Memorandum submitted by Chemical Industries
Association
INTRODUCTION
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).
THE NEED
FOR REGIONAL
DELIVERY
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.
THE EFFECTIVENESS
OF RDAS
AND THEIR
ROLE IN
ADDING VALUE
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.
THE EXTENT
OF, AND
NEED FOR,
RDA OVERSEAS ACTIVITIES
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.
EXPANDING RDA REMIT
INCLUDING THE
DELIVERY OF
EU FUNDING
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.
THE ACCOUNTABILITY
OF RDAS
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.
CONCLUSION
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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