HC 1067 Published on 3 November 2009

by authority of the House of Commons London: The Stationery Office Limited

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House of Commons

East Midlands Regional Committee

East Midlands Development Agency and the Regional Economic Strategy: Government and East Midlands Development Agency responses to the Committee’s First Report of Session 2008–09

First Special Report of Session 2008–09

Ordered by The House of Commons to be printed 28 October 2009

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 Heppell 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_publications.cfm

Committee staff

The current staff of the Committee are: Adrian Jenner (Clerk); Ian Thomson (Inquiry Manager); Emma Sawyer (Senior Committee Assistant); Ian Blair (Committee Assistant); Anna Browning (Committee Assistant); and Shireen Khattak (NAO Adviser).

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: regionalcommittees@parliament.uk.

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First Special Report

On 29 July 2009 the East Midlands Regional Committee published its First Report of Session 2008–09, East Midlands Development Agency and the Regional Economic Strategy (HC 406). The Government’s response was received on 2 October 2009 and the East Midlands Development Agency’s response was received on 29 September 2009, and are published as Appendices 1 and 2 to this Report.

Appendix 1:Government response

Introduction

We are grateful to the Committee for its inquiry into the East Midlands Development Agency (emda) and the Regional Economic Strategy (RES). We have considered the Committee’s comments carefully and provide our responses to each of its conclusions and recommendations below.

Recommendation 1

We hope that political disagreements regarding the establishment of Regional Committees will be resolved and look forward to welcoming opposition Members to the East Midlands Regional Committee. We welcome the establishment of the East Midlands Grand Committee. (Para 2)

Response

We agree with the Committee. Regional select committees are a vital means of holding regional agencies to account. We believe that the regional select and grand committees that have taken place so far have demonstrated the value of robust debate at the regional level.

Recommendation 2

The East Midlands Development Agency (emda) has a key role in driving and co-ordinating regional economic development. We notice that witnesses have expressed varying levels of awareness of its role in the region. We urge emda to improve its marketing and communication in order to further awareness of its role, and to make businesses better aware of the support it can provide, particularly during the current economic climate. (Para 10)

Response

The Regional Economic Cabinet, chaired by Phil Hope, Regional Minister will continue to encourage emda’s regional partners to work with emda to help raise awareness of all the help that is available to people, communities and businesses.

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Recommendation 3

emda was originally established to provide strategic economic leadership in the region. Since its establishment it has taken on a large number of additional responsibilities and has moved away from its original strategic role, becoming responsible for the delivery of a number of grants and European Regional Development Funds. We note the concerns raised by witnesses that this may cause emda to lose its business focus and urge it to ensure it remains intent on its economic focus. (Para 16)

Response

Additional responsibilities were added following strategic reviews by Government. We are confident that emda has the capability and capacity to deliver its new role. emda’s overall objective remains to help to achieve the Regional Economic Performance Public Service Agreement target, which is crucially important in the current climate. There was widespread recognition in the sub-national review consultation that an integrated regional strategy to promote sustainable economic development was the right way to go. RDAs will work in conjunction with Local Authority Leaders’ Boards to deliver this, allowing them to share experience and capacity.

Recommendation 4

emda’s board members are chosen by Ministers in the Department for Business, Innovation and Skills. We note that they are chosen on an individual basis and not as representatives of organisations in the region, and so are not formally providing sectorial and wider expertise for emda. 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. We recommend that the Regional Minister should now take the lead role in board appointments, and should consult with stakeholders in the region and the full range of relevant Government Departments. (Para 24)

Response

In accordance with the Commissioner for Public Appointments Code of Practice the final decision on whom to appoint rests with the Minister for BIS. The Commissioner stipulates the level of involvement in her Code for the Regional Minister. In line with this, the Regional Minister is consulted on the specification, asked to put forward names of potential applicants as well as giving advice to the Minister on the strongest candidate to appoint in the posts to be filled, based on merit.

Regional stakeholders are invited by the relevant Government Office to participate in the consultation exercise on key documents and asked to offer names of any potential candidates.

Recommendation 5

The first Regional Economic Strategy for the East Midlands in 1999 set an ambitious target for the region to be a top-20 region in the EU by 2010. We congratulate emda on its work

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towards that goal, commend its regional priorities and fully support its continued vision and ambition for the East Midlands to be a flourishing region by 2020. (Para 28)

Response

We agree that emda should be congratulated on its record of success and the progress made towards the vision of the first RES. We also welcome the recent independent evaluations that show the positive impact of the work emda carries out within the East Midlands.

As the Committee states the two evaluation reports state that emda adds significant value to the region’s economy. The lower estimate (by PWC) concludes that for every £1 spent by the RDAs, an average of £4.50 of economic output (or GVA) was put back into the regional economies, while the Ecotec report puts the figure at around £9. Both reports provide evidence of the vital role the emda and the other RDAs play in driving forward economic performance.

We would re-iterate that whilst emda is responsible for leading on the RES, the whole region has a responsibility to see it delivered. Government will therefore continue to support the strong partnership work that is required to achieve the vision for a flourishing region by 2020.

Recommendation 6

The Regional Economic Strategy (RES) is owned by the region, and emda alone cannot achieve its objectives. It is therefore vital that key partners are brought in early to develop the RES, ensuring that they feel they have an investment in working towards the region’s goals. While some sectors have spoken of the close working relationship they have with emda, there is a perception that it did not consult sufficiently with some key sectors, such as micro businesses, trade unions and the environment sector, and some witnesses felt they were involved at too late a stage. We urge emda to establish and maintain improved relationships with key partners in the region, whilst continuing to make use of the strong links it already has with many sectors. (Para 36)

Response

We agree with the Committee regarding the importance of consulting and engaging with a wide range of partners. However, in response to the criticisms made by partners we would point out the positive nature of the recent independent assessment (by the National Audit Office) of emda’s approach to consultation and partnership working.

The 2007 Independent Performance Assessment noted the wide and inclusive consultation process that emda ran for the Regional Economic Strategy and agreed that “the innovative approach adopted has paid off … the majority of partners and stakeholders we spoke to and contacted felt that they had played a role in the development of the RES and that their suggestions had been listened to and acted upon.” [ref p. 6 IPA 2007]

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It also noted that “emda has a good reputation for engendering partnership working … emda is perceived as a much more mature organisation in terms of its own partnership working and that it is very good at bringing others to the table and helping other organisations work together”. [ref p. 7 of 2007 IPA]

We would point out that whilst some of the concerns raised during the Inquiry relate to engagement during the formulation of the RES, emda is now looking forward with its partners to arrangements that will be needed to develop the new Regional Strategy. emda is already planning—with the Leaders’ Board—how it will engage with stakeholders in developing the Regional Strategy and held a well attended stakeholder event in July this year to begin this process. Whilst it will be important for emda and the Leaders’ Board to build on what has worked well in the past, the nature of a single integrated strategy means it is right to take stock and consider what will work best for the region in the future.

Government is confident that the approach taken will be in line with its guidance, which has clearly stressed the importance of engagement with stakeholders. The current Local Democracy, Economic Development and Construction Bill sets out a requirement for RDAs and Leaders’ Boards to prepare, publish, keep up to date and comply with a statement of their policies on involving those persons who appear to them to have an interest in the Regional Strategy. Draft guidance makes it clear that Government expects ‘involvement’ to include the opportunity to engage and participate in shaping the Regional Strategy and we are confident that emda, with the Leaders’ Board, will take account of the Committee’s comments when considering how to comply with these requirements.

As well as a role for emda, we suggest there is also a role for regional partners to ensure that they are well organised and able to engage effectively with emda. We also recognise that Government itself has a role to play and acting through the Government Office for the East Midlands we will provide constructive support and challenge to emda, the Leaders’ Board and their partners wherever possible.

Recommendation 7

The range of data and statistics that emda has to gather is immense. While we acknowledge the large evidence base used by emda to underpin the current RES, which it commissioned from academics and universities, we urge emda to utilise fully the expertise and knowledge of its regional partners on data collection and analysis. We also urge emda to examine its procedures so that emda can make informed decisions based on accurate and timely data. This should ensure that emda uses a variety of sources of information and analyses, not just the large evaluation studies it commissions. (Para 42)

Response

We agree that there is a clear need for emda working with the Local Authority Leaders’ Board to engage with its partners to develop a credible, robust and timely evidence base for the new Strategy and for its wider business decisions. We agree that the new Regional Strategy requires collaboration with an even greater range of partners than the RES.

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We believe emda is well placed to deliver here, given its existing expertise on research and intelligence and track record of working closely with partners on developing and sharing intelligence and information, for instance through Intelligence East Midlands.

We note that emda has recently published an updated RES evidence base for consultation and is seeking views from all stakeholders in the region in order to ensure that this is the best possible evidence base for informing future work. This will be an important building block as partners move towards an evidence base for the single regional strategy and GOEM is encouraging regional and local stakeholders to respond to the consultation. emda is also working closely with the Regional Assembly on the evidence base in use for the partial review of the Regional Spatial Strategy.

We also note the work that emda is undertaking to support local authorities in the region to prepare for the proposed duty to carry out a Local Economic Assessment. Subject to the passage of the Local Democracy, Economic Development and Construction Bill, this duty will be introduced for county and unitary authorities from April 2010. emda has been meeting regularly with these councils for the last year, offering support and seeking agreement for ways in which the local assessments can contribute to the regional evidence base. This will provide a ‘bottom-up’ view and increase the range of information and evidence that emda and the Leaders’ Board take into account as they begin work on the single regional strategy.

Recommendation 8

emda was the first Regional Development Agency to commission an independent evaluation of all its activities and we welcome its findings. This was a ground-breaking piece of work carried out by Ecotec and highlighted the significant impact emda has had on the region. We are also reassured by the conclusions of the National Audit Office and PricewaterhouseCoopers reports, and all provide a positive endorsement of emda’s work and its benefits to the regional economy. (Para 49)

Response

We agree with the committee in welcoming the findings of the evaluation and the approach that emda has taken. The Department for Business, Innovation and Skills has used the work carried out in the East Midlands to inform the approach taken for the national evaluation of RDAs that reported in March this year.

Please refer to our response on recommendation 5 as regards the value added to the regional economy by emda.

We also note that emda is already putting to use the evaluation findings in informing its decisions about future priorities and spending, which will help it become even more effective.

Recommendation 9

emda has taken positive and effective steps to provide support to business. We are concerned to hear from witnesses that awareness of Business Link and its services is not as

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good as it should be. We urge the Government, working with emda, to improve its marketing and advertising in the region, to ensure that businesses are aware of the services they can access. (Para 59)

Response

We are aware that emda will respond direct to the Committee on its own marketing plans. We agree that the wider Government family also has a role. Nationally, there has been significant progress made during the last two years in bringing greater clarity to the business support that is funded by Government. The new Solutions for Business portfolio of 30 business support products delivers on the Government commitment to reduce around 3,000 different products to less than 100, responding to business requests for simplification. Business Link now forms the gateway for all publicly funded business support.

At the regional level, emda had already simplified its business support offer, from almost 400 schemes in 2006 to less than 50 in 2009 and is now working with local authorities and others to align its products under the national Solutions for Business brand.

Turning to the Real Help Now package of support, the Regional Minister Phil Hope has regularly tasked members of his Regional Economic Cabinet to promote the support that is available and they have responded positively to these calls. The Regional Economic Cabinet has come together around the principle that public, private and third sector partners all share responsibility for supporting the region through the recession and in preparing for the upturn. We welcome the steps partners have taken to assist emda in promoting the available support.

However, regarding the services that Business Link provides, we would bring to the Committee’s attention the latest performance figures that show high levels of satisfaction with Business Link in the region (90% for 2008–09). Targets for business contact have been exceeded—82,165 businesses and pre-start-up individuals were in contact with Business Link last year. By merging previous county-based providers, the service has also made an increase of 40% in the number of front-line advisers following significant back-office efficiencies. Whilst there is always scope for improvement, we do not agree with the Committee’s view that the Business Link service is ‘not as good as it should be’.

Recommendation 10

We welcome emda’s focus on regeneration schemes in order to create and safeguard jobs during the current economic climate. (Para 67)

Response

We agree with this comment and note that emda is already working closely with the new Homes and Communities Agency as well as existing partners on regeneration schemes that will ensure continued benefits for the region.

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emda has also been part of discussions commissioned by the Regional Minister’s Regional Economic Cabinet about infrastructure. This has enabled regional partners to keep priorities and opportunities under review, as well as work together to overcome barriers creatively.

Recommendation 11

emda has responded quickly and positively to the current economic situation. They have worked hard to support business in the region, and we urge them to continue to work with banks in order to make them aware of what support is available and to urge banks to assist companies as appropriate. We note the concerns surrounding the European Regional Development Fund and encourage emda to examine the process to make it easier to access. (Para 71)

Response

We agree that emda deserves credit for the way it has responded to the recession. It meets regularly with the banks through the Regional Risk Finance Forum and Government is confident that it is working hard to improve levels of lending and address other access to finance issues.

We understand that emda will respond directly to the committee regarding the European Regional Development Fund. Through GOEM, Government will work with emda to provide any support that it requires to review the processes in question. The GOEM Regional Director chairs the regional Programme Monitoring Committee and will continue to report to central Government regarding emda’s management of the ERDF programme.

However, we would remind the committee of the need to ensure that agreed processes are followed and all funding requirements laid out by the European Commission are met. We understand that this can sometimes lead to matters taking longer than partners would like, but this is far preferable to risking the region losing out if money has to be repaid. Government is pleased that emda is taking its responsibilities seriously, a view supported by the Chair of the Regional Assembly, Cllr David Parsons CBE, who described emda as ‘incredibly competent’ in oral evidence given to the committee.

Recommendation 12

emda needs to work with timely and accurate data on which to base decisions in the current economic climate and we urge them to improve the collection and analysis of data and to work with regional partners. (Para 72)

Response

The response to recommendation 7 sets out our view regarding emda’s work with partners on evidence and data in general. emda makes use of official data sources and its evidence base was assessed and peer-reviewed by a team of researchers and independent academics to ensure it provided an accurate portrait of the region.

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With regard to its work during the economic downturn, emda has played an active role in the Regional Economic Cabinet, where it has worked with regional partners to provide the Cabinet with an up to date picture of the regional economy. It has provided similar information on a monthly basis to the national Council of Regional Ministers. Government is satisfied that emda draws on a wide range of sources to ensure its view of the economy is up to date but it will continue to support emda in looking for ways to improve and incorporate alternative sources of data, where that data can be shown to be robust.

Recommendation 13

We welcome the Single Programme Grant in Aid which allows emda to effectively influence regional economic priorities and gives greater flexibility to manage the available resources. However, its effectiveness is harmed by the reduction in its budget. These reductions can be at short notice which affects expenditure already allocated. It has also been affected by the removal of the ability to carry-forward its budget. We recommend that emda has no further reductions in its budget in order to enable it to take strategy decisions for the good of the region on a stable and agreed budget. We also recommend that emda’s ability to carry-forward its budget is reinstated. (Para 83)

Response

We have issued RDAs with indicative budgets for 2010–11 to inform their planning for that year. However, the Government cannot give firm commitments in relation to RDAs’ future budgets.

The RDAs’ budgets enable them to deliver important investment in programmes and projects focused on economic development and the RDAs are key to the delivery of Government policies in these areas. We expect key decisions about the RDAs’ spending to be made in the context of the next Spending Review and following consultation between RDAs and Government Departments.

The take up of end year flexibility (EYF) is subject to normal Treasury scrutiny on the basis of need and realism, and the wider fiscal position. BIS will work with RDAs and HM Treasury to review the RDAs EYF position in the light of these requirements.

Recommendation 14

It is vital that projects receive funding in a timely manner and that emda is able to respond to changing economic circumstances. We have received assurances from emda that they process requests as quickly as possible. However, they are hampered by state aid rules which ensure that the system is inefficient. We urge the Government to re-examine the Treasury Green Book and recommend that the process regarding state aid rules are streamlined. (Para 87)

Response

The Green Book itself refers only to the need to ensure that proposals comply with state aid rules and the need to ensure that competition effects are properly taken into

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account. The Green Book supplementary guidance on the Market effects of subsidies published by the Office of Fair Trading and HM Treasury provides guidance on how to assess whether a proposal is likely to have a significant effect on competition and, if so, how to incorporate this into appraisal of a proposal. It does not specify a detailed process for dealing with state aid rules.

Recommendation 15

We fully support the production of a single integrated strategy, allowing better alignment of policy in the region. We look forward to emda and the Local Authorities Leaders’ Board establishing a good working relationship and to the production of the region’s first integrated strategy. (Para 94)

Response

We welcome the Committee’s support for the Government’s introduction of single integrated regional strategies. Phil Hope, Regional Minister, and Rosie Winterton, Minister of State for CLG and BIS, have held positive meetings with key partners including emda, EMRA and local authority leaders. emda, the East Midlands Regional Assembly and the Shadow Local Authority Leaders’ Board are collaborating well to develop plans for delivering on their new duties as proposed by the Local Democracy, Economic Development and Construction Bill (LDEDC). Government will continue to provide the support and challenge required to help the region get there.

Recommendation 16

We are concerned that the abolition of a regional assembly removes a dedicated and knowledgeable regional scrutiny body. We are also concerned that this removes a formal mechanism for stakeholder engagement. We welcome emda’s efforts to develop mechanisms in the region to ensure that the involvement of regional partners in policy decision making is maintained and look forward to emda’s report at the end of the year. We will revisit the issue of regional accountability once the Assembly has been disbanded and any new arrangements are in place. (Para 101)

Response

We believe that the new parliamentary arrangements in the form of regional select and grand committees, the new regional governance arrangements flowing from the Sub National Review and existing departmental performance controls do provide scope for effective scrutiny. Nonetheless, we are aware that alternative models have been proposed, including by EMRA. We will therefore work with relevant government departments and regional partners to examine the case for enhanced scrutiny and how new legislation and regulations can enable any flexibility in the region. Government’s aim will always be to secure arrangements that achieve proper scrutiny of public expenditure but do not go too far and become an unnecessary burden that has the effect of impeding the effective delivery of public services.

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Recommendation 17

We understand the concerns expressed by witnesses over the lack of clarity for sub-regional arrangements. We look forward to clarification from emda. (Para 105)

Response

Sub-regional Strategic Partnerships (SSPs) have been delivering sub-regional economic development activity at a local level in the East Midlands since 2003. The Sub National Review indicated an expectation that RDAs would delegate funding directly to Local Authorities. In line with the spirit of the SNR, the emda Board agreed, in September 2007, to contract sub-regional activity directly with the 9 Unitary and County Authorities (9Cs) from 2009–10. This has been received by the region’s Local Authorities with enthusiasm, as it assists with the process of embedding economic development into local areas’ plans and strategies.

From 1st April 2009, emda commenced its new contractual arrangements with all Unitary and County Councils in the East Midlands, with the exception of Derbyshire County Council and Nottingham City Council. The majority of SSP activity and staff has now transferred into the Local Authorities. The annual allocation to the Local Authorities and remaining SSPs is approximately worth £44m in 2009–10.

The specifics of the new arrangements are detailed below.

• Derbyshire County

Derby and Derbyshire Partnership (DDEP SSP) will continue to manage sub-regional arrangements until the 1st November 2009, from this date the County Council will take over all staff and activity in the Derbyshire County Council area.

• Derby City

Derby City has a direct contractual relationship with emda for sub-regional economic delivery activity. Derby City Partnership commissions all Derby City’s economic development activity.

• Nottingham City

Greater Nottingham Partnership (GNP) will continue to deliver sub-regional activity in Nottingham City and the conurbation area in 2009–10. Negotiations with the City are progressing well and it is envisaged that an agreement with the City will be in place by the end of 2009. In which, GNP SSP staff and activity will be transferred to the City or the proposed Economic Development Company in 2010.

• Nottinghamshire County Council

Nottingham County Council has a direct contractual relationship with emda for economic development activity. The Alliance (ASSP) staff and activity

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transferred to the County on the 1st April 2009 and commissioning activity is undertaken by Nottingham County Council.

• Leicester City Council and Leicestershire County Council

Both Councils have a direct contractual relationship with emda, with the City acting as the accountable body. Leicestershire Economic Partnership (LSEP SSP) staff and activity transferred to the City from the 1st April 2009. The Councils have established an Economic Development Company to deliver activity in line with the City and County’s priorities for economic development.

• Lincolnshire County Council

Lincolnshire County Council has a direct contractual relationship with emda for economic development activity. Lincolnshire Enterprise (LE SSP) staff and activity has transferred to the County Council. Commissioning activity is undertaken by Lincolnshire County Council.

• Northamptonshire County Council

Northamptonshire County Council has a direct contractual relationship with emda for economic development activity. The County has decided to continue with Northamptonshire Enterprise Limited (NEL SSP) for 2009–10 and will be reviewing this arrangement in 2010–11.

• Rutland County Council

Rutland County Council has a direct contractual relationship with emda for economic development activity. The Welland SSP activity has largely transferred to Rutland and Leicestershire County Councils. Rutland County Council has employed most of the Welland SSP staff and will commission economic development activity directly.

Recommendation 18

We were disappointed that emda’s presentation did not mention equality issues, and their success or otherwise in fulfilling their duty to promote equality. We would have liked further analysis assessing the impact of their programmes, and of economic change, on diverse communities in relation to race, gender, disability, socio-economic background and other areas covered by the duty. (Para 110)

Response

We understand the emda will respond direct to the Committee on this issue. We believe that emda does in fact have the systems in place to deliver on its equality duty, and that emda had not included equality issues in its evidence only in order to direct the evidence it did offer to the questions asked direct by the Committee.

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Recommendation 19

emda has a statutory responsibility to contribute to sustainable development. While we congratulate emda on its work towards sustainable development, we are not convinced that it is embedded as a priority within all aspects of the organisation. We are concerned that there is no requirement to have environmental expertise on emda’s board. We recommend that the Department for Business, Industry and Skills and the Regional Minister examine the criteria for appointment on emda’s board and seek to include representation from the environmental sector. (Para 115)

Response

Currently Board members are assessed against their knowledge and experience of environmental issues however all appointments are on merit against all the criteria in the person specification.

We are content that there is expertise within emda on sustainable development issues, but will of course expect to see this demonstrated by the development of a new Regional Strategy with a strong commitment to sustainable development.

Recommendation 20

We are concerned that no one body takes the lead on sustainable issues in the region. We urge further discussion in the region to establish whether that is a role best suited for emda or another body. We also encourage that this discussion revisits the need for the establishment of a sustainable champion in the region, similar to that already established in other regions in England. (Para 116)

Response

There are no plans to revisit the discussion given the clear recommendation from the recent consultation on delivering sustainable development in the region. However, we will expect emda, the Local Authority Leaders’ Board and its regional partners to ensure that sustainable development is embedded in the Regional Strategy and in partners’ subsequent delivery plans.

Recommendation 21

We congratulate emda for leading the development of the Regional Index of Sustainable Economic Welfare, and its incorporation into the Regional Economic Strategy. We look forward to its further development to give greater emphasis to environmental indicators. We are concerned that 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. We recommend that the Government use the Regional Index of Sustainable Economic Welfare as an alternative to the traditional GVA-only measurement of the RDA’s economic performance. (Para 124)

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Response

RDAs are tasked to raise the sustainable growth rate of their region’s economy. When appraising possible investment, RDAs are asked to consider environmental and social impacts alongside economic outputs.

Any metric used to measure the RDAs economic performance needs to be consistent with the Government national and regional economic policies aims, and needs to be transparent and robust.

Recommendation 22

We welcome the responsibility contained in the Local Government, Economic Development and Construction Bill to ensure a single regional strategy based upon sustainable development. We recognise emda’s concerns but urge them to continue to work towards sustainable development in the region. (Para 128)

See responses to recommendations 19–21 above.

Recommendation 23

We agree that the interests of rural parts of the East Midlands should be a mainstream concern for emda. However, this should not mean that rural areas do not receive targeted resources. emda must also ensure that its support is suitable for areas that are “semi-rural”, with towns and villages interspersed with countryside, and that such areas do not fall through the gaps. (Para 133)

Response

The Government does not prescribe how emda should divide its resources between urban, rural and semi-rural areas in the region. Our policy is that equitable account is taken of the needs and interests of all parts of the community, including rural and semi-rural areas, in developing and delivering policies and deciding on spending priorities. emda is a key partner and contributor to the East Midlands Rural Affairs Forum, and has been actively involved in the development of the Rural Action Plan.

The mainstreaming of rural interests does not preclude the targeting of resources at areas that most need it. For example, the Department for Environment, Food and Rural Affairs (DEFRA) is devolving around £60m of Rural Development Programme for England (RDPE) funding to emda over the period to 2013 to deliver the social and economic objectives of the Programme and target resource in rural areas. By September 2009 emda had already received 258 endorsed Expressions of Interests and 43 approved full applications that represent £7.6m of RDPE grant investment. In addition, emda has allocated £13m through the LEADER approach to enable ‘bottom-up’ community involvement in rural development in large parts of Lincolnshire, the Peak District, Bolsover and North East Derbyshire, Bassetlaw and Newark & Sherwood and North Northants.

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Examples of projects supported by emda in rural areas and market towns include:

• Rectory Farm in Northamptonshire:

Awarded £170,000 by emda for the demolition of a redundant agricultural building and the construction of a new 496 sq metre building containing offices for let and a community room, in a rural area with very few facilities of this kind.

• Retford Enterprise Campus:

Over 1000 square metres of office and incubator space for new start ups and early growth businesses on a high profile site on the edge of Retford market town centre. It will create 36 jobs, support 18 new start or growth businesses and will provide much needed investment in a rural area surrounded by areas of multiple deprivation, largely as a result of the decline of the former North Nottinghamshire coalfields.

• Business and Innovation Centre in Market Deeping:

Aims to encourage local enterprise in south Lincolnshire by improving the conditions for the start ups of small to medium-sized businesses, as well as creating jobs. The centre has secured an ERDF grant of £499,962 and emda Single Programme support of £1.1m.

Recommendation 24

The availability of broadband is an essential tool for business. While we recognise that much has been done in the region, there are still areas, particularly in the rural parts of the region, where availability is patchy, if not non-existent. We urge the Government to invest in broadband infrastructure and coverage in the East Midlands to allow businesses to take advantage of new technologies. We look to emda to continue to lobby Government on this issue. (Para 136)

Response

The Government is now working to implement the recommendations made in the Digital Britain Report around universal service that will enable universal broadband access to virtually all UK homes and businesses at a speed of 2Mbps by 2012. The Network Design and Procurement Group will be responsible for the procurement and delivery of the universal service commitment. Those currently unable to receive a service will be given priority.

The Government is also working to set up the Next Generation Fund to help pay for upgrading the UK telecoms infrastructure, which will help to deliver next generation broadband in the ‘final third’.

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Recommendation 25

We welcome the work emda has done towards supporting the demand in appropriate work space units in market towns. We congratulate them on the initiative they have shown in the development of Cransley Park, and encourage them to continue to work to support small businesses in rural areas. (Para 139)

Response

We agree that emda deserves congratulating for Cransley Park. See response to recommendation 23 on rural issues more broadly.

Recommendation 26

The Regional Economic Strategy, with its aim of making the East Midlands a flourishing region, highlights the ambitions of the East Midlands. We believe that emda plays a key role towards achieving that vision, driving and co-ordinating regional and economic development and regeneration. It has delivered measurable outputs and its beneficial impact has been recognised in the reports by Ecotec, the National Audit Office and PricewaterhouseCoopers. (Para 140)

Response

We agree with this comment. See our response to recommendation 6 on emda’s performance.

Recommendation 27

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. However, emda must give continuing attention to ensuring businesses can access financial support. The Single Programme Grant in Aid allows emda to be flexible in its approach and to prioritise the available resource. However, this action is jeopardised by the reduction and cuts in emda’s budget, some of which are at short notice. This affects emda’s ability to take forward strategy decisions for the good of the region. (Para 141)

See response to recommendation 13.

Recommendation 28

However, there are areas where improvement is needed. emda’s resources alone will not achieve the objectives of the Regional Economic Strategy. It is therefore vital that key partners work together to ensure that a common vision is shared. It is also important that the knowledge and expertise of key partners in gathering and analysing data is utilised. Contributing to sustainable development is one of emda’s statutory functions. While it has

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led the way in the development of the Regional Index of Sustainable Economic Welfare, the sustainability ethos needs to be further embedded in emda. (Para 142)

Response

The Government considers that emda has a sound approach to observing the principles of sustainable development we set out in Securing the Future (2005) to ensure policy formulation contributes to a strong, healthy and just society and to our ability to live within environmental limits. The current RES sits with the regional spatial and housing strategies within the framework of the ‘Integrated Regional Strategy’ for the East Midlands. emda observes Government Guidance on Appraisal, Delivery and Evaluation which requires sustainable development to be considered in programme and project design and ensures the long term impact of projects is considered. emda uses a framework to incorporate sustainable development into individual responsibilities of staff.

We agree that delivery of the RES is not down to emda alone and note the extensive work already undertaken by emda on the implementation plan, where 101 organisations provided details of the contributions they would be making to delivery of the RES.

We note the progress made to date in putting in place new arrangements for the single regional strategy that will set out a common vision for partners. The Regional Minister and GOEM will be keeping a close eye on the development of these arrangements as work towards the Regional Strategy begins, including the inclusiveness of work on gathering and analysis of data.

We welcome emda working alongside the Government Office and the Regional Assembly in promoting sustainable consumption and production; in particular in developing a stronger administrative framework for managing waste arising in the region and ensuring that we draw more effectively upon regional expertise, for example from Northampton University.

We note the positive steps that have been taken in preparing the Regional Funding Advice over the last year. emda has shown its ability to work with regional stakeholders and create consensus on significant regional funding matters and we look for a continuation of this approach as the regional strategy process gets underway.

We further note that in its wider operations emda supported the Government Office and the Regional Assembly throughout the consultation process and the development of the regional Climate Change Programme of Action. The Programme of Action provides a public statement of commitment by the main regional bodies to support central and local government policy in addressing the causes and consequences of climate change and provides a framework for action within the region. emda now chairs the Regional Climate Change Partnership Management Group charged with delivering the Programme.

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Recommendation 29

The Sub-National Review means another period of change for emda. It will result in additional responsibilities and the need to build working relationships with new bodies, and to develop new working methods. As it moves forward, it is imperative that it develops and maintains close working partnerships in the region. However, the dissolution of the Regional Assembly removes a knowledgeable 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 is welcomed. As emda moves forward, it is imperative that it develops and maintains close working partnerships in the region. (Para 143)

Response

Under the LDEDC Bill emda will be jointly responsible for the new Regional Strategy with the Leaders’ Board and both bodies recognise that the Regional Strategy is a new challenge for them. Government is content that they are working well together to develop plans for delivering on their new duties.

On the issue of scrutiny please see the response to recommendation 16.

Phil Hope MP Minister for the East Midlands 2 October 2009

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Appendix 2: emda’s response

1. Introduction

The East Midlands Development Agency (emda) welcomes this inquiry into emda and the Regional Economic Strategy (RES) and the associated Report published on 29 July 2009.

We are pleased that the Committee’s Report recognises emda’s vital leadership role in relation to economic development in the region, along with a confirmation of emda’s effective and efficient delivery and our overall economic impact. The Report highlights a range of achievements, not least our quick and positive response to the economic downturn via our associated business support activities and our focus on priority regeneration schemes in order to create and safeguard jobs. In addition, we welcome the Committee’s support for the regional priorities set within the RES and our ambition for the East Midlands to be a flourishing region by 2020. The Report highlights a real strength in relation to our engagement with partners, our approach to consultation, and our groundbreaking work on issues like the Index of Sustainable Economic Wellbeing.

emda is committed to seeking regular feedback from our regional stakeholders and partners in order to improve how we deliver our activities and to refocus our priorities where necessary. We have, therefore, considered the Committee’s recommendations in detail and set out below our response to the recommendations and the issues contained within them. We have only sought to respond to those recommendations that were directed to emda—the remaining recommendations will be covered in the Government’s response to the Report.

2. Response to the Committee’s Recommendations

2.1 emda’s Marketing and Communications Activities

The East Midlands Development Agency (emda) has a key role in driving and coordinating regional economic development. We notice that witnesses have expressed varying levels of awareness of its role in the region. We urge emda to improve its marketing and communication in order to further awareness of its role, and to make businesses better aware of the support it can provide, particularly during the current economic climate. (Recommendation 2, paragraph 10)

emda has taken positive and effective steps to provide support to business. We are concerned to hear from witnesses that awareness of Business Link and its services is not as good as it should be. We urge the Government, working with emda, to improve its marketing and advertising in the region, to ensure that businesses are aware of the services they can access. (Recommendation 9, paragraph 59)

As Jeff Moore highlighted in his oral evidence to the Committee, “we are not complacent about our profile … Obviously, you can always do more if you have limitless resources”. Given the budgetary constraints within which we are currently operating, we believe that we are striking the right balance between direct delivery and marketing and communications activities. It is essential that we focus on our principal task of responding

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to the challenges posed by the current economic climate and helping the region prepare for recovery.

We believe that we engage effectively with regional businesses. Our recent customer perception and satisfaction survey (March 2009), demonstrated that 64.5% of organisations felt the role that emda plays in the region is clear, with 93.1% of respondents having a full of partial understanding of this role. Furthermore, 92% of respondents have an awareness of our primary channel for business support and engagement—Business Link—and a significant proportion (40%) of respondents had previously accessed the service.

Business Link is the primary gateway for businesses and individuals to access the range of support packages available and is the brand that emda, alongside our regional partners, market to businesses. Business Link also undertakes targeted marketing campaigns to ensure that businesses of all sizes are aware of the support that can be provided. We expect a high level of awareness amongst the business community of brands such as Business Link and feel this is the most effective use of our marketing resources, rather than marketing emda.

During 2008–09 over 67,000 businesses used the Business Link service in the East Midlands. This figure demonstrates the significant level of awareness of our primary business support gateway and our effective engagement with businesses on our business support services.

2.2 Maintaining emda’s Business and Economic Focus

emda was originally established to provide strategic economic leadership in the region. Since its establishment it has taken on a large number of additional responsibilities and has moved away from its original strategic role, becoming responsible for the delivery of a number of grants and European Regional Development Funds. We note the concerns raised by witnesses that this may cause emda to lose its business focus and urge it to ensure it remains intent on its economic focus. (Recommendation 3, paragraph 16)

emda’s core aim is to coordinate and drive forward economic development and regeneration across the region and this is demonstrated in the Strategic Priorities set within the Regional Economic Strategy (RES). All emda’s activities are aligned with the Strategic Priorities and Priority Actions in the RES, which are centred on improving the region’s economic performance, thus we will always maintain an economic focus.

Although emda’s remit has expanded over the years to include activities such as the management and delivery of the Business Link service, the Rural Development Programme for England (RDPE) and the European Regional Development Fund (ERDF), we believe that these new responsibilities relate directly to our core economic remit and represent a strong drive towards cohesive regional delivery. Crucially, we have a wealth of experience and a strong track record in successful delivery. As Jeff Moore stated in his oral evidence to the Committee—“we have been successful in providing efficient, effective delivery of those services for Government and that has continued to broaden our remit”.

The East Midlands is eligible for approximately £209m ERDF funding between 2007 and 2013 (subject to exchange rate fluctuations), which when combined with the required match funding, provides a programme value of approximately £418m—a significant

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investment in the economic development of the region. The decision to transfer the management of this programme (focused on innovation and enterprise) to emda is a positive endorsement of our capacity to deliver efficient and effective economic development activity.

Despite changes to our remit and new responsibilities, we believe that we have always maintained a strong business focus and played a pivotal role in bringing together partners in order to successfully deliver the actions within the RES. This has been recognised as a key strength by the business community as stated in Catapult’s written submission to the Committee—“emda has a good grasp of the commercial issues that are important for sustainable business success and have added greatly to a cohesive joined up Regional Economic Strategy … emda also act as a facilitator in getting together different business groups and are seen as neutral supportive territory. Some business groups would not have come together in productive dialogue to make things happen if emda were not in existence. They are well respected by the business community and can therefore take this important role”.

2.3 emda’s Engagement with Stakeholders

The Regional Economic Strategy (RES) is owned by the region, and emda alone cannot achieve its objectives. It is therefore vital that key partners are brought in early to develop the RES, ensuring that they feel they have an investment in working towards the region’s goals. While some sectors have spoken of the close working relationship they have with emda, there is a perception that it did not consult sufficiently with some key sectors, such as micro businesses, trade unions and the environment sector, and some witnesses felt they were involved at too late a stage. We urge emda to establish and maintain improved relationships with key partners in the region, whilst continuing to make use of the strong links it already has with many sectors. (Recommendation 6, paragraph 36)

emda has a strong track record of undertaking inclusive strategy development and successful delivery with its regional partners and we are committed to building on this approach as we move forward with the development of an integrated Regional Strategy.

As highlighted in both our written and verbal evidence to the Committee, the production of the third RES followed the most extensive consultation process we have ever undertaken. emda attended over 100 events, reaching 1,400 regional stakeholders and partners. The consultation process resulted in 495 substantive written contributions from a wide range of regional stakeholders and residents from across the region.

As the Report recognises, a great deal of evidence was submitted to the Committee that endorses our proactive and inclusive approach to stakeholder engagement. For example, Professor Coyne highlighted in his oral evidence to the Committee, the extensive capacity in which the East Midlands Universities Association (EMUA) had been involved in drawing up the RES—“we found emda to be very proactive in seeking our advice, expertise and support”.

The good practice in our RES consultation was also endorsed by EMUA, in their written evidence to the Committee—“The process by which the RES was drawn up should be considered best practice, in terms of engagement and consultation as well as development

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and use of informed baseline data and evidence … Stakeholders were fully involved and able to make comment on and shape the strategy”.

The opportunity to engage with the consultation process was also recognised by the EEF who noted that—“EEF and other business organisations were consulted in a number of ways”. This point was reiterated by the National Forest Company who noted in their written evidence that they “always found emda staff and board members accessible and has been impressed with the breadth and depth of the consultation exercises it has undertaken.

Nottinghamshire and Derbyshire Chamber of Commerce comprises 3,500 members and a further 6,500 affiliate members. In their letter to the Chair of the Committee following publication of the Report, they stated that they did not recognise the perception that emda does not actively seek the views of businesses and that emda is vigorous and thorough with its consultation, stating that—“It [emda] utilises organisations such as the Chamber of Commerce to disseminate messages and ideas to small and medium-sized companies and the mechanism works well … Furthermore emda has worked tirelessly to set up an effective vehicle for direct engagement with small businesses by establishing East Midlands Business, owned by this Chamber and the Leicestershire and Northamptonshire Chambers. That organisation, through the Business Link, Train to Gain and UKTI brands, informs and engages constantly with thousands of businesses in the region”.

In terms of our ongoing engagement with regional businesses, we were surprised to hear that the Federation of Small Businesses (FSB) felt that we tended to place emphasis on larger businesses and “forget about the 99.2% in the small business sector”. This was the first time this issue had been raised, despite a positive and effective ongoing relationship with the FSB. It also appears to conflict with other elements of their evidence which suggest that we had been keen to take on board the views of small businesses—“emda has encouraged our views and we have found them to be receptive to our comments about small businesses”.

emda engages with the business community on an active and ongoing basis. As detailed above, 67,000 businesses used the Business Link service in the East Midlands, 70% of which had 10 or fewer employees. In addition, Business Link helped over 14,000 individuals who were thinking about or wanting to start a business and over 3,000 business start-ups—the majority of which were sole traders or employed fewer than 4 people. The East Midlands Business Forum is another avenue which emda utilises to engage regional businesses. This group comprises representatives from a range of business forums (IOD, CBI, FSB, EEF and the Chambers) and provides an opportunity for emda to get direct input from all types of businesses. This engagement has helped inform our business support offer and ensures that we meet the concerns and needs of businesses within the region. In addition, the Regional Risk Finance Forum brings together key organisations from finance and private investment and works alongside the Regional Economic Cabinet to help unlock finance for businesses within the East Midlands. We feel that it is this constant engagement, across a range of forums, that assists emda in understanding the diversity of our business community, and this is reflected in the range of initiatives available.

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We have always sought to work closely with the Trade Unions, both through direct representation on the emda Board and a variety of other routes. In recent times, this has particularly focused on joint working in response to the issue of redundancy support. A number of mechanisms are already in place to respond to large scale redundancies and we have been keen to ensure that Unite and the TUC are closely engaged in these. For example, the Large Business Support Group, chaired by Jobcentre Plus, and hosted by emda, seeks to achieve a coordinated approach to delivering this agenda. The TUC are members of this group. In addition, emda funds the Career Chain Project, which focuses on providing redundancy and redeployment support—Unite are active members of the Project Steering Group.

2.4 emda’s Data Collection and Analysis

The range of data and statistics that emda has to gather is immense. While we acknowledge the large evidence base used by emda to underpin the current RES, which it commissioned from academics and universities, we urge emda to utilise fully the expertise and knowledge of its regional partners on data collection and analysis. We also urge emda to examine its procedures so that emda can make informed decisions based on accurate and timely data. This should ensure that emda uses a variety of sources of information and analyses, not just the large evaluation studies it commissions. (Recommendation 7, paragraph 42)

emda needs to work with timely and accurate data on which to base decisions in the current economic climate and we urge them to improve the collection and analysis of data and to work with regional partners. (Recommendation 12, paragraph 72)

As Jeff Moore highlighted in his oral evidence to the Committee, we did not commission our evidence base solely from academics and universities. “It was produced by our own people, using industry-standard mechanisms with experts from outside—universities and academics.

In addition, emda actively engaged with partners in drawing together the RES Evidence Base to ensure that it was co-owned and trusted by the region, enabling us to develop a credible strategy with strong partnership support. Whilst much of the analysis was undertaken in-house, emda sought input from a number of appropriate regional stakeholder organisations. For example, the East Midlands Public Health Observatory contributed demographic analysis, whilst the British Geographical Survey (based in Keyworth), Environment Agency, English Nature, English Heritage and the Countryside Agency assisted with development of the environmental chapter of the Evidence Base Report (The East Midlands in 2006).

This utilisation of expertise and knowledge from regional partners was noted by Natural England in their written evidence to the Committee—“emda principally used Natural England (and our founding bodies) as formal consultees to the RES, advisers in the Strategic Environmental Assessment and as potential providers of data to inform the evidence base”.

The Waterways Trust also endorsed emda’s evidence base—“Through the Regional Economic Strategy, and groundbreaking research, emda have identified the significant economic value of waterways”.

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The East Midlands Biodiversity Trust also noted their engagement with emda—“emda, they are a member of East Midlands Biodiversity Partnership and are particularly involved with our work on biodiversity data and evidence, which will help inform the developing regional evidence base”.

emda utilised a number of partnership groups to obtain early, ongoing and inclusive engagement of partners in the Evidence Base development. A Task and Finish Group (comprising a range of regional stakeholders) was formed to source contributions and to act as a sounding board. An additional Task and Finish group to support the Strategic Environmental Assessment of the RES was also established and facilitated the engagement of a range of environmental partners (such as East Midlands Environmental Link, CPRE etc.) and with Statutory Consultees (English Heritage, English Nature, Environment Agency)—these groups were given regular opportunities to provide ongoing comments on the validity of the Evidence Base.

In its evidence session, the FSB stated that emda has a tendency to use statistical evidence which is outdated, and this has therefore been a barrier in terms of our ability to fully understand the extent and impact of the economic downturn. Whilst it is true that emda uses data from a range of official sources (for example, the Office for National Statistics), and we fully accept that this is often subject to time lags, these sources represent only one aspect of the intelligence that underpins emda‘s strategic approach.

Our evidence base is not static and is continually updated and refined using the most up-to-date intelligence and data—this is used to inform updates to Government on a monthly basis. These updates summarise the latest official labour market statistics and provide more up-to-date intelligence through reference to recent business surveys, reports on redundancies and new investments, and Business Support Advisors’ summaries of employers’ views of current conditions. In addition, our statistical evidence is always supplemented with survey data and intelligence gathered through business networks—such as the East Midlands Business Forum, from key partners (e.g. Job Centre Plus, Government Office), through close engagement with members of the region’s Economic Cabinet, the Bank of England’s Regional Agents, and directly from the many businesses and private sector contacts we deal with on a day-to-day basis. We also engage directly with a wider range of businesses in our delivery of Business Link. The outcome of Business Link interactions are recorded on a database called the Regional Business Support information System (RBSIS), which is then used to inform resource allocation and programme design to ensure that we are meeting the changing needs of business.

2.5 emda’s Delivery of the European Regional Development Fund

emda has responded quickly and positively to the current economic situation. They have worked hard to support business in the region, and we urge them to continue to work with banks in order to make them aware of what support is available and to urge banks to assist companies as appropriate. We note the concerns surrounding the European Regional Development Fund and encourage emda to examine the process to make it easier to access. (Recommendation 11, paragraph 71)

emda aims to streamline and simplify all our funding application processes and our general approach has been noted by BRP Medical—“Working with emda staff to complete the

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application was relatively straightforward and follow up has been thorough. Clearly, when large sums such as this are being distributed, it is understood that an audit trail needs to be in place and reasonable scrutiny needs to be applied, but this was achieved without being unnecessarily bureaucratic or intrusive”.

Our approach to managing and delivering the ERDF programme also received support from witnesses and Cllr. Parsons stated in his evidence session that—“I have also been involved in European funding. It [emda] has been incredibly competent on that”.

Whilst we fully recognise that the regulatory framework surrounding ERDF is complex, we do not believe that applicants in this region are being treated differently than in other parts of the country. As Jeff Moore stated in his oral evidence “The evidence that I have seen and read is that we apply the rules too stringently. I think in the current climate I would treat that as a compliment rather than as a criticism. Adhering to the rules under which our funding has been given is quite crucial as far as I am concerned … I would say we have made approaching £30 million-worth of investments in our universities and we think that compares very favourably with our proportion of the overall RDA pot”.

We do not believe that we have unnecessary processes in place in respect of the ERDF programme, however we will continue to take a proactive approach to requesting feedback from applicants and offering support wherever possible.

2.6 Regional Accountability

We are concerned that the abolition of a regional assembly removes a dedicated and knowledgeable regional scrutiny body. We are also concerned that this removes a formal mechanism for stakeholder engagement. We welcome emda’s efforts to develop mechanisms in the region to ensure that the involvement of regional partners in policy decision making is maintained and look forward to emda’s report at the end of the year. We will revisit the issue of regional accountability once the Assembly has been disbanded and any new arrangements are in place. (Recommendation 16, paragraph 101)

As set out in our written and oral evidence, emda is accountable in many ways. We are accountable to Parliament through the Secretary of State and other Ministers in the Department for Business, Innovation and Skills. As with all RDAs, our annual performance report and accounts are laid before Parliament. We also appear before Parliamentary Select Committees and regularly answer Parliamentary Questions. In addition, the National Audit Office undertakes an Independent Performance Assessment (IPA) of RDAs.

At the regional level, we are held to account by our Board and by regional partners in a variety of ways; through consultation exercises, attendance at partner meetings and our Annual Public Meeting, where the average attendance is between 300 and 400 stakeholders (including a significant proportion of businesses and business representatives).

We are currently subject to scrutiny by the East Midlands Regional Assembly (until March 2010). This process is conducted by the Regional Scrutiny Board and emda‘s performance is assessed against a series of thematic reviews on an ongoing basis. This process is governed by a clear protocol and supported by quarterly meetings. We are also now subject

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to parliamentary scrutiny through the new Regional Select Committee, and the Regional Grand Committee which met for the first time on 9 September 2009.

Whilst it is true that one scrutiny process is drawing to a close, we do not feel it is correct to link this to a loss of stakeholder engagement. As the Report notes, we are currently working with the Shadow Local Authority Leaders’ Board and the Regional Assembly to develop effective stakeholder arrangements in relation to the development of a new integrated Regional Strategy—this activity is very different to the role and purpose of current Regional Assembly scrutiny.

2.7 Update on Sub-Regional Arrangements

We understand the concerns expressed by witnesses over the lack of clarity for sub regional arrangements. We look forward to clarification from emda. (Recommendation 17, paragraph 105)

emda set out the recent changes to sub-regional delivery in both our written and verbal evidence. In 2001, emda agreed to fund seven Sub-regional Strategic Partnerships (SSPs) to bring together businesses, the public sector, and the third sector to tackle the distinct needs of their local areas. Between 2003–04 and 2008–09 emda has allocated £255m of Single Programme funds to the SSPs. In line with the spirit of the Sub National Review, the emda Board agreed, in September 2007, to contract sub-regional activity directly with the 9 Unitary and County Authorities (9Cs) from 2009–10. This move has been positively received by the region’s Local Authorities, as it assists with the process of embedding economic development in Local Area Agreements and Sustainable Development Strategies.

From 1 April 2009, emda commenced new contractual arrangements with all Unitary and County Councils in the East Midlands, with the exception of Derbyshire County Council, which will commence new arrangements after 1 November 2009, and Nottingham City Council, where it is envisaged that an agreement will be reached by the end of 2009. The majority of SSP activity and staff have now been transferred into the Local Authorities. The emda allocation to the Local Authorities and remaining SSPs is worth approximately £44m in 2009–10.

We recognise that changes to sub regional arrangements in the region are ongoing and, as such, we will continue to effectively communicate any changes to our regional stakeholders and partners.

2.8 emda’s Consideration of Equalities Issues

We were disappointed that emda’s presentation did not mention equality issues, and their success or otherwise in fulfilling their duty to promote equality. We would have liked further analysis assessing the impact of their programmes, and of economic change, on diverse communities in relation to race, gender, disability, socioeconomic background and other areas covered by the duty. (Recommendation 18, paragraph 110)

Achieving Equalities is one of three Structural Themes within the RES, along with Sustainable Development, and together they underpin everything we do. Equalities and

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Sustainable Development are cross-cutting themes in our Corporate and Business Plans, and are cascaded through our project development and appraisal systems. In addition, the RES is subject to an Equalities Impact Assessment to ensure that all of the activities and policies we champion reflect the needs of all equalities groups.

The successful integration of equalities issues into the work that emda undertakes is critical to our overall success; indeed we cannot fulfil our role as an economic development agency without considering the needs of people from all equalities groups. Our approach is one of mainstreaming equalities into core business processes i.e. all projects are required to undertake Equalities Impact Assessments on all potential investments as well as specific, targeted interventions where appropriate.

emda is currently consulting on the preparation of an Integrated Equalities Scheme, which will replace and update our current Race, Disability and Gender Equality Schemes. This integrated scheme sets out our approach and priorities in terms of promoting economic opportunities for all and asks our key stakeholders and equalities groups how best we can work together to achieve our equalities goals. Our final Scheme will be published following approval of our Executive and Board in December 2009.

2.9 Sustainable Development Champion Body

We are concerned that no one body takes the lead on sustainable issues in the region. We urge further discussion in the region to establish whether that is a role best suited for emda or another body. We also encourage that this discussion revisits the need for the establishment of a sustainable champion in the region, similar to that already established in other regions in England. (Recommendation 20, paragraph 116)

In 2006, Defra responded to a review undertaken by the Sustainable Development Commission (the Government’s Sustainable Development watchdog) recommending that English Regions should establish independent Sustainable Development Champion Bodies to provide a critical friend function to regional bodies. In early 2007 regional partners initiated a review of sustainable development coordination arrangements (funded by emda) and to determine appropriate next steps. However, the launch of Government’s Sub National Review (SNR) in the summer of 2007 raised a number of critical issues of relevance to Sustainable Development. In light of SNR, it was agreed (by EMRA, GOEM and emda) that the review of SD arrangements and consideration of a potential Champion Body would need to fully reflect the outcomes of the SNR process. Despite delays to the SNR process, regional partners secured funding from Defra in 2008–09 (matched by emda and EMRA) to undertake independent bespoke research and consultation to determine how to best take forward sustainable development issues.

This work included desk-based research, a review of UK best practice, interviews with regional stakeholders and consultation events. The original assumption had been that stakeholders would desire a fully independent Champion Body—however, stakeholders clearly expressed a view that sustainable development should be fully embedded within future arrangements as opposed to be being transferred into another organisation (Embedding Sustainable Development in Regional Strategy in the East Midlands, GHK, May 2009).

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In terms of how we are taking these issues forward, it is clearly early days. However, in relation to Sustainable Development:

• Emerging plans for structures to support the Regional Strategy include a Sustainable Development Advisory Group. This will involve statutory and non-statutory stakeholders and will provide technical Sustainable Development input as well as an ongoing Sustainable Development critical friend function;

• We expect that this Group will have a key role in supporting emda and the Local Authority Leaders’ Board in undertaking the various Sustainable Development appraisal/assessments that the Regional Strategy will be subject to: Strategic Environment Assessment, Sustainability Appraisal, Habitats Assessment and Equality Impact Assessment; and

• Regional stakeholders, led by emda, have secured funding from Defra (again matched by emda) to develop a regional approach to determining sustainable economic growth within environmental limits. The Government’s consultation on a Draft Policy Statement for Regional Strategies (BIS/CLG, August 2009) demonstrates that the forthcoming Regional Strategy will be required to deliver the outcome of sustainable economic growth. As such, the work we are leading will ensure that Sustainable Development issues are fully integrated in the strategy design and development process. Regional stakeholders will be fully involved in the development and finalisation of this work.

Regional stakeholders have clearly stated their preference that Sustainable Development should be fully integrated within Regional Strategy arrangements. emda agrees that the mainstreaming approach is the right approach to create a truly flourishing, sustainable and resilient East Midlands. We will continue to work with stakeholders to make this a reality in the region’s new arrangements from April 2010. For more detailed evidence of emda’s embedded approach please refer to our response to recommendation 28.

2.10 emda’s Delivery of the Rural Agenda

We agree that the interests of rural parts of the East Midlands should be a mainstream concern for emda. However, this should not mean that rural areas do not receive targeted resources. emda must also ensure that its support is suitable for areas that are “semi-rural”, with towns and villages interspersed with countryside, and that such areas do not fall through the gaps. (Recommendation 23, paragraph 133)

As outlined in both our written and verbal evidence, we do not seek to spread our funding equally across all parts of the region and this was reiterated by Jeff Moore in our evidence session on 27 April 2009—“we are not about making sure that each of the 42 or 44 districts in the region gets one forty-second, as it were, of our total budget”. emda endeavours to prioritise activities that will deliver the greatest impact or tackle specific geographic needs and challenges within the region.

To achieve our vision of the East Midlands becoming a ‘Flourishing Region’ by 2020, it is essential that all investments fit within agreed strategic priorities and are targeted appropriately across a range of spatial areas and this approach has been endorsed by

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Groundwork, who stated in their written evidence that—“emda have developed a clear strategy/policy framework in their consideration of urban, rural and coalfield issues and done so through an open engagement process. If resource allocation is consistent with those frameworks and the priorities that they have identified then I remain satisfied”.

As outlined in our written evidence, mainstreaming delivery of rural activities means that we now consider the needs of rural communities and businesses in the context of all our Single Programme investments, which makes it impossible to disaggregate our investments by rural and urban classification. This approach has been endorsed by our partners and in particular, when asked whether any of the witnesses would argue for a specific percentage of overall funding to be spent in rural areas, Cllr. Parsons stated—“No—this was unanimous”. Further, in their written evidence, Lincolnshire Enterprise stated that—“The abandoning in the 2006 Flourishing Region RES of the separate Rural and Urban strands in the 2003 Destination 2010 RES was therefore welcomed as it provided the opportunity to develop policy and interventions to meet the needs of all the region’s businesses and communities irrespective of whether they have an urban or rural base”.

In addition to mainstreaming rural activities, emda’s Rural Team works across the organisation in the development of our policies, programmes and projects to ensure rural issues are appropriately considered at the earliest stage. This approach was welcomed by our partners, as demonstrated by Lincolnshire Enterprise—“The intent to ensure that all activities were “rural proofed” was also welcomed as a means to ensure that the specific needs of rural communities—particularly the challenge of providing accessible services—were built into interventions”.

In July 2009, emda published a piece of research entitled ‘working positively with rural estates’ which sought to identify the scale and nature of estates, land and premises in the region, as well as how they are already contributing to the priorities in the RES. In launching the research Helen Woolley, Regional Director, Country Land and Business Association, stated that—“I very much hope the other Regional Development Agencies take a leaf out of emda’s book and instigate similar research in their regions so a national picture can emerge”. Further that, “emda’s study into the potential benefits of the public sector working more positively with rural estates will improve our ability to support our members in fulfilling both these roles”.

emda is also responsible for delivering the socio-economic elements of the Rural Development Programme for England (RDPE) which amounts to approximately £60m of EU and DEFRA funding, between 2007–13. The funding is aimed at improving competitiveness, collaboration and diversification in the agricultural and land-based business sectors and their associated supply chains, as well as enhancing opportunity and quality of life in rural areas.

In addition to ensuring that the correct mechanisms are in place to ensure that our policies, programmes and projects are inclusive of rural communities and businesses, emda has a successful track record of working successfully at the sub-regional level. As set out above, we allocate approximately one third of our funding to the sub-regional level in order to ensure that decisions on local investments are made at the correct spatial level and that the needs of local areas continue to be considered and addressed on an ongoing basis.

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emda also seeks to influence the work of other partners and stakeholders in the region through our role as a core partner of the East Midlands Rural Affairs Forum (EMRAF). emda is charged with leading and reporting back on the implementation of three of the seven priorities within the East Midlands Rural Action Plan, which was developed under the auspices of EMRAF.

Examples of emda activity in support of Rural Action Plan priorities include:

• Ensuring that the summer 2007 flood relief grant scheme for small businesses was fully extended to rural areas, including land-based businesses;

• Supplementing the regional business support service to fully encompass land-based business sectors. Supporting the delivery of RDPE 2007–13 and helping develop the capacity of Business Link to engage fully with land-based sectors;

• Ensuring that Business Link delivery is fully engaged with the Post Office Network Change Programme to help mitigate the impacts and assist business adaptation; and

• Developing a rural evidence base document to underpin development of the Rural Action Plan.

emda has supported a wide range of projects across a spectrum of rural communities and businesses. A small selection of these are set out below:

• emda is funding a rural micro-business support and community renewal programme in the East Midlands area of the Peak District National Park. The programme is designed to complement the services available through Business Link, RDPE and other locally available programmes. ‘Live & Work Rural’ will demonstrate that the principle of being able to live AND work in a rural community is a real possibility;

• emda’s £5m Waterways Investment programme aims to reinvigorate the region’s waterways and realise their economic potential through schemes located near waterways. A total of 22 projects have been contracted to date, covering a wide range of areas, from land remediation for future employment use to infrastructure improvements to stimulate wider developments; waterways transport schemes, restoration projects and riverside mixed use developments;

• A market town benchmarking website has been developed by Welland Market Town Management using funds derived from the Welland SSP and will assist in the development of the 14 market towns in the area. The website allows participating towns to enter data on various key performance indicators, such as car parking occupancy and business confidence in order to assist communities to better understand where they stand in a range of issues; and

• A grant has been awarded for the construction of a 3.5m gallon storage reservoir at Silver Mist Nurseries located in Boston, Lincolnshire. This reservoir will feed a brand new state-of-the-art water irrigation system which will be used to irrigate plants and vegetables that will be used to supply 48 vegetable grower businesses in the region.

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2.11 The Embedding of Sustainable Development

emda’s resources alone will not achieve the objectives of the Regional Economic Strategy. It is therefore vital that key partners work together to ensure that a common vision is shared. It is also important that the knowledge and expertise of key partners in gathering and analysing data is utilised. Contributing to sustainable development is one of emda’s statutory functions. While it has led the way in the development of the Index of Sustainable Economic Welfare, the sustainability ethos needs to be further embedded in emda. (Recommendation 28, paragraph 142)

Contributing to Sustainable Development is one of emda’s five statutory functions as embodied in the RDA Act and reflected in the collective mission of RDAs “to transform England’s regions through sustainable economic development”. As such, we seek to support developments which balance economic, social and environmental considerations leading to a flourishing East Midlands characterised by sustainable economic wellbeing.

Loughborough University note in their written evidence—“In the area of sustainability, emda has played a key leadership role in the region … Indeed the development of the low-carbon energy cluster at Loughborough, and highlighted during the recent visit of the Prime Minister and Secretary of State for Business, are a clear example of the great benefits of the sustained and strategic intervention that emda has deployed in areas of special opportunity”.

The UK Sustainable Development Strategy (Defra, 2005) establishes the context in which Sustainable Development is delivered in the East Midlands. Its principles are fully embedded within the current RES and further articulated in our measurement of the RES vision using the Regional Index of Sustainable Economic Wellbeing (R-ISEW). Furthermore, five of the ten Strategic Priorities demonstrate how our regional economic ambition embeds national sustainability priorities: energy and resources; environmental protection; cohesive communities; economic inclusion and economic renewal.

The national Sustainable Development principles cascade from the RES down through our Corporate Plan and project development and appraisal systems. Any organisation seeking funding from emda must demonstrate how they will deliver against Sustainable Development (SD). From a corporate perspective, emda has an Environmental Management System (EMS) which seeks to reduce our environmental impact whilst improving our corporate efficiency. It includes a number of environmental improvement targets to be achieved by 2010–11:

• 5% reduction in the carbon emissions arising from our offices;

• 20% reduction in business miles; and

• 10% reduction in waste from our office activities.

As well as discharging our SD responsibilities in developing the RES, emda has developed a number of additional subsidiary strategies and action plans which deliver against SD—key examples include emda’s Economic Inclusion Development Plan, the Business Support and Regional Innovation Strategies and our Statutory Equality Schemes focused on race, gender and disability equality. We have also worked with regional partners in the

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development of other regional strategies, policies and action plans to ensure that economic and SD principles are fully embedded.

The National Forest Company noted that—“We are currently working with emda on two projects: the RISEW scoping study (see above) and a project to investigate the potential for carbon markets in environmental services (PES), which could contribute to developing sustainability approaches in the new regional plan. Both of these projects may expand our collective understanding of how the region’s environment sector might contribute to the economy and be incorporated in the Regional Strategy”.

In their written evidence EEF endorsed our approach—“emda has demonstrated a commitment to sustainability not only through the delivery of business support services to encourage businesses to reduce waste and improve efficiency, but also in its approach to physical developments e.g. a requirement for all new buildings to meet BREEAM standards and the on-going redevelopment of one of the most toxic sites in Europe; the former Avenue Coking Works. We feel that emda continues to demonstrate a commitment to the sustainability agenda”.

We fully support the Committee’s focus on sustainable development and will continue to maintain and further strengthen our approach in this area.

2.12 How emda is taking forward the Sub-National Review

The Sub-National Review means another period of change for emda. It will result in additional responsibilities and the need to build working relationships with new bodies, and to develop new working methods. As it moves forward, it is imperative that it develops and maintains close working partnerships in the region. However, the dissolution of the Regional Assembly removes a knowledgeable 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 is welcomed. As emda moves forward, it is imperative that it develops and maintains close working partnerships in the region. (Recommendation 29, paragraph 143)

As stated in both our written and verbal evidence, and set out above, emda has a strong track record of undertaking inclusive strategy development. This was identified as a real strength by the National Audit Office in their 2007 Independent Performance Assessment of emda which stated “emda undertook a wide and inclusive consultation for its RES. The majority of stakeholders we spoke to felt they had played a role in the development of the RES and their suggestions had been acted upon”.1

For clarity, emda has not commenced with drawing together a new Regional Strategy. We await the outcome of the Local Democracy, Economic Development and Construction Bill’s passage through Parliament and for further guidance from Government, which will follow the Bill, before we commence any formal preparatory work with the Local Authority Leaders’ Board.

1 Independent Performance Assessment: East Midlands Development Agency (emda), Page 6, National Audit Office,

2007

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The process we aim to adopt for the new Regional Strategy will place stakeholders at the very heart of our strategic development processes. In line with the Government’s requirements, the region (emda, EMRA and Local Authorities) submitted a Change Management Plan (CMP) at the end of March 2009 which set out the principles and ways of working that will deliver SNR implementation in the East Midlands.

The CMP indicated that the next six to twelve months will see emda, the Regional Assembly and the shadow Local Authority Leaders’ Board engaging in a number of crucial activities to prepare the way for the first Regional Strategy. The first core activity is an open consultation with stakeholders that aims to identify arrangements for stakeholder engagement in the development of the Regional Strategy (RS). In response to this, emda and EMRA recently held a stakeholder event (on 2 July) to begin shaping arrangements for the development of the RS. This event was well attended with over 80 stakeholders from a range of organisations across the East Midlands present.

emda has always prided itself on its approach to partnership working, and our partners also recognise this, for example, Cllr Parsons stated that “I will say this of emda … it will listen to me—there is never a question. If I ask to be heard, I am heard”.

Professor Coyne reiterated this point by stating that—“Our engagement with emda has been strong and effective, and has grown. We have been welcomed in decision making and emda has been receptive to our ideas … I want to leave the message that we are well aligned with an organisation that we see doing a very effective job, that harnesses and uses its resources well, that presses all of us to leverage advantage and that does not lose sight of the end game, which is the delivery of an economic strategy that improves the social and economic condition of the region”.

We intend to continue with this approach as we develop our plans to jointly develop and implement a new Regional Strategy for the East Midlands, with the region’s Local Authorities.

Bryan Jackson Chairman East Midlands Development Agency 29 September 2009