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Memorandum submitted
by the East of
Background
1. The East of England Regional Assembly (EERA) is a regional strategic partnership which promotes the economic, social and environmental well-being of the region. It has statutory responsibilities as the regional planning and housing body and in ensuring that the East of England Development Agency (EEDA) is accountable for its work in the region. 2. The Assembly also provides a wide range of services and assistance to local government in the region including consultancy, training, networking events and conferences. There are 105 members of EERA in 2008-09 comprising 70% elected councillors and 30% community stakeholders.
3. EERA welcomes the opportunity to submit evidence, which draws on a number of sources including:
· the Regional Funding Advice submission to Government in February 2009;
· the East of England Implementation Plan consultation draft April 2009;
· "Public Expenditure in the East of England" prepared for the East of England Strategic Authority Leaders Group by Stephen Lord in February 2009;
· the joint EEDA / EERA statement submitted to the House of Lords inquiry into the Barnett formula in March 2009; and
· the EERA review of EEDA's commissioning of the regionalised Business Link service for the East of England March 2009.
The nature and extent of the Government's
programme in the East of
4. The Government's principal response to the downturn, "Real Help Now", includes a range of initiatives intended to help businesses and individuals, including: assistance for business to secure access to finance and maintain cash flow; help for business regarding payment terms and resource efficiency; skills provision; debt and legal advice; aid to prevent repossessions; shared equity and shared ownership home buying schemes; and assistance with affordable and social housing.
5. There are signs that some of these initiatives are being delivered successfully in the region and the Assembly welcomes this. For example it is understood that: nearly £20m of eligible applications for the Enterprise Finance Guarantee Scheme have been granted, are being processed or assessed; Her Majesty's Revenue and Customs Business Payment Support Service has allowed over 10,200 businesses in the East of England to benefit from arrangements giving them more time to pay their tax bills; under Train to Gain over 40,000 people took up training during 2008-09, representing an increase of 174 per cent on the previous year; South Norfolk and Kings Lynn & West Norfolk Councils have completed mortgage rescue schemes; and tenants in Thurrock and Basildon will benefit from nearly £5m for repairs and refurbishment being brought forward in response to the recession.
6. The Government's programme is complemented in the East of England by flexible use of the EU Structural Funds. Finance from the European Social Fund is being used to supplement co-financing plans under the Employment Programme to support the Economic Downturn and Redundancies Joint Regional Plan. New activity and extensions of current contracts have been funded to support those facing redundancy, those who have recently been made redundant and the long-term unemployed. The European Regional Development Fund can now be used more flexibly under the Structural Fund Regulations; an additional 2.5% float has been approved for the Competitiveness Programme to ensure that monies are not lost to the region and Programme funding can now for the first time be spent on energy efficiency measures for low-income housing. In the view of the Assembly, it is crucial that the region continues to lobby to influence, and acts to make maximum use of, EU funding to support businesses and economic development.
7. The enhanced business support offer through EEDA, including Business Link East, has included: the delivery of 5,000 free Business Link 'health checks'; responding to greatly increased volumes of enquiries to Business Link; additional funding to help businesses to start up and grow; work with the banking sector to develop a better understanding of the financial support available; £1.32m additional investment in the Manufacturing Advisory Service; enhanced provision of information and advice; and the introduction of a new regional loan fund.
8. The enhanced business support offer is welcomed and the re-focusing of finances is supported, but the Assembly notes with concern that this activity has taken place against a backdrop of constant cuts to the budget of the RDA and that further raids to the EEDA budget are under consideration by BERR for the forthcoming financial year. It is difficult to reconcile the Government's reliance on RDAs to help combat, and lead the country out of, recession, with frequent raids on RDA budgets.
The role of front line agencies in delivering this programme
9. A review of EEDA's commissioning of the regionalised Business Link service for the East of England was completed by EERA in March 2009. EERA found that Business Link East meets, indeed exceeds, the targets set by EEDA but made a number of recommendations about changes that might be made to better support economic growth and job creation or protection in the region. In particular the Assembly recommended that:
· there should be an up-to-date Business Support Strategy for the East of England that promotes and co-ordinates more intensive, value-added business support and advice services as opposed to light-touch and superficial contact; · there is an urgent requirement to develop a new performance framework for the service since the current three key performance indicators are unhelpful and drive perverse outcomes; and · more resources should be made available to deliver the Business Link service in the East of England since, as with other aspects of EEDA and local authority funding in the region, the Business Link budget is relatively modest compared with other regions and this acts as a considerable constraint on the capacity of the service to support businesses during the current economic circumstances and this will apply equally during the upturn.
How the various agencies are working together to deal with the current climate and also to prepare citizens and communities for the future upturn
10. In addition to national and regional initiatives the local authorities in the region are working to address the current challenges and future needs; for example: · Cambridgeshire County Council is acting through a Cambridgeshire Together project called Weather the Storm, whereby a group of the County's most influential organisations has launched www.weatherthestorm.org.uk; a guide to local and national advice and for individuals, families and businesses through the economic downturn; · Norwich City Council is in the process of re-focusing finance available through the Local Enterprise Grants Initiative to: support increased business advice sessions and start-up training at Norwich Enterprise Centre; increase support to Norwich4Business, the Foundation East Community Development Finance Initiative and the Prince's Trust; enhance local skills provision; deliver new marketing support in key sectors; promote inward investment; and support development of the Genome Analysis Centre. · Essex County Council with other public sector partners has launched a number of actions to support its communities through the economic downturn including proposals to establish Banking on Essex; · Basildon District Council is: intervening early to prevent residents from falling into financial difficulty; continuing to strengthen its partnerships with other community organisations; and helping ensure that local small and medium-sized businesses can compete against outside companies for local authority contracts; · Ipswich Borough Council has prepared and launched an information leaflet "Credit Crunch: how we can help" including information on: business support and advice; benefits and council tax discounts; concessionary travel; easy direct debits; and housing; · Watford Borough Council has delivered its residents' magazine "About Watford" to all 35,000 households in the borough promoting Watford CAB and Watford Credit Union; · Tendring District Council ran a Business Summit in January 2009 to advise businesses what help is available to them through the recession. Tendring has also produced a "Credit Crunch Leaflet" and has designed a webpage that is updated regularly with new information; · Central Bedfordshire Council has approved an additional £50,000 to help voluntary organisations respond to a rise in demand for services, particularly around debt, redundancy and benefit advice; · Kings Lynn & West Norfolk Borough Council held an economic summit titled "Tracking and Tackling the Recession in West Norfolk" in January and has subsequently published a report proposing measures to assist businesses and council taxpayers in areas such as: hardship relief; business advice; and debt counselling. · Stevenage Borough Council has been working since late last year on a programme of work to support communities, local businesses and the voluntary sector agencies through the recession and into the "upturn".
11. EERA also has a key role in the current climate and is for example issuing and analysing a series of questionnaires to all local housing authorities in the region to gauge the impact of current market conditions on homelessness, mortgage rescue, private sector housing and housing starts and completions.
12. EERA will also: publish quarterly 'Housing Market Updates' providing a range of information, analysis and housing market data; programme manage 16 projects funded through the £25 million Private Sector and Mixed Communities Fund to deliver projects that will help stimulate the green economy in the region whilst reducing carbon emissions and fuel poverty; and lead a £5 million 'Eco Retro-Fit' programme to improve conditions the existing housing stock, working with a range of partners including EEDA and HCA.
The impact of economic aid to the region
13. In addition to generic policies and programmes at the national level, The East of England attracts economic aid through three Growth Areas, four Growth Points and 21 Key Centres of Development and Change.
14. Growth Area Funding will be worth £144 million of the national total of £489 million during the period 2009-11 and for the same period £58 million has been awarded to 8 regional projects. Under RFA (2) a further £1.2 billion has been awarded for the period 2008-19 for major transport schemes such as the completion of A11 dualling between Fiveways and Thetford.
15. Nonetheless, despite the region:
· having gone into the recession in a position of strength, as a diverse economy with relatively high levels of private investment and low levels of unemployment; · being in a good position to respond to the upturn, not least because of its strengths in innovation and high growth sectors such as IT, R&D and life sciences; and · being one of only 3 UK regions along with London and the South East that makes a net contribution to the Exchequer (of around £5.4 billion to £6.1 billion);
prospects
for future growth are constrained by its receipt of significantly lower levels
of public expenditure than the
16. These low levels of public spending are found across all parts of the public sector and more appropriate needs-based funding is required to ensure the region remains successful.
17. Although English regions are not individually subject to the Barnett Formula they do experience many of the same drawbacks since England's public spending differential with the rest of the UK is carried over to the regions. English regions with above average population growth are disadvantaged because accurate estimates of population by local authority or PCT are available only with the release of Census data every ten years. In recent years, revisions to official estimates of England's population between censuses have all been upwards. Furthermore the cost of service delivery differs between regions due to differences in wages, living costs, transport infrastructure and population density and differences in need often have regional characteristics.
18. Because of a failure to address these factors convergence of per capita public spending across England is not happening, as is evidenced by the following:
· Between 2002-03 and 2007-08 the East of England received around 87% of the average spending per head for England. In 2007-08 planned expenditure per head in the East of England was £6,555, compared with £7,535 for England as a whole;
· For 4 of the 6 years, the East of England had the lowest level of public spending per head of any region in England;
· Spending per head of population in the East of England on Economic Affairs was only 80% of the England average, with spending on "enterprise and economic development" only 42% of the English average; the East of England also received a relatively low share of expenditure on transport, 77% of the England average, and housing and community amenities, 65% of the average;
· In 2008-09 local authorities in the East of England region will receive £396.92 per head of population through formula grant, compared with an average of £537.70 per head for England. The East of England allocation is 74% of the England figure, a difference of £139.78 per head of population;
· In aggregate, the East of England region receives the second lowest formula grant per head of any region in England and this will remain so until 2010-11 at the very least;
· Local authorities in the region will also receive £246.6 million, 8.1% of the total, from 46 area based grants. This amounts to £43.36 per head of population, compared with £59.73 per head for England overall. The difference of £16.37 per head is equal to a shortfall in grant of £93.1 million;
· In total, local authorities in the East of England region will receive £3,936 million from specific grants in 2008-09, equivalent to £692.19 per head of population. This compares with an average of £752.55 for England, a difference of £60.35 per head. If councils in the East of England were funded at the same level as the England average, they would receive an additional £343.2 million in specific grants;
· The East of England received £183.76 per pupil less than the England average of £4,079.88 per pupil from the Dedicated Schools Grant in 2008-09. This is equivalent to a shortfall in funding from DSG of £147 million; and
· For all the other grants for schools and younger people, the region received a lower share than its share of pupil numbers. This shortfall, in total, is equivalent to £305.52 per pupil, or £244.4 million in grant.
The measures which could be taken to provide sustainable economic growth
19. The East of England Plan, the region's spatial strategy (RSS) adopted in May 2008 and Inventing our Future: Collective Action for a Sustainable Economy, the new regional economic strategy (RES) launched in September 2008, set ambitious targets for the region. As the two strategies have a shared evidence base and a clear set of priorities that will shape the spatial and economic context for the next 20 years there are clear benefits in developing a joint response to implementation and this work is underway through a project that is unique to the East of England.
20. EERA and EEDA, as "custodians" of the RSS and RES respectively have been working with regional and sub-regional partners, including GO-East, the Environment Agency, the Homes and Communities Agency and the local authorities to prepare the East of England Implementation Plan (EEIP).
21. The EEIP, which is out for consultation until 3 July 2009, aligns the targets and objectives of the RES and RSS and sets out the critical interventions needed to meet these up to 2021 and beyond. The final document will show how the region intends to move towards meeting its ambitions to deliver sustainable growth, which includes appropriate infrastructure investment, a skilled workforce, vibrant places, distinctive urban and rural environments and a good quality of life for all communities. This will enable a greater coordination of delivery and alignment of major investment decisions across organisations. The EEIP will be central to securing more resources for the region and making better use of those that already exist.
22. In its draft form, the EEIP promotes 7 themes, each delivering a set of programmes, and these represent the emerging regional view on what activities should be supported to provide sustainable economic growth:
· Housing; · Transport; · Utilities; · Enterprise, Innovation and Business Support; · Skills and Employability; · Culture, Creativity and the Visitor Economy; and · Green Infrastructure.
23. The evidence base for this work in the East of England draws on a forecasting model run by Oxford Econometrics and managed by regional stakeholders through EERA's Labour Market and Economy Group (LMEG). The model projects economic, demographic and housing trends in a consistent fashion and is a key tool in informing the Regional Spatial Strategy review. LMEG has developed a number of recession scenarios including moderate, severe recession and fast recovery to run through the model.
24. The results of these forecasts are being used by the region and partners to help assess the likely consequences of the recession under the different scenarios. This will help predict and prepare for possible economic, demographic and housing changes and ensure that existing policies are adapted and new policies implemented to manage the change as appropriate.
In Conclusion
25. EERA is largely content with the additional measures the Government has introduced to respond to the economic downturn. However, we are less satisfied that the Government has thought through and prepared to deliver the resources necessary to ensure that when the downturn ends, the region is able to play a strong role in supporting UK plc and taking its fair share of future growth and development.
26. The Government needs to find new, fairer ways
to "fund the goose that's laying the golden eggs". Investing in the region's success
will be the best guarantor of that outcome. While that process will not be
easy, particularly during years of fiscal tightening, the East of
22 May 2009 |