Regional development agencies and the Local Democracy, Economic Development and Construction Bill - Business and Enterprise Committee Contents

Memorandum submitted by Chemical Industries Association


  The Chemical Industries Association is pleased to have the opportunity to make a submission to the Committee about the role of Regional Development Agencies.

  The CIA is the leading representative and employers' body for the UK chemical industry, with 150 members at over 200 manufacturing sites. Some sites produce bulk chemicals; others make smaller volumes of speciality chemicals.

  Turnover of the UK chemicals sector in 2006 was £57 billion (including merchanted goods). It accounted for 1.5% of UK GDP and almost 12% of manufacturing's gross value added. [Source: Office for National Statistics (ONS), Annual Business Inquiry.] It employs some 185,000 highly skilled people directly and supports several hundred thousand jobs throughout the broader economy. The chemical industry typically contributes an annual surplus of £5bn to the UK's balance of payments [Source: ONS].

  The industry is global both in terms of markets and ownership, with over 65% of CIA's membership being foreign "headquartered". All our members rely directly or indirectly on non UK-business and they complete globally for these contracts. Any significant imbalance between the UK business climate and other markets can therefore lead to the loss of UK trade and investment.

  The CIA does not have much experience of working directly with Regional Development Agencies but we do work closely with the RDA funded Regional Chemical Initiatives (RCIs).


  1.  The chemical industry is concentrated in three key regions, the North West of England, the North East and Scotland. Companies in these areas benefit from being a priority within the regional structure. There is also significant industry in the South and South East but because it is not clustered it does not have the distinct identity to help it attract support through the regional structure.

  2.  The creation of the RCIs such as—Yorkshire Chemical Focus, NEPIC, and Chemicals Northwest by the RDA's has been of value to many chemical business in the those areas.

  3.  Smaller companies in particular benefit from the "one stop shop" role the RCIs play, especially as an interface between companies and public sector schemes to benefit them. They also give companies access to useful networks, best practice sharing and, general local business collaboration.

  4.  They are also a useful platform to spread messages to local firms on national policy issues such as health, safety and environment. Regional government funding of the RCIs also allows for attractive membership fees, which helps ensure that many small chemical companies do participate.

  5.  These are extremely useful services, with the RCIs acting as very valuable regional delivery mechanisms.


  6.  The perception of RDA effectiveness amongst CIA membership is not consistent.

  7.  Within the regions where the chemical industry has as strong presence many companies value the RCIs. Other companies are scathing about the relevance of RDAs, especially for an industry that competes globally rather than regionally.

  8.  The best evidence that the RDAs who have a focus on chemicals and fund a RCI add value is the discontent amongst SMEs in the south of England who do not get support from their RDAs. This means there is not a level playing field for businesses that are in areas where the industry is more dispersed and as a result is not given priority by the RDA. This is an issue that needs addressing, especially if there were to be an increase in the budget and remit of the RDA's as this would increase the potential to distort the market place.

  9.  Where the RDA's add value is through the work of the RCIs delivering national policy locally and in the sharing of good practice.

  10.  Byway of examples, the CIA has worked closely with Chemicals Northwest to deliver workshops on responsible energy use and the EU Emissions Trading Scheme. This is a good example of where the RCI's regional network has helped us to deliver national policy issues with international implications.

  11.  Similarly we are working with NEPIC to spread the word about new European chemical legislation called REACH. We have recruited a REACH Ambassador to alert businesses in the North East through the NEPIC network, to their possible responsibilities under REACH and to sign post them to the help they need.

  12.  The National Skills Academy for the Process Industries (NSAPI) is another good example of where national-level thinking—through the Chemistry Leadership Council—has progressed to national/regional collaboration in delivering the Academy. This represents a good example of the RCIs, CIA and national Government working well together.


  13.  The view of the CIA is that with chemicals being a truly global business, support for companies to explore and exploit overseas markets is welcome.

  14.  However a key issue for the chemical industry is that regions should not be competing against each other in the international arena. Government funded overseas activities should focus on promoting what UK Plc has to offer and not the rivalry between regions.

  15.  The reality is that when companies are assessing where to invest they are not choosing between UK regions they are comparing the UK to its European and Asian rivals. An apparent disconnect within the UK is not a helpful image to portray and is an inefficient use of resources.

  16.  Anecdotally we hear of trade missions from one RDA following hot on the heels of another with no attempt at co-ordination. This does not give potential foreign investors the perception that the UK is a dynamic and convenient place to do business if they have to deal with each region and its complexities separately.

  17.  The remit of the RDAs should require them take into account the international interests of the industry as a whole when planning their regional activity.

  18.  The best use of RDA overseas funding has been when one of the RDA's has done some co-ordination of trade support for the chemical industry. This function could be provided by existing bodies at a national level.


  19.  The key priority for any change in remit for the RDAs verses central government, agencies and local government is greater clarity for business about who does what.

  20.  At the moment there seems to be a great deal of overlap in remits, which means wasteful competition on some issues whilst others are neglected. With the remits of RDAs often, unclear businesses are not able to make best use of the services they already offer.

  21.  If the RDAs gain new functions, including the delivery of EU funding then the issue of a level playing field for businesses must be addressed. We would also be cautious about the danger of double funding.

  22.  There are already inconsistencies between the level of support available to chemical companies in the south and north of the UK. It would be unfortunate if an increased imbalance further eroded the ability of southern-based companies to compete because they are not the dominant economic driver for the region.

  23.  We strongly believe that the remit when it comes to business should remain using local networks to deliver practical business support and spreading of best practice. We do not believe that the remit should be formally widened to include lobbying on public policy, which is already happening informally. We do not believe this is an appropriate use of public funds and any move towards delivering EU funding would need to be matched by very clear terms of reference and accountability.


  24.  As a national trade association it remains very difficult for CIA to judge the effectiveness of RDAs. Our relationships are good with the regional chemical initiatives but it would be impossible for us to give a considered view on whether the RDA structure provides good value for money.

  25.  We are not clear where they get their mandate to act as a lobbying influence and how business can shape the views that they put forward.


  26.  In conclusion the chemical industry values the funding that has gone into the RCIs to improve business competitiveness. We would point in particular to the support for best practice sharing, local industrial (and academic) collaboration and the ability of the RCIs to help deliver local messages on national/international policy and legislative issues.

  27.  On the assumption that there are key performance indicators in place, we would support a continuation of funding for local business support and networks. In giving this support we would also plea for a simplification and rationalisation of business support schemes and structures, with clear remits for all delivery mechanisms.

  28.  If the RDA structure and its delivery arms were to be disbanded, the CIA does believe that it would still be able to work well with businesses in the regions—in part a consequence of, and tribute to, the good work done by the RCIs. We would want to see the funding for local business support remain regardless of how it is administered.

1 October 2008

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