Memorandum submitted by England's Regional Development Agencies

 

 

Introduction

 

Across England, RDAs are committed to helping small businesses survive the current economic downturn and come out even stronger. We are working collectively and with national government, business organisations and other partners to ensure a comprehensive response. At the national level, RDA Chairs are members of the Regional Economic Council, chaired by the Chancellor of the Exchequer and the Secretary of State for BERR. The Council was established to ensure that the issues and concerns of businesses in each region are heard and acted upon across Government.

In the regions outside London, the RDA Chair and the Regional Minister co-chair a Regional Economic Delivery Council with representatives of businesses and organisations that support them. In London, the Mayor co-chairs the High Level London Group, a group of senior leaders from business, unions, and the public sector established by himself and the Minister for London to focus on key strategic issues affecting London's ability to respond effectively to the current economic difficulties; and to identify specific action to be taken by the public sector to feed into national and regional policy making.

These bodies ensure that all concerned have an up-to-date understanding of the issues impacting on businesses in each region and provide a high-level means of ensuring a comprehensive and joined-up response. RDAs provide the councils with monthly economic assessments of the economic performance of their region.

In responding to the downturn, RDAs in the regions outside London are supporting national initiatives to support businesses, re-focusing existing regional initiatives and resource allocations to meet the particular needs of businesses in their regions, and where necessary, establishing additional measures to address new market failures. In London, working with partners, the Mayor is implementing an Economic Recovery Action Plan which refocuses all public sector investment towards helping businesses and includes a new LDA package of public sector support and initiatives for businesses.

 

These interventions all fall within the emerging Business Support Simplification portfolio of products, but utilise the flexibility available to respond to particular business needs and priorities where these vary.

 

Pre-Budget Report

 

The RDAs have been central to Government thinking over recent months, acting as an 'ideas factory', designing innovative suggestions for improvements in the interventions required to assist businesses. We have been creative in our responses, encouraging Government to think outside of the usual rules and regulations. A significant outcome of this enhanced role for RDAs saw, for the first time, the Pre-Budget Report (PBR) contain a specific chapter devoted to the work of the RDAs, entitled 'Meeting the economic challenges in every region' (Her Majesty's Treasury, November 2008).

 

RDAs were supportive of the package of access to finance measures launched in the PBR, which included:

 

Small Business Finance Scheme, enabling up to 1bn lending to be guaranteed by Government;

 

A separate 1 billion guarantee facility to support bank lending to small exporters;

 

a 50 million fund to convert businesses' debt into equity; and

 

in the regions outside London, Regional Transition Loan Funds (TLFs).

 

RDAs were involved in the development of these measures and are providing 110m of their funding towards this package in addition to the wider range of support they are providing to businesses, of which up to 25m is to be provided through the TLFs.

 

 

RDA Response

 

Enhanced Business Link

 

RDAs are responsible for delivering the Business Link service in their regions and have refocused the Business Link offer to provide:

 

Free Business Health Checks, including maximising cashflow, marketing and business planning, debt management, new market and product development;

Access to finance advice, credit crunch presentations and finance clinics;

Guidance and events on how to survive and thrive in difficult times, including advice on reducing energy consumption and costs;

Access to the RDA funded Resource Efficiency Programme;

Access to a specialist skills assessment and the Train to Gain service; and

Analysis and information on new business opportunities and markets.

 

Where necessary, RDAs are either providing additional funding or reallocating existing resources to their Business Link service providers to enable increased access to professional advice and ensuring a comprehensive delivery of the Health Checks. RDAs are mounting a national marketing campaign, supported by tailored regional campaigns, to further promote the support available through Business Link.

 

 

Business Loan Funds

 

Regional Transition Loan Funds

 

In the regions outside London RDAs are committed to establishing Regional Transition Loan Funds to help viable businesses through short-term liquidity problems. The loans will be directed at businesses with good management and viable business plans that can demonstrate an ability to service the borrowing required or refinance it when commercial markets stabilise. The loans will help where such businesses are unable to obtain sufficient funding from conventional sources and as a result are at risk of failure to achieve growth potential, significant short term contraction or going out of business. RDAs have so far launched two Transition Loan Funds (AWM and SEEDA), worth 4 million and up to 3 million respectively, integrated with their existing financial support schemes and further Funds are in the process of being developed in other regions (e.g. the East of England Development Agency is launching a Fund in early Spring 2009 and emda is working with AWM to extend their fund into the East Midlands ).

 

In London, the LDA is developing an Economic Recovery Investment Fund as part of the Mayor of London's Economic Recovery Plan which is due to be launched this month.

 

Increasing Investment in existing or new Funds

 

In addition to the Transition Loan Funds, RDAs are reviewing and in a number of cases extending existing financial support schemes, for example:

 

ONE (North East Regional Development Agency) is providing an additional 6.25 million into the North East Investment and Co-Investment Funds to give vital access to finance for growing firms;

 

Some RDAs (eg NWDA and ONE) are investigating how to secure significant funds (ie in excess of 100 million) from JEREMIE-the Joint European Resources for Micro to Medium Enterprise initiative. The potential scale of this fund will enable the RDAs to continue to deliver existing Investment Funds and also look to create new funding mechanisms that will help support businesses.

 

Yorkshire Forward has approved an investment of 9.7 million in an interim fund to provide support to the South Yorkshire Investment Fund and Partnership Investment Fund and also for the development of a new single regional Venture Capital and Loan Fund. The investment is expected to support 95 businesses.

 

SEEDA will be providing 3 million into a Commercialisation Fund to support businesses to bring new products and services to market as part of the 20 million South East Funding Escalator.

 

emda has provided an additional 1 million of funding for a Resource Efficiency Grant Programme based on stimulating investment by business to reduce their energy, waste and water costs.

 

Grant for Business Investment Scheme

 

The Grant for Business Investment scheme help businesses expand, create new jobs and safeguard existing posts. RDAs have responded to the needs of business in the current climate by enhancing the availability of the scheme and increasing funding for the scheme.

 

Community Development Finance Institutions

 

Community Development Finance Institutions (CDFIs) are a financial tool for social, economic and physical renewal in under-invested communities. They lend and invest in deprived areas and under-served markets that cannot access mainstream finance. RDAs have increased investment in these vehicles, for example, the North West Development Agency is expanding CDFI loans and are working closely with banks on co-financed loans. emda has established a 4.5 million regional CDFI fund. Some CDFIs are also exploring how they might become SFLG accredited.

 

Enhanced Business Support Measures

 

RDAs are refocusing and boosting business support to address the impact of the economic downturn. These measures include some of the examples below.

 

Dedicated Events

 

Some RDAs have held a series of specific events to respond to regional concerns around the economic downturn. emda, for example, has held a series of "Survive and Thrive" events, using private sector experts to run master classes to help business owners to understand how to manage their cashflow more sensitively; negotiate with Banks more effectively; more efficiently manage their resources; and how to deal with any legal issues that may be caused by restructuring their business.

 

Manufacturing Advisory Service

 

RDAs are ensuring that businesses continue to benefit from the Manufacturing Advisory Service by extending and strengthening the service. In particular there is a focus on process improvements to improve productivity and cash flow. In July the RDAs produced a national MAS Activity Report that demonstrated that the MAS service, per in depth consultancy project, produced a 17:1 gross return for the public sector. Yorkshire Forward and emda have approved investments of over 7 million respectively to enhance their MAS programmes which will enable a more comprehensive service to regional manufacturers. EEDA has boosted its investment in manufacturing, design and innovation services with an additional 1.7 million of ERDF funding. MAS pilots, trailing different responses to the economic downturn, will be taken forward to offer MAS at reduced rates in Yorkshire and Humberside and in the West Midlands.

 

Train to Gain

 

RDAs are working with the Learning and Skills Council to secure increased flexibility for the Train to Gain programme to ensure employees have the skills and business knowledge they need and allow shorter, more relevant training. Yorkshire Forward has enhanced Train to Gain funding by 50 million to provide, for example, 100% funding for any training in cases of notified redundancy and a Job retention subsidy of 1,000 per person up to 500,000 if a new investor takes on otherwise redundant employees. NWDA are putting a 22 million package of support measures together, focussing on Leadership and Management and Mentoring.

 

Designing Demand

 

SEEDA is adding a new element to the 'Designing Demand' programme called 'Immerse' which will provide intensive, extended design support to selected larger businesses. EEDA is rolling out a similar scheme, working with the Design Council and their manufacturing and innovation advice services.

 

Corporate Commitment to support SMEs

 

RDAs have committed to meeting the government's target of paying invoices within 10 days. The LDA as part of GLA Group is also committed to paying SMEs within 10 working days.

 

Liaison with the Regional SME Base

 

RDAs, through their private sector-led Boards, are close to the needs of businesses. RDAs have strong relationships with businesses of all sizes within their regions and with the regional arms of the principle business organisations. Indeed the RDAs organise themselves on a national basis to do this on behalf of the network, with lead RDAs cultivating strategic relationships on behalf of the network with the Confederation of British Industries, the Institute of Directors, the Federation of Small Businesses, the British Chambers of Commerce and with the Engineering Employers Federation. RDAs use these relationships to assess the level of priority that businesses place on an issue to help guide the development of responses and importantly to attain timely feedback on the impact of interventions.

 

December 2008