LCEGS total), 2011 by English Region (Areas where East Midlands is significantly over- represented compared to England in orange font)
East Level 1 Level 2 England Midlands
Regions Air Pollution 0.9 1.1
Contaminated Land Number of Businesses Employment Employment as a % of 2011 BRES total Reclamation & Remediation 0.9 1.2 East Midlands 3405 62512 3.1 Environmental Consultancy & Related Services 0.8 1.0 East of England 4994 86885 3.5 Environmental Monitoring, Instrumentation and Analysis 0.1 0.2 London 9247 163841 3.7 Marine Pollution Control 0.1 0.1 North East 2033 38793 3.7 Noise & Vibration Control 0.2 0.2 Environmental North West 5116 93909 3.0 Recovery and Recycling 5.8 4.1 South East 6585 119858 3.1 Waste Management 4.8 4.3
South West 4260 77721 3.2 Water Supply and Waste Water Treatment 7.4 5.1 West Midlands 4235 77311 3.2 Additional Energy Sources 1.2 1.3 Yorks & Humber 3743 67872 3.0 Alternative Fuel Vehicle 11.8 6.1 England 43618 788702 3.3 Alternative Fuels 15.2 21.3
Source: K Matrix, on behalf of BIS, 2012. ‘Low Carbon Environmental Goods Nuclear Power 3.8 2.7 and Services: Report for 2010/11’. BIS: London.
Building Technologies 12.1 13.2 Low Carbon Low Carbon Capture & Storage 0.5 0.6
Carbon Finance 3.1 0.1
Energy Management 2.5 3.4
Biomass 4.9 5.3
Geothermal 8.6 8.2
Hydro 0.5 0.8
Photovoltaic 4.3 4.9
Renewable consulting 0.5 0.5 Renewable Energy Renewable Wave & Tidal 0.1 0.1
Wind 9.9 14.4
Source: K Matrix, on behalf of BIS, 2012. ‘Low Carbon Environmental Goods 40 126 and Services: Report for 2010/11’.BIS: London. Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Map A1: Business Birth Rates Map A2: Model-based Unemployment Rates (number of business births as a % of total (% economically active residents aged 16+), stock of active enterprises), 2011 2012
East Midlands Region East Midlands Region 11.2 to 18.3 (20) 9.6 to 15.6 (19) 10.1 to 11.2 (22) 7.7 to 9.6 (20) 9.8 to 10.1 (14) 6.7 to 7.7 (17) 9.2 to 9.8 (16) 5.2 to 6.7 (20) 7.4 to 9.2 (23) 3.7 to 5.2 (19)
Contains Ordance Survey data © Crown copyright and database right, 2013. Contains Ordance Survey data © Crown copyright and database right, 2013. Source: ONS Crown Copyright, 2012. ‘Business Demography 2011 – Source: ONS Crown Copyright, 2012. ‘Model-based estimates of Enterprise Births, Deaths and Survivals.’ unemployment’, January-December 2012. From NOMIS [accessed 18th November, 2013].
41 127 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
Map A3: Indices of Deprivation, 2010
East Midlands Region ,001 to 6,500 6,500 to 13,000 13,000 to 19,500 19,500 to 26,000 26,000 to 32,500
Contains Ordance Survey data © Crown copyright and database right, 2013. Source: Communities and Local Government, 2011. ‘The English Indices of Deprivation 2010 – Neighbourhoods Statistical Release.’ HM Government: London.
42 128 Item 7, Appendix 1 Meeting Need | Realising Opportunity A Socio-Economic Framework for the East Midlands to Inform the Delivery of EU Structural Funds (2014-2020)
East Midlands Councils This document is available in Braille, large print format and T: 01664 502 620 tape format on request. East Midlands Councils publications F: 01664 502 659 are also available in a range of languages if required. For more information please call 01664 502 620 or E: [email protected] e-mail: [email protected] W: www.emcouncils.gov.uk This document has been printed on recycled paper. East Midlands Councils, Phoenix House, Nottingham Road, Melton Mowbray, Leicestershire LE13 0UL Published December 2013.
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Executive Board 6th December 2013
Regional Employers’ Board Report
Summary
This paper updates Members on the recent work of East Midlands Councils’ Regional Employers’ Board.
Recommendations
Members of the Executive Board are invited to:
Note this report. To provide comments and feedback on the employment issues identified within the report to inform EMC’s input to future Employers’ meetings at Regional, National and European level.
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1. Introduction
1.1 The Regional Employers’ Board leads the development of employment issues and on councillor development; it forms the Employer’s side of the Regional Joint Council. This report updates members on the progress and work of the Board to date.
2. Background
2.1 At East Midlands Councils’ AGM 2013, Cllr Tom Beattie from Corby Borough Council was elected as Chair of the Employers’ Board with Cllr Ian Fleetwood from Lincolnshire County Council as Vice-Chair.
2.2 The Board is comprised of 15 members: Cllr Tom Beattie - Corby BC (Chair) Cllr Ian Fleetwood - Lincolnshire CC (Vice Chair) Cllr Ken Savidge - North East Derbyshire DC Cllr John Clarke - Gedling BC Cllr John Burrows - Chesterfield BC Cllr Simon Greaves - Bassetlaw DC Cllr Dennis Kelly - Bolsover DC Cllr Pat Lally - Broxtowe BC Cllr Robert Parkinson - Erewash BC Cllr Mary Malin - Kettering BC Cllr Tony Roberts MBE - Newark and Sherwood DC Cllr Terry King - Rutland CC Cllr David Slater - Charnwood BC Cllr Jeffrey Kaufman - Oadby & Wigston BC Cllr Christopher Darcel - West Lindsey DC
3. Employers’ Board and Regional Joint Council Meetings
3.1 The Regional Employers’ Board met on 7 th October 2013. At this meeting, the Board discussed and agreed areas for focus over the forthcoming year, namely: Implementation of the Living Wage Zero-hour contracts Relationship with CEEP UK/Europe Creating jobs and youth employment Blacklisting amongst contractors Working together on terms and conditions
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3.2 A meeting is also arranged for 2 nd December 2013 and to progress the agreed work strands set out above, a main item is the Living Wage.
3.3 The Regional Joint Council met on 7 th October 2013 and the key discussion points of the meeting were national bargaining and pay, with particular reference to the implications of more local, rather than national level, collective bargaining and changes to Green Book terms and conditions. The Regional Joint Council confirmed its support for national bargaining. It was agreed to focus a future meeting on the living wage, inviting presentations from authorities who have implemented to share their experience and approach.
3.4 A meeting of the Joint Council on 2 nd December 2013 will receive a presentation from Bassetlaw District Council on their approach and experience of implementing the Living Wage to become a Living Wage Foundation accredited employer.
3.5 Local Government pay is an item at both meetings to inform negotiations at national level for 2014.
4. National Association of Regional Employers (NARE)
4.1 NARE brings together all of the regional employers’ organisations across the country to inform developments in local government employment and terms and conditions. It also provides an opportunity to share experience and work jointly on projects for the benefit of local authorities, e.g. mediation and pay benchmarking. The meetings are attended by Directors and Chairs of Regional Employers’ Organisations.
4.2 The last meeting of NARE took place on 24th & 25th October 2013 and was attended by myself and Cllr Ian Fleetwood as Chair and Vice-Chair respectively of this Board. At the meeting, I was appointed as a representative of NARE to the CEEP UK Executive Board. The meeting discussed: information and developments with the Living Wage across the regions. Progress on projects and case studies being delivered by Skills for Local Government, the sector skills council for roles and professions in local government not covered by other specific sector skills councils.
4.3 A seminar on the future local government work took place as part of the meeting, including: a presentation from Sarah Messenger, Head of Workforce at the LGA, on setting a strategic approach to pay and rewards for 2014/15 and beyond.
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a case study on moving from local authority employment to establishing a community interest company. a case study on organisational change.
5. European Level Employment Developments
5.1 EMC is a member of CEEP UK, which represents the interests of public sector employers at European level negotiations through its role in CEEP, which is a social dialogue partner.
5.2 The latest meeting of CEEP UK took place on 20 th November 2013. The meeting received a presentation from CEEP’s General Secretary, Valeria Ronzitti, on the priorities of the EC and the impact of CEEP’s work programme. CEEP has increased its profile and impact as indicated by: meetings with President Barossa and his office. successful lobbying to prevent implementation of proposals to change pension funds which would have a negative financial impact on pension funds in the UK of several billion Euros. being asked to participate in informal discussions on developments with the Working Time Directive, following the Social Partners’ failure to reach agreement earlier this year.
5.3 The European Director of BIS attended the meeting to discuss the importance of the social partners and to jointly launch a brochure that has been developed by the Social Partners to promote the benefits of an inclusive labour market and to showcase good practice examples.
5.4 Current areas of focus for development in the EU include youth employment, equality and gender pay equality and health and safety.
5.5 The Foreign Secretary launched the Review of the Balance of Competences in July 2012 to take forward the commitment in the Government’s Coalition Agreement to examine the balance of competences between the UK and EU. The Social and Employment Review is being led by BIS, jointly with DWP, HSE, DCMS and CEEP UK will be meeting with BIS on 19 th December 2013 as part of the call for evidence. It will be an opportunity to express views and contribute to the Government’s understanding of the nature of EU membership and provide a contribution to the wider European debate about modernising, reforming and improving the EU. Questions for consideration will be:
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is EU intervention in social and employment areas a necessity for the function of the single market or are these interventions desirable on their own (and to what extent)? What evidence is there about the impact of EU action on the UK economy? How far can this be separated from any domestic legislation needed in the absence of EU action? How could action in social policy be undertaken differently? Eg, ways of improving how EU legislation is made (eg through greater adherence to the principles of subsidiary and proportionality or the ways social partners are engaged).
6. National Employment Developments
6.1 The joint trade unions have submitted a pay claim for Local Government Services (“Green Book”) employees for 2014. The claim is for a minimum increase of £1 an hour on scale point 5 to achieve the Living Wage and the same flat rate increase on all other scale points. It has been estimated by the LGA that this would add 8.5% to the national pay bill in local government.
6.2 A consultation event is being hosted by East Midlands Councils on Friday 6 th December 2013 to provide an opportunity for local authorities to meet with national negotiators to inform this round of pay negotiations. The event will take place at 2.30pm at Melton Borough Council’s offices.
6.3 A decision is still awaited from CLG following the consultation on their proposal to end access to the Local Government Pension Scheme for councillors.
6.4 There has been no further information from CLG on their proposals to remove the statutory requirement for a Designated Independent Person to be appointed to progress matters concerning the conduct or capability of Chief Executives, Monitoring Officers and s151 Officers.
7. Provision of Support for Councils in the Region on Employment & Councillor Development
7.1 The Board provides a steer and Member oversight on the support that is being provided to local authorities.
7.2 A significant strand of this work is councillor development. This includes: Supporting authorities to achieve and gain reaccreditation of the Member Development Charter. Two authorities have been assessed against since the last Board meeting.
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An accredited Community Leadership Programme, using the programme provided by the South West region. Currently 7 councillors are going through the programme and one councillor has been awarded the Advanced qualification and one councillor has been awarded the practitioner qualification. Sub-regional skills programmes, which have received high evaluation and engagement levels. The programmes for Derbyshire authorities and Northamptonshire authorities have both now been completed, with high levels of attendance and evaluation. Discussions are taking place with other sub-regions to inform their future programmes, and an event has taken place for councillors of authorities in Lincolnshire. A series of regional programme of briefing events for Councillors which consist of knowledge-based events on topical issues. The most recent event held on 21 st November 2013, focused on Welfare Reform. 25 local authorities subscribe to the programme and 311 councillors have attended the sessions to date. The events are rated highly by delegates. The remaining events in this year’s programme are: Wednesday 29 January 2014 – Planning Reforms Thursday 13 March 2014 – Maximising Opportunities for Influence & Funding at European Level
7.3 Continuing Professional Development (CPD) Programmes offered by East Midlands Councils for both planners and environmental health officers continue to be successful. Since the last Board meeting, one seminar has been held for environmental health officers on housing issues, attracting 146 delegates. Two seminars have been held for planners, one on Environment & Climate Change, attended by 88 delegates and one on Planning for Growth which attracted 103 delegates. Given the success and cost-effectiveness of the programmes, they are now being adopted by other regions.
7.4 Support is being provided to local authorities who are interested in the Living Wage. The support is in the form of collating and providing information and examples of practice from across the region and nationally, together with supporting the national employers to provide advice. This will be particularly useful, given the range of approaches that authorities are considering or have taken in terms of the implementation of the Living Wage. As indicated above, this strand of work has been identified by the Employers’ Board as a priority.
8. Recommendations
Members of the Executive Board are invited to:
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8.1 Note the contents of the report.
8.2 Provide comments and feedback on the key employment issues identified above to inform EMC’s input to future Employers’ meetings at regional, national and European level.
Cllr Tom Beattie Chairman Regional Employers’ Board
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Executive Board 6th December 2013
East Midlands Strategic Migration Partnership Board Report
Summary
This report updates Members on the recent work of East Midlands Strategic Migration Partnership Board.
Recommendation
Members of the Executive Board are invited to note this report.
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1. Introduction
1.1 The East Midlands Strategic Migration Partnership provides a regional advisory, development and consultation function for member organisations from the statutory, voluntary, community and private sectors - for the co-ordination and provision of advice, support and services for migrants.
1.2 East Midlands Strategic Migration Partnership is funded by the United Kingdom Border Agency (now Home Office) Enabling Grant. The East Midlands Strategic Migration Partnership is one of ten UK partnerships.
1.3 This report updates members on the progress and work to date of the Board.
2. Background
2.1 The East Midlands Strategic Migration Partnership was established in 2007. In April 2010 it became a Board of East Midlands Councils.
2.2 The Board is comprised of 4 members:
Councillor Paul Kenny Boston Borough Council (Chair) Councillor Geoff Stevens Derbyshire Dales (Vice Chair) Councillor Peter Robinson Lincolnshire County Council Councillor Jewel Miah Charnwood District Council
2.3 Our key partners at the moment represented on the EMSMP Board and standing sub-groups are:
Local Authorities Public Health Police EMC Jobcentre Plus ACAS Priority Properties One East Midlands Refugee Support TUC Refugee Action NIACE
2.4 Other partners, including service users, attend our general stakeholder forum, ad-hoc and occasional sub-groups and workshops.
3. East Midlands Strategic Migration Partnership Board
3.1 The Board last met on 20 th November 2013. The main items for discussion were an update from the Home Office, a discussion on the dispersal areas for asylum seekers in the East Midlands, an update from the LGA asylum, refugee and
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migration task group, an update on ESOL, the Migration Advisory Committee consultation regarding migrant workers and low skilled work, impact of Roma and a regional response to issues of enforced labour and modern slavery. Progress on these issues is highlighted below.
4. Work Programme and Key Priorities for 2013/14
4.1 In order to support the further consideration of migration and how it effects communities and local councils in providing support and wider services on behalf of their communities a briefing/consultation event is planned for February 2014. This is part of the new approach for EMC and will be reported to a subsequent meeting of the Executive Board. Initial priorities previously agreed by the Executive Board are: a) Asylum Seekers
4.2 Objective: To work with the Home Office to review current dispersal agreements including whether to reaffirm or widen the current arrangements. The EMSMP position is that the current arrangements are sufficient and that any expansion in terms of numbers or new dispersal areas has the potential to have elevated impacts on service provision.
4.3 Progress: The Home Office has confirmed the methodology for a review of dispersal arrangements. Meetings facilitated by the EMSMP are taking place with the provider and all three dispersal areas on the impact of dispersal and how this can be mitigated. The first meeting has taken place between EMSMP, the accommodation provider G4S and Derby City Council to discuss future dispersal strategy, accommodation procurement, impact on local service provision and cohesion issues. The meeting was productive and an agreement was reached to inhibit future dispersal into Derby.
4.4 At a national level, East Midlands Councils have been invited to participate in a meeting in the New Year with regional counterparts and senior Home Office officials on shaping dispersal policy taking into account experiences on local authorities and partner agencies in the region. b) English as a Second Language (ESOL)
4.5 Objective: The census findings suggest that in the East Midlands there is a slightly lower English Language proficiency in comparison to England and Wales as a whole. This coupled with increasing pressure on public services to reduce translation and interpretation costs means that access to ESOL provision is of
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increasing concern. The EMSMP Board have agreed to write to Ministers at the Department of Innovation and Skills and Communities and Local Government to express their concern about impending further changes to provision and the impact on service delivery.
4.6 Progress: The Chair will write to the Minister regarding ESOL provision once the situation becomes clearer. A recent CLG community ESOL competition has awarded funding that will benefit ESOL provision in Leicester. East Midlands Councils are undertaking a review of ESOL provision in the East Midlands to determine where there are any gaps and to lobby for future funding if appropriate. c) Funding
4.7 Objective: To continue to monitor the impact of funding pressures on local authorities in respect of service provision and to explore sources of funding to meet socio economic needs and encourage labour market participation. This includes the European Integration Fund and Structural Funds.
4.8 Progress: East Midlands Councils has provided guidance on the inclusion aspects of the EU structural funds to LEP Boards across the region. The EMSMP is keen to ensure that funding opportunities are maximized within the East Midlands and has promoted the use of the European Integration Fund at the September Board meeting. Funding pressures on infrastructure to support integration and cohesion are of concern and work is ongoing to identify how these pressures can be mitigated. d) Forthcoming legislation
4.9 Objective: To respond to consultations on the Immigration Bill and changes to Legal Aid to identify potential impacts on local authorities and communities.
4.10 Progress: The EMSMP has submitted responses to recent consultations on the Immigration Bill. It has also submitted comments to the Commission on Modern Slavery in advance of the forthcoming Bill. e) Labour Market and Economic Activity
4.11 Objective: To address concerns regarding fair and legal employment. The EMSMP is raising awareness with employers of their obligations as employers and also to ensure that workers are able to exercise their legal rights. Local authorities have a clear role in supporting employment creation and influencing local labour
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markets, e.g. by adopting such initiatives as Nottingham City Council in offering entry level employment opportunities to Nottingham City residents in the first instance.
4.12 Progress: An event is planned for 6 th March 2014 in Boston to work with employers and workers on their rights and obligations. The event will include representatives from across government, business and the voluntary sector.
4.13 The EMSMP supported the recent Migration Advisory Committee visit to Boston to consult on migration and low skilled employment.
4.14 EMSMP is working together with the South East Migration Partnership and the Unseen organisation on developing an anti-slavery/trafficking partnership for the East Midlands. Terms of reference and membership of the partnership are under discussion. f) No Recourse to Public Funds
4.15 Objective: to develop a programme of training for local authorities and the voluntary sector to be confident in their assessments and knowledge of case law. To continue to monitor numbers supported who have NRPF in the region and to support national lobbying of the Home Office to prioritise local authority supported cases. (This also applies to former Unaccompanied Asylum Seeking Children who are Appeal Rights Exhausted but continue to receive Local Authority Support).Also to identify cost effective methods of providing support.
4.16 Progress: 28 frontline staff have received training on Human Rights Assessments for children and adults since the last Executive meeting. This training has been facilitated by EMSMP and delivered by the National NRPF Network based at Islington Council. Local authorities were able to benefit from a 50% fee reduction supported by enabling grant project funding from the Home Office. The Home Office were able to give financial support based on the recent NRPF research which identified training as a key issue in reducing costs of supporting NRPF cases. A further two-day programme of advanced training for practitioners is planned for the New Year.
4.17 A letter has been sent by the ADCS and NRPF network supported by the EMSMP and the LGA to the Immigration Minister highlighting the additional cost burdens borne by local government. The letter highlights three areas of concern:
4.18 The impact of the ‘Newcastle Judgement’ in which the Newcastle High Court has recently given a judgement, upheld in the appeal process, that local authorities
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have a duty (with no discretion) to make a grant in relation to educational expenses and this could include a grant for university tuition fees for former looked after children. For each case that local authorities are required to fund as a result of this legal case there will be an expenditure of approximately £25,000 per student per annum.
4.19 Secondly for those former unaccompanied asylum seeking children whose asylum claim is fully refused, known as Appeal Rights Exhausted (ARE), there is a requirement from the Home Office on local authorities to conduct a Human Rights Assessment (HRA) when they reach the age of 17½ to determine whether withdrawal of local authority support would constitute a breach of human rights.
4.20 Some authorities with a minimum number of 25 are eligible to reclaim a grant of the equivalent value of Section 4 support for failed adult asylum seekers for a maximum period of three months from the Home Office. Authorities with less than 25 young people receive no grant at all.
4.21 The Home Office consider that three months is an adequate period of time for the removal of a young person in this situation to have taken place. A number of local authorities have however expressed concern that removals do not happen in this period and that they continue to support for protracted periods of time which carries both significant costs to them whilst individuals vulnerabilities are increased due to their state of limbo as they are not entitled to work, education or benefits. Any costs that accrue to local authorities who qualify for the grant are not funded beyond this three month period.
4.22 This is becoming an increasing problem in the East Midlands as minimum numbers are falling below 25. A recent national mapping exercise has identified that the average daily cost per person per local authority is £36.40 and the average length supported is 417 days.
4.23 The NRPF network have calculated that the proposed changes to the residence test for legal aid could lead to a £17.3m cost shift to local government across the 132 upper tier authorities.
5. Migration Briefing for Members
5.1 East Midlands Councils recognise the sustained public interest in matters relating to migration. The Chairman of the EMSMP has proposed that officers produce a toolkit of resources for Members to equip them to respond to requests from the media regarding the impact of migration in their area.
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5.2 In addition, East Midlands Councils are preparing a regional briefing for Members in February. Further details will be circulated before the end of the year.
6. Recommendation
6.1 Members of the Executive Board are invited to note the contents of the report.
Cllr Paul Kenny Chairman East Midlands SMP Board
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Executive Board Meeting 6th December 2013
Regional Improvement and Transformation Board Report
Summary
This report provides Members with an update on the recent work of the Improvement and Transformation Board and highlights proposals to expand EMC’s member development programme and the potential for further work with the region’s MPs through, for example, a joint review of health matters.
Recommendation
Members of Executive Board are invited to note the information contained within this report.
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1. Introduction
1.1 The Board has now overseen the completion of the RIEP sub-regional and regional legacy projects.
1.2 Alongside this, the Board has considered options on how best to provide the strategic lead to EMC’s sector-led improvement and transformation work in the future. The following paper highlights Board proposals on: The strategic focus and delivery of the EMC member development programme. The potential for further work with the region’s MPs, for example, through a joint health review.
2. Roles and Responsibilities
2.1 Members are reminded of the Boards’ revised roles and responsibilities previously endorsed by the Executive Board: To oversee the development of new arrangements for sector-led improvement and transformation. To advise the EMC Executive Board and wider membership on sector-led improvement, transformation and efficiency agendas. To provide political leadership; influence the EMC Business Plan by ensuring the priorities of the sector are appropriately reflected; and overseeing a programme of work to deliver the strategic priorities set by EMC Executive Board. To provide collaborative support and oversight to the development of sector performance information and intelligence. In conjunction with the LGA, to work with councils in difficulty. To maximise the opportunities for sector-led improvement and transformation activity across councils in the East Midlands, with particular focus upon adult and children’s services, public health/Health and Wellbeing Boards. To build and maintain effective relationships with key stakeholders and, in particular, undertake all work in conjunction with member councils and/or the LGA. To commission sector-led leadership/councillor development programmes and wider workforce development as part of the ‘improvement offer’.
3. Key issues Considered a) Member Development
3.1 One of the primary roles for East Midlands Councils is to support and deliver a councillor development programme. Effective political leadership is at the heart of effective democracy and East Midlands Councils is committed to supporting
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and developing councillors in meeting their development needs in fulfilling their role.
3.2 As the role of councils is rapidly changing, so to is that of councillors. East Midlands Councils have several programmes to develop the leadership skills of councillors with a range of opportunities to support members.
3.3 To reflect the changing nature of the challenges and opportunities facing councillors, it is essential that the member development programme must remain relevant and useful, and reflect the strategic aims and objectives as identified by Members.
3.4 Members were supportive of the member development programme, in particular the briefing events for councillors. These offer not only learning opportunities for councillors but also the opportunity for members of EMC to inform the work of EMC on specific issues – and as such are a key component of the new approach for the organisation.
3.5 The current programme is made up of 6 separate events. There is support for a significant expansion of the programme and members will consider a forward programme to ensure the events remain topical, focused and reflect the priorities facing local councils. b) Networks
3.6 Objectives of the networks are to support local government learning and development by: Sharing practice and information. Informing the development and delivery of specific work programmes and events that can be offered on a regional basis to achieve efficiencies of scale and coordination. Reflecting the strategic priorities of East Midlands Councils, as agreed by its membership.
3.7 Members considered the priorities for transformation and improvement work of East Midlands Councils and how the networks managed by organisation contribute to the delivery of these. In effect, the networks managed by EMC should provide a means of delivering its strategic priorities.
3.8 The management of networks offer a means for the wider membership to directly inform the work of East Midlands Councils. There are a range of networks that EMC manages, some with the LGA, and these are both member and officer focused.
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3.9 A number of these networks, eg welfare reform, and performance management, have been particularly successful and offer opportunities to improve engagement with EMC’s membership. The contribution of other networks in meeting the strategic priorities of EMC will be considered.
3.10 From initial discussions held with members of the APPG EM, there is an opportunity to undertake joint work between councils and MPs on health matters and how this impacts on the health and wellbeing of local communities. In undertaking any work, MPs, councillors and other partners should be clear on the objectives of the work, and its mandate for undertaking any review.
3.11 However, given the shared interest in health issues, there is considerable potential for a joint ‘review’, and members of the Improvement and Transformation Board invite the Executive Board to agree to the drafting of terms of reference and to further explore the potential for such work.
4. Recommendations
Members of the Executive Board are invited to:
4.1 Note the information contained within this report.
4.2 Support proposals to widen the member development programme.
4.3 Highlight key issues for the member development programme to focus upon.
4.4 Consider initial proposals for a health review, in conjunction with MPs and other partners.
Cllr Roger Begy, OBE Chairman Improvement and Transformation Board
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