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East Midlands Development Agency and the Regional Economic Strategy

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East Midlands Development Agency and the Regional Economic Strategy House of Commons East Midlands Regional Committee East Midlands Development Agency and the Regional Economic Strategy First Report of Session 2008–09 Report, together with formal minutes, oral and written evidence Ordered by the House of Commons to be printed 20 July 2009 HC 406 Published on 29 July 2009 by authority of the House of Commons London: The Stationery Office Limited £0.00 East Midlands Regional Committee The East Midlands Regional Committee is appointed by the House of Commons to examine regional strategies and the work of regional bodies. Current membership Paddy Tipping MP (Labour, Sherwood) (Chairman) Mr John Heppel MP (Labour, Nottingham East) Mr Bob Laxton MP (Labour, Derby North) Judy Mallaber MP (Labour, Amber Valley) Sir Peter Soulsby MP Labour, Leicester South) Powers The East Midlands Committee is one of the Regional Committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No.152F. These are available on the Internet via www.parliament.uk Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/parliamentary_committees/emid/emid_reports_and_publicat ions.cfm Committee staff The current staff of the Committee are: Rhiannon Hollis (Clerk); Anwen Rees (Inquiry Manager), Emma Sawyer (Senior Committee Assistant); and Ian Blair (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the East Midlands Regional Committee, Committee Office, 7 Millbank, London SW1P 3JA. The telephone number for general inquiries is: 020 7219 0654; the Committee’s e- mail address is: [email protected]. East Midlands Development Agency and the Regional Economic Strategy 1 Contents Report Page Summary 3 1 Introduction 5 Background to the Committee 5 Inquiry 5 Future Inquiries 6 2 East Midlands Development Agency 7 Additional Responsibilities 8 Tensions between Regional and Government Policy 9 emda’s Board 10 3 Regional Economic Strategy 12 Partnership Working 13 Use of Data 15 Measuring Effectiveness 16 4 Response to current economic climate 19 Data Collection 21 Access to Finance 22 Regeneration Projects 22 European Regional Development Fund 23 5 Funding 25 emda’s Budget 25 Decreasing Budget 25 Carry-forward 26 Project Appraisal 27 6 Sub-National Review 29 Single Regional Strategy 29 Role of Regional Minister 30 Stakeholder Involvement 30 Accountability 31 Sub Regional Authorities for Economic Development 32 7 Sustainability 34 emda’s Progress on Sustainable Development 34 Environmental Expertise 35 Lead on Sustainable Development in the Region 36 Tensions between Economic and Sustainable Development 36 Regional Index of Sustainable Economic Welfare (R-ISEW) 37 Sub-National Review 38 Rural, Semi-rural and Urban Divide 39 2 East Midlands Development Agency and the Regional Economic Strategy Broadband 40 Market Towns 40 8 Conclusion 42 Conclusions and recommendations 43 Formal Minutes 48 Witnesses 49 List of written evidence 50 East Midlands Development Agency and the Regional Economic Strategy 3 Summary Our inquiry arose from our belief in the importance of emda’s role in the region, and its key role in driving and co-ordinating economic development. The first Regional Economic Strategy (RES) for the East Midlands in 1999 set an ambitious target for the region to be a top-20 region in the EU by 2010. emda is to be congratulated on its work towards that goal and its continued vision and ambition for the East Midlands to be a flourishing region by 2020, which has been recognised by the conclusions of an independent evaluation, and of reviews by the National Audit Office and PricewaterhouseCoopers. The single pot of funding from contributing departments gives emda flexibility to manage its resources. However emda’s budget will decrease over the forthcoming years, and it will receive £20 million less cash over 3 years in the Single Programme Grant in Aid. It has also been affected by the diversion of funds to establish HomeBuy Direct and the need for DEFRA to set a balanced budget. This frustrates emda’s strategic priorities and causes difficulties to projects in the region. There is also a tension that exists between emda’s role in promoting the region’s economic interest, and its role in managing government funds. Since its establishment emda has taken on a large number of additional responsibilities. It has moved away from its original strategic role and has become responsible for the delivery of a number of grants and European Regional Development Funds. There is a perception in the region that this has lead to a loss in business focus by emda. emda’s board members are chosen by Ministers in the Department for Business, Innovation and Skills (BIS), and are selected on an individual basis and not as representatives of organisations in the region. With increased responsibility within the region, emda’s remit is now significantly broader than the area overseen by the Department for Business, Innovation and Skills and we recommend that the Regional Minister should take the lead role in board appointments. While the RES is developed and championed by emda, it is owned by the region. It is therefore vital that key partners work together to develop the RES and to ensure they share a common strategic vision. While some sectors have spoken of the close working relationship they have with emda, there is a perception that it does not consult sufficiently with some key sectors, such as micro businesses, trade unions and the environment sector. It is vital that emda establishes and maintains improved relationships with key partners in the region, while continuing to make use of the strong links it already has with many sectors. There is also some concern regarding emda’s data collection within the region, which is commissioned from academics and universities. We urge emda to utilise the expertise and knowledge of its regional partners on data collection and analysis. The financial and economic downturn has affected all businesses in the East Midlands region, and major job losses have been experienced. Following initial delay in the Government’s reaction, emda has responded well to the current economic climate. It has adapted its role from growth to survival and has acted swiftly. Its ‘Survive and Thrive’ events have been very successful in the region, providing support to businesses. Its primary channel for the marketing of its business support products is through Business Link. We 4 East Midlands Development Agency and the Regional Economic Strategy are concerned to hear from witnesses that awareness of Business Link and its services is not as good as it should be and that there is a need to improve the business community’s awareness of its role. We urge emda to continue working with the banks in order to make them aware of what support is available and to urge banks to assist companies as appropriate. We also note concerns regarding access to funds via the European Regional Development Fund and we look to emda to improve the process. Under the Sub-National Review, the production of a single integrated strategy will allow better alignment of policy in the region. However, the dissolution of the Regional Assembly removes a dedicated regional scrutiny body and a formal mechanism for stakeholder engagement. emda’s efforts to develop mechanisms in the region, to ensure the involvement of regional partners in policy decision making, are welcomed. As emda moves forward, it is imperative that it develops and maintains close working partnerships in the region. Contributing to sustainable development is one of emda’s five statutory functions. However increasing GVA is a key performance indicator for emda as a Regional Development Agency and this creates difficulties between economic and sustainable development. The emphasis on economic indicators and the need to demonstrate economic impact for every environment project is detrimental to emda’s ability to deliver sustainable development. emda had led the development of the Regional Index of Sustainable Economic Welfare and we recommend that this is used as an alternative to the traditional GVA measurement of the RDAs’ economic performance. There is concern that the sustainability ethos is not embedded as a priority within all aspects of the organisation. There is no requirement to have environmental expertise on emda’s board and we recommend that the Department for Business, Industry and Skills and the Regional Minister examine the criteria for appointment on emda’s board. There is also no one body that takes the lead on sustainability issues in the region and we encourage partners to establish whether this is a role best suited for emda or another body. The East Midlands is predominately a rural region, with a number of principal urban centres. There is concern that the urban centres of Leicester, Nottingham and Derby dominate. emda’s approach is one of ‘rural mainstreaming,’ and no specific rural strand or budget exists. Instead emda looks at where it can prioritise actions to deliver the greatest impact or tackle specific needs within the region. emda must ensure that its support is suitable for areas that are “semi-rural” and that such areas do not fall through the gaps. The availability of broadband is an essential tool for businesses and there are areas in the region where availability is patchy, if not non-existent. We urge the Government to invest
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