Memorandum from East Midlands Regional
Assembly (EM 04)
INTRODUCTION AND
EXECUTIVE SUMMARY
1.1 Since EMRA's formation in 1998 we
have worked with East Midlands Regional Development Agency (emda)
to support their development of the Regional Economic Strategy
(RES) and, using the powers provided by the 1998 RDA Act,
held them to account for their performance through regional scrutiny.
Alongside examining reports from emda and questioning them about
key aspects of their performance, EMRA's Regional Scrutiny Board
has undertaken eleven in depth scrutiny reviews into thematic
areas of emda activity, including innovation, business support,
energy, skills, tourism, foreign direct investment, support for
rural areas, local area regeneration, strategic sub regional partnership
and business formation and survival. Our scrutiny is robust but
always constructive and has been underpinned by the East Midlands
Scrutiny Protocol, agreed between EMRA, emda and GO-EM (Government
Office for the East Midlands) in January 2006. Our experience
of undertaking regional scrutiny and the key findings from our
reviews underpin this submission.
1.2 The key points of our submission are:
— Regional co-ordination has resulted in
better integration of the development and delivery of economic
policy in the East Midlands.
— emda has steadily improved its effectiveness
and met the targets in its contract with Government. This has
been supported by robust regional scrutiny.
— emda has been particularly strong in
managing the delivery of services and support to businesses. There
remains scope to further improve emda's partnership management
to effectively co-ordinate resources and activities around the
delivery of the RES.
— emda's future role, relationships and
accountability require further clarification.
— emda would benefit from stronger local
democratic ownership and more representative input from the business
and wider stakeholder community to the emda board.
2. The Role, Responsibilities and Accountability
of emda
2.1 emda's roles and responsibilities have
developed over time. It has degrees of responsibility for strategy
development, partnership management, funding and delivery in a
number of areas of economic policy. It acts as an agent of government
in managing government funds to achieve the targets in its Corporate
Plan. These targets are drawn from the Government's Tasking
Framework with the level of the targets agreed between emda
and Government. emda also acts as an agent for the region in promoting
the region's economic interest. There is an inherent tension between
these roles, especially where government policy and the interests
of the region may diverge. This tension is an inherent and logical
consequence of any regional policy. Government should be more
tolerant of diverse approaches in the regions. However, in order
to inform and justify more distinctive regional policies, there
is a need for stronger local democratic "ownership"
of RDAs.
2.2 Whilst emda would benefit from the greater
credibility and legitimacy in leadership that greater local democratic
ownership would bring, emda has benefited from the flexibility
of single pot funding and using influence to bring strategic coherence
between diverse economic development functions such as skills,
business support, regeneration and foreign direct investment.
This flexibility and strategic coherence is a strength of the
current approach and it will be important that it is built on
under any new arrangements.
2.3 Through our scrutiny reviews we have
identified a number of strengths in emda's performance including:
— emda is a much improved organisation
with a strong delivery focus.
— emda has pursued an integrated approach
across an expanding remit of economic policy issues.
— emda has taken significant steps to reform
how Business Support is delivered and managed at the regional
level, resulting in a better service.
— emda has a very good track record on
delivering Corporate Plan output targets.
— emda has supported activity and approaches
at the regional level that are new in the East Midlands, such
as regional approaches innovation and energy.
— emda have reacted well to one-off crises
such as Foot and Mouth and flooding.
2.4 Through our scrutiny reviews we have
made a number of recommendations to emda to take action to improve
the region's economic performance. Since the Scrutiny Protocol
was published in January 2006, emda have responded to scrutiny
reviews in a consistent format through an Action Plan detailing
the actions they will take and later reports on implementation
and impact. However, emda are not under any statutory obligation
to implement the Assemblies recommendations. Through detailed
analysis, constructive recommendations and an agreed response
mechanism for emda, EMRA has strengthened emda's accountability
and supported their improved performance. The recommendations
made by the reviews are detailed in Appendix A. The key issues
identified in Scrutiny Review are detailed below followed by a
reference to which of the recommendations in Appendix A they are
drawn from. They key issues include;
Setting the strategic direction
— (Recommendations I1, I2, I3, BS1, E1,
E2, R1, R2, S1, T1, SD3, FDI1,FDI2, FDI9, SSP3, BBR1-8)
2.5 Reviews have identified the consistent
importance of ensuring that economic development activity in the
region is underpinned by robust and well informed strategies.
In particular emda correctly describe their role as a "catalyst
for change", recognising that their resources alone will
not achieve the objectives of the Regional Economic Strategy.
A key element in encouraging key partners to align their resources
and strategies to achieve the objectives of the RES is for them
to share a common strategic vision and a shared understanding
of the key issues for the region. In some areas stakeholders have
reported collaborative working on research whereas in others it
is seen that emda have "presented" research to support
a negotiating/lobbying position rather than being fully engaged
in its collaborative development.
Partnership management
— Strategic Partnership working (Recommendations
E3, S3, S5, LA1, LA4, R5, SD11)
— Delivery Partnership working (Recommendations
BS2, E4, S2a, LA2, LA3, LA6, T5, SD8, FDI10, SSP10, SSP13, BBR20,
BBR21, SSP9
— Business Input/Customer Focus (Recommendations
BS4, S2b, S4, FDI6, S3c)
2.7 As detailed above, harnessing the resources
and expertise of partners such as local authorities and businesses
to deliver the RES is important and EMRA have made a number of
recommendations that reflect this. The Sub-National Review (SNR)
puts less emphasis on the RDAs' delivery of outputs and a stronger
emphasis on making strategic decisions and working in partnership.
emda will need to strengthen their partnership working, especially
with Local Authorities. Scrutiny Reviews have made a number of
recommendations to improve partnership working on strategy and
delivery with regional and sub-regional organisations.
2.8 emda's effectiveness at strategic influencing
has been less than the influence achieved through contracting
and commissioning. Whilst, in some areas, emda have worked in
partnership with local authorities and other organisations, there
are perceptions that emda has sought to extend its remit over
areas of policy, such as skills, business support, European funding
and regional planning that have been or are led by other organisations.
This has led to challenges to develop a genuinely "Team East
Midlands" approach to represent the region's best interests.
2.9 As a "catalyst for change",
during its early years emda sought to change the way economic
development was planned and delivered in the region, which some
pre-existing organisations found challenging. In particular, Strategic
Sub-Regional Partnerships (SSPs) were set up that fell across
the boundaries of all upper tier local authorities in the region.
The geographic basis and operating model of SSPs was justified
by emda as a business-like and economic focused approach, although
this was not universally recognised as the case by local authorities.
This early intervention hindered the development of effective
partnership working between emda and local authorities. Following
EMRA's scrutiny review, SSPs—Delivering their Potential
in 2005, emda has further developed its approach and taken a number
of actions to help improve delivery and relationships with local
authorities.
2.10 As the accountable body for "single
pot" spend emda sought to retain an element of prescription
over how any devolved funds are spent, which posed challenges
to bodies funded by a variety of sources. EMRA's Tourism review
found that emda favoured a "principal—agent" relationship
with local Destination Management Partnerships rather than a more
dynamic partnership approach. emda have, however, since taken
a number of steps to improve relationships with Destination Management
Partnerships.
2.11 The implementation of the Sub-National
Review has necessitated a greater level of collaboration and dialogue
with local authorities and a refashioning of sub-regional delivery
structures and relationships. In this process emda has demonstrated
learning from the SSP experience.
2.12 There remains concern from business
and other stakeholders over how their sectors engage with and
are represented on the emda board. For example, the "business"
members of emda's board are selected on the basis of their individual
business experience rather than being seen by businesses to represent
their interests.
Marketing and Communication
2.13 A number of reviews have pointed to
the need for better marketing and communication for two principal
reasons. Firstly, due to emda's complex role they have been occasionally
criticised for issues beyond their control or the value of their
activity is not understood. However, more importantly, where the
service that emda provide has been seen to be good and effective,
such as in business support, it is important to increase market
penetration.
2.14 A wider point is that it is essential
for businesses to have confidence in emda, particularly SMEs.
Getting to know the customer base and engaging them in regional
policy, rather than exhaustively surveying them, can be difficult.
emda has experienced continuing difficulty in persuading a private
sector representative to become the Chair of the Employment, Skills
and Productivity Partnership. Developing business engagement is
crucial to emda's credibility as a "business led" organisation.
Review, Learning and Flexibility
— Review (I5a, I7, S6, LA7, FDI8. SSP 12
— Flexibility (I1c, I1d, R3, R4, LA5, SSP2,
SSP6, SSP8, BS6a &d
2.15 A theme running through a number of
reviews is ensuring that emda retain the capacity to learn and
improve from a variety of sources, not just the large evaluation
studies that are commissioned. Whilst getting the strategic context
is important, operationally there is value in the flexibility
to adapt as a result of experience, circumstances and the needs
and experiences of customers, especially in a fast moving economic
environment. As part of this, ensuring that appropriate monitoring
procedures are in place to assess and demonstrate the effectiveness
of activities in achieving the objectives of the Regional Economic
Strategy is important. The Region has been characterised as having
greater internal diversity than difference from the other English
regions. Some economic issues, such unemployment, or patterns
of economic activity and skills have a particular local or sub-regional
focus. It will be important that single pot, "single agreement"
devolution of funds allows scope for significant local issues
to be addressed that may form the basis for economic and social
improvement without directly contributing to a "tasking framework"
output.
Delivery
— Supporting Delivery and Performance
Management—through Action Plans, Delivery Capacity, Setting
Targets, learning from other regions and Training) (BS5, BS6b&c,
E6, E7, FDI3, I4, I5a&c, T2, T4, T6, SD1,2, 4,6,7.9.10.12,
FDI 5 &7, SSP 1,4& 7, BBR 9,10, 11, 12, 13,15,16,
18, 19 &22)
— Defining emda's Delivery Role
(S2e, I2b, I4b, E5b, SSP5
— Resourcing (I4c, BS5a, FDI4, E5, T3,
BBR14
— Speed of grant approval/decision-making
(I5b,
— Leading by example.(SD5, S2d, E8
2.16 EMRA's reviews have made a number of
practical recommendations about improving delivery as well as
strategy, management and communication. These have covered a diversity
of issues as reflects emda's wide agenda. A key theme has been
ensuring that extent of emda's delivery role and how it interfaces
with the role of others is defined and understood. Other issues
include the need retain robust grant approval procedures whilst
aiming to speed up decisions to ensure that decisive and timely
investments are made in the economy. Given the need to intervene
quickly in the current fast changing economy, BERR should examine
how emda can be enabled to approve interventions more quickly.
Accountability
2.17 Regional Assemblies have held RDAs
effectively to account for their performance in the regions through
Regional Scrutiny, within the framework of the relatively weak
statutory powers provided by the RDA Act.
2.18 The SNR proposals, including the establishing
of Regional Select Committees and the ending of government funding
for Regional Assembly scrutiny will lead to significant changes
to the accountability of RDAs. The East Midlands Regional Select
Committee will bring the strategic perspective and knowledge of
East Midlands Parliamentarians to provide high profile accountability,
at a strategic level, to all regional organisations, including
emda. However, the loss of a dedicated, experienced, constructive
and ongoing regional scrutiny body comprised of local authorities
and regional stakeholders that takes an in-depth look at key aspects
of the RDAs performance will lead to a significant void in accountability
to support the ongoing learning and development of emda. Whilst
the SNR gives local authorities key roles collectively as co-developers
of the Single Regional Strategy and locally as part deliverers
of the strategy, provisions for overseeing the RDAs role in facilitating
the delivery of the strategy are less clear.
2.19 A particular strength of Regional Scrutiny
has been the dedicated involvement of stakeholder representatives,
from business, academic, trades union, voluntary, environmental
and other sectors, who have brought considerable insight and expertise
to the Assembly's work. Working on Scrutiny Panels and the Regional
Scrutiny Board, they have been invaluable in analysing evidence
and shaping practical, deliverable, focused and constructive recommendations,
on a thematic basis, that are sufficiently detailed to have genuine
traction but strategic enough to address the key issues. The recommendations
detailed in Appendix A reflect this and illustrate the difference
in role played by EMRA scrutiny and that played by the East Midlands
Regional Select Committee.
2.20 During the current year, EMRA has a
Business Plan, agreed with Government, to deliver regional scrutiny
whilst paying due regard to the work of the Regional Select Committee.
There is a clear distinction between the roles of EMRA Scrutiny
and the Regional Select Committee in terms of depth and continuity
of relationship. Both have important and complementary roles to
play. This was recognised by the Business, Enterprise and Regulatory
Reform Select Committee's recent report on RDAs.
2.21 It would be a mistake to suggest that
because emda are undertaking activity to address the economic
recession that less accountability is required, even in the short
term. EMRA's scrutiny has never been about stifling initiative,
promoting risk aversion or even preventing mistakes being made.
In banking, we have seen that if people act without informed accountability,
it leads not only to mistakes being made, but mistakes becoming
entrenched and not learned from. In terms of scrutiny we have
no problem with mistakes being made if they're made using best
judgment, recognised, learnt from and practice improves. If you
make mistakes and you don't learn, you repeat them, embedding
what goes wrong.
3. The process by which the RES was drawn
up and the level of involvement of regional stakeholders
3.1 A large amount of evidence was gathered
in support of the RES, together with a widespread public awareness
raising campaign. Whilst EMRA are co-signatories to the RES, our
role was as enhanced consultee to the process rather than joint
author.
3.2 Whilst a wide range of work was commissioned
as part of the RES evidence base, not all has been reflected or
drawn on in policy. How strategic options were developed on the
back of evidence and prioritised was not always clear.
3.3 Going forward, continuing to gather
a wealth of evidence will be important to inform the development
of the Single Regional Strategy and drawing on the experience
of developing the RES will be valuable. The Single Regional Strategy
will require a greater degree of collaboration on the commissioning
and design of the evidence gathering and more collaborative analysis
and decision-making about the meaning and policy implications
of the evidence gathered.
3.4 It should be recognised that whilst
a single strategy has an inherent logic, the Examination in Public
Panel for the draft Regional Spatial Strategy (RSS) found no conflict
between RES and RSS policy. Indeed, initial scoping work indicates
that Government will be able to designate the existing RES and
RSS as the first Single Regional Strategy.
4. The effectiveness of the RES for the East
Midlands in delivering against its targets
4.1 emda has an excellent track record in
hitting its Corporate Plan targets, and this is its organisational
focus. Wider regional targets have more "owners" and
are subject to greater macro-economic influence and are consequently
harder to achieve. This raises questions about whether emda is
more suited to being a strategic or delivery organisation or an
organisation that procures the delivery of outputs from others.
At the moment it has a combination of these roles but appears
to have increasingly moved from strategy to delivery.
5. The effect of the financial and economic
situation on businesses in the region including the effect on
different sectors and the impact on local employment, and how
well emda is meeting needs in the challenging economic climate
5.1 In keeping with the overall record of
effective management of regional business support, emda have revised
their delivery of services to businesses to reflect current economic
conditions. The economic strategy that was developed in times
of growth remains in place. However EMRA, has called for it to
be looked at again. On 18 July 2008, EMRA passed a motion
that called on emda to "undertake an urgent review of elements
of the Regional Economic Strategy in order to take account of
the new economic challenges facing our region". A particular
challenge for emda will be how it deals with increasing worklessness
alongside a focus on productivity.
6. The changes to regional policy proposed
in the Local Democracy, Economic Development and Construction
Bill and the potential effect on the work of emda
6.1 Regional organisations including EMRA,
emda, GO-EM and the shadow East Midlands Local Authorities' Leaders
Board are pursuing a pragmatic approach to managing the transition
through the implementation of the SNR. The process will not be
straightforward and there are different organisational cultures
to reconcile. However, regional organisations are working through
the arising issues in a co-ordinated way.
7. The role of other Government agencies such
as the Government Office for the East Midlands, and of partnerships
between Government agencies, local government and the private
sector, in delivering the aims of the RES
7.1 See earlier comments on "partnership
management".
8. The way emda's resources are divided between
rural and urban parts of the East Midlands, and whether the division
is appropriate
8.1 EMRA's report Flourishing Rural Communities
examined emda's rural performance in depth. The report backed
emda's "mainstreaming" approach covering both urban
and rural areas. However, it suggests that better evidence would
help emda and partners design policies that work equally well
in rural and urban areas and that remote rural areas may need
special help. It recommends that emda and partners should look
at how the region's Rural Action Plan is delivered and the role
that Local Area Agreements can play. It advocates enhanced support
for Social Enterprises delivering local services and better use
of the skills of migrant workers.
8.2 Whilst emda have taken a number of actions
to address some of the report's recommendations, Government policy
has been evolving and ensuring that rural issues are appropriately
addressed by regional agencies remains a continuing challenge,
one that is recognised by emda and one that will continue to be
a focus for EMRA's Regional Scrutiny Board.
9. How well emda is performing on sustainability
9.1 emda have undertaken a range of proactive
activity to support sustainable development and sustainable economic
development, including engaging in the development of a Regional
Energy Strategy. However, emda do not consider themselves to be
the lead organisation in the region on Sustainable Development.
9.2 EMRA supports a single regional strategy
based upon sustainable development, which is defined in Planning
Policy Statement 1 as the core principle underpinning planning.
RDAs single main objective is economic growth. How emda and local
authorities can work together in the production of the Single
Regional Strategy will be a key test of the new arrangements.
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