UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 406-i

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

EAST MIDLANDS REGIONAL COMMITTEE

 

EAST MIDLANDS DEVELOPMENT AGENCY AND THE REGIONAL ECONOMIC STRATEGY

MONDAY 27 APRIL 2009

(NOTTINGHAM)

MICHAEL CARR, DIANA GILHESPY, GLENN HARRIS, JEFF MOORE and ANTHONY PAYNE

 

Evidence heard in Public

Questions 1 - 29

 

USE OF THE TRANSCRIPT

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4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

 

 

Oral Evidence

Taken before the East Midlands Regional Committee

on Monday 27 April 2009

Members present:

Paddy Tipping (Chairman)

Mr. John Heppell

Mr. Bob Laxton

Judy Mallaber

Sir Peter Soulsby

 

Examination of Witnesses

Witnesses: Michael Carr, Executive Director of Business Services, Diana Gilhespy, Executive Director of Regeneration, Glenn Harris, Executive Director of Corporate Services, Jeff Moore, Chief Executive, and Anthony Payne, Executive Director of Strategy and Communications, East Midlands Development Agency (EMDA), gave evidence.

 

Chairman: I welcome everyone to the first ever public meeting of the East Midlands Regional Committee, and I am delighted to welcome colleagues from the East Midlands Development Agency. The Select Committee set out its priorities for its work and put EMDA at the top of the list. Jeff, I am sorry if you feel that you have been scrutinised and over-scrutinised, but my perception is that this is an opportunity for you to talk to a democratically elected body. So I hope that we can build a strong and useful relationship that lasts for a bit of time.

I should explain what will happen this afternoon. Jeff Moore and the team from EMDA will make a presentation to begin with. That is not normal for a Select Committee-this is an abnormal occurrence-and I know that a lot of work has gone into the presentation. We will hear Jeff and his team to begin with, and then members of the Select Committee will pursue some questions with EMDA.

To those of you who are listening to our proceedings, we have put out a call for evidence. We are keen to talk not just to EMDA but to other stakeholders in the region. If you would like to submit evidence, please do, and you can do so by way of written evidence, or we may ask people who have given written evidence to come to give oral evidence. But we will try to keep this informal, relaxed and friendly, to have a kind of local style, rather than a Westminster style. With that, Jeff, I will hand over to you. Perhaps you would introduce your team.

Jeff Moore: I will do, indeed, Paddy. Good afternoon, ladies and gentlemen. Thanks very much indeed for inviting us here today. With me, I have the whole of my executive team. On my left, I have Diana Gilhespy, who is my director of regeneration and partnerships. On her left, we have Anthony Payne, who is our research and strategy director. On my right, we have Mike Carr, who is our director of business services, and on his right, we have Glenn Harris, who is our director of corporate services.

Thank you for inviting us here and particularly for giving us the opportunity to present. As we discussed, I have got about 25 minutes' or half an hour's presentation. It is great to be here; it gives us an opportunity to explain to you-and to the much wider audience, obviously-what we do. What I will do in that is focus on our role, because it is always useful to reiterate what our role in the region is, some of our major successes and achievements, and some of the challenges that are facing us in the current economic downturn. So if you are okay with that, we have given each of the members a pack of the slides and there is space for you to take notes and questions as you go through. I hope that you have all got those; I think that I can see that you have.

First, regional development agencies were set up in 1999, to bring a regional focus, coherence and co-operation to economic development. Why were they set up? Basically, since the second world war, there had been a host of industrial and economic development policies, and while some had been successful, they had been less successful than perhaps they might have been. So, the Government wanted to bring coherence and co-operation on a regional strategic level to economic development. As it says on the slide, under our public service agreement we have two targets. One is to increase the absolute performance of the East Midlands economy and the other is to reduce disparity between the East Midlands and those regions that are seen as performing more highly, particularly the South East of England. But what we do is not just about investing in economic development projects that you can go round and tap with a hammer; one of the key issues and one of the key roles that we have is strategic economic leadership in the region, and that takes its main focus through the statutory role of producing the regional economic strategy. We believe that is particularly important in the region because, as I said, for the first time since probably the second world war, everybody within the region-local authority partners, business partners and third sector partners-has their shoulder pushing the wheel of economic development in the same direction.

What is unique about our RES? Everybody has a RES, obviously. We are particularly proud of the fact that we were the only RDA at the outset, in 1999, to set a specific measurable target. That target was that by 2010 we would be a top-20 region in the EU's 77 regions-there were 77 at that time. We started in the low 40s, have gone through the 30s and are now in the 20s, and we continue to measure that target. We are now in our third iteration of the RES-you have to do these things every three or four years. It is called "A Flourishing Region" and was published in 2006. We will do our next one probably in 2009-10 or 2010-11, depending on the progress of the sub-national review. That is why you have not seen a review since 2006. We are proud of that iteration as well, because no other RDA in the country went as far as we did in terms of public consultation. We held more than 100 events, with 1,400 direct participants. We also ran advertisements on buses and radio stations and had a "Have Your Say" website. We got to the audience that people often cannot reach, and so we think of it a bit like the Heineken ad-we got to those that you could not get to. Why is that important? It is important because you need to consult widely on these things anyway, but also because it is the region's strategy, not EMDA's. We repeat that wherever we go. The RES, "A Flourishing Region", is a strategy for the region, and the fact that we consulted so widely was very widely praised by the National Audit Office in its 2006-07 performance assessment of us.

What is the core aim of the RES? As you can see on the slide-I shall not repeat it-the core aim is to set a vision. What does it do? It effectively galvanises the partners in the region. We are here today to account for our £178 million or so budget, but the public sector in the East Midlands is probably worth £25 billion to £26 billion and our overall economy is worth about £75 billion or £77 billion. It is the influence that the RDA can bring on that £77 billion that is important, and that is why we try to galvanise partners. It is not just about warm words and apple pie and motherhood though. One of the key underpinning documents-we could have buried you in evidence today-is the evidence base for the RES. It is the size of several breeze blocks. It was produced by our own people, using industry-standard mechanisms with experts from outside-universities and academics. It is a fundamental piece of work that really does help us to decide our priorities for our own investment and the rest of the public sector's investment in the East Midlands, and it has driven up the quality of decision making on what priorities we adopt through our economic development.

There is also a uniqueness about the current RES, in addition to its consultation. It contains a unique and groundbreaking index called the index of sustainable economic well-being-ISEW. As we have gone through iterations of the RES, we have worked out quite clearly that it is no longer simply a matter of measuring GDP prosperity. If your GDP increases massively but everybody is in fear of crime and living in a polluted atmosphere, your region is not actually that much better off. What ISEW seeks to do, as well as measuring the capital benefits from investment, is to take account of the costs of crime and pollution, and the benefits and advantages of volunteering, labour, caring and those sorts of things. So this tries to bring a more comprehensive index together. Lots of people are following that, and it is quite interesting that, after we introduced it, one or two political parties found it an interesting way of perhaps capturing prosperity and development.

I have talked about our regional role and the statutory requirement, the RES, but what is the East Midlands economy like? We all live and work here, but quite often we are not exactly sure in some corners of the region what the East Midlands economy is actually like. Compared with other regions, it is not dominated by one single conurbation; if you are in Advantage West Midlands across our western border, Birmingham dominates that economy, just as Manchester probably constitutes about 70% of the gross domestic product in the north-west. Lots of regions are dominated by one particular city, but we are not. Clearly, the focus of much of our economic activity is in the three cities of Leicester, Derby and Nottingham, but there are also hugely important urban centres, such as Northampton, which is growing very rapidly and might overtake Derby within the next 10 to 15 years in population terms. We also have Lincoln, Chesterfield, Mansfield and many other important areas.

It is quite striking-I am sure that many people will be interested in this today-that we are the third most rural region in the UK. Some 30% of our population live in rural areas, which is 10% above the UK average as a whole, so a key role is played by market towns. As an example of that, because I know that your evidence notes the test of rural, we actually get 3% of our cash from DEFRA, yet we deliver 38% of our outputs to rural parts of the region.

Until recently, before 2008-09, we enjoyed relatively high levels of economic growth; in 2007 we were one of the fastest growing regions in the UK, but we still have major challenges economically. We have performed less well on productivity than some of our competitor regions at about 92% of the UK average for gross value added. We have pockets of serious deprivation centred in our cities, but there is also a huge amount of deprivation in the former coalfield, and there are specific, small pockets of deprivation in rural areas. Furthermore, the Lincolnshire coast is not the gem that it once was and needs considerable economic intervention.

As a region, we have traditionally had high levels of employment, but that has generally tended to be in low-pay, low-skill jobs. We have also found from the start that the region has traditionally had low ambition and aspiration. As a Nottingham lad myself, Nottingham was only ever interested in whether it was beating Derby-I do not mean that in just a football sense-or whether it was beating Leicester, when we should really be concerned about the regions of Singapore, Australasia and South East Asia, which are growing and developing, so we have had to address that concern.

Things are starting to change. As members of the Government party, you know that the development of knowledge-based industries is crucial. They are growing at a faster rate in the East Midlands than elsewhere and currently have a 14% growth rate here compared to an average of 9% in the UK.

I have talked about the RES, which is designed to tackle the deep-seated challenges within the economy, but I suspect that one of the things that you are going to ask me today is how we are responding to the economic downturn. We believe that our funding of around £100 million is sufficiently flexible to respond to the current downturn, and we are fairly fleet of foot in that respect. Like all regions, ours is suffering from the downturn-output is falling, confidence is low and unemployment is rising. The claimant count in February rose at a higher rate than it has for two years. Although, as we saw in the papers through the late summer and early autumn, construction and property were hit first, all small businesses are beginning to struggle, as are some of our large national and international ones. That is particularly true of the region's manufacturing sector. I am often in Whitehall and confronted with comments about how manufacturing is desperately affected in the north of the country and financial services in the south, but manufacturing is our largest sector in terms of employment: 19% of the East Midlands population work in manufacturing compared with an average of 13%, so when manufacturing catches a cold, the East Midlands catches a cold as well. Perhaps one interesting stat that you will be really fascinated to find out is that in the Peak park, the second most visited national park in the world, more people work in manufacturing than in tourism-that is quite an astounding fact.

There are serious threats that businesses will cut investment in the long term. We have talked about challenges, innovation, enterprise and skills. The construction industry is really struggling and there is no or very little private sector cash for regeneration schemes, but, while we would not wish to talk about green shoots of recovery, there is anecdotal evidence that we may have reached the bottom. We will test that out as we carry through, but we are beginning to get more anecdotal evidence from some companies that they feel that they have stopped declining, but it is about how long they will progress along the bottom.

How is EMDA responding to the recession? We have an excellent track record of responding swiftly and decisively to shocks. After 9/11, Rolls Royce downsized quite significantly and we were instrumental in making sure that the engineers who were losing their jobs were not lost to become sandwich makers or driving instructors. We set up a programme-a dating agency-that married them to other engineering companies in the East and West Midlands.

We responded massively to foot and mouth, particularly with some of those manufacturing businesses in the Peak that could not get access to sell their services. We worked with road manufacturing businesses, for instance, to keep them going. We also responded in the floods of 2007, when North Notts and North Derbyshire were particularly badly affected, and we launched a recover programme on marketing issues within days. One reason why we were able to do that is that we stay very close to business and understand the needs of business. We have not talked about it much so far, but our board is dominated by business representation-they make up the majority. We have a lot of private sector expertise around the executive team and the team in EMDA itself, and we stay very close to both large and small businesses to understand their needs. The down of the downturn happened to coincide with our period as chair of chairs, which comes round every four years, and we could not have had a more interesting time for it, could we? We were chair of the RDA family from 1 October to 31 March this year. We acted as a clearing house and an ideas factory for Government on what could or could not work.

Some quick snippets of things that we have done: we have massively simplified business support in the region as part of national policy and gone from some 3,000 products nationally to 30 and fewer; we took over the Business Link service two years ago, reducing five Business Links to one, which has allowed us to increase the number of front-line advisers by 40% and reduce back office costs by over a third; and we have refocused our Business Link adviser service so that it is giving direct advice on cash flow, credit management, downsizing, and bank and investment dealing to companies. We were particularly pleased to launch what we called our "Survive and Thrive" initiative in November and December of last year; I do not know whether any of you were able to attend. Over 2,000 businesses visited. It was about how the businesses in the East Midlands could manage on a day-to-day basis. It is fascinating to hear "survive and thrive" used all over in Government and industry speeches. It has been a very positive soundbite for us. We also deliver and commission millions of pounds worth of general business support advice, which has continued to be delivered.

We could talk at length about the ability to raise finance. We have an escalator of finance products and a strong tradition of leading the way. We were the first RDA in the country to launch a regional venture capital fund and we raise funds from all the local authority pension funds in the region, apart from Lincolnshire. That was quite an achievement. Nottinghamshire county council invest in it. There is a range of loan and grant funds: perhaps the newest and latest is the East Midlands transition loan fund. We have a £6 million fund that gives direct support for those businesses that cannot get money from the banks or the Enterprise Finance Guarantee Scheme and need that money to survive. Our products are not just about funds; they are also about investment advice. Many businesses need the advice about how to be investment-ready and how to deal with their funds-that is what we do.

Quickly touching on key regeneration schemes, I talked about regeneration being flat on its back-it really is. We have done a lot with Derby, Leicester and Nottingham to bring forward some major schemes that will create and safeguard jobs: the cathedral quarter in Derby, the new business quarter in Leicester and the regeneration of Nottingham station and its new hub. Finally, we have launched "Career Chain", which is a similar policy to the one I talked about in relation to Rolls Royce and 9/11, and that is matching those who are becoming unemployed in the construction industry with opportunities elsewhere-on building skills for the future, for instance.

We still need to develop innovative and knowledge-focused businesses to compete with the regions of the world, and our evidence base has allowed us to identify those key sectors that work with large businesses and universities to build on them. Just one example is Loughborough university, where we are developing a low carbon cluster. We are very pleased that the Energy Technologies Institute was won by Loughborough University with other partners in competition against the rest of the country. A lot of work is done by Rolls-Royce on fuel cells there, and that has levered in £1 billion-worth of work into research for the new energies that we need in the 21st century.

We have lots of other investments there. The Systems Engineering Innovation Centre is a world leader, globally recognised, and is a partnership between Loughborough and British Aerospace. Regarding the Sports Technology Institute, sports is a massive business in this region, equipping our Olympians and other sports to succeed. It is hugely important, with major investments there. They are just some of the examples, including, in the ETI's case, a manufacturing technology centre, which we are bringing along with Rolls-Royce. We have examples where we work across boundaries-RDAs are often criticised for not working across boundaries. Both the ETI and the MTC are in co-operation with Advantage West Midlands, and we have done lots of motor sport work with colleagues in the South East and elsewhere.

You will all have heard of this other example, particularly any of you who read the Nottingham Evening Post. Every time I look at it, there is someone of significance standing in front of BioCity, claiming credit for it. It is a classic and world-beating example that success has many fathers. What we would say is that without our involvement, it just would not have happened. We were responsible for acquiring it from BASF and for bringing the two universities round the table together, and we have put millions into refurbishing it. What we would say is that that is industrial activism in action. Some 57 knowledge-intensive businesses have been brought about out of there, levering in £27 million-worth of investment. It also has national and international recognition-as I said, it is very successful. But the problem it has created for us is that everybody wants one. They want one in Market Deeping, one in Glossop-they want them all over the region. Deciding whether we extend on that side, or whether we want somewhere else, is a key challenge.

There is another thing that we are particularly proud of-I know that you are getting a bit of an overload of achievements here, but we will come on to some of the challenges in a minute. Blueprint is the first of its kind in the UK: a 50:50 public-private split. EMDA and English Partnerships each own 25%, with 50% owned by Igloo Regeneration, which has sustainable development as its strategic key objective-it is not a "build boxes and move on, cheaply make a profit" organisation. That has kick-started a lot of development that would not have happened otherwise, by levering in its private sector expertise and our public sector expertise into areas of market failure. That has levered in £31 million in private sector finance.

Other examples include Nottingham Science Park, the green and yellow building that you see on the slide. That had lain derelict in the public sector's hands for 18 years. Within 18 months, they have put the acquisitions together, dealt with the planning issues and delivered a zero carbon, state-of-the-art building for the East Midlands, alongside Castle College Nottingham and Toyota Academy for the engineers of the future. In Peter's constituency, or city, they are working on a digital media centre in the centre of town near the Curve, and they have made some major changes, and are working through the recession as we speak to bring about schemes that have dropped to the floor with others.

But clearly, our biggest regeneration challenge is the coalfield. Not only is it our biggest challenge, we have more of it than anybody else: we have 27 sites with a total required investment of well over £300 million. Our USP is that we are involved through the life cycle of development, so we actually acquire, remediate, redevelop and then move on to the private sector. The one that you see up there is the Avenue coking works, which is the most polluted site in Western Europe-possibly in Western and Eastern Europe. When it was built, it was not a pit, it was a coking works, built in 1956. The gas journal at the time said it was "undoubtedly one of the finest in the world"-it was at that time. Now it is one of the finest in the world in terms of the remediation technologies that we are applying there to clean the site up.

So, we clean it up on site; we do not transport lorry-loads of muck through the five villages nearby. We have received lots of awards for that. One of the particularly pleasing things is that, on a site of well over 100 hectares, there is lots of rich biodiversity and rare insects and animals. We have worked all the while with Derbyshire Wildlife Trust to create nature reserves there, to make sure that there is the least disruption possible to the wildlife. And we have worked throughout with the local community. So Phil Reeve, and Mike Fenton after him, have knocked on every door every time we did something there to explain to residents what was happening. All the schools have taken part in competitions, to decide names for things and to help us, and we use the community to monitor activity on the site, not in an aggressive, adversarial way, but in a joint, supportive way.

Another example of partnership work, and this is something that I would recommend if the Committee want to see something on site at the moment, is at Steetley, which crosses the Derbyshire-Notts border-the Bassetlaw-Bolsover border. It is really an interesting scheme in partnership. It was struggling to come forward, we have put £5 million into it, it has levered in £57 million of private-sector development and it will eventually lead to 270 jobs. Laing O'Rourke, a major, multinational, world-leading company, is going to use it as one of three major hubs in the UK-one of its biggest construction hubs-and it is going to be developing the construction techniques of the future. You manufacture off site and then you can make a lot quicker development.

Perhaps last on the coalfield is Shirebrook-£23 million investment in the Shirebrook site. This is one that is further on. We are delighted that we managed to get Sports World International there-Mr. Ashley has had some difficult times over the past year with his football club, but his plant up at Shirebrook has been quite successful. It takes two thirds of the site and employs well over 1,000 people-more and a more diverse background than with the pit. It is an excellent example of development, inward investment, marketing and skills development, so local people can develop jobs.

At the softer end, economic development is also about skills and upskilling. There are others in the region that do lots of skills development-maybe one day the LSC will be here to answer questions before the Committee-but we use our marginal skills budgets to pilot ideas and to test them in other areas. So, we do a lot on science, technology, engineering and maths-STEM. We have had a whole partnership with education and business-what skills are missing, what is the region short of? As a result, we have invested £10 million over three years, which is bringing forward innovative, exciting projects to get kids engaged with science, technology, engineering and maths. An example of that is A Lab in a Lorry, which thousands have benefited from.

Bringing it towards a close now, I would say all that, wouldn't I? I am the chief executive of the organisation that has done things. If I don't claim praise and call those big achievements, no one will. What do they actually amount to? What independent evidence do we have for the statements that I have made? That, I am sure, is of great interest to the public here today and to the parliamentarians.

What I have said is that our strength lies in taking evidence-based risk. That is what RDAs were created to do. They were created to take those risky, edge-of-action projects that others would not do. So, we do flagship, demonstrator and beacon projects, as well as mainstream business support. That is a key knowledge point about RDAs: it is the risk-based stuff that we do. We believe that then sets an example to the rest of the region and those things are then taken on by mainstream, public and private sector partners. We have met every one of our targets each year in the past 10 years and we have done that with one of the most cost-effective staff bases, so we are probably, in absolute terms, the lowest-cost-in terms of salaries-RDA going.

Most important, what has been our impact? In 2005, when I started as chief executive, before anyone else did it-before BERR and PWC-EMDA commissioned ECOTEC to undertake a full evaluation of everything that we did between 1999 and 2006. It is regarded as the gold standard study for this kind of work. It looked at all our activity and found that we had a significant impact on the region. It was used as the fundamental underpinning evidence for the national impact evaluation framework that BERR did with PWC.

We found our headline figure, which we published in March. It was actually available in June last year, but we were told not to publish it while the national study was being completed by PWC. We have no money of our own-it is the taxpayers' money. The Government have no money of their own-it is given by the taxpayer. For every pound that EMDA spent, it generated £9 to £15 worth of economic benefit. That compares with the national average in the PWC report of £4.50. We have invested wisely in output and objectives, and it is all in the ECOTEC report. Even that is an under-representation of our added value.

All the stuff about strategic added value, leadership and research that I talked about does not score-that is just from the projects that we have delivered. Having a RES, developing motor sport in the UK, Rolls-Royce on the environmentally friendly engine, and making sure that our region benefits as much as possible from competing for and the delivery of 2012-none of that counts in there. The report recognises that we have a unique role in bringing together partners to tackle economic, complex situations and it confirmed what we had done. The National Audit Office reviewed our performance management in 2006, and we scored 22 out of the 24 top performing RDAs in the country, which we share with our colleagues in the North East. We are not complacent. We need to do much more.

We have not made a big fuss about the £9 to £15 because if you are unemployed at the moment or your business is in difficulty, the fact that I say we are worth nine to 15 quid for everything that we do does not cut that much ice. We need to be constantly vigilant. The regional economy is fairly resilient, but we need to continue the long-term challenge of low skill, low pay, low ambition and low aspiration. I believe that EMDA is best placed to deliver on that and that we can make effective responses to local and regional challenges. We are committed to setting long-term, strategic priorities, but also to be flexible enough to respond to short-term difficulties.

The Prime Minister and Lord Mandelson launched "industrial activism" only a week or so ago in Loughborough and that is what we do all the time. A company that was developed out of the regional venture capital fund is now based at Nottingham Science Park. It has world-beating technology on cooling telephone exchanges and many other applications. It started in the region in the past few years. It is now worth well over £100 million and will become massive. We do industrial activism.

Our business leadership and insight is crucial. Our board and leadership can make decisions that are not necessarily affected by parochial issues and sometimes the pressures of the political cycle. We can take brave and tough decisions. BioCity was a tough decision. No one else wanted to take it. We took it, and look at how successful it now is. We work over administrative boundaries, such as with Steetley, Energy Technologies Institute and Making the Connection. We undertake ground-breaking activities and research that others do not. No one else has measured what impact congestion has on the East Midlands. We did. No else had even dreamt of the ISEW when we did it. We have had £9 to £15 for every £1 that we have invested.

In closing-it is exactly on the half hour that I was given-I come now to the key point of my speech. I started work in the public sector way back in March 1973, some 36 years ago. When I joined, everyone in the public sector had an ethos of doing the best for the public they served. I do not think that that has necessarily changed much. People still have that ethos. I get out of bed every day because I am enthusiastic about what we can do for the people of the East Midlands. EMDA, through the sponsorship that it gets from the Government and the support that it gets from the public and private sector partners, makes a real difference to the lives of the 4.3 million people who live in the region. I am extremely proud to be EMDA's chief executive. We are all very passionate. I have a supportive network. We make a difference to the lives of those in the East Midlands for the better and I want to continue to do that as much as possible. I would now be delighted to answer any questions that you have.

 

Q1 Chairman: After that performance, I am not sure whether there are any more questions to ask-it was full on. Jeff, I have come across this phrase, "survive and thrive", which is on a card that is issued to every member of the Cabinet. You have told us a lot about the successes, and at one point you mentioned challenges. Can you tell us about two or three big challenges or problems that you are facing at the moment?

Jeff Moore: There are lots of challenges. Lots of small businesses are finding it difficult to get orders, so we see companies every day that are struggling with trade credit insurance. We also see those who are having difficulties with access to finance. We see good companies that are finding it difficult to get finance from their normal lenders or having restrictions that could tip them over the edge. So they are immediate business challenges. Also some of our multinational, internationally renowned names need major support to continue to compete in this marketplace. One of our biggest employers is Toyota in Derby. The automotive industry is down on its knees, as we all know. Toyota is an excellent company. It has been able to deal with it better than many others, particularly some of those in the US, but it no doubt impacts on their ability, so that affects right across the piece.

Everything is a challenge in these difficult times, but the other big challenge is there is no private sector cash out there for hugely, fundamentally needed regeneration schemes. You cannot find lenders to fund them. If you can find lenders to fund them, the limits are too small. You cannot find lenders to finance the buying of them. Regeneration schemes are hugely difficult, so work has stopped in town centres-the Westfield Broadmarsh centre has now gone into a cold corner for two years or so, and there will be lots of others. In rural areas, people still want enterprise development, so how we do give enterprise to rural areas? We developed a whole set of centres throughout Lincolnshire-Market Deeping, Holbeach, Lincoln and elsewhere. It is quite tough out there in all senses of the word. Access to finance continues to be on our register every day.

 

Q2 Chairman: You talked to us about the RES. Clearly, that is an important document, the way you consulted about it. How far do you feel that the RES is your document? Or how far is it a document that belongs to partners and stakeholders in the East Midlands?

Jeff Moore: As I said in the presentation, it is the region's RES, not our RES, because of that degree of consultation that we went into. The kid at the bus stop is often quite a challenge to engage with the region's RES, but we attempted to do that. We went beyond where everybody else went. We also had about 190 partners sign up to the implementation plan for the RES in 2006, and I think we have had a great deal of support from our business, public-sector and third-sector partners. So I think it is the region's RES. I do not know if you want to add anything to that, Anthony.

Anthony Payne: Undoubtedly, it is the region's RES. We went out much more than any other RDA to consult on the RES. We brought in more partners to the consultation on the development of the RES, and we took forward the development, as Jeff said, of the implantation plan. We work day to day with partners across the region to actually make that happen. I do not think the RES would be delivered-it certainly would not be delivered-if it was just left to us as an organisation to deliver it. The only way it can be delivered is in partnership with a range of organisations.

In my current role, I am the executive director for strategy. Previously I led on a lot of the development and regeneration work. A lot of the examples that Jeff has given, like Steetley colliery and so on, would not have happened unless we had brought partners to the table to make projects become realities. Absolutely it is the region's RES. Without regional partners getting behind the wheel, as Jeff said in his presentation, we would not make the progress we are making.

 

Q3 Chairman: So if I can just follow that through a little bit, one of the partners, which Jeff mentioned, was the Learning and Skills Council-the LSC. One of the issues for the East Midlands is that in comparative terms we lag behind. I do not want to be critical of a body that is not here, but I will be. They have made a bit of a mess of their capital programme. How far are you as a body able to influence organisations such as the LSC?

Jeff Moore: I will try to answer that one, Paddy, but then I will call Mike in to talk about how we bring some alignment of university funding behind the RES to show it is the region's RES, because higher education is also a very major contributor to the skills that are generated in the East Midlands. Our eight or nine universities are very big businesses. The LSC has a budget approaching £750,000, which is almost five times the size of mine. But when it was created I think that it had a degree of commitment and a degree of pipeline that it had to follow through. I think we have been able to influence them quite well-they are very receptive to our conversation-but our influence in their marginal and discretionary spend is less than it otherwise might be. They have a whole series of programmes that they need to continue to deliver and I think our degree of influence on that is less than on their discretionary spend. However, they are part of the region's Employment, Skills and Productivity Partnership, of which I am the chair. They attend that and try to flex their programmes as much as possible for us in that direction.

I will now ask Mike, and then Diana, to comment on that. Mike will talk a bit about universities and Diana will talk a bit about the LSC and our work with them. It is probably best if I announce them like that each time, because it forewarns them to tap the microphone on when I tap mine off.

Michael Carr: Thank you, Jeff. Just to follow up on the points around sectoral alignment, I think it is quite important to emphasise and use the universities as an example. Giving sectoral priorities very clearly within the RES-sometimes a little bit unpopularly, by choosing a very strict regime of just four priority sectors-has allowed people to get behind those sectors. What you will see with the universities is that when they bid into the science and research councils and when they bid into things like HEFCE, they are able to actually focus around the RES to back up their bids and therefore, by being able to focus on that, give successful bid documents which in turn bring funding into the region. We then assemble that funding. So again, Jeff talked about industrial activism. Well, if you look at BioCity, BioCity is a really good example of industrial activism, because what you have got is the regeneration agenda, the business support agenda, the start-up agenda and you have got university research and development money all coming in from external streams, coming together to make a really strong sectoral presence in that particular sector that we have prioritised.

Just a couple of words in terms of skills on the business side and then I might hand over on the LSC capital programme. One area where we have really worked closely with the LSC has been on their support to business. You will probably be aware that from April we have now got a joined-up, integrated service under the Business Link brand, which brought the Train to Gain independent brokerage system and the Business Link independent brokerage together under one heading. Two years ago we worked with the LSC in a far-sighted way to predict that and we have had, for the last two years, a very integrated service being run collectively by one broker. That is how we have been able to influence their thinking to ensure that business gets a very appropriate service that, actually, is not confusing to them.

Diana Gilhespy: Working with the LSC on the capital programme, in the past what we have done is made sure that where we are putting our investment in physical regeneration projects we are not crossing over or undermining any work that the LSC are doing and, indeed, that we have worked together to make sure that we can align our funding together so that we can get a regeneration impact out of an investment, alongside an investment that the LSC is making. One of the examples in Derby would be the Roundhouse development, where a huge environmental and historical building has been regenerated to the benefit of both skills development and the regeneration of Derby. So, we have done that.

I will just say that we have not got the funds to bridge the gap that there currently is within the LSC capital programme, and even less so at the moment. So I just wanted to mark that up. As I say, we are aligning funds where there are clear regeneration benefits, not in order to displace LSC skills funding.

The other area that we have co-operated with the LSC on is through the Employment, Skills and Productivity partnership that Jeff chairs. In particular, I would like to give the example of the work that we have been doing with Jobcentre Plus as well as the LSC, who are also partners of the ESP, in tackling worklessness. Collectively, what we agreed was an approach to disbursement of European social funds that would particularly take some of the good examples of tackling worklessness-for example, in the Shirebrook area and the coalfields area-and apply that to a programme founded by the European social fund across the whole of the East Midlands. That is another example of where we have not got the funds ourselves but where we have worked together with partners to align funds and make sure that we get the best possible impact out of public funds that we have collectively at our disposal.

Chairman: I think Peter wants to pursue a point around this, and then we will turn to the budget, and Bob and Judy will lead on that.

 

Q4 Sir Peter Soulsby: Thanks, Paddy. I want to follow that line of questioning about the LSC and to take you to another key contributor to the well-being of the regional economy-transport infrastructure. I will perhaps ask about the single integrated strategy a bit later. I want to ask about your relationship now with the Department for Transport and the Highways Agency and the way in which you seek to align your priorities with theirs and how much impact they can have on yours and you on theirs.

Diana Gilhespy: Yes, shall I start and then Anthony, for his previous role, might like to chime in? This morning I was at the opening of Corby railway station by the Secretary of State, with great support from Phil Hope. That is a clear example of where we have worked together with the railway interests-the operating company, Network Rail, the Department for Transport and our colleagues in what was English Partnerships and now HCA, in order to deliver a mixed regeneration and transport project. Corby, as you know, is a growth area and it is very important that in growing the number of houses and jobs, we do not increase congestion on the roads. So it is really important that we have that rail link. Similarly again, we are working on the interchanges in Leicester, Derby and Nottingham in order to ensure that we can have good regeneration benefits within those cities around the railway stations as well as improve access by railway to our city centres. Anthony, did you want to add anything to that?

Anthony Payne: The first thing to say in relation to the transport agenda is that we are there as an influencer as much as a doer. If you look at our budgets and the budgets that relate to transport infrastructure, our budgets are just a drop in the ocean. In relative terms, what we can physically do for transport is limited. Our role is a strategic and influencing one. One of the big pieces of work we undertook this year was to put together the regional funding advice, working with the Government offices and the regional assembly. That brought in partners such as the Highways Agency to try to identify the priority schemes for the region over the next 10 years and going forward. We have a really important role there as a strategic influencer and trying to get partners round the table to identify the key priorities.

At the same time we have a role to play in undertaking cutting-edge research. As Jeff said in his presentation, we were the first and, as far as I am aware, still the only region which has attempted to look at the economic impacts of congestion on the region and what it means to the regional economy. That work helps inform some of the RFA submission and it will help our future strategy work around evidence and so forth. That is one of the key roles we play from a transport perspective.

Jeff Moore: I would just add, regarding transport in its widest possible sense, that, obviously, we work very closely with the airport to try to mitigate the impact of air transport but also to make sure that, with its specific characteristics as one of the UK's largest freight airports, taxation changes and Government policy are minimised in terms of the employment opportunities there.

 

Q5 Sir Peter Soulsby: Thanks. I would like to take the example of the Parkway station. As I recall, EMDA put £1 million into that, which is a small contribution towards the scheme. Clearly, that development is likely to have quite a significant impact and is likely to bring a lot of positive benefits to the region. I am trying to explore whether there are any mechanisms that enable you to influence the priorities that lead to such a development, because I would guess that your £1 million was not what actually brought it into being; it may have helped to give birth to it, but I do not think that it was part of initiating it. Are there mechanisms to enable the EMDA priorities to be reflected in those for the Department for Transport and its various agencies?

Jeff Moore: Certainly, I will look to answer some of those detailed questions. You would be surprised how many people tell us that our £1 million would be the difference between something going ahead and not going ahead. In fact, I would say that in probably 99% of our schemes the applicant says, "And if I don't get your money, it won't go ahead." That is something that we quite robustly test. An example of a transport scheme that would not have gone ahead without our funding is all the Skylink bus activity that we have undertaken with Derby, Nottingham and Leicester, in order to minimise the impact of people travelling to the airport.

The main influencing mechanism would be our direct work with the Highways Agency. As a chief exec of a regional agency, I meet lots of other chief execs of regional agencies, and it will be about articulating our priorities to them and also making sure that they are consultees of the RES. We talked about it being the region's RES; the whole ethos is to make sure that partners, such as the Highways Agency, are engaged as well. Is there anything you want to add, Anthony, about that influencing?

Anthony Payne: Going back to the connections to Network Rail for a minute, in terms of influencing and deciding our priorities, our board agreed last year that regeneration at major transport interchanges in the region was a priority for investment. We got that decision and agreement by working through our board, but we made the decision in close co-operation, in the first instance, with Network Rail. We meet with Network Rail strategic managers for the East Midlands on a six-monthly basis. We have regular contact meetings with them, so that we can align our priorities wherever possible.

You are absolutely right, Peter, that our investment in Parkway was only £1 million of £25 million, but it made the quality of that offer much better. The station there is of a higher quality; we brought sustainable construction techniques into its design and have ended up with a much more sophisticated, much higher quality product. Once Parkway was in place, the other thing that we were able to do, working with partners, was to ensure that a shuttle service was provided between Parkway station and the airport. That was something that all partners felt was essential. We got commitment to that from the majority of local authorities, and with a bit of funding from ourselves, we managed that to make that happen as well. That was a spin-out from the Parkway investment.

The other point to make on this is that, working with Network Rail, we have identified the major priorities for regeneration at transport interchanges across the region. As Diana said, she was at the opening of Corby station this morning. Corby was the largest town in Europe, as far as we know, not to have had a train station since 1966, so we think that Corby train station will be a major boon to Corby and its growth aspirations. Equally, we have now committed money to the Nottingham hub regeneration project and so has the city council. We are now working to make sure that Network Rail comes to the table with the £14 million that it and DfT will bring to the party. As Peter well knows, we are working very closely with Leicester. Peter chose the station board at Leicester to try to make Leicester station development and the associated development in the hub next to it come to fruition. So we are working very closely with Network Rail in particular, and our board has signed up to the priorities that we put to it last year.

Chairman: We pass the ball on to the budget.

 

Q6 Mr. Laxton: I will kick off with a bit of a change. It is a very diverse region that we live in. What is your profile of spending of the budgets that you have? Your budgets are not huge, but are they geared to seasons of the year or the end of the year, or is it a bit of sort of play along and see how you go? Perhaps you could give us a bit of a clue?

Glenn Harris: I will answer that one. Basically, in terms of expenditure, our funding comes in two categories-capital and revenue. The revenue expenditure, generally speaking, at the start of any business plan year around April, is committed almost fully for that year. That expenditure tends to be fairly even; almost on a month-by-month basis, you will see that expenditure go through. It is the capital expenditure, mainly on the large regeneration schemes that we have been talking about, that tends to be more uneven. Although the schemes themselves have been approved and contracted often many months and sometimes a year previously, often the expenditure goes through in the final quarter of the financial year. That is predominately because those schemes have many local authority partners that like to claim from us once a year and get all the figures and outputs sorted out, so a lot of that expenditure goes through in the final three months of the year.

 

Q7 Mr. Laxton: Thanks for that. Last year, you had something like a £2 million undershoot towards the end of the year. What was the reason for that? I think that it was the last financial year-2008.

Glenn Harris: I am not sure what that is, actually. Certainly, for the past five years, we have not had any underspend of our allocation. For example, we are just sorting out the final audited accounts for this year, and we have spent within £110,000 of our budget of £160 million. We have tended to use our allocation every year, so we have not had an underspend that I can recall.

Jeff Moore: He said the last five years, because he has been finance director for five years, and I was finance director before him. Before, we would pretty much spend every year as well. A major difference that we have had over the past few years is that we used to be able to carry forward at the end of the year. You could perhaps be advocates for that in government. It makes a significant difference on the capital spend side to organisations, and that end-year flexibility was taken away two years ago. If, out of the inquiry, we could get that end-year flexibility back, while we have not had the problems to which Bob is referring, it would help us to not have them in the future.

Mr. Laxton: That is something that we could perhaps, as you say, take away and talk to some other people about.

 

Q8 Judy Mallaber: If I can follow on from that, what proportion of your spend goes via the sub-strategic partnerships?

Diana Gilhespy: A third-approximately, £50 million out of £150 million.

 

Q9 Judy Mallaber: And is that your main mechanism for making sure that money is distributed reasonably fairly around the region, or, as your priority is economic development and regeneration, are you pushed towards big projects that might be city-based or a major project such as the one that you mentioned in the coalfields area? How do you ensure that money also gets spent in other areas? You mentioned rural areas, places with smaller market towns or places such as my area, which has a lot of manufacturing but on industrial estates. How do you ensure that money gets spent equally, or is that not your priority? How do you ensure that the money that goes via the sub-strategic partnerships is spent in a way that meets your overall priorities?

Diana Gilhespy: There are several things there. It is quite a large question, so I will look around the table to see if I have missed out anything. We rely on the sub-regional partnerships to know what is important in their locality. As we have said, it is a very diverse region. For example, at a regional level, we would not know whether a community facility in Summerley Park or a skills centre in Alfreton is something that was a priority for the sub-region. We could not judge that at a regional level. Having said that, you are particularly talking about rural projects and the rural side of things, we have a different mechanism for deciding priorities around rural expenditure.

As you probably know, there is a statutory requirement on RDAs to have regard for rural issues, and we take that very seriously. Within the RES and through every single priority, there is a rural dimension. In other words, we have rurality written through our regional economic strategy. We do not categorise rural as being a bit of spend over here; it is something that we take through the whole of our RES. In practical terms, that means that we rural-proof all our programmes, priorities and policies, as well as every project. So every project that comes to us has to explain whether and how it has taken into account the rural aspects of the project. That is another way in which we ensure that sub-regional funding-the one third of funding that we give to sub-regional partnerships-deals with rurality or the smaller projects. We try to do that across all our programmes.

In addition, of course, we have a particular fund from Europe-namely, the rural development programme for England. That is around £60 million over six years, which is about £10 million a year, and is managed directly by us. Again, that is another way in which we take into account rural expenditure and needs.

Jeff Moore: But as I said in my presentation, we are not about making sure that each of the 42 or 44 districts in the region gets one forty-second, as it were, of our total budget. Part of what we, our business board and the processes that we use are about is identifying the key strategic priorities that will make a difference to the region. Inevitably, that means that there will be peaks in some places and not in others. But, as I hope my presentation conveyed, we are not dominated by one sort of urban conurbation; it does not all go into Nottingham, as it were.

We have talked about the one third that goes to sub-regional partnerships, but in addition to that we have perhaps £30 million of business support, £15 million of which is delivered through Business Like and another £15 million of business support. That is available throughout the region, so an SME in Mablethorpe, Heanor or Market Harborough will be able to tap into those services and benefit from them. Much of our stuff is available on demand in terms of business support on those programmes throughout the region, but we also put a lot into innovation with universities, which are in specific localities. It is not about an even spread of spend, but about ensuring that we have the right priorities to do those beacon and flagship projects that I have talked about.

 

Q10 Judy Mallaber: How do you ensure that there is effective budgetary control of spending in relation to the big projects that you decide upon regionally and the projects that are devolved through the sub-regional partnerships? What are the mechanisms for ensuring tight control, and what happens when the spending is either too high or too low as you get to year end? How do you cope with that?

Glenn Harris: Every single project that we fund, whether directly from the region or through one of the sub-regional partnerships, we independently monitor. We have a team that monitors every single project independently of the project manager or host. We have a risk-based system, so we do much more intensive monitoring visits and checks of the larger projects, which tend to be inherently more risky, with more money at stake, while the process is slightly less intensive for the smaller projects. That is done independently of the applicant and the team that processes the appraisal.

At the front end, every time a project comes forward, we look at it in relation to the Treasury's Green Book appraisal process, and if we think it is then okay for us to fund the project, we have a fairly intensive monitoring arrangement once the project has been contracted and approved. At the back of that, we also reinforce the process with internal audits; our internal audit team, which we contract out to KPMG, also does selected monitoring visits to some of the key, high-risk projects that we think need closer attention.

Jeff Moore: If I can add to that-this is very operational and maybe a bit boring, but each week, as an executive team, we look at the key performance indicators for the region. They range across the key things that matter, such as the spend of sub-regional partners and of our own projects, the delivery of our outputs and outcomes, as well as what is in the pipeline. Those things are in front of our executive team every Tuesday morning, so that is what we look at for the first 15 to 20 minutes. We will be going through them again tomorrow in relation to what we have spent and done in the first few weeks of April. We do that each and every week, because we see it as hugely important. It protects the taxpayer's money, but there is never enough money to do everything and so you need to make sure that, where you are getting underspends, you are addressing them and diverting the money to projects that will spend and will make a difference.

 

Q11 Mr. Laxton: I made reference to the 2008 budget and a £2 million underspend. Now that may very well have been money coming back from one of your sub-strategic partnerships as an underspend. Bearing in mind, Jeff, that you cannot carry that over, and you have made a clear point of that in the last couple of years, are you one of those organisations that ends up saying, "Oh my God, we are going to have an underspend. What do we do? Let's just spend it on something to make sure that we don't end up underspending, with that money in effect going back to the Treasury"?

Jeff Moore: We do not get ourselves in that position, because of the direct monitoring I am talking about. I suspect what you are alluding to was when we took it back from a sub-regional partner that was not going to spend it. We take, in their eyes, fairly draconian action, but rather than lose it to the region we avoid that happening. It is true to say that we have never lost a pound to the region, going to the centre, in our 10 years. That is not easy, because if you cannot carry forward and you cannot have opening and closing balances, it is quite a piece of fine-tuned choreography to do that. But we have not lost any. What we do, though, is to have almost a bank of land acquisition projects that are required to take the region forward. There are always more of those land acquisition projects than we can fund. If we were faced with that situation at the last minute, we may do a land acquisition, but what we also do, and we were instrumental in doing in my time as finance director, is create an internal market with the other RDAs. So, if we are going to underspend-and we have not, but let us use your example-by £2 million and let us say, for the protection of the innocent, the LDA is struggling because it needs another £2 million for the Olympic park, we could lend them that on 31 March and get that back at 8 o'clock on 1 April the next day. So there is a mechanism in which we would have an internal funding market around that. But that is as the last resort. We monitor our spend, we monitor the profile of what we do and we have a reserve set of projects to ensure that we do not get into the position to which you are referring. But it is tough. It is easy words, but it is quite a tough job.

 

Q12 Judy Mallaber: This microphone situation is very frustrating. It does not make for an easy kind of interchange of communications, does it?

You mentioned one of the projects in my area, which was put forward via the sub-strategic partnership. It was unbelievably frustrating and difficult to get that off the ground, because it was getting funding between Coalfields Regeneration, yourselves and-what was the third one? I cannot remember now. Each of the three organisations would not move until that one had moved, and they would not move until you got that lease signed, but you could not get that lease signed until you got agreement for the funding there. It can be unbelievably difficult to get very, very good projects off the ground. What can you do, or are you doing, to enable that to become easier, particularly with projects where maybe you have not necessarily got the full resources of the county council behind you putting the effort into putting it forward, but where it may be a good project which a local community group is behind and which has perfectly good methods of taking that forward, but where it is very difficult to sort out the different funding streams when you have got to get match funding between different areas?

Diana Gilhespy: I think any regeneration project is very difficult, I will say that up front. I think that very often people underestimate how long regeneration projects take to bring together. I will just say that up front because in my experience people have a lot of really good ideas, really clear visions, but actually pulling together all the bits, particularly if you have got land and development and premises involved in that, always takes a little bit longer. However, I do think that we can always improve on that. One of the ways in which we can improve on that and which we are endeavouring to do, with our sub-regional partnership partners, is to have clarity about a programme and the priorities of the projects that are coming forward for funding. In other words, we do not get to the funding year before we start discussing what the project is.

Local authorities are being given the responsibility for local area assessments in the current Bill that is going through at the moment. We are working with local authorities to decide what the priorities are within those local area assessments. The next stage of that is to work with them and the local communities on what projects need to come forward in order to deliver on those assessments. So the whole time I think it is about working with partners well ahead of the delivery of the project. But, as I say, it is difficult and there are no easy answers to making it easier.

Glenn Harris: Just to add to that, three years ago we centralised the way that we do all the appraisals. Often a lot of time can get taken up in terms of getting the idea that people have into something you can actually contract. We have a small team that does that to a really high standard. The average we have taken to turn an appraisal round is 15 days. We aim to try and improve that process and spend less time so that we can get a real quality project and get back to people quickly if there are problems with it.

 

Q13 Judy Mallaber: My question was not really about your own internal processes but the difficulty of liaising with, in this case, the lottery and Coalfields Regeneration Trust, when none of you will move until the others do, and half the time you do not seem to talk to each other to try to ease the path, or if you do, it is not always transparent to people at a local level. It is a cause of considerable frustration.

Jeff Moore: We certainly talk to each other, but I suspect one of the problems is that we all have a different set of rules that effectively says we are the funder of last resort. If each body is the funder of last resort out of five partners, it needs someone to come to the party first. That is often one of the difficulties. If each one sees its funding as being the only final gap funding, that is where the problem comes, Judy. So we recognise the problem that you talk about. It is an issue. Everybody needs to get together to try to eradicate that as much as possible, which we try to do.

 

Q14 Chairman: I think that we need to move on. Before we turn to John, we will talk about the Budget and the current climate. Can I just ask you about your administrative costs, because we now live in the age of austerity and you will need to demonstrate that you are driving down your administrative costs? Can you give us some examples of what you have been doing so far and what you intend to do in the future?

Jeff Moore: Glenn can give you some of the detail we have gone through, but I would say several things in terms of driving down our administrative costs. When we took over Business Link there was a huge administrative cost and there were a certain number of front-line advisers. By turning five into one regionally managed Business Link service, we were able to reduce the back-office costs from 30% to 23%, and still going south, and we were able to put 40% more advisers out there on the street, as it were. As we have said in answer to other questions, they are out there in every part of the region. They are not out there in the City of Nottingham, the City of Leicester and the City of Derby exclusively, so that is one example. Each year for probably the past five or six years we have been required to come up with a minimum 2.5% efficiency saving. Well, that is something that we do. We have achieved our efficiency plan each and every year, but I can tell you that working for a chairman who used to be the managing director of Toyota UK is quite a challenging task. Toyota is one of the most, if not the most, efficient companies in the world, so when Governments set us £2.5 million, my chairman says, "What are you going to do to double that, Jeff?" And we have hit his targets as well.

So we drive out waste all the time. We have done that through drastically reducing the use of consultants, through how we competitively tender for the services that are provided to us, how we manage our asset base, and the land that we have got. We have driven quite significant costs out of that. To be quite frank, in the current scenario, given some of its political turmoil and the state of the public finances, we consider as an executive team what a 10%, 15%, 20%, 30% or 50% cut would look like to the East Midlands Development Agency, obviously in terms of the Government's overall finances and the need to support parts of the Government. In the autumn of last year, the RDAs gave up £300 million to help fund the new housing initiatives such as HomeBuy Direct, and the fact that we are losing about £25 million over three years drives us to perform some significant efficiency savings. Do you want to add any more detail, Glenn?

Glenn Harris: I was going to confirm that our administration costs were just under 7%, which is the lowest of any RDA in absolute terms. Three RDAs are smaller than us in terms of overall budgets, but we have the lowest cost. As Jeff said, our chairman is a big fan of the lean system so we have been subjected to it regularly. Two examples of when we managed to squeeze out additional sums was when Jeff transferred our investment assets to Blueprint, the public-private property vehicle, to manage. It can manage them better than we can, given its expertise at a lower cost. We shifted that over.

We talked earlier about the appraisal process. About two and a half to three years ago, the appraisals were done in a sub-regional partnership. Some of them were done by us. We centralised that, which saved about £300,000. We spend about £500,000 less on consultants that we did four years ago. We go through all the headings and each time we re-contract, we squeeze out as much as we can.

 

Q15 Mr. Heppell: I notice that you moved £1.04 million of your admin budget into the programme, so when I saw a £1.2 million reduction in admin over three years, it seems not to have been that challenging. A 50% figure might be a bit drastic. A few people here might be looking for jobs, if that was the case. Things were really getting tighter for you well before the credit crunch. Let us be right about matters: you talked about a £20 million cut in the comprehensive spending review and RDA budget overall. The Department for Environment, Food and Rural Affairs has withdrawn money to balance its books and the Department for Communities and Local Government has withdrawn a bit of money, so you have a tighter budget but an even greater demand as a result of the credit crunch.

EMDA and the Government put together the report "The East Midlands economy-A joint response to changing economic circumstances" in August 2008, concerning when you changed some of your priorities and what you need to do. The Local Government Association then published the report "From Recession to recovery: the local dimension". It projected how things would happen differently in different regions, so that needed to be taken into consideration. In April 2009, the Government published the paper "Building Britain's Future-New Industry, New Jobs". That set out how the country in different areas can beat the recession and secure its economic future. All of those publications suggest to me that you must be having to re-think your priorities all the time in respect of what you need to be doing. What has been changed in your budget that reflects the new economic circumstances?

Jeff Moore: Times are getting tight. What the Lord giveth with one hand, the Lord taketh away with the other. As for your bit, John, about the transfer to programme, in the early days when we made efficiency savings, we could divert a certain proportion of them to more activities and more programmes as opposed to just handing back cash to the centre. That has changed drastically. As I have said, we gave up the £20-odd million in August. Things constantly get tighter. We monitor our business on a close basis. We have looked at a whole host of different scenarios as we move through each week, but what we have principally changed and what we anticipate changing more is one of the three main regeneration initiatives that we shall prioritise. We have talked about those three and what they are doing and how they are creating and safeguarding jobs.

We have also changed over recent years. We used to take projects that came through the door. I do not want that to sound as casual as it is but we have been open to projects all through our 10 years. What we have done far more in the last two years, as we have seen the declining funding scenario, is what we call-are we not in love with acronyms?-the invitation to apply for grant funding, whereby we commissioned work on waterways for instance. We also saw the need to get more and better employment floor space throughout the region, so we did an invitation and commissioning exercise for employment floor space. That is doing a lot, particularly in the cathedral quarter in Derby. Two applicants have come through there to get funding, as it were. BioCity will have applied for extra funding in that sense. So we have changed to commission fewer, larger projects. I will look to Mike to give details on some of the things that we have done on his side. I do not want Mike to think that, given that he has not had to answer too many questions, he is one of our 50% planning scenario evictions.

Michael Carr: Thank you for that, Jeff. It is fair to say that in the four years I have been involved with EMDA we have focused strongly on the support we have been offering for business. One thing I would say, ahead of the economic change that took place in the middle of last year, is that we have been working extremely hard to become more efficient in the way we deliver. Jeff mentioned some examples earlier in terms of business support. We are clearly supporting significantly more businesses. Just to give you a feel, Business Link supported 82,000 businesses or people wanting to start a business last year, compared to 67,000 the previous year, with the same resourcing. How are we doing it? We are driving more and more support through online channels, telephone channels and getting more front-line advisers into play to help people in an intensive and assisted manner. We have also been directing more money directly into businesses in the form of grant aid and grant support and that is one of the benefits of becoming more efficient as well. Overall we have been focusing our attention on support. We clearly have had to re-focus in the current climate, to answer your question. For instance, the banks stopped lending around Christmas time and we recognised there was a need to react quickly, taking advantage of working with our colleagues in the West Midlands to pick up a scheme they already had running. Utilising that, as it had FSA approval, we were able to put in place within a couple of months a £6 million transition loan fund which has started to make loans available to businesses to support them through this difficult time. We expect £3 million to £4 million of that to be pledged in the next four to five weeks. We have moved very quickly into redirecting money where we can into direct support to businesses. That is just a flavour. There are many more examples I could give you.

 

Q16 Mr. Heppell: That tells us some of it. My understanding is that the transition loan fund was something you did after the August report. I was trying to see if anything else came as a result of these other reports. For instance, could I look at a budget-that is what I am thinking about-and see the actual changes on a budget sheet where money has been shifted from one area to another as a result of the changing circumstances? You can say business support and grant aid but that does not show me anything in terms of what has really happened with the money. Would I be able to see those? Let me give an example. Initially you earmarked £4 million for employment, learning and skills in 2009-10. Has that been changed? Is it still £4 million? Is it £6 million? And what went down to balance the books?

Glenn Harris: There is a change to the budgets that you just talked about. The example of employment, learning and skills indicated funding allocation for 2009-10 was £4 million. It is now £3.7 million. So there has been a change. We put our funding against the strategic priorities of the RES in some way, shape or form. Most of those have had changes from our original corporate plan which set out the three-year funding position. You will see that the areas that have been boosted, effectively, are business support and enterprise because that is where the main emphasis is since last summer.

Jeff Moore: We will provide you with a detailed written analysis of that as well, John, so that you can see the changes that we have made. Another example is that we had general sector support starting in 1999. Since 2006-07, we have developed what we called iNets-innovation networks-which are designed to deliver into our four key sectors. There is one each for bio-farming, transport technologies- which is about things such as aerospace and automotive-sustainable development and food and drink. Those four are getting the key investments that we are making. So it is about doing fewer, bigger projects against those sectors that we have.

In terms of being able to give you the budget papers, we will give the Committee, through the Clerk, an analysis of the major changes that we have made. I am not sure when your evidence-taking period ends, but we are required by BERR to revise our whole corporate plan, in the light of the last six months, by 31 May. So we will supply BERR with a new plan, and I think that fits your time scale, Paddy, so we can give you that, which will show you changes. We will give you some historical changes that we have made, but we will then give you that, which shows how we are reacting to the changes that we have had.

 

Q17 Mr. Heppell: One of the other things I think I must recognise is that it must be much more difficult for you to appraise schemes now, because there is difficulty with getting the funds in, so some that you might have thought were quite viable a year or so ago may not seem quite so viable now. Are there any existing schemes for which you already have a nod, if not full approval, that you think will not happen now as a result of the changes that you make?

Jeff Moore: What we want to test out there is partners who say that they can still fill the gaps. There are inevitably some regeneration schemes that cannot raise the level of private sector funding that they previously said that they would. Do you have any specific examples that you want to give, Diana?

Diana Gilhespy: Sorry, I am just having the other ear being whispered in, so I missed that.

Jeff Moore: We are finding it more difficult to prioritise, and we have to reject more schemes than we previously would have done. There is less money available. We still get good projects, but we are finding ourselves having to reject some schemes for a variety of reasons, one of which is that we do not think that there is sufficient funding coming forward. There is a scheme in the National Forest that is being delayed. What very often happens is that people do not say that it will no longer take place: it gets delayed. So there is a scheme in the National Forest in terms of increasing an improving the tourist attraction there, which has had to go by the bye because certain funding partners have postponed the date when that funding may come. That is commercially confidential to the particular private sector funder-and in one case, an individual funder-but that is being delayed because of that. There will be other examples.

Where I think we are seeing most change is probably an actual lack of new projects coming forward with partner funding, so the pipeline slows down, rather than those that come to us. If you imagine that we are the funder of last resort, notwithstanding Judy's and my concern about who is not the funder of last resort, most of those that are already into us are ones where it was our difference that was going to make the margin. But, certainly, in terms of schemes going forward, the private sector element is proving to be quite difficult.

I am the chairman of Blueprint Partnership, and we have had to delay a significant number of the schemes because the alternative funding is not there. They run into probably six, seven, eight, nine or 10 schemes. We have made significant changes, and as chairmen of that board, we have had to stop schemes. So we are doing the digital media centre at the moment. We are not building out of the ground with any other scheme, so we are not building Princes supermarket at the moment. We are not building Green Street in the Meadows, which is a scheme that Blueprint has. We are not building another one, which is in your constituency, John-Albany Works, on Carlton Hill, near the Co-op there. And with the digital media centre, how many phases can we get going?

In terms of those development and regeneration schemes, they are definitely stopping. Blueprint delivers a lot of our direct regeneration schemes. A similar one, obviously, for which the funding is hugely difficult is Gedling Pit-we have got to build a £35 million road; we have got to provide a country park, a waste station and no end of other public facilities out of the supposed profit, but there is no profit now, so we cannot do it. You spend a lot of the way finding your way around, so a lot of schemes are delayed rather than cancelled.

 

Q18 Mr. Heppell: One final quick question-I have been noticing that the two Departments seem to withdraw money from you. Nowadays, we always talk about three-year budgets and so on, and it seems strange that Departments are allowed to do that-suddenly to realise that they are a bit tight on their budgets, so EMDA has to carry the can. What are your thoughts? Should your budget be set in the same way as those of Departments? You should not get changes if things go wrong with their budgets.

Jeff Moore: These are not my microphones, these are Hansard's microphones, and I think therefore that I would limit my comment to, "We find it frustrating."

 

Q19 Chairman: We shall turn to Judy and Bob in a minute, but pursuing that-you ought to be in the diplomatic service, Jeff-suppose the Government came along and said, "The car industry is in a real mess. Toyota is in your area. We want you to put x amount of money into it." It is not in your business plan at the moment, but you would have to do it, wouldn't you?

Jeff Moore: We would, and we would have to find a way in which we would do it. That would inevitably entail making difficult choices and disappointing people. That can lead to a lot of press and media bad publicity. We are used to that and have had some of that in the not-too-distant past. It is inevitably frustrating for us that we find large sums of money removed from our budget overnight. However, we acknowledge and identify that we are part of the taxpayer-funded businesses, and we have to bear our share of supporting the new priorities that the Government have. I think we have been pretty robust about that at all times.

The bigger the cut, the shorter the notice, the harder it is to cope-as you say, it is not just cuts but new demands. New demands are being placed on us, particularly from large-scale businesses, all the time and we shall have to cope. Inevitably, that will mean prioritisation and difficult decisions being made. What we would say is that we believe that we have the mechanisms that can make those difficult decisions-some of those that I talked about in the presentation were difficult choices at the time. All we would ask is that we get support from others in understanding why we have made those decisions.

We are absolutely delighted to be here today-I cannot stress that enough-and to be accountable. We recognise that we must be accountable for the use of public money. I personally, having worked in the public sector for 36 years now, have never worked for a more accountable organisation. I know that there is a political dynamic to the accountability of RDAs, but we are happy to be accountable, although we shall inevitably have to make tougher decisions, as the economic climate surrounding our own resources, and the increasing demands put on to us, gets colder. We then just seek support from those who we explain the decisions to about the basis of those decisions. We are open in that way.

Yes, we would have to do it and it would mean cutting certain things. We are in a similar situation to Her Majesty's Government, in effect. Do you salami-slice everything that you do, or do you stop whole programmes? That is a choice upon which there are a whole host of perspectives.

 

Q20 Judy Mallaber: Can I ask you to expand a bit more on the support and help that you are giving to individual businesses affected by the credit crunch? Jeff and Mike, you have both talked about the problems that businesses are having, even if they are trading perfectly well, because bank finance has frozen and because of the problems with credit insurance. The business support officer in my local sub-strategic partnership has been going around some companies there that have such problems, and others in Derby. Do you have the powers that you need? How easy is it for you to talk to the banks and try to give them a kick up the backside to do something? Are you using your transition loan fund, and what happens when it dries up? Do companies and banks realise that there are Government programmes, and is it possible to tap into that? How are you linking to Government Departments in doing that? Perhaps you could expand on some of those matters, because we will all have businesses in our areas that desperately need that help and yet should be able to carry on trading perfectly satisfactorily.

Michael Carr: Judy, I will lead on that, if that is okay. There are lots of questions inherent in that. Can I start with the way that we have been trying to organise the business support services to respond to business needs? I will then move on to the way we are working with banks a little bit, as part of that.

First and foremost, we felt that it was important that we engage fully with businesses on the challenges that they had. The main vehicles we used to do that were things like the "survive and thrive" events that Jeff talked about, through which we opened a door to businesses and gave them some very practical advice and guidance. We also then supported them fully through the Business Link service, and in doing so we have refocused the work of the Business Link adviser teams to predominantly look, when they go in, at the financial health of businesses.

Since we set up alongside the Government under their "real help for business" campaign, we have carried out more than 5,500 free health checks on businesses in the East Midlands over a three-month period. So we have been working extremely closely with businesses, making them aware that the support is there, and we have seen a significant inflow of established businesses coming to talk to us. In many ways, this recession has brought Business Link to the fore, and it has been seen to respond very strongly in the eyes of businesses, given the numbers that are contacting it and the constant positive response that we get from our independent surveys of the work that it is doing.

In terms of direct support, we have moved forward. For those businesses that have really been struggling with regard to their own financial position, we changed the way that we offered our business transformation grant. That grant was made available to bring expertise through the Business Link network into a business, paid for on a 50:50 basis. We felt that for businesses that were struggling and wanted some form of accounting or recovery expert to come in, we could offer the first three days of that support free of charge. More than 65 businesses have already taken advantage of that.

We have also tweaked our capital support grants to help businesses, particularly those that were being challenged in the third quarter of this year with regards to resource efficiency and the cost of energy, etc., by giving specific help to get them to invest in capital schemes that were better and more cost-effective for them. We have moved quite a lot of the focus of our work to directly supporting businesses in that sense.

Working with the banks, and the long-term future development of that, has been very much at the forefront of our work. We have developed on the ground some pretty good relationships with the banks over the past three to four months, and that has been based on two things. First, there is the work that we have been doing through the regional economic cabinet and Phil Hope's work, in particular driving the banks at regional director level to come together and recognise some of the challenges. Secondly, we have been using our risk finance forum and have invited more of the regional directors of those banks to come in to that, so that we can debate and discuss the issues. What is coming out of that is a clarification to the relationship managers of banks as to exactly what support is available, so that they are clearer about being able to direct their clients to business support. Similarly, the adviser teams are becoming much more aware of the requirements of banks. They can help prepare the client for help from their bank by having them go in with the right information.

Over the past three months, we have seen much closer working with the banks, and pleasingly, the banks are now starting to offer more money as loans. You will remember that, around Christmas time, it was very difficult, and you will also remember in particular the Denbigh issue that we worked on closely together, which was a typical situation of the banks freezing. I am pleased to say that the banks are now starting to unlock a little bit; I am not saying that things are easy, but at least the communication and support are there for us to actually help clients find bank lending if it is appropriate for them.

 

Q21 Judy Mallaber: That is very helpful. Is there anything else that would be of assistance to you in that work? You have already made one request for us to put something forward to the Government about your end-year funding. Is there anything where those programmes could work better and where there could be extra help?

Jeff Moore: Mike will give some more detail, but I think the more we can market Business Link at a national level, the better. Business Link has had a very successful reception during the recession and the downturn, and the experiences of the vast majority of businesses that go there have been positive. But I am surprised at how much we need to keep taking out the message, "Use Business Link as your source of access and advice." I do not know whether Mike has anything specific to say.

Michael Carr: First and foremost, we work very closely with the team at BERR on those areas. We work with them on our own budget submission, and Jeff alluded to the fact that credit insurance is a big part of that, and you will have seen, through the budget, that credit insurance changes. In terms of a wish list, export support, particularly around credit, is still lacking, which is preventing some of our businesses in the region from exploiting the favourable trading position that has come from having a slightly weaker pound at present, because they cannot raise the finance or get the guarantees from their partner bank in European or Far East countries, or get support from their own bank. We have raised that with BERR, so it knows that it is an issue, but it would be good if we could further endorse the fact that we need to get some export finance.

Jeff Moore: We have seen a much more receptive climate from the banks since Christmas. I think, certainly in terms of ourselves as a regional agency, that the banks are very willing to co-operate with what we do and with what we want them to do. There will be a number of answers to the question of whether that then translates into individual investment decisions in individual banks, but I do not think that any more can be done with the banks for the time being. We think that we have done enough schemes, and that they now need to be well-publicised, operated and the banks need to continue to drive them right throughout the banking sector. Something like 26 lenders have signed up to the enterprise finance guarantee scheme. It is not about signing up more lenders, but about driving that scheme through and getting people to access it. The more we can do to market the services of Business Link in that respect, the better.

Michael Carr: I have just one thing to add, which is that the banks are now saying that there is not sufficient traffic for them to be able to hit the targets that they have agreed with the Government, so one of our challenges is how we now drive that up. I think that that is partly because businesses do not believe that the banks are going to be able to support them. Things are changing and we have to get confidence back into our businesses, so that they can approach the bank and will probably get a slightly more favourable response than they might have had three or four months ago, which was such a damaging period when, in effect, the banking system froze.

 

Q22 Mr. Laxton: That is interesting, Mike, and is not something that I had picked up-you learn something new every day. Jeff, you said in your presentation that your board-I will not use the word "dominated"-has a higher proportion of people with business expertise than from other areas. Pretty much every year, or as every year has gone by, added responsibilities have been given to RDAs, such as research development grants in 2005, economic and social funding and rural development programmes in 2006, regional development funds from the European Development Fund in 2007, manufacturing advisory service and so on.

The Business and Enterprise Committee undertook an inquiry a short while ago. What is your response to the position that they took? I think they said that if additional responsibilities, particularly in the areas of planning and so on, were handed over to RDAs then in effect this could have the tendency to switch off business people from engaging, or continuing to engage, in the way that they have in the past with RDAs. Do you think that that was a valid comment made by the Select Committee? Do you see signs of that? Have you got concerns about additional responsibilities being handed over to your organisation?

Jeff Moore: I remember that very well because I gave evidence in chief to that particular question. They asked, what do you think one of your major weaknesses is? How I actually responded was that I said, in the eyes of business-and I mean business out there generally and particularly the sort of business representative organisations such as the CBI, the EEF and the IOD-in their responses to the Select Committee on Business and Enterprise they pointed out that we had too broad a remit. That is the view of a number of business representative organisations. So, in answer to that question, I said that that was seen as a weakness by some businesses. I felt that that was, in a way, a strength. The reason it was a strength was because we had been seen as successful deliverers from 1999 onwards. When the Government had a problem in this sort of economic development sphere, they said who can we give it to? They gave it to the RDAs. It was in recognition of our delivery strength that we ended up with such a broad remit of responsibilities. So like all good interview candidates I turned my weakness-hopefully-into a strength, which is what I also put on the public record at that time.

I think business is concerned about the breadth of our responsibilities. It has made the comment that it feels our remit has potentially been diluted. It is concerned that, if we take on the full range of planning powers that was at one time envisaged under the sub-national review, or now the Local Democracy, Economic Development and Construction Bill going through, that we would be weakened even further. Clearly, the debate in Parliament has moved on. There are now different proposals in terms of planning responsibilities where they will be discharged jointly by the leaders board and ourselves. I think it is something that we need to watch for. I still see us getting quality applicants to be on our board, so I do not see any diminution in the enthusiasm of business representatives to give up their valuable time to serve on our board because they feel they are going to be hammered about deciding on planning applications, or not doing what they should want to be on. It is a concern that we need to watch for. Certainly business representation, representative organisations, have raised it as a concern. We just need to make sure we deal with that task as the world changes, as the Bill goes through and becomes an Act. We need to make sure we are not deflected from those core purposes and priorities. I recognise the concern.

The one other comment I would make is that I did say "dominated by business representation" in my presentation-I did not mean that. The majority are from business; they certainly do not dominate it. We get a very robust contribution from our four local authority representatives who are on the board, from our third sector representatives and the VC of a university, so while they are in the majority eight or nine of the 15, they do not dominate it.

Certainly, this potential diminution of powers is of concern, but we always argued that one of the key weaknesses of our first 10 years was that we delivered the strategic regional economic strategy, yet the spatial strategy was delivered by another organisation at a different time scale to a different evidence base. There is no criticism of the assembly in that, but they did the spatial strategy and we did the economic. One of the key problems there was that we could have an economic strategy that says, let us say, ABC district needs a factory or three factories. Yet the spatial strategy could say, well, in ABC district it will stay for ever brownfield, or greenfield, or whatever and the two did not marry up. Part of the whole thrust behind the sub-national review is to overcome that problem so that they are done at the same time, to the same evidence base, by the same combined group of people. That should overcome some of the fetters we have had to activity, particularly in Lincolnshire in our first 10 years.

Chairman: I think we must be telepathic, because Peter Soulsby is going to pursue the issue of the sub-national review.

 

Q23 Sir Peter Soulsby: Thanks, Paddy. I mentioned this earlier on. Clearly, there has been a lot of criticism about the fact that the spatial strategy and the economic strategy have been separated. As you have said, Jeff, the proposals are somewhat modified now. Is there not, even with the revised proposals, still a danger that the RDA will be deflected from its core task of delivering a regional strategy? Is there not also a danger with the proposals that are now emerging that we might actually have something that is less transparent and less accountable than the division of responsibilities we have had until now?

Jeff Moore: I look to colleagues if they want to contribute as well. I do not know if you want to contribute to this one, Anthony.

There is a danger in any change, Peter. People are concerned about change and concerned about uncertainty. After a fairly slow start we are working very well, we think, with the assembly to develop the proposals going forward from April 2010. They are obviously, inevitably, somewhat grey because the Act has still got to be passed, the Bill is going through Parliament and it has not even been through the Commons. In fact, I think it gets its Third Reading in the Lords today and goes through to the Commons later on in the week and going forward. So there is always a danger in change. I think that we are aware of that danger. What we need to do is make sure we have geared up properly. Anthony works with the assembly and he works with the Government office for the region to try and overcome precisely those difficulties. We need to develop the RES and the integrated regional strategy going forward.

 

Q24 Sir Peter Soulsby: I am interested in how you are planning to recruit the necessary skills among those who work for you and whether it will need some change in the balance of those on the board.

Jeff Moore: Anthony, you address the skills, and what we are doing about filling the gaps.

Anthony Payne: The first thing to say is that we have been working very closely with regional partners, local authorities, the Government office and the assembly to put a change management plan in place to help deliver SNR. That has been submitted now by the Government office through to central Government and we are waiting for a response on that. That, if you like, sets the framework for the change management. Obviously, we need to work through the detail, but it goes through and addresses things like stakeholder engagement and how we are going to get the right people around the right table to actually develop a joint regional strategy. That change management plan will be key to the work going forward. It has had buy-in and support, both from the EMDA board now and from the local authorities leaders board. That relationship between us and the local authorities leaders board, made up of the nine upper-tier local authorities, if you like, and five districts now, is really maturing and positive.

The second thing to say is that we have agreed how we will create a joint board between us to look at the single regional strategy. We will have to develop that and take it forward. There will be a lot of learning for all of us, but we have agreed the principles behind that.

Picking up on Jeff's last point in relation to added responsibilities and complexity, indeed, it will be a complicated process-there is no denying that-but there are key things that will benefit and improve as a result. For example, one of the key challenges that we always find within the region is marrying up things like energy infrastructure and where development should go, capacity and opportunity, and by working and bringing all this together, we stand a much better chance in the regional strategy to marry those things, rather than having them in separate documents, not necessarily always contradicting each other, but with the opportunity and possibility to contradict each other. Undoubtedly, it will be a complex process, and undoubtedly, we will need the skill set internally. We have got a spatial team internally, with spatial planning skills. We have got a very strong research team, which we talked about earlier in relation to the evidence base for the RES, and we will adapt and use that appropriately to make sure that we can use those skills to take forward the single regional strategy.

Jeff Moore: In terms of your question about the board specifically, Peter, I do not see a need to change the skill mix of the board. That change happens naturally, as we get rotation of the board-each board member has a maximum of two three-year terms-and in the recruitment process, a balance is struck between particular expertise. Also, a joint board of ourselves and the leaders board will commission and ensure that the integrated regional strategy gets done. That will have three local authority leaders on it, and it will have three EMDA board members and will commission the work from the existing assembly planning staff and from our economic staff.

We have agreed with the assembly-we have made major progress with David Parsons there-that that joint board will always be chaired by a local authority. Now, that joint board has to get the integrated regional strategy signed off by the economic development agency and by the leaders board. So I think that, in terms of the leaders board, which is 12 or 13 people, and the economic development board of the RDA, you have sufficient of the skills sets that you will need, but they will be refreshed over the period of time that we go forward.

Our biggest concern at the moment is perhaps-I suppose that I would make this point, wouldn't I?-that regional assembly has a scrutiny function of the RDA. We, as we have said here today, are delighted to come out and be accountable and scrutinised. What I do not want to do, though, is be accountable and scrutinised in duplicate, time and again. We have written to the regional assembly, asking that it drop its scrutiny programme for 2009-10, because we are now, as we have evidence this afternoon, being scrutinised by yourselves. So the concern is that we will spend a lot of time being scrutinised and not be doing the day job. That is our main concern at the moment with the changeover, because that is not happening in other parts of the country.

 

Q25 Sir Peter Soulsby: Can I just follow that question of scrutiny? It may be something we want to return to later. When, as you describe it, you are going to be working in such close partnership with the leaders board-indeed, you will have a joint body-and with the change in arrangements for the regional assembly, is there not going to be a need for new mechanisms for you to be accountable to people in the region rather than to us as parliamentarians? Is there not going to be a deficit, a gap, if you are working in such close partnership with them and they are not going to be the ones to stand back and hold you accountable?

Jeff Moore: This is one of the main issues that has been raised on the Bill. The problem is that the leaders board is effectively scrutinising itself and therefore there is a conflict of interest when it is operating jointly with us. That is something that is developing. I do not know whether Anthony has got any more from the development of progress on the Bill. It is something that everybody is looking at because we need to be accountable to you as the regional Select Committee and we also need to develop that in-region scrutiny function as well, but that has not yet been done. We also need to make sure that they do not duplicate each other. The great danger is that we spend all our time attending scrutiny and nobody is doing the day job to be scrutinised. I am not making that point about today, but that is certainly a concern that our business board representatives express quite regularly. We need to find a way that that conflict is overcome and I believe it is Parliament that is trying to address that conflict through communities and local government policies.

Chairman: Coming to an end, three quick questions, first from Judy.

 

Q26 Judy Mallaber: The Equality Bill was published today and we have not really had any mention on issues about that. I wondered what the make-up of the board was in terms of gender and race. I realise you have a difficulty because you are not necessarily nominating people but perhaps you could answer that.

Jeff Moore: Recruitment to the board is done by BERR. We do not do that ourselves. We take no part in it at all. I need to stress that for the record because that is often mistaken. People often think that I have some influence on who is on our board and I have no influence at all. I find out after others who our new board members are. The recruitment is done by BERR who very much have an eye to political, gender, ethnicity and geographic representation on our board. We started with 13 and rapidly had to go to 15 in 2000 because we had nobody from Northamptonshire and Lincolnshire. It is something that is addressed all the time but it is BERR that looks at that. In terms of the Equality Bill, Harriet spoke this morning about the need to take a strategic view, that those authorities that are key throughout the country need to take a strategic view about equalities. The answer I would give you is the one Diana gave you on rural-proofing-everything we do, we rural-proof. Similarly, everything we do, we equalities-proof, and that is what we will do in terms of our response to the Equality Bill. Are we making sure that the services and products that we have to offer reflect the needs of the whole diverse East Midlands?

 

Q27 Chairman: I have noticed a spat that has been going on in the local paper, the Nottingham Evening Post, between you and one of our colleagues, Alan Simpson, who specifically asked me to raise the issue of the kitchen at QMC. It would be helpful if you could just put your side of the story on the table.

Jeff Moore: Fascinating, because I thought things in that case should be the other way round, because Alan is actually my MP personally. Maybe the question should go the other way. There was a project put forward by the combined City and QMC to build a new kitchen for those hospitals onsite to cut down on some of the cook-and-chill transportation that was happening from elsewhere, and try to push some of the procurement activity into the East Midlands. We thought that it was an excellent project-no doubt about that-something that we hope the National Health Service would pursue.

But as you will recall in my reference to the many questions that you have asked today, particularly John and Bob as it were, we have decreasing budgets and increasing demand on those budgets, and so we have to make tough decisions. We did not think that funding that kitchen, which could have been funded by the NHS, was the most appropriate use of our money in this difficult time. Effectively, finding money to do the £6-million transition loan fund and the money to help other major employers have been where our priorities lay. We see it as a useful project and a good one for the NHS to do, but our Board Resources Group, our investment committee of seven independent, non-executive board members, were unanimous in deciding that they would not be able to fund that project because it was not at the top of their priority list, given the declining budgets and increased demands. We have to prioritise, and we cannot do everything, and that was one of those that we decided not to do. If John asks me specifically about schemes, that effectively is a scheme that is not going ahead with our money. But we hope it goes ahead with NHS money, because we can see the merits of the project for the NHS.

Chairman: We will go straight to the conclusion.

 

Q28 Sir Peter Soulsby: It will be very quick. We have had over two hours of questioning. We talked about the challenge of the economic climate, but surprisingly, we have not heard anything at all from you about climate change. It has been suggested that EMDA has been pretty slow to respond to the challenge of climate change in general, and the Stern report in particular. I wonder whether that is a legitimate criticism. I think all that we have had from you today is a picture of some wind turbines in passing, and nothing more substantial.

Jeff Moore: It might have been a quick question, Peter, but it may be a long answer. At least three of my colleagues will want to refute the comment that we are light, weak or windy on climate change. First, I will go to Anthony to talk about some of our strategic responses, then to Diana, and then Mike will talk about some of the things to sum up what we are doing directly with businesses, so it may be a longer answer.

Anthony Payne: In January this year, the regional climate change action programme was launched. It identifies a number of priorities for the region. We are playing our role there in leading around all the economic resilience work to support that action plan, looking at resource efficiency, adaptation to climate change and all those types of agendas.

Stepping back slightly, as an RDA, we have looked at our performance as an organisation. We have brought in things such as environmental management systems to our own management. Year on year, we are reducing our own resource use-energy use, water use, paper use and all that-to show our responsibilities as an organisation. At the same time, as a regional body, we are supporting research. We have done a number of pieces of cutting-edge research, first, around the economic impacts of climate change, which is due to report very shortly. That will bring out baseline information on the breakdown of CO₂ emissions per sector across the region and on the type of activities that could be undertaken to address some of the challenges. We are also working on a study, which Diana is very close to, looking at climate change impacts on the Lincolnshire coast and what that means for the development of the coast.

I know that Mike will come on to this as well, but one of the first things that we did as an RDA through the business support service was look at a much more coherent resource efficiency business support package for companies across the region. That was in direct response to the economic performance and increased productivity of businesses, but against the backdrop of all the issues that we are all very well aware of around the climate change agenda. We can give examples in written evidence, if you want, of the type of support that we have given to companies to improve their bottom line and reduce their resource use. As a result of one project, we helped a joinery company in Leicestershire put in a biomass installation for their energy use, using the waste from their products to provide their energy. It has given them huge financial savings over the year and a huge saving in their CO₂ as well. I think that we have been doing a lot to support business. It depends who you talk to but there are people who would say that we have done more than our fair share.

To go back to the first thing that we were talking about today-"A Flourishing Region"-the other thing that is really important to point out is that we undertook a very strict sustainability assessment of that RES and made sure that it itself addressed, as far as it could, the sustainability and the climate change agendas through many of the actions that that RES purports to support. For us, the third RES does that better than any of our preceding RESs. That was a really important piece of work for us as well. Can I pass on to Mike and Diana?

Diana Gilhespy: Just a couple of things: as well as working with the Environment Agency on the Lincolnshire coast issue, we are also working with it on flood risk in our cities and on projects such as the Avenue, which Jeff mentioned. On that we are not only doing the remediation but also working with the EA to put in a flood risk programme that will save about 800 homes and businesses within Chesterfield. Again, it is about making sure that we marry up our funding with the Environment Agency to solve all of the issues that surround our towns and cities.

Another thing is that for all of our funding, either directly into construction projects or indirectly via our grants, we insist that the projects meet the highest environmental standards. We support our businesses to meet those standards as well. In other words, it is not a question of saying, "You have to have those standards", we also support our supply chains in the construction sector to try to meet those standards. On the rural programme that I mentioned-the European programme-we are very much focusing on energy and resource efficiency, in particular around biomass, other energy usage projects and water use-recycling rain water so that instead of letting it run off and the problems that that causes, we use it.

Michael Carr: Last but not least, Peter. Anthony has already talked a little about the business support programme and I would like to give a bit of structure on that. We have the majority mainstreamed through the Business Link service. All our advisers over the past two years have been going through quite an intensive capacity building programme to make them more aware of the requirements of business around resource efficiency. As I mentioned earlier, we back that up with the business transformation grant, which we put some more money into in September last year to try to help to make small capital investments in that area with businesses. They can also use that same grant to access expertise.

Anthony was alluding to the business resource efficiency work that we have been doing. Waste work is a large grant scheme, in which you can get up to about £40,000-BTGs are limited to about £10,000. We are just about to start a new campaign, following the success of a programme that we ran around a theme called "Survival of the Fittest", which was very much targeted at waste efficiency, with the help of the Carbon Trust and Envirowise. We are now starting a programme simply called the "Improving Your Resource Efficiency" programme.

That is what we have been doing from a business point of view. Jeff touched very lightly on beyond just the wind turbine-the fact that in Loughborough university we have been doing a tremendous amount of work to build a low-carbon research and development exploitation community. That is really one of the stand-out university-based projects. There is good work going on in other universities that we have supported, but there you have the ETI, the fuel cells development that Rolls-Royce and others use quite substantially, and Cenex-excuse the acronyms-which is another automotive-based resource efficiency programme. Our new science park, phase 2 of Holywell, will be significantly low-carbon-based in its output. That gives you a flavour of the approach. We take it very seriously. It is hugely important in today's agenda.

 

Q29 Chairman: I am sorry that we have not had time to cover all the ground that we had hoped to. In particular, we have not talked about the PricewaterhouseCoopers study, which came out extremely well, or the ECOTEC study, but we have got them and shall read them.

Thank you for all the information that you have given us today. It has been a really helpful, constructive dialogue. Maybe I should take it forward a little bit. I think, Jeff, you have promised to let us have a look at the revised budget provided for BERR by 31 May-that would fit in with our timetable and what we intend to do. We have put out a call for evidence across the East Midlands asking a variety of different things, one of which is sustainability. I know you have your own networks. It would be helpful if you could draw attention to people for evidence. We have met the executive team today, but privately you have said that there would be an opportunity, if we wanted to, to meet some of your non-executive directors. That might be helpful. Finally, we are going to take a couple-perhaps three-oral sessions around the region and talk to stakeholders. But, ultimately, what we would like to do is to have a similar session to this towards the back end of June or the beginning of July, giving you some feedback about what people have been saying to us and giving you a chance to comment.

We have started on a path. You have got us off to a good start. I am really grateful. It is the first evidence session that we have had. I found it really helpful and constructive. If we work together in this kind of way, we can ensure that people who live and work in the East Midlands aspire to that top 20 in Europe that we are all keen to get to. Thank you all very much. Jeff, you had the first word, so you can have the last word, if you like.

Jeff Moore: It was a pleasure. Hopefully, when we have our follow-up session, we can avoid microphone chess, because I felt rather restricted-I know others did-that we could not respond immediately. Ergonomically, that was not at all helpful. Maybe we shall get more of a rapport. I feel for those who have had to create it in this way, but it has been a pleasure for us. We have enjoyed it. Thank you very much for giving us the time, particularly allowing us to present at the start. We look forward to seeing you again in a few months' time and rounding off. Thank you very much indeed.