House of Commons South East Regional Committee

Post Appointment Hearing: the New Chair of South East England Development Agency

Oral Evidence

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy, South East England Development Agency

Ordered by The House of Commons to be printed 15 December 2009

HC 199-i Published on 7 April 2010 by authority of the House of Commons London: The Stationery Office Limited £0.00

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South East Regional Committee: Evidence Ev 1 Oral evidence

Taken before the South East Regional Committee on Tuesday 15 December 2009

Members present:

Dr. Stephen Ladyman (Chairman) Gwyn Prosser David Lepper Mr. Andrew Smith

Witnesses: Rob Douglas, Chair, Pam Alexander, Chief Executive, and Paul Lovejoy, Executive Director, Strategy and Communications, South East England Development Agency (SEEDA), gave evidence.

Q1 Chairman: Welcome. Would you like to start by Rob Douglas: It is always diYcult to guess why introducing yourselves for the record? people appoint you, and when years later you find Rob Douglas: I am Rob Douglas, Chairman of out, it is often for a completely diVerent reason that SEEDA. you never spotted, but I think there were a number Pam Alexander: I am Pam Alexander, Chief of things. First, I think my experience in a major Executive of SEEDA. multinational is relevant, because I understand the Paul Lovejoy: I am Paul Lovejoy,Executive Director decision-making processes in major multinationals, of Strategy at SEEDA. and why they invest in a certain place, why they pull out of a certain place, and their relations with Governments. I think that that is one diVerence with Q2 Chairman: Rob, congratulations on the new my predecessor. Jim was a very successful appointment. Let me first of all absolutely businessman in the small and medium-sized emphasise something for the record. We had the enterprise world. My background is also in business, greatest respect for your predecessor, the job that he but I have diVerent experience of major did, and the leadership that he showed for the multinationals. Within that experience, there were Agency, but we will question you today about how two sub-elements, if you like. One is that I have the Agency might change under your leadership, and worked overseas and I have worked in regions that the areas where you might see things diVerently from we would see as competitors to the South East. So I your predecessor, but that will imply absolutely no have spent time in the Netherlands and in northern criticism whatever of your predecessor. If you say Italy. I have also spent a lot of time, both with Shell that you want to change direction on anything, we and subsequently, travelling in east Asia. I think that will not say that that implies any criticism of the there is a very strong relevance to that experience, past. New leaders are expected to make changes and because we always talk about what is happening in to see things diVerently from the chap before, so I China, but it is only when you actually see it that you begin by emphasising that. Having congratulated realise just what the challenge is. I have spent a lot of you, I start by asking in general terms what might be time in China over the years; I have probably been the diVerence in future between SEEDA under your there more than 30 times, I would think. I think that leadership and what it was under your predecessor’s that experience brings a dimension to my arrival as leadership. chairman of SEEDA that is valuable, because I can Rob Douglas: I think I would say that I have arrived see what we are up against. I am confident that we at a time of major transition for SEEDA, and that can compete, but I see what it is that we are up there is a new organisation in place with a new steer against. So that is one part of my experience. I think from central Government and the Department for the second part is that I have been heavily involved, Business, Innovation and Skills (BIS) through the since I left Shell, as a non-executive on the skills new industry, new jobs agenda. What I had arrived agenda. I have been chair of a local Learning and at was already moving in a new direction, and I think Skills Council and I am on the regional Learning and my role as Chairman is to make sure that the Board Skills Council now, following the abolition of the gives support and leadership to the executive on local councils. I got quite involved in the skills that, and that I engage the key stakeholders who are agenda when I was in SEEDA previously. I think part of that new industry, new jobs agenda. We were that the timing has turned out well. Again, a change already engaging them, but they have become my from the time that my predecessor was in the seat is priority. I can be more specific if you like, but as a that we are being tasked with extra responsibilities general starting point, that is what I would say. around the skills agenda, in formulating the demand side and integrating a skills strategy into the regional Q3 Chairman: We have seen your CV, and we know plan. I hope that my experience in that regard will be that you have an impressive background. We also helpful, just as my experience as a non-executive know that you have been involved with SEEDA board member on the Higher Education Funding since 2001, so you know the organisation, but will Council helps to weave in, if you like, the higher you summarise for us what you think your particular education with the vocational and further skills and contributions will be? education. Those are two aspects. Like my Processed: 01-04-2010 20:05:48 Page Layout: COENEW [E] PPSysB Job: 002283 Unit: PAG1

Ev 2 South East Regional Committee: Evidence

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy predecessor, it probably helps to have had a foot in Q6 Chairman: Finally, before I ask one of my the business world and a foot in the public sector. colleagues to come in, you have read our report— That does not necessarily mean that I always essentially, our report and recommendations would understand the public sector, but I am probably have referred to your predecessor’s time, but are better oV than somebody who has never worked in there any particular recommendations that you it. disagree with us about or would have taken a diVerent position on than SEEDA did in responding? Q4 Chairman: Do you think that your background Rob Douglas: No. They were all issues that I was not in multinationals will help us to attract more surprised that you had raised. One issue I had been multinational activity into the region? concerned about, which you spent some time on, Rob Douglas: I hope so—that is the simple answer. I and I am not surprised, was, given the dissolution of also hope that I can engage multinationals to try to the assembly, what happens to the other prevent them leaving. In the current climate and in stakeholders and how do they get their voice heard? all the discussions that we have, I understand what That is something that I had talked about when I their issues are. I am already finding that. I have put met SEEDA colleagues before I came back as well— “What is happening?” So, I am not surprised that a lot of focus in my first two or three months on you raised that, which I think is a concern and which meeting representative bodies of business. Those is being addressed. We, as part of the partnership representatives are actually business people in their board, are working to come up with a plan to engage own right. For example, in the CBI there will be a the other stakeholders. couple of CBI oYcials but there will also be people Chairman: I will not leap ahead, because we intend from businesses in the South East. I have found that to question you a little more about that. David, do the experiences that I have had in the multinational you want to come in now? world are ones that—we understand each other. I think that that helps the conversation. Q7 David Lepper: Welcome. Operating with smaller budgets and in a situation where next year is likely to Q5 Chairman: You mentioned the current economic see changes of some kind or another, depending on climate. What is your assessment of how SEEDA the outcome of the general election, there seem to be has performed during the downturn? Have you done mixed views coming from the Conservative party well? Have you enhanced your reputation? Could about the future of organisations such as SEEDA. There is talk of local enterprise partnerships you have done better? replacing them. Others say that we need a strong Rob Douglas: My impression is that some people are regional dimension. How are you able and what sort very pleased with us and some people are less than of plans are you making at SEEDA to respond to the pleased with us. The feedback that I am getting is sorts of changes that you might have to face in terms that businesses feel that SEEDA reacted quickly and of the political environment over the next year? that it took the funding—the £10 million-plus—and Rob Douglas: I am not a politician, and the tried to put it into the system very quickly, right at politicians will decide what structure they want in the beginning when the banking system seemed to be place. I am not going to lobby one way or the other. seizing up. That is before I was involved, but the My view is that something needs to be between the feedback that I am getting is that SEEDA moved national and the local. The PricewaterhouseCoopers eVectively. I am also getting very positive feedback report showed that, just taking SEEDA—I know on the way that SEEDA is working with the you discussed this at the last meeting, but to reiterate Learning and Skills Council, Jobcentre Plus and any it—for every £1 in, £5.60 came back. Our view in other agencies, including local authorities of course, SEEDA is that we must not lose that—whatever to deal with some of the major job losses in the changes are made, the value that came out of those region, whether it was Ford, BMW with the Mini, or interventions has to be preserved, regardless of what Vestas. People were pleased with how we reacted. I the structure needed to deliver that is. I am not have had positive feedback. The smaller budget that taking any particular view on what the structure SEEDA has and the refocusing that we have had to should be; the politicians will decide it. Within do inevitably mean that we have had to pull out of SEEDA, my view is that we just need to get on with certain projects that we were previously supporting, what we do and what we do best. I think if we sit here although we were not necessarily committed to them worrying about what is going to happen, that will in contractual terms. Clearly, it is no surprise that not help the South East very much. Everyone is very people are upset when you have said you are a focused, and the board is very focused on this. We supporter and suddenly you say, “We were a are realistic—things may change, but until they supporter with money and now we are a supporter change, we shall get on and do what we think we but we have no money”. There was evidence from do best. your previous meeting of certain people who were clearly upset about that. I am not surprised, but it is Q8 David Lepper: There are projects that are already unavoidable when you have a smaller budget and under way—you have talked about having to you have to focus. And we have to focus on helping withdraw from some projects in the past—with the South East get through this crisis. The feedback SEEDA support. Taking both the political and that I am getting is pretty positive on SEEDA, yes. economic context, do you see SEEDA being able to Processed: 01-04-2010 20:05:48 Page Layout: COENEW [O] PPSysB Job: 002283 Unit: PAG1

South East Regional Committee: Evidence Ev 3

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy give any guarantee of a general kind to the future of Q10 Gwyn Prosser: Before Pam comes in, you have those projects that you are still involved in? Are you been talking about more bangs for your buck. In confident that there will not be another stage of other words, for every pound that goes into SEEDA, withdrawal from some things during the course of over £5 comes out. That is one view of regeneration the next year or so? and what regeneration agencies should be doing, but Rob Douglas: I think that in the current climate I how do you compare that with meeting the greatest would be foolish to say that I am confident. I think social need? The South East as a whole is still that we are well aware of what we all talk about as relatively prosperous but, as you know, patches of the black hole at BIS. They are trying to fill that hole the South East, and certainly patches of East Kent, in as constructive a way as they can, but the money suVer from gross deprivation. Some might argue— is going to have to come from somewhere. We believe I would argue—that rather than just looking at the that we can make a good case for the South East to simple bangs for the buck, you should be looking at continue getting the funding, but if we find our which areas need the most support. How will you funding reduces, we will have to look at the satisfy that in terms of having £52 million less to commitments and projects that we’ve got. Our spend and 15 per cent. eYciencies and so on? starting point with all of this is that where we have Rob Douglas: Let me take that in two parts. The £1 legal commitments or contractual commitments, we in and £5.60 back includes a value put on reskilling feel very strongly that we must honour those. people, for example, and it includes a value put on Elsewhere, we have to look at everything, as you regeneration. It is quite a complex methodology, would in a business. If you lose a major client in a which one can criticise. For me, it is not that it is £1 business; you have to change your structures and in and exactly £5.60 out; the point is that we put your profiles. We can deal with that, but it is painful money in and get more value out than has gone in. and will be painful for the people we work with. We It is good news for the taxpayer. The second point is are clear where we need to focus, which is on those about making sure that we don’t lose sight of the sectors in the South East that will most help us come statutory responsibility for regeneration, which I out of this recession. While I always wish that think is what you are picking up. We have tried to focus on two diVerent areas within SEEDA. We have SEEDA had more money than it has, certainly more eight diamonds for growth, but we also have four per capita, the reality of being a smaller agency with other areas that we know still need to be addressed: less per capita is that you think carefully where you Hastings and Bexhill, Dover, Thanet and, of course, have put your money and are very focused. There is Ashford. So there is still a focus there. In this current very little spare—there never has been any in climate when it is harder to get private sector SEEDA. I think we have always had quite a good property developers involved, we ask how we can process for working out where our priorities were, regain momentum on several of the regeneration and I feel that we have refined and honed that since. projects in which we have been involved. One of the I feel that I have come into something that is much things that we are doing is talking to the Homes and more focused than when I left it, and that is driven Communities Agency, which has now arrived on the by this smaller budget, and by the need to get the turf. We ask how we can leverage each other’s South East back on the road—although I think it strengths to make sure that we do not lose probably came less oV the road than most other momentum. While we are focusing on the diamonds regions. If the South East gets back on the road, so for growth, it does not mean that we are not still does the rest of the UK. concerned about and involved in other areas of regeneration. There is always the danger with the word “focus” that people immediately assume that Q9 Gwyn Prosser: I echo the Chairman’s welcome to we are focusing on one thing, that it is the priority you. In your annual report, you talked about and we are not doing something else. We have talked restructuring, downsizing and so on. Most of us look before about priority sectors and we immediately get on that as another phrase for getting rid of jobs. Is it people knocking on our door saying that they are a as simple as just getting rid of jobs within SEEDA? sector, not a priority.It does not mean that we do not Rob Douglas: It is not as simple as that—getting rid care about it; it is just a matter of where the majority of jobs is never simple. We have had to lose people; of the resources go, but we are still concerned absolutely. We have lost a mixture of people who about it. were not full-time employees but were on various Gwyn Prosser: Pam, do you want to come in? types of short-term contracts, or consultants. We Pam Alexander: The restructuring was about a lot have lost some core employees, and that is always more than simply the cuts, although it did have to diYcult in any organisation, but we have to live deliver administrative savings that we were targeted within our means. We have taken the opportunity— to make. We really did want to change the focus of perhaps I could ask Pam to say a few words on this the agency,partly because of the recession and partly because she has followed it through from before I got because of which of our interventions we had learnt involved—to refocus the organisation coming out of was the most eVective. To link your two questions, that exercise. Yes, it is painful, and a number of posts in creating an agency that has a very much stronger have disappeared. However, I am satisfied that the sector-based business support agenda, we are structure we now have is fit for the purpose that we looking to treat place still as very important, but the are wanting. I hope we don’t find that we have to cut economy of place. If we can help businesses to thrive back further, but there is some flex in it. in places, we will create better futures for those Processed: 01-04-2010 20:05:48 Page Layout: COENEW [E] PPSysB Job: 002283 Unit: PAG1

Ev 4 South East Regional Committee: Evidence

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy places. Part of the infrastructure of helping business confidence with the people we have been dealing to thrive is what we create in regeneration, but with. What have you done, if anything, to address without the skills and the jobs that will actually that loss of knowledge and experience? make that work, we will not be bringing long-term Rob Douglas: Again, I will ask Pam to answer in sustainable regeneration to any areas. We really detail. But I would say that the people I have met want to make the two new groups in SEEDA: the who have taken on the new positions have a lot of place area focus, and strategy and economy analysis, knowledge. Of course you lose experience when work with the business support and sector focus that people go out the door; I absolutely agree with that, we can get through real critical mass and scale of but I do not think we have raw recruits taking their interventions. Let us look at some of the results. place—particularly in Kent, I think we have a Hastings, for example, is one where we started with number of people, because we have the oYce in the skills base. Only then did we bring in better Chatham, who know Kent quite well. So I would be oYces and places for businesses to grow. If we look disappointed if you found that you did not have the at the benefits that Javelin is bringing to Dover, the same quality of interaction with the SEEDA oYcials infrastructure will make that place have a better you meet in the future as you have had in the past. future. Pam Alexander: We have had a very strong programme of transition. The majority of the people who have gone have gone on voluntary redundancy, Q11 Gwyn Prosser: We travelled on it yesterday. so we have had plenty of time to help to manage that All of the political parties are talking to diVerent process to make sure that we have ensured that the degrees about cutting down on quangos within organisation keeps what they knew and that we have agencies. Is that happening within SEEDA? I am not a good transition into the new teams. There are a talking about cutting out SEEDA as an agency, but number of areas where we have cut back and we will are you looking to pare down the number of be operating diVerently in the future, so for example partnerships and agencies working within the the area teams are now smaller and have one back system? oYce supporting each of the area directors and Rob Douglas: I am sorry; may I ask for clarification? deputies. That will mean a diVerent sort of Do you mean the number of bodies that hang oV us, engagement into the future and that is because we which we fund? need to change the way we work. So I think that Gwyn Prosser: Yes. there are also going to be a number of areas where Rob Douglas: Just before I left SEEDA in 2007, there we will build skills into the future. We already have was an exercise to review our funding of various some training programmes that we are developing, local economic partnerships. We came up with a both for new recruits and for existing members of rationalisation. I can probably ask Pam for the staV. So we are very alert to the need to ensure good details. We scaled back the number. We sought to transition. We have a transition team led at director reprioritise. Apart from those, our funding of level to make sure that as people move up we are Business Link and Finance South East has been a making sure that the work is properly moved major success. Business Link, in particular, has forward. become leaner and more eVective in the year since it moved from central Government to us. We are Q13 Gwyn Prosser: Lastly from me, in your rather proud of that, and we are just moving to a new introduction, Rob, you talked about your overseas contract with Business Link. contacts and your travel. Do you still maintain those Pam Alexander: Which, of course, will be moving contacts on a business level or any other level now? from six organisations to one. It is quite a good Rob Douglas: Yes. I moved from working in one of example of what you are talking about. We hope that the world’s biggest multinationals to working in with Serco we will make major economies of scale essentially a one-man band: my company—Douglas and eYciency, as well as getting a better service for Associates—you have it here before you. Of the businesses. Another example might be the work that I do, about 70% is overseas, either in the innovation and growth teams which have brought USA or mainland Europe. That gives me the chance together in locally based and locally run to continue, if you like, meeting people and partnerships a number of diVerent tools and businesses outside the UK. interventions that we have used in the past, such as the enterprise hubs and the Innovation Advisory Service. We have brought them all together into one Q14 Chairman: I hope the name of your company service with which business can engage directly. reflects your own name and not the town in which you have your tax status registered. How are you getting on with the leaders’ board? Q12 Gwyn Prosser: Some of the individuals within Rob Douglas: We have not had a meeting of the SEEDA, whom I have had regular contact with and leaders’ board as such, but we had a workshop of the who have been involved in projects in my partners. I thought it went well. In my last constituency and other parts of East Kent, have lost incarnation as a board member on SEEDA, I met all their jobs and moved on. We understand the reasons but one of the current leaders of the shire counties for that. You explained that. With those people and many of the other district and unitary authority going, you lose a huge amount of on-the-ground leaders. Once we had got beyond the initial sort of experience and knowledge of the business. Indeed, political hostility, my impression and my experience from our point of view, we build up a certain has always been that people roll their sleeves up and Processed: 01-04-2010 20:05:48 Page Layout: COENEW [O] PPSysB Job: 002283 Unit: PAG1

South East Regional Committee: Evidence Ev 5

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy we get on and do business. I have found the leaders the whole region from higher education, local very pragmatic. I found out at this workshop—we authorities and so on. That is an area of particular had a very good, robust discussion—that there was interest to me. not a single view from the local authority leaders at Chairman: I did say that we would come back to the that event, either. It was a workshop just asking what question of stakeholder involvement. We have now were the main issues that we needed to address and come to that bit. pick up at the partnership board and at the strategy board. I thought it was very constructive and I have Q16 David Lepper: You spoke earlier about your no reason to believe that we will not manage a concerns and said that consultation and engagement constructive conversation. with stakeholders would be an important feature of the new arrangements, and that that feature is unequivocally supported by SEEDA. You are Q15 Chairman: What contribution do you think the working to a timetable on preparing the statement of partnership board is making towards the production policy on community involvement. How is work on of the single regional strategy? that progressing? Rob Douglas: As I say, I have not actually been to a Rob Douglas: There was a technical consultation partnership board yet, but there was a meeting of the with people who had been closely involved with the strategy board that seemed to me to come up with a production of the South East plan and the RES. We timetable and an approach. There was nothing in have the feedback from that and I may ask Paul for there that rang warning bells to me, but until I have the precise details. I think we are working towards chaired the first partnership board it is diYcult to April 2010 to produce the details of the consultation answer you in more detail. I do not know whether it process. I will ask Paul to comment on that. is worth asking Paul to comment on that. Paul Lovejoy: Yes, we are required to have a Paul Lovejoy: At an oYcer level, good progress is statement of community involvement in place by being made in preparing the evidence base, which April, and we are well on track to beat that was the key element in the work programme for this comfortably. A full draft proposal was taken to the year. That brings together the skills and experience strategy board that met on 26 November, and it will, of SEEDA with the staV of the former assembly who with further development, be taken to the were working through the partnership board. This is partnership board, which meets in February. a time when all parties involved need to recognise Stakeholder representatives are involved in a that the evidence base informing a new strategy number of those structures, so, outside that, we have looking forward 20 years cannot be based simply on been meeting more broadly with stakeholders as a extrapolating past trends into the future. This is a group. I led a meeting with a group of stakeholder time to think about the significant changes we have representatives last week and we have agreed a seen over the past 12 months and beyond, and what number of steps to take. For example, the they mean for the region looking ahead a generation stakeholders originally thought that an annual or so. We also need to reflect on the development conference might be the way forward, but it seems to prospects that emerge from that. Work on us that it would be more sensible to oVer at least the developing those think pieces—the work that will prospect of gathering a broad grouping of shape the evidence base—will advance. We would stakeholders together on a quarterly basis to open expect to have those in place, to discuss them widely up the process and to deepen the engagement right and to shape them with strong stakeholder from the word go. To a degree, I think that reflects involvements in the months following the Christmas a learning point. Perhaps with the inevitable hiatus and new year break. following the ending of previous arrangements and Pam Alexander: If I might add, since we last met in the run-up to the Bill’s becoming an Act, there has with you, we have, in addition to the regional been a certain pause in some strands of work in the transport board and the regional housing and eyes of some stakeholders. Because it is a key regeneration board, set up the economic commitment to us, and because it is so important to development and skills board. That will be us to reinvigorate that, we need to be seen to take particularly important in creating the regional skills positive action now. We met last week, and we are strategy, which will underpin the single regional again meeting the steering group early in the new strategy, as well as in taking forward all the other year. We expect to hold the first broad stakeholder aspects of economic development that the delivery session—involving probably 200 or 250 or so board of the regional partnership will address. delegates—by the end of the first quarter of next Rob Douglas: May I add to that? You asked me right year. at the beginning to diVerentiate areas and my own involvement compared with my predecessor. I have Q17 David Lepper: You hinted at slightly diVerent been heavily involved in talking about how we react views or approaches by some of the stakeholders. to the direction coming out of the Department for The three main groupings that exist are the business Business, Innovation and Skills on the skills agenda community, the third sector and the trade unions. I and the role of the Regional Development Agency. I assume that the leaders’ board is dealing with the have been working with my SEEDA colleagues on local authorities. Are there diVerent approaches the economic development and skills board on how between the three broad sectors, or do they have we make sure that we get the right input from across diVerent responses to the way things are going? Processed: 01-04-2010 20:05:48 Page Layout: COENEW [E] PPSysB Job: 002283 Unit: PAG1

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15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy

Paul Lovejoy: Yes. I can give a brief answer, and can have real-scale impact, and then where are the perhaps elaborate if you want me to go further. areas where we can help local authorities to drive There are, I think, clear diVerences. Taking the three more local initiatives. broad thematic groups, our characterisation would be that the environmental stakeholders are an Q19 Mr. Smith: Do you maintain good co-operative extremely well organised, cohesive group with strong arrangements with other organisations that are well regional representational roles. They have been able placed to advise business on the transition to a low- to adapt to changing arrangements with a fair degree carbon future? Have you got examples of that? of consistency and capacity. To a degree, that is there Pam Alexander: We work with the Carbon Trust and with the social partners. There is a regional all the main advisers that businesses can go to. We infrastructure organisation that plays that role. The are also working with the European Investment sheer scale of the sector means that we will be talking Bank, which is very keen to invest in this area, and about many tens of thousands of organisations, and we are trying to link through diamonds a that means that there is a real challenge in delivering programme that could bring diVerent sorts of impact meaningful engagement that people can recognise to diVerent towns across the region. I don’t know and feel a part of. As for the economic stakeholders, whether you want to say anymore about that, Paul. in one sense that is a clear cohesive group. The Paul Lovejoy: That is a good example of challenge has been to bring two overlapping and collaborative working with local authorities. The parallel structures together into one. The assembly diamonds for investment and growth represent the had an economic stakeholders grouping. The region’s leading urban areas. They are the areas regional economic strategy and the SEEDA where there is a very strong interest in and, structures had close relationships with a range of obviously, ability to help shape the impact on the business organisations. Those two did not always region’s carbon footprint. It is a very welcome entirely connect, so there has been a degree of development that the local authorities at the core of selection and a slimming of that group. We should those areas have sought to shape their ambitions to not forget that outside of those three, the town and exceed the regional targets for addressing the parish councils across the region would argue that ecological footprint, and to move very quickly they are a fourth strand in this and that they would beyond a broad statement through to practical need to be represented if anything evolved. policy measures that look very diVerent in diVerent towns and cities but which add up to a practical Q18 Mr. Smith: Welcome. Sorry I missed the very programme that addresses that issue and provides beginning of the presentation; I was on a Statutory opportunities to learn across the network—and, Instruments Committee that overlapped with this indeed, to extend those lessons beyond the major one. Moving on to the environmental context and urban areas. the challenge of climate change, which is obviously Pam Alexander: The other example, of course, very topical with Copenhagen going on at the would be the greater South East. We are working moment. What are you doing to ensure that the very much with the other RDAs in the Thames South East remains competitive, or is even more gateway on the Institute for Sustainability, which competitive, in the low-carbon future ahead of us? will promote a low-carbon approach for the whole Rob Douglas: Many of the industries that we have in Thames gateway and give some real demonstration the South East are well placed to contribute to that models of how one can retrofit buildings, looking at low-carbon energy world. If you look at the sectors ports and logistics and the implications there, and of that we are prioritising—advanced engineering, for course working in London with the Mayor’s agenda example—a lot of the breakthroughs that will be for low carbon. So in that way we are creating needed will be in that sort of area. The priority critical mass across the whole of the three regions. sectors that we have picked are ones that we can help Rob Douglas: The other obviously very specific develop to meet that challenge. We have to meet it. example is the new Mini E in Oxford, where we have I am acutely aware—and I know that we have put in some funding. discussed it in this Committee before—that we need Mr. Smith: There was an event at 10 Downing Street three planets to carry on at this level of today, where a couple of recipients had the keys to a consumption. It is something that the board feels car, and it was all very welcome. strongly about. We need to make sure that we Moving on to the broader— respond to that and take the business opportunity Chairman: Before you do that, and while we are that it oVers. boosting our constituencies, I just put on the record Pam Alexander: May I just add that one of the things that the London Array contracts were all signed that we feel that we can do is create the scale, the today, so that the biggest wind farm in the world is critical mass, to bring programmes forward that will to be built in the Port of Ramsgate. have real impact? We have a £2 million programme of initiatives. That may not seem like very much Q20 Mr. Smith: Against the broader current money, but by bringing people together and creating business environment, what is your general view on partnerships focused on, for example, diamonds, we how businesses across the region are doing right plan retrofitting programmes, which will help local now? authorities to bring that sort of approach in areas Rob Douglas: Let me make some introductory which can then be rolled out across the region. What comments and then perhaps pass over to Paul if you we are looking at is which are the interventions that would like more detail. The messages that we are Processed: 01-04-2010 20:05:48 Page Layout: COENEW [O] PPSysB Job: 002283 Unit: PAG1

South East Regional Committee: Evidence Ev 7

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy getting from industry are, as you would expect, very are a successful business in an area of discretionary mixed. Some sectors are doing better, others are not. spending such as hospitality or the leisure industry I know that that is very general, but there is no clear then as a business leader you will be able to argue trend in any one direction, in my view. We seem to that you know your business very well and that you have got to the bottom of the de-stocking, but there can see reasons why a particular business plan will is a lot of worry among industry that this may be a succeed. If you look at that same business plan from bounce. They are not confident that it is finished. the perspective of a bank that will look at it with The other issue that concerns me a bit is that I think some concern if it was spend in the discretionary the South East managed the initial recession quite sector, you may feel that you are not able to share well. A lot of people were not shed but put on short- that confidence and make that same leap of faith. So time working, but a lot of those arrangements are there are tensions there. coming up for review at the end of the year, early in While the sense of what is commonly called “red the spring. We just have to wait and see whether lining” tends to move around, right now there is companies feel that they need to renew them or certainly concern in some sectors and activities that whether they actually need to shed some people. banks are taking an overly cautious view of That is a debate that is still going on. Perhaps I could prospects in that sector. Banks are responding by pass over to Paul for more detail, if you like. saying that they have to take a conservative Paul Lovejoy: I can give that briefly.Our overall view approach given the need to rebuild their capital base. is that while, as we know, the results for the third It is not an easy one to square. quarter as a whole were less strong than what we Pam Alexander: It may be worth saying that we have hoped for, by the end of the third quarter there were now had three meetings of the South East Financial the first signs of an upturn, certainly in terms of Services Forum, which is a new forum that I chair forward orders and investment, and we have seen that brings together all of the banks in the South that continue through the current quarter. The East with the providers as well. So, for example, leading indicators that we put great store by, which Business Link comes to the meetings, which helps us are supported by the RDAs and are produced using to talk about how we can bridge and resolve that the purchasing managers index—it provides a tension where businesses are having problems forward look, taking a three to six-month view— dealing with their banks because the relationships have continued to strengthen through the last are not as good as they used to be. Business Link has quarter. Those are encouraging signs. There are provided an intermediary service to look at business signs that in the past few months strength has tended cases that are being put forward and in many cases to come particularly from the region’s to help the businesses to improve them. So there is a manufacturing base. We need to see that spread to real issue of quality and demand, as well as some of parts of the service sector for there to be a strongly the problems that we have in the supply chain. That rooted and genuine position of recovery. Looking is something we have focused on also in the South beneath that, there are still some significant areas East Economic Delivery Council, which Rob co- that we need to focus on. There are causes for chairs. Peter Ibbetson came to talk with the business concern. Overwhelmingly, businesses continue to member organisations about some of the diYculties. report that accessing finance, the rate that they pay There is a dialogue going on but, as Paul says, some for it, and the processes they must go through to of these are really tricky issues to resolve. attract and retain those facilities continue to cause problems—not perhaps at the scale that we saw when the capital markets froze up in the last quarter Q22 Mr. Smith: May I ask about one sector that we of last year, but there is still a very definite concern, have not touched on? The tourism and leisure perhaps particularly focused at the small and industry is very important across the region. Has it medium business area. That continues to be an area been able to take advantage of the relative value of of dialogue that we have to focus on with banks the pound to attract overseas visitors? Is there across the region. evidence that that is helping the recovery in the region? Rob Douglas: Can I make a comment on that? I had Q21 Mr. Smith: That is very interesting. This was lunch yesterday with the chairman of Tourism South going to be my next question and you have partly East. What is coming through, not particularly from answered it there. When you get on to the banks, conversation, is that the business conference market, what do they say to you—“We’re too busy thinking if you include that in tourism, has slumped rather. about our bonuses”? But tourism benefited from those who stayed at Paul Lovejoy: Strangely enough, that has not arisen. home—the “staycationers”. Although it is still a bit The bank’s response will be that this is a very diYcult fragile because of the loss of the business side, the climate in which to continue reliably their loan book people staying in the UK have helped. It is such a in a way that means they are not exposing themselves major industry in the South East. I spoke earlier to risk. They will argue that they are in a period about sectors who asked why they were not in our where they are required to rebuild their own capital priority list. Tourism is a good example of one which base and that means that while they must continue is a £12 billion value industry in the South East. and are committed to continue lending, they must do Mr. Smith: A job-intensive industry. so in a way that has regard to their portfolio risk. Rob Douglas: Absolutely. It employs something like Around that there are certain discussions about the 300,000 people in the South East. I think it is the fifth attitudes that are taken to particular sectors. If you biggest sector. Processed: 01-04-2010 20:05:48 Page Layout: COENEW [E] PPSysB Job: 002283 Unit: PAG1

Ev 8 South East Regional Committee: Evidence

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy

Q23 Chairman: While we are on the subject of case, we’re reviewing the project to see whether we specific sectors, English as a foreign language is an can manage it by bringing it within our limit, but it important sector for many of us on this Committee. does tend to skew decisions that perhaps would be Can I encourage you to look at the issues to do with made on a diVerent basis if we could make them the review of tier 4 immigration rules and make ourselves. appropriate representations to the Home OYce on behalf of the English language schools across the Q25 David Lepper: I didn’t want to dwell on the region? project, but you’ve talked about the diVerent levels Rob Douglas: I think the visa issues generally are of of appraisal. Do you see any sign of Government great concern. Your point is well taken. being willing to look at that issue? I’m talking not about the particular project, but in general. Q24 David Lepper: As chair of the all-party group on Pam Alexander: I understand that. We’ve not had English language teaching, may I echo what our any positive feedback, if I can put it like that. Chair has said? The review that the Government David Lepper: That’s very diplomatic. announced, unexpectedly, of the visa system in the Pam Alexander: But we never give up hope. middle of November has generated more correspondence for me, as a constituency MP, than Q26 David Lepper: May I take us on to something any other issue except climate change this year, and that we have touched on, I think—the approach of it has generated that correspondence in the course of SEEDA to regeneration of deprived areas? The about three weeks. There are real worries out there point was made to us quite forcefully by in the sector, so any representations that you can representatives of 1066 Enterprise and Hastings make to Government would be very welcome. May council about the sometimes long time scale of I ask about the funding formula and the relationship regeneration projects before they begin to show their between RDAs and Government in decision true worth. Has the approach of SEEDA been making? We recommended, in our report, that there changing towards projects in deprived areas? should be a review of the funding formula—the £10 Rob Douglas: I think I might ask Pam to answer million limit above which Government approval is that. necessary. Again, it’s something dear to my heart as Pam Alexander: As I said earlier, the answer is yes it a constituency MP,because the long-running saga of has. Before I explain how, perhaps it is worth saying the Brighton centre is a classic example of the that one of the most important things to understand problems with that process. I know SEEDA says about regeneration is that it is a long-term business there are no plans to review that system, but I and that unless you aim for long-term benefits, wonder whether your view is that what can cause short-term benefits will not be sustained. Hastings is problems is the £10 million limit above which an excellent example of that because we had a 10- Government approval is necessary, or the process year plan, which we are now six years into. In the that has to be gone through where Government first few years, we had little to show in the way of approval is necessary, irrespective of what the limit success, although we quickly had University Centre might be. Hastings. The enormous impact that has made on Rob Douglas: I will ask Pam for the detailed reply. I the skills aspirations of young people in Hastings in think in the current climate, with the problems that just three or four years is absolutely extraordinary. Government have with this black hole, asking them We now see after six years that we have doubled rents to give us more scope will not be met with a great in Hastings. That is a good thing, because they were deal of success. That’s just being realistic. Against very low. It means there is now a market. We have that, I would have to say if you demonstrate that you seen incomes rise from 69% to 74% of the regional spend responsibly and eVectively—we are good at average, which is pretty impressive in six years. As delivery in SEEDA—most organisations would long as one recognises that it is a long-term objective, recognise that and say, “We’ll trust you.” I just see we can still make impacts in the short-term. The new two diVerent tensions here, but Pam is at the sharp environmental technologies business park, which is end of this. being built at the moment, and which has brought Pam Alexander: We’re familiar with the case you real private investment into Hastings that had not refer to. In fact, this doesn’t aVect us as much as been seen for many decades, is another example. many other RDAs, because we don’t have enough Once we can get beyond a tipping point, it will take money to spend a lot more than £10 million very itself forward. Despite the economic climate, we are often, but we are, as a group of RDAs, constantly seeing good inquiries for that business park. We are putting the case for a higher limit. I believe the LDA determined to make sure that it maintains the has a higher limit and it’s certainly a point that we’ve quality of being an environmental technologies put to Government many times. You make the point park. I am not sure whether I answered your second that if we could get the process more streamlined, question. that might make it a less painful process, even if we David Lepper: I think you have. There are some do have to go to the centre for approval. That’s projects that you have had to withdraw from. almost true of any process, isn’t it? So there’s no Pam Alexander: We have been looking in the refresh question—we shouldn’t try to do that. The diYculty, of the corporate plan to achieve critical mass and though, is the number of diVerent appraisals one has impact intervention that really focuses on business to go through to get a central approval. That’s support and bringing the sectors of business that inevitably going to cause delay. As you know, in this could drive us out of the recession. Yes, we have been Processed: 01-04-2010 20:05:48 Page Layout: COENEW [O] PPSysB Job: 002283 Unit: PAG1

South East Regional Committee: Evidence Ev 9

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy very clear that the regeneration infrastructure in Q30 Mr. Smith: It is an interesting comparison that which we invest in future will be business-critical you make there. Broadly, what are the factors at infrastructure. That may mean that we will not take work in the remarkable rise of those regions up the forward some of the more culturally led or public table and in the South East sinking down? role-led projects that we might previously have been Paul Lovejoy: What comes through from the able to invest in ourselves. That does not mean that analysis, and we have had observations from those we won’t be willing to oVer our expertise and doing business in those regions, is that both of those collaboration to the partnerships that we are are regions that have a broad range of sector working with. strengths, which will often encompass the same areas. So in both of those regions we see a very strong representation of environmental technologies and Q27 David Lepper: If I could come on briefly to the services, and aerospace, supplemented by defence in question of other partners, perhaps it varies from the case of Greater Washington. However, there are project to project, but is there a diYculty in the strengths in value-added services relating to the current climate of finding partners or of partners university sector. Those are strengths that, to a coming forward to take on some of the role that degree, are replicated in the South East, on diVerent SEEDA might once have had? scales and often in very diVerent climates and Pam Alexander: It is obviously diYcult when money circumstances. But there are suYcient similarities is short for all organisations in the public, private that, for example, we can point to inward investment and voluntary sectors. The answer to that is to successes recently from both Kanagawa and achieve common purpose. That is what the regional particularly from the Greater Washington-Fairfax economic strategy enables us to do. For example, we County area in, for example, enabling the major have worked with the Homes and Communities inward investment by Boeing in the South East. So, Agency, which has taken over some of our while at one level those regions are clearly very programmes—the Brownfield Land Assembly diVerent and are on diVerent trajectories that reflect Company, for example. We work with local diVerent cultural backgrounds and the very diVerent authorities that are able to take ownership of others, situations applying in those economic blocs, at the particularly the skills and employability projects. We same time there are strengths and similarities that we have been working to identify in the corporate world can build on to enhance the position of the South where we can get real focus from those of our East. Also, we can remind ourselves of what other business colleagues who are willing to take on successful regions in other parts of the world are programmes. We have a new corporate cabinet doing, so that we can learn from them and adapt programme where the businesses themselves are where it is appropriate. taking forward the programmes. The very fact that Rob Douglas: Can I just add something to that? This we can define so clearly how the regional economic analysis was first done in about 2001. The SEEDA strategy applies to a number of diVerent board at the time spent quite a lot of time studying organisations enables us to make those new this, because at that point we were further up so we partnerships work. thought that it was an excellent system. You make the point that gradually we have seen ourselves slip Chairman: We had some queries in our report about down. I have not gone into the methodology in whether we were benchmarking ourselves against detail, but something like 19 indicators are brought the right countries. Mr. Smith has some questions. into play. All those building blocks are present in the South East. We have no obvious gaps. We just need Q28 Mr. Smith: You mentioned two particular to be better at the building blocks. But you don’t regions among a number of others for look at it and say, “Oh my God, we’re missing benchmarking purposes: Kanagawa in Japan was something that is critical”. one and Greater Washington was another. Are they broadly in the same economic position as us and Q31 Mr. Smith: I am sorry to interrupt. In forecast to recover at the same rate, or are they comparison with other highly competitive regions, doing better? how much is our ponderous infrastructural planning Rob Douglas: I am afraid I will have to pass on that. system a drawback? The Government is addressing It is for Paul as to whether they are in exactly the that obviously, through the report. same position. Rob Douglas: There is no doubt that infrastructure Pam Alexander: Before Paul comes in, may I say that is a key issue. When I have my conversations with in the latest competitiveness index, Kanagawa has businesses, the message that comes back about what jumped up 57 places and the South East of England their problems are and what may deter continuing has fallen 19 places? So we think that it is quite inward investment—because with the important that we continue to— multinationals, they are adding to the investment that is already here—there are two things that they have been saying to me: infrastructure in the South Q29 Chairman: So are you taking the blame for that? East and the skills agenda. On both of those, I think Pam Alexander: There are a number of reasons for that you will see that a number of the regions have that, one of which is that there are eight new regions. leapfrogged us, which is a weakness. On other However, I think that it is really important that we things, we have shown that we are quite strong. For keep looking at those regions that are doing well. example, on employment rate levels, we are up at 10, Processed: 01-04-2010 20:05:48 Page Layout: COENEW [E] PPSysB Job: 002283 Unit: PAG1

Ev 10 South East Regional Committee: Evidence

15 December 2009 Rob Douglas, Pam Alexander and Paul Lovejoy

I think. But infrastructure and skills are the ones businesses and that we have evidence that we can where we really have not got it together. Paul bring to show that we have done has made a touched on the point about ensuring that we get HE diVerence to those businesses. fully integrated into this agenda, because we have such a powerful HE sector in the South East, but it I hope that, through those innovation and growth is a bit haphazard and dependent upon personalities teams but also through working with UKTI, we will as to how strongly it interacts with business in this have brought in promises of, and ideally physically particular climate. arrived at, more foreign direct investment. So I am confident that we have a strong agenda to pursue and I am also confident that we have in place the Q32 Chairman: This hearing has been in the nature, I organisation that should be able to do it. I have been suppose, of “Rob Douglas: the first 100 days”. Next talking to the board as an incoming chairman. I have Christmas, when we are sitting here and we are doing had one-on-one conversations with all my board “Rob Douglas: the first year”, what do you think we members and we are all very clear that we are should be looking back on? What do you hope to see absolutely behind this current agenda of SEEDA SEEDA achieving in the next 12 months? and we will make sure that we work as a board in Rob Douglas: In very specific terms, I hope that we that sort of critical friend role to ensure that the will have addressed this skills issue; we will have got Executive delivers it. the regional skills plan as part of the regional plan. I Chairman: If none of my colleagues has anything am excited by this idea of a coherent single plan. I further to ask, it remains to thank you for coming. I think that it makes a huge amount of sense and I do not think that you will be away from us for long, have got well down the track of that. I think that it because we have just agreed to do a report on is April 2011 that we are supposed to produce the housing in the South East. I suspect that you will plan, but there has to be the draft and everything want to have some input into that, so we will be there before then. So we will have got that out in a seeing you before long. I wish you a happy holiday, coherent form. I hope that our innovation and I wish my colleagues happy Christmas and I wish a growth teams will have really started to help some of very happy Christmas to all the support team, the the good businesses in the South East to be better Clerks and Hansard.

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