Memorandum submitted by the East of England Development Agency (EE 22)

 

 

Contents

 

Part 1 Summary

 

Part 2 East of England Development Agency

 

Part 3 How the global economic downturn is affecting the East of England

 

Part 4 EEDA's response to the global economic downturn

 

· Supporting people in the East of England

· Supporting businesses in the East of England-business support

· Supporting businesses in the East of England-start up and growth

· Supporting places and investment in the East of England

· Economic intelligence

· Communications

· Impact

· Working with partners

· Preparing for the upturn

 

Part 5 Ensuring sustainable economic growth in the East

· Regional Economic Strategy, Regional Spatial Strategy and joint implementation plan

· Regional Funding Advice to Government

 

1. Summary

 

1.1 The East of England went into the recession in a relatively strong position as one of the strongest growing regional economies in the last 20 years. It nonetheless went into the recession faced with the long term challenges of building on successes such as innovation and enterprise, and boosting investment in infrastructure and longer-term skills development. These long term challenges were a key part of the Regional Economic Strategy which was published in 2008 and are still relevant today. Now the region has the additional short-and medium-term priorities of ensuring the survival of businesses and jobs during the recession. So far, the region has been less vulnerable to job losses than other UK regions, although there are no guarantees that this will continue.

 

1.2 Whilst there is little doubt that this will be a difficult period for the East of England, as elsewhere, it is possible that the region can make a significant contribution to the recovery of the UK economy. The East of England Development Agency (EEDA) has taken an approach that deals with the long term challenges of economic development as well as the short term threats of recession.

 

1.3 EEDA's main roles, in dealing with both the long term challenges and the short term threats are:

· setting and shaping the direction of economic development in the East of England;

· persuading and influencing others to bring resources together to find innovative ways to solve challenging economic issues; and

· investing in programmes and projects that tackle market failures and will have a significant impact on economic development in the East of England.

 

1.4 EEDA has been applying this approach in responding to the impact of the economic downturn through supporting people, businesses and places to:

· help them through the current climate;

· prepare them to take advantage of the upturn when it occurs; and

· ensure sustainable economic growth in the East of England.

EEDA also plays vital roles in providing economic intelligence to inform service provision, co-ordinating publically-funded support to businesses and communicating the support available. EEDA has delivered or promoted national initiatives in the region but it has also supported the delivery of unique initiatives which respond to specific needs in the region.

 

1.5 EEDA has taken a consultative, responsive and flexible approach to responding to threats posed by the downturn. It has realigned its budget to focus its resources on appropriate and accessible measures to mitigate the economic downturn. EEDA has also sought to optimise the use of existing European funding programmes available and lobby for further EU investment. EEDA is building on strong partnership working in the region, working with many other partners who have a role to play in supporting the region through the downturn.

 

1.6 There has been strong demand for EEDA funded programmes and services. Although it is too early to evaluate their impact in the current climate, many of these programmes have previously been evaluated and demonstrate a significant impact and good cost-effectiveness.

 

1.7 EEDA is supporting the skills, sectors and clusters that will drive the region's medium-term growth. EEDA is balancing its immediate response to demand during the downturn with the need to maintain support to ensure the region is well-placed to take advantage of the upturn when it occurs.

 

1.8 The Regional Economic Strategy and Regional Spatial Strategy remain the long-term plan for the future well-being and prosperity of everyone in the East of England. The focus of activities over the medium term needs however, to recognise and respond to the difficulties of the current economic situation. Many public sector budgets, including our own, are also facing significant reductions. In this context, achieving some of the region's ambitions will be more challenging.

 

1.9 Continued strong partnership working in the region, with other key agencies, local authorities and others will be essential. The East of England will also not be able to achieve its ambitions for sustainable economic growth without the support of Government. The Regional Funding Advice to Government identified a number of areas where further Government support is welcome to tackle key strategic issues identified by the region to stimulate sustainable economic growth.

 

1.10 This evidence sets out some relevant background information on the East of England Development Agency and how the global economic downturn is affecting the East of England. It then sets out the mechanisms by which EEDA is addressing the economic downturn. It also sets out the mechanisms by which EEDA is ensuring the region is able to take advantage of the upturn when it occurs and ensuring sustainable economic growth in the region.

 

1.11 The East of England Development Agency welcomes the opportunity to submit evidence to the Committee's inquiry. If you require any further information on this matter we would be happy to assist.

 

 

2. East of England Development Agency

 

2.1 EEDA is one of England's nine Regional Development Agencies (RDAs) established in 1999 as Non-Departmental Public Bodies reporting to the Department for Business, Enterprise and Regulatory Reform (BERR). The RDAs are required to improve the economic performance of the English regions and reduce the gap in economic growth rates between regions. EEDA drives economic performance in the East of England by addressing issues including innovation, business competitiveness, skills, and transport, but is not the only public agency responsible for the region's economic performance or responding to the downturn. EEDA's main roles are:

· setting and shaping the direction of economic development in the East of England;

· persuading and influencing others to bring resources together to find innovative ways to solve challenging economic issues; and

· investing in programmes and projects that tackle market failures and will have a significant impact on economic development in the East of England.

EEDA prepares the Regional Economic Strategy (RES) for the East of England, on behalf of the region[1]. EEDA is business-driven, championing a business perspective in public decision-making in the region and ensuring that the climate for business success continues to flourish. EEDA delivers immediate, effective and appropriate financial advice and support to firms, especially small and medium-sized enterprises.

 

3. How the global economic downturn is affecting the East of England

 

3.1 The East of England has one of the strongest economies in the UK. Over the last 20 years, the region has had one of the highest long-term economic growth rates and one of the highest employment rates of the UK regions. It nonetheless went into the recession faced with the long term challenges of building on successes such as innovation and enterprise, and boosting investment in infrastructure and longer-term skills development. The East of England is the country's top location for innovative activity and private sector research and development[2] and has one of the highest numbers of small and medium sized enterprises (SMEs) of the regions. The region has assets of national importance, including major international ports and airports, research institutes and the globally-renowned Cambridge University. The region's diverse economy and lesser reliance on traditional manufacturing means that the East of England entered the recession in a less vulnerable position with sectors that are more likely to survive in the recession or to recover in the short term. EEDA's analysis of the impacts of the recession has shown that the region's pharmaceutical, technology, niche manufacturing and agricultural sectors have maintained growth, but that some sectors have contracted significantly[3]. Structural change is occurring in the economy, and the sector outlook will continue to change and be subject to uncertainty for some time.

 

3.2 The East of England's economy has contracted sharply since mid-2008, although the pace of decline is slowing. Construction and housing-related activities have seen high levels of redundancies in line with the downturn in the region's housing market. Housing starts fell to their lowest level on record in the second half of 2008 and house prices have fallen 18 per cent from their peak in January 2008. Activity is now returning to the market in terms of new enquiries and sales, although prices continue to fall and first-time buyers continue to experience difficulty accessing mortgage finance and raising larger deposits.

 

 

 

3.3 Manufacturing has been the hardest-hit sector in this recession with the highest number of notified redundancies, including automotive manufacturers such as Perkins Engines (Peterborough), Visteon (Essex) and Delphi Diesel Systems (Suffolk) and food production companies such as Vion (Suffolk), Bernard Matthews (Norfolk) and Tulip (Norfolk and Cambridgeshire). This is evident in regional labour market impacts. Contrary to early assumptions that the Greater South East's service sector would be hit hardest in this recession, unemployment has increased most in the traditional industrial regions of northern England and the West Midlands. In the East of England, unemployment increased to 5.9 per cent in 2009 Q1, from 4.5 per cent a year earlier. Impacts have differed across the region, with Harlow, Peterborough and Thames Gateway experiencing the largest relative increases in unemployment. Cambridge has been least affected, due to its high student population and public sector employment.

 

 

3.4 Employment in the region has remained stable over the last year. In 2009 Q1, the region's working-age employment rate-at 77.7 per cent - was the same as a year earlier while numbers in employment had increased. The rise in unemployment reflects growth in the labour supply including new entrants to the labour market who have experienced difficulty obtaining work due to fewer vacancies available. This will be of particular concern as we approach the end of the academic year[4].

 

 

3.5 The lower value of sterling relative to other currencies has helped to boost domestic tourism bookings within the region, benefiting coastal areas in particular-including Great Yarmouth (the region's most deprived district). However, the decline in world trade has offset the benefits that many exporters may have realised from the lower value of sterling. The decline in world trade is evident at the region's ports with port operators at Felixstowe and Harwich cutting costs and jobs due to overcapacity. Key investments are also under threat with Dubai Ports World stalling its projects worldwide to cut costs-including its £1.5 billion investment at London Gateway (Thurrock).

 

3.6 Looking ahead, EEDA forecasts suggest that the region's GVA will decline by 4.1 per cent in 2009, followed by marginal growth of 0.3 per cent in 2010. Businesses are now less pessimistic about their outlook than at the end of 2008 although, even when business conditions begin to improve, unemployment is unlikely to fall until businesses are confident of a sustained recovery. The region's future economic success will lie in our historic economic strengths and assets. Key will be enhancing our role as a leader in innovation and ensuring that the region has the potential to further develop innovative opportunities that will arise.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. EEDA's response to the global economic downturn in the East of England

 

4.1 The Government has made it clear that action is required internationally, nationally and locally and has introduced a range of measure to respond to the global economic downturn. The Government's 'Real Help for the East of England' booklet describes the help available[5].

 

4.2 In light of the economic downturn and budget reductions, EEDA has taken a consultative, responsive and flexible approach. It has realigned its budget to focus its resources on appropriate and accessible measures to mitigate the economic downturn[6]. EEDA is responding to the impact of the economic downturn on the East of England region through supporting people, businesses and places to:

· help them through the current climate;

· prepare them to take advantage of the upturn when it occurs; and

· ensure sustainable economic growth in the East of England.

EEDA also plays vital roles in providing economic intelligence to inform service provision, co-ordinating publically-funded support to businesses and communicating the support available.

 

4.3 EEDA has delivered or promoted national initiatives in the region. For instance:

· enabling Business Link to deliver free 'health checks' for businesses in the region; and

· supporting the flow of bank lending through discussions with the banking sector in the region.

EEDA has also supported the delivery of unique initiatives which respond to specific needs in the region. For instance:

· the region's response to redundancy programme which also enables smaller businesses, which dominate in this region, to access support for which they would otherwise fall below the threshold of support owing to their size.

In addition to adapting our own programmes, EEDA has also sought to optimise the use of existing European funding programmes available and to lobby for further EU investment, to assist businesses and individuals in dealing with the downturn. For instance:

· EEDA has worked with the European Social Fund to boost the Beyond 2010 skills programme, including the response to redundancy programme, increasing the total package to £7.2 million.

 

4.4 The East of England will continue to require support from Government on issues relating to the downturn. For example, issues that are raised through the Regional Economic Forum and Regional Economic Council, as well as support for EEDA as we re-profile our budget in the current spending period to provide an enhanced package of business support. EEDA welcomes the way in which the Government has responded to issues that have been raised previously such as the issue of trade credit insurance. Examples of areas where additional support is required include:

· addressing the gap in early stage finance for companies in sectors with long lead times for getting products to market such as clean technology, life sciences and advanced engineering;

· given the increased demand for Higher Education, lifting the cap on funding of University places would help to stem rising unemployment and provide long-term productivity benefits; and

· using the tax system to incentivise individuals and businesses to adopt low carbon technologies, increase investment in new technologies and create new demand for products.

Section 5.10 sets out some of the areas where Government support is required for the longer term development of the region.

 

Supporting people in the East of England

 

4.5 The East of England has seen a substantial increase in redundancies, particularly in December 2008 and January 2009 and in line with national trends. The RES highlights that improving skills levels is one of the most pressing challenges in the region. While labour demand is weakening and the labour supply is increasing, skills are becoming increasingly important to enable individuals to compete in the labour market. With demand for higher-level skills increasing, the weaker skills profile of the region will also present a real challenge in the medium to longer term to individuals, society, businesses and the wider economy.

 

4.6 EEDA is working with Jobcentre Plus (JCP), the Learning and Skills Council (LSC), local authorities and others to help provide support, advice and guidance for employers, employees, unemployed people and the economically inactive during the economic downturn. Support for people is provided through EEDA's £7.2 million European Social Fund co-financed Beyond 2010 programme, £3.9 million Train to Gain brokerage and £28 million Economic Participation programme. In the short term these initiatives will help employers retain and develop their workforce, provide guidance and re-training opportunities to individuals facing redundancy and improve the employability and skills of employees and individuals in the region. In the longer term, this will help businesses improve their efficiency and productivity and equip individuals to compete in the labour market. Support for people in the region includes:

· EEDA has increased its investment in its Beyond 2010 skills programme[7] by £1 million using European Social Fund funding to boost the support available within the response to redundancy element of the programme. Over 260 companies, with over 420 participants, have been supported through this part of the programme since Autumn 2008;

· Beyond 2010 also includes the response to redundancy programme which provides advice, guidance and re-training opportunities to individuals facing redundancy. Over 2,600 individuals in over 260 companies have been supported with skills training to help them to work or self-employment through this programme since Autumn 2008. This programme is currently taking on around 400 individuals a month.[8] EEDA also takes the lead in collating data on the holistic redundancy picture in the region;

· As part of the Government's 'Solutions for Business'[9] initiative, from 1 April, EEDA has managed the brokerage element of Train to Gain. This means that the information, diagnosis and brokerage functions which relate to business support are now strengthened by similar functions that support employers' access to skills development and training. This integrated package of support is delivered under the Business Link brand. Integrated brokerage enables businesses to receive a more joined-up package of support. EEDA is working to develop integration further so that all packages of support to business are more readily accessible; and

· EEDA's flexible sub-regional Economic Participation programme provides innovative approaches to support people facing barriers to the labour market and flexible, responsive support to those affected by the downturn.[10]

 

4.7 Evaluation of the cumulative impact of EEDA's people and skills interventions to date has shown a high rate of return for investment, with a return of £6.60 for every £1 EEDA has spent, compared with a national average for RDAs of £2.50 for every £1 spent. Mainstream funding levels remain amongst the lowest amongst all regions and efforts to join up the employability and skills offer locally are still at an early stage. Economic participation funding remains the most flexible source of funding available to localities to help address skills and employability and support early enterprise development, complementing and enhancing regional responses to redundancy.

 

Supporting businesses in the East of England-business support

 

4.8 EEDA is providing accessible business support that flexibly responds to needs in the region. EEDA has worked hard to ensure that its own suite of business support products is compliant with the Solutions for Business framework, as required by BERR. Along with our Business Map this ensures that they deliver a very clear route map for businesses seeking support.

 

4.9 EEDA has boosted its £30 million business support package to respond to needs in the region. Core EEDA-funded businesses services include:

· Business Link Gateway[11];

· Manufacturing Advisory Service (MAS East)[12];

· Resource Efficiency East[13];

· East of England International[14];

· TakeITon[15];

· access to finance[16];

· women's enterprise[17];

· social enterprises[18];

· support for the London 2012 and Paralympic Games electronic brokerage service, Competefor[19]; and

· Business Map[20].

 

4.10 EEDA has flexed its universal frontline support through Business Link. Business Link responses include:

· free personalised 'health checks'[21]. Since October 2008 around 5,000 free health checks have been delivered by Business Link in the East of England[22]. The Business Link gateway is also adapting its service to respond to high call volumes, signposting businesses to specific areas of support;

· free Business Link events, with the usual £30 fee being waived-saving businesses in the region around £400,000 per year;

· a £500 voucher scheme redeemable against consultancy services;

· Business Link introduced a new business start up course in October. There has been continued strong demand for Business Link's support for start-ups as the downturn prompts many people to consider starting their own business.

 

4.11 EEDA has also boosted its core EEDA-funded targeted support. This includes:

· additional investment of £1.32 million in the East of England's Manufacturing Advisory Service, having secured additional European Regional Development Funding[23]. Last year MAS supported over 300 businesses. Benefits to businesses who receive MAS support are typically in excess of £100,000. The new funds bring the total package to over £4.4 million. This will enable the programme to deliver its support to even more companies across the region. The new integrated service will also provide innovation and design support to improve market competitiveness;

· EEDA's £2.9 million TakeITon campaign to assist businesses in their use of IT to improve business performance has been refocused and benefited from a £250,000 expansion to help SMEs save costs through IT, with focused workshops and additional funding through the TakeITon grants scheme. EEDA has made grants totalling over £754,000 under its TakeITon campaign; and

· an additional £250,000 for Enterprise Agencies. This funding enabled 600 additional businesses to receive intensive business support and brokerage on to additional business support

· in support of companies who are looking to develop their export potential, EEDA is working with UK Trade and Investment who have several programmes available.

 

4.12 EEDA is also helping businesses and individuals to improve their efficient use of resources, while supporting the land-based renewable energy and environmental sectors to grow. This includes:

· since October 2008 Resource Efficiency East, funded by EEDA, has commenced investment of £2.1 million[24] on achieving measurable improvement in the resources efficiency of SMEs in the region-helping them to reduce business costs and improve competitiveness; and

· grant for working woodland centre in Bedfordshire to boost sustainable businesses, skills and jobs by creating a new hub.

 

4.13 In some cases, EEDA has worked directly with companies to safeguard jobs both within that company itself and through the supply chain.

 

4.14 EEDA is also leading by example in the way it engages with businesses as a customer. For example:

· EEDA championed the Government's ten day payment initiative by introducing a commitment to pay SME suppliers within ten working days of receiving a valid invoice.

 

Supporting businesses in the East of England-start up and growth

 

4.15 EEDA is providing support for business finance to help businesses wanting to start up and grow. Core support includes the delivery of national programmes such as Grants for Research and Development (GRAD) and Grants for Business Investment (GBI)[25]. During the economic downturn there has been a worrying contraction on venture capital funding that is a key driver behind the region's technology and biotechnology sectors. Yet the region is witnessing continuing evidence of businesses wanting to start up and grow.

 

4.16 Further EEDA-funded activity has, therefore, been brought on stream to meet the strong demand for business finance, particularly as other funding streams have become more difficult for some businesses to access:

· three further rounds of EEDA's Proof of Concept funding[26] have been introduced in response to demand. The first of these additional rounds saw very strong demand with more applications than previous rounds despite a much shorter window for applications. This round saw 19 companies receive a share of £390,000, a 20 per cent increase in funding on previous rounds. The latest rounds have been part-funded by the European Regional Development Fund and bring EEDA's total investment in proof of concept to over £1 million in the last year. The latest round shows signs of continued strong demand;

· in January EEDA announced a £250,000 innovation voucher scheme. This fund of specialist consultancy grants can provide SMEs with £3000 worth of one-to-one collaboration with the region's top universities. EEDA received 139 applications from regional businesses developing new products;

· EEDA has recently launched a £5 million regional loan fund[27] aimed at supporting innovative SMEs in early growth prior to attracting venture capital funding;

· EEDA is also introducing a new Understanding Finance for Business programme[28] which will provide coaching and mentoring to investment ready companies aimed at increasing the SME's chances of securing finance; and

· EEDA has also been working with Business Link and the banking sector in the region on issues being faced by businesses in accessing finance. This has helped to ensure that there is a better understanding and knowledge of the financial support available to viable businesses.

 

4.17 EEDA is also supporting businesses and individuals into business and work who may not be able to access mainstream services. For example:

· EEDA has invested an additional £350,000 into Foundation East this year, to provide small loans to new and existing businesses that cannot get a loan from a bank. EEDA's total investment of £750,000 last year has already provided 91 loans (on average £18,000) totalling £1.4 million, which has levered in £250,000 of private investment.

 

Supporting places and investment in the East of England

 

4.18 The construction industry and housing market have been severely affected by the recession. In response to this situation and in addition to the investment outlined above, EEDA is bringing forward and maintaining the momentum of capital projects to provide a fiscal stimulus and meet longer-term priorities for the region:

· EEDA has brought forward £5.7 million from 2010-11 into 2009-10 for key regeneration projects. These projects will meet the longer-term priorities for the region while providing a fiscal stimulus to the economy and supporting the construction industry. Projects that were in EEDA's portfolio that have been brought forward in this way include the Royal Opera House Production Campus, the Waveney Campus and Thetford Enterprise Park; and

· EEDA is working on de-risking its own asset portfolio during the downturn to ensure employment sites will be in a good position when the market returns. In many parts of the region, EEDA is also providing advice and support to partners to enable them to do the same.

 

4.19 EEDA welcomes Government decisions to bring forward investment in transport infrastructure, for example the A11 Fiveways to Thetford improvement and proposed measures for the A12 which align with the RES and EEDA lobbying based on evidence in the ground-breaking Transport Economic Evidence Study (TEES) report.[29]

 

4.20 Integrated Development Programmes (IDPs)[30] are either in place or being finalised in the majority of the region. The Haven Gateway IDP is already being used to prioritise and deliver investment essential to maintain development in the current economic climate. In North Colchester, housing development was in danger of coming to a complete standstill because the developer due to pay for key improvements to an interchange with the A12 pulled out. The local IDP identified this work as critical to future development. On the basis of the evidence in the IDP, advance funding was provided by EEDA, with a provision that private sector contributions would be clawed back over time. Subsequently the IDP has helped provide the evidence for a successful Community Infrastructure Fund bid. This will allow house building to continue and hopefully help to restore confidence.

 

4.21 Recent cuts in RDA budgets have restricted EEDA's ability to re-prioritise its investments in light of changing circumstances. However, the introduction by Government of an incentive scheme to reward Local Authorities for creating the conditions for business growth has the potential to support local economic development projects which would otherwise stall as a result of EEDA budget reductions. The recent round of Local Authority Business Growth Incentives (LABGI) provided a financial stimulus of £11m to Local Authorities in the region, amounting to in excess of £60 million over the three year life of the scheme.

 

4.22 EEDA is ensuring that rural impacts of the downturn[31] are being reflected in regional and national intelligence gathering and responses. This includes

· recognising the preponderance of rural communities in the East of England and given our national RDA lead role on rural affairs, EEDA has worked with the Department for Environment, Food and Rural Affairs (Defra) and the Commission for Rural Communities to ensure that rural impacts are appropriately reflected in regional and national intelligence gathering and responses;

· a new partnership, Landskills East, has been set up to provide rural businesses with improved access to skills and training opportunities in the region. The £4.5 million investment has been funded under the Rural Development Programme for England (RDPE) and managed by EEDA;

· in March, EEDA (through Business Link) announced new funding to support rural pubs in the region; and

· Business Link delivered support to nearly 34,000 businesses in rural areas in 2008/09, an increase of almost 25 per cent on the previous year.

 

Economic intelligence

 

4.23 EEDA plays a crucial role in providing economic intelligence on the downturn to key decision makers (local, regional and national). EEDA achieves this by:

 

· Delivering policy-relevant information on the downturn to key partners:

o monthly Regional Intelligence Snapshot presented to BERR, HM Treasury, Communities and Local Government (CLG), Defra and other government departments, the Regional Minister, Regional Economic Council and the regional redundancies group (LSC, JCP, EEDA and GO-East). It is a detailed briefing covering housing, product and labour markets, feedback from business on policy initiatives, company and area-specific intelligence[32];

o monthly Labour Market Briefings on regional ONS Labour Market statistics for the Regional Minister;[33] and

o East of England Forecasting Model (EEFM): EEDA-funded forecasts to assess the likely short and long-term impacts of the recession in the region, local areas and sectors, and producing scenarios of the depth and severity of the recession to explore different paths to recovery. Outputs are available to all local authorities and validated by the region's Labour Market and Economy Group (principal analysts from EEDA, EERA and upper-tier local authorities).

· Collecting and sharing intelligence on redundancies:

o sharing intelligence from Business Link with JCP to supplement information from JCP district offices and HR1 notifications;

o providing a monthly briefing pack to partners in the regional redundancies group;

o providing intelligence and analytical support to local authorities on redundancy-related matters (e.g. Vion in Haverhill).

· Collecting and sharing intelligence from business:

o regular meetings with regional representatives of major banks, business groups, and the Bank of England's regional agent.

· Supporting primary data collection through surveys of business trends:

o contributing funding to the twice-yearly RDA National Business Survey.[34]

· Supporting pan-regional efforts to share intelligence:

o contributing to a joint-RDA analysis of the spatial impacts of the recession across England for RDA chairs and chief executives;

o quarterly presentation and briefing to London Development Agency, EEDA and South East England Development Agency chairs and chief executives on the impact of the downturn on the Greater South East;

o providing inputs to CLG studies on the impact of the downturn on key investments in the Thames Gateway; and

o spatial analysis of the impact of redundancies in London's financial sector on employment throughout the Thames Gateway.

· Undertaking theme-based economic studies:

o international benchmarking and an audit of the region's innovation performance-assessing strengths that will be important once the recovery begins[35]

 

Communications

 

4.24 EEDA is ensuring that information and advice is easily and universally accessible. This has included communications with businesses and people in the region directly and through intermediaries:

· EEDA's Business Map[36] has been designed exclusively to help businesses in the East of England access publically funded business support, with Business Link at the heart as the gateway to this support. There have been over 12,000 visitors to the Business Map since it was launched in September 2008. The most popular page following the home page was the finance line. In light of this and recognising that access to finance is still a major issue for many businesses, EEDA has drawn together details of all publically funded finance schemes into a new easy to use website[37] that sits within the business map framework;

· mailings to over 200,000 businesses in the region and regular updates to MPs in the region;

· EEDA worked with LSC and JCP to produce a pamphlet for employers and their employees on redundancies in response to feedback through the Regional Economic Forum[38];

· EEDA co-hosted with GO-East a regional lending roadshow at Cranfield and held an event for intermediaries in April; and

· delivering briefings to businesses about regional and national business support initiatives at sub-regional economic summits arranged by EEDA, local authorities and MPs.

 

Impact

 

4.25 An independent impact evaluation report published in March found that based on an evaluation of £142 million of EEDA investment between 2002 and 2007 has already generated between £525 million and £820 million of wealth in the region measured in terms of GVA. This represents an achieved return on investment of £3.70 to £5.80 for every £1 invested-with a mid point of £4.75. The evaluation estimated the benefits, as they mature to potentially generate a further £380 million; taking the forecast returns up to between £905 million to £1.33 billion.

 

4.26 Although this is evidence of positive impact on the regional economy, EEDA has not been complacent. The current economic climate is such that impact and performance need to be improving in order to sustain the regional economy. EEDA has implemented a rolling programme of evaluation and has embedded learning from the evaluation into its business model through:

· a new performance framework;

· programme delivery plans designed based on lessons learned from the evaluation; and

· refreshed Corporate Plan in terms of programme budgets and impact forecasting.

 

4.27 Insufficient evidence exists as yet to demonstrate the returns were the funds to be diverted. However, the Eddington Review[39], in the context of capital investment on transport, suggests a 'high' return on investment for public intervention as over £4, demonstrating that EEDA's impact compares favourably with benchmark ranges.

 

Working with partners

 

4.28 The activity detailed above sets out how EEDA is ensuring a joined up response, making the most of low levels of public expenditure in the region. EEDA is building on strong partnerships, working with many other partners in the region who have a role to play in providing support through the downturn. These include key government agencies in the region such as the Government Office, Jobcentre Plus, the Learning and Skills Council and the Homes and Communities Agency, as well as local authorities, business organisations, third sector organisations and other partners. EEDA has been flexing its £30 million business support package and other investment but EEDA's expenditure accounts for only 0.38 per cent of identifiable public expenditure in the East of England. This joint working includes:

· supporting people-joint response to redundancy plan;

· supporting businesses-engagement with the banking sector; first UK regional pilot of a Small Business Research Initiative[40];

· supporting places and investment-IDPs; Regional Funding Advice (RFA) to Government; the RES, the region's spatial strategy and joint implementation plan; joint work with HCA; economic participation investment through Local Area Agreements; and

· new cross-cutting mechanisms-Regional Economic Forum[41] and Regional Economic Council.

 

Preparing for the upturn

 

4.29 Across the range of activity, EEDA is balancing its immediate response to demand during the downturn with the need to maintain support to ensure the region is well-placed to take advantage of the upturn when it occurs. EEDA is supporting the skills, sectors and clusters that will drive the region's medium-term growth:

· supporting sectors and clusters that will drive the region's medium-term growth-life sciences, biotechnology, clean technology (with a focus on low-carbon vehicles, renewables, the built environment and water management), advanced manufacturing and information and communication technologies;

· using its 15 enterprise hubs, EEDA continues to deliver public and private business support measures to start-up companies in industry-specific settings throughout the region. A recent EEDA investment in the Hauser Forum, Cambridge University's enterprise hub which will stimulate innovative collaborations between clusters of academics, start-up businesses and established industries, provides for £2 million of regional business support services;

· in partnership with the region's multi-national enterprises, EEDA is encouraging the development of open innovation science parks. In the short-term this provides a boost to the construction industry, followed by the creation of thousands of new high-skilled jobs over the next five years and knowledge transfer to smaller enterprises;

· key sectoral and spatial investments in Martlesham, Norwich Research Park, Colworth, Stevenage and Cranfield exemplify this approach;

· providing support for individuals and businesses to access greater opportunities to develop higher skills levels through investment in demand-led further and higher education provision; and

· providing support for business finance to help businesses wanting to start up and grow as outlined above.

 

5. Ensuring sustainable economic growth in the East of England

 

Regional Economic Strategy, Regional Spatial Strategy and joint implementation plan

 

5.1 The RES articulates a long-term vision for the economy of the East of England with ambitious targets for economic growth and productivity, skills, resource-use, the environment and equality. It identifies the strengths to build on, the weaknesses to be addressed and the major trends that will affect businesses and communities over the next twenty years. It sets out where we are now, where we want to be, what needs to change and how we get there. The strategy is underpinned by a comprehensive evidence base, and received unprecedented support from stakeholders, including an unqualified endorsement from the Regional Assembly. The RES is owned by the region and shapes the work of a range of organisations and their priorities for investment. The RES is underpinned by a comprehensive evidence base and leading-edge, integrated approaches to target-setting and sustainability appraisal that have established best practices for regional strategy development in the UK.

 

5.2 The East of England Plan (the region's spatial strategy, or RSS) and the new RES, set ambitious and consistent targets for the region for high and sustainable levels of growth to 2031. The joint implementation plan for the RES and RSS will be a first for our region, and in fact any region, illustrating the close partnership in which stakeholders are working to drive forward economic development in this region. It is also a real step towards aligning economic and infrastructure needs in the region, in line with and ahead of the principles of the Sub-National Review. The current consultation on the draft joint implementation plan, the East of England Implementation Plan (EEIP), aligns the objectives of the RES and RSS and sets out the critical interventions in terms of the programme's needed to meet these up to 2021 and beyond. This will help create greater coordination of delivery and alignment of major investment decisions. Other regional strategies set priorities for different aspects of sustainable development, all of which have an impact on the region's economic development. Key elements of the RES will be delivered at the sub-regional and local levels through LAAs and, in future, Multi Area Agreements.

 

5.3 The RES and RSS remain the long-term plan for the future well-being and prosperity of everyone in the East of England. The focus of activities over the medium term needs, however, to recognise and respond to the difficulties of the current economic situation. The current situation also makes it more difficult to augment public investment with private funding. Many public sector budgets will also face significant reductions. In this context, achieving some of the region's ambitions will be more challenging.

 

5.4 The consultation process for the implementation plan which runs until 3 July is the start of creating a set of shared implementation priorities at national and sub-national levels. The plan analyses the scale of the implementation challenge to 2031 using the RES and RSS targets and establishes what current and planned activity will achieve. Work with stakeholders and delivery partners identified critical infrastructure, short-term responses to recession and key interventions that will help deliver our long term targets. These include proposals for access to finance packages, such as a new venture capital fund to support innovative businesses.

 

5.5 The implementation plan will enable the region to unlock barriers to sustainable growth and development by providing the evidence to accelerate the funding and delivery of key schemes. It will also set the longer term context and priorities for investment in areas such as housing, transport, wider infrastructure and sustainable economic development. This approach will ensure the region can manage risk-using prioritisation and phasing to redeploy resources in changing circumstances.

 

5.6 The consultation draft of the EEIP contains both shorter-term programmes focused on mitigating the effects of the downturn and starts to look at the medium term to start to understand the scale of interventions that will enable the region to tackle key strategic challenges identified by the region:

· housing-meeting the housing needs of the region, supporting economic growth whilst creating sustainable places;

· transport-tackling the transport needs of the region, supporting long-term economic and housing growth;

· utilities-ensuring that the region has the necessary utilities infrastructure to facilitate growth, whilst driving up environmental standards and achieving greater resource efficiency;

· enterprise, innovation and business support-supporting businesses through the current downturn and promoting greater long-term innovation and enterprise performance;

· skills and employability-ensuring that the region's current and future workforce is suitably skilled and everyone has the opportunity to contribute fully and benefit from increased prosperity;

· culture, creativity and the visitor economy-how culture, creativity and the visitor economy can generate economic benefits and widen opportunities for businesses, people and communities in the East of England; and

· green infrastructure-sustaining a high-quality environment, managing natural resources, flood risk, the region's coast and the effects of climate change.

 

Regional Funding Advice to Government

 

5.7 The development of the RFA submission[42] ran in parallel with the production of the implementation plan and the two processes complemented each other. The RFA process shaped the design of short to medium-term programmes with the implementation plan ensuring we captured the longer-term strategic interventions.

 

5.8 The process of developing the second round of RFA has helped EEDA and its key regional partners to focus on what is really needed in the region, particularly in response to the recession and providing the support that businesses and individuals need. Through this exercise, EEDA and its partners have shown strong commitment to:

· developing and delivering an enhanced business support and response to redundancy package over the short to medium-term to mitigate the effects of the economic downturn;

· building on existing and emerging areas of international comparative advantage (research and development, life and biosciences, information and communication technologies, clean technologies);

· accelerating the transition to a low carbon, low resource economy; and

· pioneering an integrated investment framework to deliver sustainable growth and tackle market failures at the appropriate spatial level, in response to the implementation of the Sub-National Review.

 

5.9 Delivering these short to medium-term priorities in the time of recession is not an easy task. EEDA is operating within the confines of budget reductions, and is responding as flexibly as possible to target funds to the priorities emerging from the changing economic climate. However, the Regional Funding Allocation submission acknowledges that now more than ever it is critical to align the investments of EEDA and partners to the longer-term ambitions set out in the RES and RSS, the national strategies, such as enterprise, innovation, manufacturing and creative economy, and build on the region's strengths in research and development and knowledge-generating clusters.

 

5.10 The region identified a number of areas where further government support is welcome, to:

· consider new fiscal incentives to stimulate venture capital investment in early stage, high technology companies;

· concentrate and align investment in the East of England's existing clusters of international importance, to ensure they continue to grow and sustain the competitiveness of the UK in the medium and long term;

· consider formal endorsement of IDPs as a basis for sub-regional investment planning by public agencies; and

· acknowledge that adverse economic conditions will affect the achievement of economic and employment PSA targets in the short term.

 

5.11 The East of England has one of the lowest levels of public expenditure per capita of all the regions[43] and receives less in terms of public spending than the region provides in taxes. Yet, the region does not have the lowest level of need. EEDA and the East of England Regional Assembly recently provided a joint submission to the House of Lords Barnett Formula Select Committee. This submission set out how issues such as transport, skills and innovation all demonstrate the consequences of the discrepancies in patterns of expenditure across the regions and how a change would, in turn, have an impact on the efficiency of England and the UK's economy as a whole.

 

 

22 May 2009

 

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[1] 'Inventing our future, Collective action for a sustainable economy', the East of England's Regional Economic Strategy was published in September 2008: http://www.eastofengland.uk.com/res/

[2] 'Innovation Insight: the innovation performance of the East of England,' Insight East (March 2009): http://www.insighteast.org.uk/WebDocuments/Public/approved/user_9/EEDA%20Innovation%20Report.pdf. Insight East is the new economic intelligence centre for the East of England, funded by EEDA. Insight East has been developed to help decision makers across the region better understand the economy, including the impacts of the downturn.

[3] EEDA's 'Regional Intelligence Snapshot' for BERR, HM Treasury and the Regional Economic Council, and Insight East's 'Monthly Economic Outlook': See Insight East's 'Monthly Economic Outlook for the East of England, April 2009': http://www.insighteast.org.uk/WebDocuments/Public/approved/user_9/20080424%20Monthly%20Economic%20Outlook%20_April_.pdf.

[4] EEDA will continue to monitor the impact of the recession on the region's migrant workforce as fluctuations in exchange rates could have implications for the availability of migrant workers to fill labour shortages in the upturn.

[5] The Government's 'Real Help for the East England' booklet was published in February 2009: http://www.realhelpnow.gov.uk/pdf/eastofengland.pdf. We understand that the Government evidence to the Committee will set out the national measures to respond to the downturn in more detail.

[6] EEDA produced an economic analysis of the downturn and an overview of the response to the recession in August 2008. This report was a statement of the joint response by EEDA, HM Treasury and the Department for Business, Enterprise and Regulatory Reform (BERR) to the changing economic circumstances.

[7] Beyond 2010 works alongside Train to Gain to ensure that businesses can get the skills training they need, with up to half the cost of training available from EEDA and the European Social Fund.

[8] EEDA is keen to incentivise the link between training and finding employment by offering up to £500 for training with a further £500 if the course costs more and the individual finds relevant work within three months of completing their course. For those individuals who have not been able to find work, EEDA will refer them directly to the new LSC-funded support for further help.

[9] 'Solutions for Business' is the Government's streamlined portfolio of business support products accessible via Business Link. Further detail can be accessed at http://www.berr.gov.uk/whatwedo/enterprise/simplifyingbusinesssupport/page44805.html.

[10] EEDA works closely with local authorities and their partners on this programme, with a major focus on labour markets that are most affected by the downturn like Luton, Peterborough, Great Yarmouth and Southend. In 2008/9 it created 285 jobs, over 50 new businesses, assisted over 8,600 people into employment and over 16,500 people with skills development, levering in over £16 million of public and private sector investment.

[11] Business Link is a national but regionally managed and locally delivered universally accessible service whose aim is to help SMEs and new businesses start, survive and grow, signposting businesses to specific areas of support.

[12] MAS East provides advice and support to help businesses boost their performance and survive the downturn.

[13] Resource Efficiency East supports businesses to improve resource efficiency.

[14] East of England International supports companies to win business globally and in locating and growing a business in the region.

[15] TakeITon is assisting businesses in their use of IT and to improve business performance.

[16] EEDA's access to finance programme supports business finance to help businesses wanting to start up and grow.

[17] EEDA's work on women's enterprise is supporting women looking to start or grow a business.

[18] EEDA is providing business support, advice and mentoring to social enterprises through support and access or referral to mainstream provision.

[19] Competefor is giving businesses unique access to opportunities arising from the London 2012 Games.

[20] EEDA's Business Map is helping businesses to access publically funded business support.

[21] Business Link 'health checks' provide a holistic review covering a range of issues including finance and productivity, to identify a firm's main problems and prepare an action plan, including guidance on accessing Government help.

[22] The largest numbers of health checks in this region have taken place in the real estate/renting/business activities sector; the retail and wholesale sector; and the manufacturing sector.

[23] Manufacturing businesses in the East of England can receive expert advice, hands-on support and training to help boost their performance and survive the downturn.

[24] In response to the downturn, Resource Efficiency East is seeking a further £2 million from the European Regional Development Fund (ERDF) to strengthen business survival and speed of implementation of resource efficiency measures.

[25] Grants for Research and Development (GRAD) and Grants for Business Development (GBI) both form part of 'Solutions for Business', the Government's streamlined portfolio of business support products. GRAD provides grants to help businesses carry out research and development work that will lead to technologically innovative products or processes. GBI supports investment projects which wouldn't otherwise happen and which have the potential to improve the region's economic performance. GRAD and EEDA's Proof of Concept funding have recently benefited from a £5.4 million cash injection by the European Regional Development Fund (ERDF). The new ERDF money aims to encourage more applications from companies developing low-carbon projects.

[26] This programme offers grants to help test the commercial viability of innovative business ideas. Last year EEDA helped over 85 companies turn their innovative business ideas into commercial reality through our Finance for Innovation programme. EEDA expects this investment to leverage £45 million of private sector investment and secure 450 jobs. EEDA has announced it will make £8.5 million worth of grants available to support growing and innovative businesses in the region over the next 12 months

[27] EEDA's new £5 million regional loan fund is designed to support innovative businesses finance their development. Loans of between £50,000 and £200,000 are available to new and existing businesses in the East of England with the potential for long-term growth.

[28] EEDA's Understanding Finance for Business programme is designed to help businesses identify and obtain the right type of finance for their business. The programme is open to businesses with fewer than 250 employees who are looking to secure more than £10,000 of external funding.

[29] The Transport Economic Evidence Study was published in September 2008: http://www.eeda.org.uk/3143.asp. This report, commissioned by EEDA, for the first time applied Government-compliant analytical techniques to calculate the economic costs that congestion and overcrowding on the region's transport networks impose on the economy, and identified where in the region these constraints are having greatest impact.

[30] IDPs are prioritised, evidenced and phased investment plans for infrastructure essential to sustainable growth. They have been pioneered by EEDA in partnership with EERA, GO-East and Regional Cities East. They offer an opportunity for all partners in a functional urban areas to compare their investment plans and form a single document designed to deliver the totality of growth in a joined up and sensible way. They enable relevant infrastructure to be built at the right time, and increase our ability to leverage private sector investment. IDPs are therefore one of the most important innovations in the way we plan and prioritise our public spending.

[31] EEDA produced an analysis of the impacts of the recession on the rural economy and rural areas in May 2009 for the Commission for Rural Communities. This will be published on Insight East's website: www.insighteast.org.uk

[32] The Monthly Economic Outlook published on the Insight East website refines the Regional Intelligence Snapshot, with all confidential / disclosive information removed (http://www.insighteast.org.uk/viewArticle.aspx?id=16969 ). A Quarterly Economic Brief is also published by Insight East (http://www.insighteast.org.uk/viewArticle.aspx?id=16815).

[33] Due to be published on the Insight East website in May 2009.

[34] Published on the Insight East website (http://www.insighteast.org.uk/viewResource.aspx?id=16347)

[35] See http://www.insighteast.org.uk/WebDocuments/Public/approved/user_9/EEDA%20Innovation%20Report.pdf

[36] The Business Map can be accessed at www.bizmapeast.co.uk.

[37] The finance line of the Business Map can be accessed at http://www.bizmapeast.co.uk/finance/.

[38] 'East of England advice and guidance for employers and their employees during the economic downturn' provides information for businesses in the region on help available from the public sector during the downturn: http://www.eeda.org.uk/files/Economic_Downturn_brochure_.pdf.

[39] http://www.dft.gov.uk/adobepdf/187604/206711/executivesummary.pdf

[40] Working with the NHS and the Technology Strategy Board, EEDA has facilitated the first UK regional pilot of a Small Business Research Initiative in the health sector, to help bring forward new technologies to support the achievement of regional health priorities and increase their adoption in the NHS.

[41] We understand that the Government evidence to the Committee will cover the work of the Regional Economic Forum, which the Regional Minister and the Chair of EEDA co-chair, in more detail.

[42] The East of England submitted its second round of advice to Government on the Regional Funding Allocation in February: http://www.eeda.org.uk/files/RFA_FINAL_screen_view.pdf.

[43] £6,177 per head compared with an English average of £7,076 in 2006/7.