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

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

EAST MIDLANDS REGIONAL COMMITTEE

EAST MIDLANDS DEVELOPMENT AGENCY AND THE REGIONAL ECONOMIC STRATEGY

 

22 MAY 2009

(LEICESTER)

ADRIAN AXTELL, LYNDSEY BUNN, JOHN HARDWICK, DAVID JEFFERY and STEPHEN WOOLFE

COUNCILLOR MARTIN HILL, COUNCILLOR DAVID PARSONS and MARTIN TRAYNOR

 

Evidence heard in Public

Questions 30 - 84

 

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Oral Evidence

Taken before the East Midlands Regional Committee

on Friday 22 May 2009

Members present:

Paddy Tipping (Chairman)

Mr. Bob Laxton

Judy Mallaber

Sir Peter Soulsby

 

Examination of Witnesses

Witnesses: Adrian Axtell, Regional Secretary, Unite the Union, Lyndsey Bunn, Policy Manager, Federation of Small Businesses East Midlands, John Hardwick, Chair, Area Policy Unit, Federation of Small Businesses East Midlands, David Jeffery, Skills and Development Officer, Unite the Union, and Stephen Woolfe, former Chair of East Midlands Chamber of Commerce, gave evidence.

 

<Chairman:> I am not sure whether I should welcome you to County Hall, Leicestershire, given that we are all guests here. I have a couple of housekeeping points: people on the panel do not need to play with the sound system, but our witnesses do, so will they press the button when speaking?

<Sir Peter Soulsby:> I wish to make a declaration of interest. I am a member of Unite.

 

Q<30> <Chairman:> Perhaps for everyone's benefit, will our witnesses briefly introduce themselves?

<Stephen Woolfe:> My name is Stephen Woolfe. I am the immediate past chair of the East Midlands Chambers of Commerce. In other areas of involvement relevant to EMDA, I am also chair of the Heart of the National Forest Foundation and a trustee of the National Space Centre, which has EMDA investment.

<Lyndsey Bunn:> Good morning. I am Lyndsey Bunn, Policy Manager for the Federation of Small Businesses in the East Midlands.

<John Hardwick:> I am John Hardwick. I am the Chair of the East Midlands Policy Unit of the Federation of Small Businesses, and I still run my own business in the leisure and entertainment industry.

<Adrian Axtell:> Hello, I am Adrian Axtell. I am the Regional Secretary for the union Unite in the East Midlands.

<David Jeffery:> Good morning, I am David Jeffery, an adviser on learning and skills for Unite the Union. I head up a number of initiatives for the union on learning and skills as well as supporting members on things like redundancy.

 

Q<31> <Chairman:> Thank you for coming. I thank Clayton George for coming. He is a student at the National School in Hucknall and the youngest member of the audience.

I wish to ask a fairly general question. What do you make of EMDA? How do you think it is doing?

<Stephen Woolfe:> There is always someone who has to start. I think that EMDA does a reasonable job. From the business perspective, over the years EMDA has helped to tie together a large number of loose bits of string in the economy of the development process within the East Midlands. On the whole, it has been good news. That does not mean to say that it is perfect. As in any organisation, there is always room for improvements. If you want a starting point, it has done well-B plus, if you like-and it could do better.

<Chairman:> Does anyone else wish to speak?

<Adrian Axtell:> Yes, EMDA is doing reasonably well, but it is definitely seen from a trade union perspective as business orientated. Through the recent economic crisis, in particular, the engagement from an employee's perspective has been limited-to say the least. Many of the initiatives that have come out recently have been most definitely business-led, with little to no involvement, certainly from Unite's perspective, in how they are developed and the initiatives going forward.

<John Hardwick:> The main thrust as far as we are concerned is that it engages with all types of business. Sometimes, we feel as if the emphasis is too much on the larger businesses, which make up a small minority. It tends to forget the 99.2% in the small business sector. While we accept that it is business orientated, we have to define what we classify as business.

Q<32> <Chairman:> I was about to say "You lot", but that is not very polite. All witnesses have some contact with EMDA. How much do you think people, businesses and trade unions across the region know about EMDA? Is it in touch with a wide group of people?

<David Jeffery:> It has fairly limited knowledge of the role of regional development agencies. There tends to be a view of business that is fairly one-dimensional. The economic strategy, "A Flourishing Region", is a fairly sophisticated analysis of the region, emphasising the differentiation of the region and some of the challenges in the region. Those documents talk a lot about engaging business, as though business-almost a BBC version of business-is swashbuckling entrepreneurs. We are part of business, and if you look at two of the main themes in the economic strategy-raising productivity and achieving quality-we are well placed to assist in and to deliver that.

It worries me greatly that we have difficulty in communicating with EMDA. I do not think that there is an understanding of, one, the complexity of what business actually is, and two, what our role is. Equally, they have a simplistic view of trade unions-they probably see us as being with placards saying that we want more money, or that we will fight redundancies. We work strategically, and on a whole range of issues, and there ought to be that joined-up view of what our role is and what we can help to deliver. I shall give you an example. We work with employers and talk to them regularly about things like productivity, but we do not seem to have that conversation with EMDA.

Yesterday I printed off the response to the economic climate-admittedly August 2008-but again there is no mention in that document of trade unions or the role of trade unions. It is quite frustrating for us. We agree with their analysis of the problems, but I think that we are part of the solution.

 

Q<33> <Chairman:> Would that be a generally shared view across trade unions?

<David Jeffery:> Yes-talk to colleagues from unionlearn in the TUC. I will give you another example. I think there is a general lack of support for union-wide initiatives. For example, we led a consortium of trade unions recently, working through the TUC, to co-ordinate a response to redundancies. Our industrial officers pick up redundancies, or people at risk of redundancy, or an employer has said to an officer, "I think I'm going to have to make people redundant-help." We wanted to have some consistency in the response across the region, and it has been difficult. Politicians will say, "Yes, that's a great idea," civil servants will say that it is a great idea, individual members of staff of EMDA will say that it is a great idea, but how about actually getting support? Essentially, it was for a modest amount of money-we were talking hundreds of thousands of pounds, perhaps £250,000 over a two-year period. That is to work across the region with perhaps the main cost being around three members of staff.

To us that was a straightforward, simple thing, which would deliver a lot of benefits to employees-not just union members, but all employees who were at risk of being made redundant. We could co-ordinate a response for employers as well, so we can put people in touch with other people-like the Pan redeployment project, for example, in the north of Nottingham. We are doing some good work around construction and engineering. We just hit this brick wall. In some respects, it is like fortress EMDA. Often we are frustrated. We want to work not just with EMDA but with a lot of agencies, and we seem to get a brick-wall response, even on the simple level of not replying to phone calls, e-mails, communications-that sort of thing.

 

Q<34> <Chairman:> That is interesting. Do you think, across the business community, there is a real awareness of EMDA?

<Stephen Woolfe:> You see the awareness at different levels. Clearly, the larger businesses in the East Midlands are only too well aware of EMDA. If you look at the bulk of chamber members-there are some larger chamber members; of course, across the East Midlands are some of the really big companies-in general they are the dynamic small and medium-sized enterprises that form the backbone of what the East Midlands is all about. The awareness of EMDA is probably a bit variable across some of those businesses. It very much depends on whether the leaders of the businesses are involved in wider issues than just running their business. Those who are perhaps involved in chamber, CBI, Institute of Directors and FSB activity will be only too well aware of EMDA, but in terms of general awareness, I would say it is mixed.

Can I pick up on one other point, which was made earlier? It was about EMDA being a business-led organisation. Certainly from the Chamber perspective, we do not see it as a business-led organisation. There are people who are business men and business women on the EMDA board, but they are there because of who they are in reality; they are not seen as representatives of business. We just have that caution about EMDA being seen as a business-led organisation. We would like it to be a business-led organisation, but it is not.

<John Hardwick:> There is certainly, in our perception, a distinct lack of representation from micro-business. I am going to hark on about that, because at the end of the day that is where the majority of our evidence will come from, because the majority of our membership is from that sector.

 

Q<35> <Chairman:> I will pass the questioning over to Peter in a moment, but just let me ask you this. If EMDA did not exist, what would be the consequences? Would there be a black hole? Lyndsey?

<Lyndsey Bunn:> If EMDA did not exist, I guess that there would be something else in its place, because obviously EMDA was derived from various other agencies before, which were responsible for economic development. I assume that, in terms of regionalism and localism, there would be something to take its place.

Going back to the point that you made about what people in general know of EMDA, I agree with Stephen: it is very mixed out there. I think there is, to a certain extent, a fault with the RDAs in general, in that they were originally created as these strategic bodies that were also grant givers. Those organisations that have been on the receiving end of some of the money from EMDA will obviously be very welcoming of EMDA's policies and initiatives. Those many organisations that have not managed to get any funding from EMDA might have a completely different viewpoint. It is mixed. I think it would have helped if there had been some clarity much earlier on about the RDAs' role in terms of either being strategic or being grant giving. Obviously, the changes that are coming out as a result of the sub-national review are looking to address that problem.

 

Q<36> <Chairman:> Are you advocating that more strategic role?

<Lyndsey Bunn:> I would advocate a role for economic development within the regions that has benefit for businesses, which are the wealth creators in the regions.

 

Q<37> <Sir Peter Soulsby:> I want to pursue that point, because when EMDA gave evidence to us, it said something to the effect that if, as may be the case, Government priorities changed, that would entail it making difficult choices and disappointing people. I want to pursue what is perhaps the tension between its role as the giver of grants and the agent of Government and the other role of being the champion for the region. I invite you to comment on how it is managing that tension at the moment and perhaps what would be a desirable way of managing it in future. Perhaps Stephen could start.

<Stephen Woolfe:> I shouldn't sit on the end, should I? I think there is a tension between the two roles. If I just forget my Chambers role for a second and put on my other hat, as Chair of the Heart of the National Forest Foundation and a trustee of the National Space Centre, those organisations have been the recipient of some grants from EMDA-either through EMDA directly or, previously, through the LSEP as well. The relationship that both those organisations have had with EMDA has been excellent. In terms of which element of EMDA's plans each hits, with the Heart of the National Forest Foundation, you are looking at tourism and environmental regeneration on a huge scale. It must be one of the largest environmental regeneration sites in the whole of the East Midlands. In terms of the space centre, you are looking much more at an education-led programme and some tourism, which is very important.

Certainly it seems to me, including from my knowledge of other organisations, that with regard to some of the major requirements for investment in terms of grant giving through EMDA, it has been fulfilling the needs very well indeed. The dialogue between organisations and EMDA seems to work very well indeed. What you also see through those involvements is its focus on strategy and the promotion of the East Midlands very much coming into its thinking. In that sense, I do not think there is a tension between what it is doing in terms of grant giving and strategy. In some respects I see a tension between their role as a champion of the East Midlands and their role as a Government regional development agency. There must be a balance between trying to gain the maximum investment potential for the East Midlands and what the Government are prepared to give and representing the Government. I am not quite sure how you get round that tension. There is an obvious tension there. I would be interested to hear what the other people on the panel have to say about it. There is a very real tension there.

<John Hardwick:> Different RDAs have had their own schemes. I think where it sometimes falls down is that there is no level playing field between different RDAs. We are all talking about championing our own areas, but we have to realise that every other RDA is doing exactly the same thing and putting forward exactly the same thing about their area. Because the schemes are different it is sometimes difficult for businesses, certainly those on the fringes who are contemplating, "I might move there, because the deal's better on the other side of the river", or whatever, to put it into very basic terms. Therefore, because there are no national schemes, that presents a problem. If you are trying to say, "Come to the East Midlands because this is the area," there is too much competition from other areas. What we would like to see is a more standardised setting so that there was less of this championing as such per se. We would like to see all the anomalies ironed out so that the East Midlands was just as good a place to invest, to bring your business or to grow your business, as any other RDA. That is where something has gone wrong, because of all the different schemes run by different RDAs. Do not ask me to quote what the differences are-we are just aware. As a national organisation, we get feedback from other regions.

<David Jeffery:> That is quite an interesting point, because I know when our colleagues in the West Midlands have dealt with the RDA there, their experience has been a lot different to ours. We have to accept that the West Midlands is a different region to the East Midlands. Of course it is. But culturally the approach has been different. It has been much more an open door as far as the trade unions are concerned. In some RDAs, from what I can ascertain, there is not so much tension, because there is a link between the grants and the championing in the region. It all seems to flow and to make sense. I think sometimes we see a disjoint between this idea of championing in a region and not being prepared or willing to talk about some of the key people within that region. It seems ad hoc. I am sure it is not ad hoc, but that is how it feels outside the RDA, compared with the responses we see in the West Midlands.

<Adrian Axtell:> Dave is absolutely right about that. It is not just a development agency issue; it runs right the way through the region. If you look at the economic cabinet that was set up, you will see that there was not a trade union seat on it originally. Through discussions, we finally got a TUC regional secretary on it. In comparison, in the West Midlands, there was not only a TUC representative, but the Unite regional secretary. It was as if that was automatic, as if they needed to be involved immediately in those discussions if we are going to address these pressing problems within a region. From a union perspective, that is clearly visible, because of the nature of the way the unions are set up across the region. We are always, if you like, comparing the east and the west. Although it is an entirely different region, there appears to be a recognition that the trade unions need to be involved in these issues and form part of this or, at the very least, they need to be talked to. That is clearly the difference.

<Chairman:> Can we move on to Bob? Bob is going to ask you about additional responsibilities.

 

Q<38><Mr. Laxton:> I want to come back much later to the point that you made about what would happen if it did not exist, but there have been some big, chunky moves-they are not incremental-in terms of the powers and responsibilities of EMDA, particularly in the area of giving grants. There are further changes as part of the regional leadership teams, with the demise of the regional assemblies and those sorts of things. Do you think that that has in some way perhaps diverted it away from having a focus on business, commerce, industry and industrial relations? Do you think that this adding on of powers strengthens, weakens or diverts EMDA? Do you think it has lost focus in some way?

<Stephen Woolfe:> It is actually a very good point. If you look at the size of EMDA when it started however many years ago, you will see that it was a much smaller organisation. It has been a bit like Topsy-it has just grown. I think I would agree with you that the very, very strong focus it had in the early days has been weakened. I am not necessarily saying that that is bad because the region is large and there is every good reason why you do not want a number of different regional agencies doing a series of different things-they could overlap and conflict with each other. But I think you are absolutely right that it has lost the strong focus that it had on its creation and in its very early days. I am not saying that that is bad, but I think it is true.

<Lyndsey Bunn:> I think at the moment there is obviously an emphasis on its engagement with local authorities. Obviously, in the light of the changes that are happening, it is more and more important that the RDA liaises very, very closely with local authorities, whereas in the past it has not. It has looked to the business sector. That is one particular area where the business community feels that we are being pushed away to a certain extent, and that our role is being diminished, despite the fact that we have heard from Government that seats on the EMDA board and other RDA boards will remain business focused. That is one area.

What has not helped is the fact that you have had EMDA picking up areas of work that should perhaps have been picked up by other regional bodies such as, for example, skills development, which you would have thought should have rested purely and simply with the Learning and Skills Council. I think in that respect, it has caused confusion in terms of why EMDA is there and what it is there to address. To me, it should always be about addressing market failure rather than picking up on the schemes that the LSC or Jobcentre Plus may or may not be able to fund.

<David Jeffery:> Just picking up on the point that our colleague made about the confusion between the role of the LSC and the RDA, when the LSCs were first established-they were organised on a county by county basis-at least there was an openness and a dialogue with the trade union movement. It was easy to go to the LSC with an initiative based around a market failure, usually around skills or training and development or that type of thing, and actually get some support and get something done. It might be a small pilot project, but it was about engaging with the whole of the business world, not just this top-down perception of it.

Our frustration is that we lost that to some degree as EMDA's role changed, or developed, however you want to describe it. The LSC seemed to take a similar route: because it is regionally based, we feel that there is a top-down approach. There are some underlying assumptions there: that employers are best placed to understand the issues around training and development, to articulate the needs and aspirations of the work force and to understand the wider economic needs of the region. We are not saying that employers do not understand any of those things, but they are not always best placed to understand them.

Sometimes our frustration is that no one asks employees-or they will do it in a piecemeal, but not systematic, way-about their aspirations and how they engage with the world of learning, training, development, or whatever it is. It is always seen as engaging with the employer, but that is the big frustration. We are uniquely placed to articulate that employee point of view-not in every sector of the economy but, by God, we cover 24 sectors of the economy in Unite. The trade union movement in the East Midlands covers every sector of the economy. There is an appreciation that we have problems, but there is no mechanism, from an employee perspective, to engage with. If you talk to our members or employees about EMDA, they would have no appreciation of it.

<Chairman:> Let us move on a bit. John, you talked to us right at the beginning about the very difficult situation at the moment and we know that Judy wants to pursue that.

 

Q<39> <Judy Mallaber:> Could you say something in general about how you feel EMDA has responded to the current economic climate? In relation to the Unite response, I take what you are saying about the lack of involvement of the unions, but I would be interested to know how that means that you feel that EMDA ought to relate and use the unions-both in relation to individual business failures and the economy more generally. Maybe we could start off with the business end and how you think that EMDA has responded in general to the economic climate.

<John Hardwick:> We are very glad that EMDA made its reply in August. We had been flagging it up from our own survey. The one thing that the FSB does on a regular basis is that it surveys members-215,000 members provide one hell of a stable reply, which is broken down on a regional basis. We started to flag up that there were significant problems from January 2008. We raised that through the East Midlands Business Forum and in direct meetings with the regional Minister. That was reinforced by our findings in April 2008 and it then culminated in quite heated discussions in July and August 2008 when the responses had shown a gradual decline.

A lot of our resources-the replies and statistics that we had gained-were a significant part of EMDA's response to the economic situation. We are glad that eventually they did listen to the results of our surveys, which had shown a decline. The response was good-it was one of the first RDAs to make a response and we cannot fault it. Out of that came "Survive and Thrive" which was a sort of strapline to help businesses through the situation which, by then, had worsened still. Our evidence was showing the decline in orders and in confidence throughout the summer. We supported very heavily EMDA's moves to arrest the situation. We then gave feedback as to the role of "Survive and Thrive" and it was left to the chambers of commerce to plug the gap. Representations from the FSB-from individual members and as an organisation-went back to EMDA and said, "Yes, you have pitched it, but now it needs something else to follow on." So they worked very closely with the chambers of commerce to develop the follow-on seminars more on the sales and marketing side of things. Our biggest "gripe"-that is the wrong word, but the word that will be recorded-is that we were coming up with evidence-based statistics, but we felt that they were not being taken that seriously until effectively six or eight months in.

We felt that EMDA's own statistics seemed to be anything from 18 months to five years old. I recall one meeting in particular with Phil Hope. We had brought our survey to an end three days early so that we could have the statistics there-so they were three days old, which is fairly up-to-date by anybody's standards-but they were not treated in the same way as we would have liked. We felt that it was really good evidence. As for further development, yes, we are glad that EMDA has taken a positive role. We see all those responses as being positive; we just think that they have been a little delayed. I wish that it had happened earlier.

 

Q<40><Judy Mallaber:> Is there practical help on the ground, as well as the broad strategic discussions?

<Stephen Woolfe:> May I begin with the earlier point, and then move on to that further question? From the Chamber point of view, I would certainly endorse what John has said; however, I am not sure about how much the delays at EMDA reflected a lack of appreciation at-I am bound to say-central Government level about the recession that we were entering. My take on that would be that certainly smaller and medium-sized businesses were probably only too well aware, through the course of last year, that things were getting worse and worse, if not daily, certainly weekly.

On the other hand-I am putting on another hat as a senior partner in a law firm in Leicester-we had Yvette Cooper in the office in May or June last year after Patricia Hewitt organised for her to come to Leicester. Yvette Cooper's take on the recession at that time was that things would get better and that within three months things would have turned around. I am not so sure, therefore, that we can blame EMDA particularly for not perhaps appreciating the recession that we were walking into. Having said that, I don't think that anybody appreciated how bad it was going to be and how bad it is. In terms of what they are doing now, I certainly feel that there is very great concern within EMDA-you get this from talking to Jeff Moore, Bryan Jackson and other senior people-to try to help, wherever they can, within the East Midlands. However, from the other side of it, I don't think there is much understanding of the help that is on offer or of how to access it. I think that the message is very lukewarm.

<Adrian Axtell:> I think that that is absolutely right. Access is one of the main issues. It relates to the practicalities of what we were trying to develop actually before the economic crisis. In the East Midlands, there is a lottery on redundancy support depending on where the job losses occur. With Quebecor-for argument's sake-in Northamptonshire, in Phil Hope's constituency, there was a lot of support on the ground. Naturally-because the job losses occurred in that sector-the print and graphical, paper and media sectors are well-versed in these issues. The level of support there was top-class.

If the same happened in Lincoln or Loughborough, we are not sure what could be delivered, hence this idea. It was really about practical help. All the advice and support is out there-it is not that it is not there; it is just the co-ordination. We were prepared, as a union, to supply support in the way of offices and so on and so forth. It was a real, practical step. It was a central point that an employee or employer could contact co-ordinators who could tie in all the external bodies.

 

Q<41><Judy Mallaber:> Do you want that to come via EMDA at a regional level, the sub-regional partnerships, which is where we are getting more support in my area, or through Business Link? Do you have a view on that?

<Adrian Axtell:> Overriding, I would see where that came as being about the funding, to a certain degree. I thought EMDA would welcome-should we say?-and embrace that, to be perfectly frank with you. How that developed from there was very much embryonic, because the view was-including during discussions with Phil Hope in particular-that it was a simple idea, and often the simple ideas are the best. We can develop and build it from there and see what happens. However, we were trying to move away from what was in effect a lottery in relation to support following job losses.

<David Jeffery:> Adrian is right. The quality of support that people received was variable depending on where they were in the region when they lost their jobs. Often, it depended on somebody from our organisation, usually somebody who dealt with lifelong learning, in co-ordinating that response. Our idea was to have a co-ordinated response, not just from UNITE but from all the unions across the region, and to get that funded by the regional development agency.

There are a couple of examples on page 13 of the document on the economic climate that was published in August, such as the skills pledge and encouraging employers to sign up to that pledge. We have been doing that since the initiation of the skills pledge, through things such as learning agreements. We incorporated the pledge into our learning agreements, so that first, employers were aware of it, and secondly, they would sign up to it; and thirdly, we then monitored what that actually meant in practical terms. That was one thing. There is another example in that document, on page 15-I will be brief. The final paragraph "Next Steps" states that "EMDA will continue to use its strong links to individual businesses, developers and the CBI, IOD, chambers of commerce, FSB and EEF to provide in-depth and timely intelligence and analysis to ensure that Government" do this and that.

<Chairman:> Judy has another question. We need to move on.

 

Q<42> <Judy Mallaber:> You talked about the issue of co-ordination; again, the unions are not involved. Quite apart from co-ordination, do EMDA and related organisations and sub-partnerships, such as Business Link, have the tools to do the job? Is it that communication and co-ordination are not getting in quickly enough, or do they not have the mechanisms? Is there anything else that they should be able to do?

<John Hardwick:> I think the business support organisations play a very important part in making sure that our members are aware of what is available to them. For the majority of businesses, the first port of call is their accountant, the second is the FSB website-plug, plug-or our own legal help lines, to which they are entitled to: let's face it, that is why members join. The third one is what we can get from Business Link and what it can offer us. The good thing is that Business Link has changed its emphasis to survival from growth. I am glad to say that the East Midlands Business Forum had a big part in making that strategic, attitude change during the summer-it even got a couple of the leaflets reprinted to reflect that. The role of Business Link has certainly changed-it had to change. It had to become more diagnostic, taking down the diagnostic model, and it had to become something of a signposting service. Making business people aware of what they can access through Business Link still leaves a little bit to be desired. There has been a bit of TV advertising, which is good. Any advertising is good advertising, and makes people aware of what is available to them, but it is generally not perceived as the first port of call.

 

Q<43> <Chairman:> We have about 20 minutes left and we have a lot of ground to cover, so you all need to be a bit sharper, if that is all right. Let me put in a very small question at this point. EMDA has had two studies done recently, one by PricewaterhouseCoopers, and the other by EcoTech, which basically say that it does a good job. Has anyone read those reports?

<Stephen Woolfe:> A one-word answer: no.

<John Hardwick:> I personally gave evidence to EcoTech back in February, but the answer to the question is that I have not actually seen the report as yet. I was part of the evidence, shall I say?

<Chairman:> I can see that you are diligent-you have to read the report. I have actually got it sent to you. Can we talk a bit about the urban-rural work of EMDA? Judy, you are going to take us through.

 

Q<44> <Judy Mallaber:> On this panel, we have two big-city people, and two of us who are-I do not know if you would call yourself this-rural and semi-rural. One of the problems with the East Midlands and how you deal with it is the diversity that we have, from seriously rural through to seriously urban, and those of us who are locked somewhere in the middle. What unique challenges does that mean that we face? What are the particular problems in the rural areas that often tend not to get so much attention? I am sure people will be straight in on this one.

<John Hardwick:> There are small business members based in rural areas. Those are not rural businesses, but businesses based in rural areas. Let us make that clear-they are not all agriculturally based, and I don't want to label them. The biggest perception among the majority of those people is that far too much emphasis is put on the big three-Derby, Nottingham and Leicester. They feel excluded. We are not talking only about Lincolnshire; we are talking about Rutland and places south of Northamptonshire. People are in similar situations and have similar problems. People in Lincolnshire especially feel very turned off by EMDA. That is not my phrase, but it has been bandied about many times. They feel as if they are left out, and that all the initiatives tend to be focused along the M1 corridor. When I go out to meet members in those rural areas, they have a totally different perspective on EMDA and its role, and they say, "It does nothing for us." We as an organisation try to flag up the fact that those people are entitled to all the services, just as much as anybody else.

Q<45> <Judy Mallaber:> Do they need different services? What are their particular challenges?

<John Hardwick:> One of the biggest challenges that they have is a simple matter. Those of us who live in towns and cities expect broadband. In rural areas the cable is a bit thin-it hasn't got there yet, and speeds are variable to say the least. There are still areas where broadband is more or less non-existent. Everybody from the Government down is saying that we should take advantage of new technologies, but that is difficult if the companies and providers basically say that they will concentrate on the areas that give them the biggest return, and will get to other areas eventually. One of the big arguments is about the availability of broadband, which is an essential tool for doing business today, wherever it is. It is about getting a decent speed broadband throughout the entire country and especially in some of the rural areas. Lincolnshire especially flags that issue up.

<Stephen Woolfe:> I am not sure that the debate is rural versus city; there are a number of bands to it. I certainly agree that Leicester, Nottingham and Derby dominate, but there are some big regeneration projects that EMDA is undertaking around the East Midlands. I can't talk a lot about Lincolnshire as, bluntly, I don't know a lot about it, even though it comes in the East Midlands generally.

<Chairman:> Careful what you say.

<Stephen Woolfe:> I note that Lincolnshire is not represented among you, either. We can look at regeneration projects. For example, The Avenue is a huge regeneration project. I am not sure whether it is in one of your constituencies or not.

<Judy Mallaber:> Nearby.

<Stephen Woolfe:> You wouldn't say that was in a city, by any stretch of the imagination. I look at what is happening in west Leicestershire-again, that is National Forest-based and whatever-and there is huge regeneration going on there at the site of the old Rawdon colliery, with significant involvement by EMDA. I understand that those examples are replicated around a fair bit of the East Midlands. If we are looking at the purely agricultural economy, I would be amazed if there were that many farmers or agricultural workers-agriculture is a huge employer in the area-who had even heard of EMDA. It is as bad as that, I think. There is a divide, but I do not think that it is simply the cities versus everything else. There are a number of layers to it.

<Lyndsey Bunn:> A key concern that we have at the moment is the decline of market towns and the hinterland communities surrounding the cities. That is where we are not seeing the major support. Yes, there has been an awful lot of development in the former coalfields because of the amount of money that was coming in from Europe to address those issues. But it is very different when you look at places like Ollerton, which was quite near the colliery site-the investment that EMDA has put in there has been fabulous for the community-and then at places like Kettering, which is a declining town, it isn't really a market town, where you see empty shop units.

There are issues about appropriate work space environments for businesses that are based in rural areas and their ability to conduct their business from a location of their choice. It is cheaper for them to be based in a less urban environment in terms of rental costs and so on, but there is a lack of focus in terms of developing appropriate work space units, starter units and growing-on space within those core towns and communities outside the three cities.

<Chairman:> Can we take stock with where we are? We have got about a quarter of an hour left, and I want to talk a bit about the changes in the regional infrastructure and sustainability. I know that Bob and myself have concluding questions, so would you, Peter, talk about these governance changes? That would be helpful.

 

Q<46> <Sir Peter Soulsby:> Yes. The dissolution of the regional assemblies is imminent and there are going to be some questions about the accountability of RDAs generally and, for us, EMDA. How do you see that? Will it leave a big gap? Is what we have waiting in the wings to fill that gap going to be adequate?

<Lyndsey Bunn:> There is a significant accountability gap, in my view. EMDA will point to the fact that it is audited by external and internal auditors and that it has to provide monitoring reports to the Government office, but there is a huge concern, from my perspective, that no one actually goes back to check the figures that EMDA is reporting.

EMDA is very good at promoting what it does in terms of output, achievement and core PSA target outputs in particular, but we don't tend to hear about the added-value stuff. In terms of the role that regional assemblies have played, local councillors, business representatives, environmental partners, trade unions have been able to ask them searching questions about what they are doing outside achieving those core PSA target outputs. With the demise of the assembly, and with all due respect to the Regional Select Committees that have been established-

<Chairman:> Nobody else has respect!

<Lyndsey Bunn:> I think there is going to be less accountability under the future arrangements rather than more, and I feel that every public sector organisation should be under the same degree of scrutiny if they are spending taxpayers' money.

 

Q<47> <Sir Peter Soulsby:> How can we fill that gap?

<Lyndsey Bunn:> I would say this, wouldn't I? I think it could be done by a proper stakeholder organisation, which is being proposed through the regional assembly's joint leaders board, whereby a group of democratically elected personnel, as well as business representatives, businesses and other economic, social and environmental partners, can continue to ask questions of the RDA or any other Government-funded body in the region. That would be a way of ensuring that your work, for example, could be supported, so that you were not duplicating the scrutiny and accountability that was going on.

<Stephen Woolfe:> I just think there is a difference between accountability and scrutiny. I am certain that accountability would exist through the Select Committee, but I am not sure what happens after March 2010 when the scrutiny through the regional assembly finishes. There seems to be a gap there that needs to be filled.

<John Hardwick:> The only thing I would say about that is our involvement-if it is another forum of the great and the good, we are socially excluded.

 

Q<48> <Sir Peter Soulsby:> Following what you have said about the accountability gap, there is also the prospect of the single regional strategy and the responsibility for a spatial as well as an economic strategy. Do you see that as bringing new challenges in terms of accountability?

<Lyndsey Bunn:> We would welcome the single integrated regional strategy. We think it is incredibly useful to have a single document that outlines exactly what economic development is going to happen, when and where, and how it is going to benefit communities and individual citizens, not just businesses. In terms of accountability, our concern is the level of stakeholder engagement that will be going on outside the relationship between EMDA and the local authorities. That is a crunch issue for this region at the moment in terms of how we ensure that stakeholders are not just seen as people to consult on a finished article. We actually want to be there at the beginning, driving what the strategy contains. We also want to be involved in consulting on the draft finished article and then in agreeing a set of principles moving forward.

<Sir Peter Soulsby:> I want to hear more, because I saw a lot of nods.

<John Hardwick:> The only thing that I would add is that members of the East Midlands Business Forum have a good reputation for working together. It is not like different business organisations coming together. That is not always the case, and it does not happen in every part of the country, but we have a good reputation for working together. We should make that work for the benefit of everybody.

 

Q<49> <Sir Peter Soulsby:> I mentioned the single regional strategy. To what extent do you think that EMDA has the skills to take on this new responsibility in-house? Do you know anything about any plans to ensure that it fills any gaps in its skills?

<Lyndsey Bunn:> It will involve a change, particularly in terms of spatial experts who currently reside within the regional assembly. You have planning and transport experts and so on. Although EMDA has a very skilled work force, it will have to consider what skills it has to undertake that work effectively. Whether it feels that it has the skills at the moment is for it to answer, I suppose.

<David Jeffery:> There needs to be an appreciation of what it seriously means to lose your job or to be socially excluded and all those things. There are some good people in EMDA, and with individual members we have had some great support as far they could take that. However, we need some sort of development in how they engage not only with trade unions, but with community groups, because we are stakeholders, too. However, it is sometimes more difficult for people who are not accustomed to it to articulate their needs and desires. Perhaps EMDA needs to think about how it engages with our broader communities.

 

Q<50> <Sir Peter Soulsby:> Finally and very briefly, we asked EMDA about its involvement in sustainable development and the broader agenda. It is very clear that it has been involved in some very innovative projects, but-I hope that I am not being unfair-it did not see itself as the lead in regional responses to sustainable development issues. Do you think that that is the right perception of the way in which it is acting? If it is not in the lead, who ought to be?

<Stephen Woolfe:> There is an interesting relationship between EMDA on the one hand and the county and district authorities on the other. For example, north-west Leicestershire-one of the ones that I know best in terms of sustainable development-has huge policies and strategies to try to turn it into one of the greener districts in the country. To the question, "Who will take the lead?", the answer might be that some of the authorities have to do that, rather than EMDA. Over the past few years, there has been an interesting balance.

To return to The Avenue, on sustainability, regeneration and whatever, I would have thought that the lead would certainly have been taken by EMDA-not alone, but it has played a very significant part. However, with a changing political climate across the East Midlands, much of the lead must come more locally than regionally. That is where the emphasis could perhaps be better applied.

 

Q<51> <Mr. Laxton:> About an hour ago, Paddy asked what would happen if the RDA was to go. Lyndsey's response was, "Well, it can be replaced by something else." May I put that behind the eight ball? Before the RDA, we had the East Midlands Development Company and before that it was basically Whitehall and what is now the Government Office for the East Midlands. GOEM was supposed to be a voice for the regions in Whitehall, but many people saw it as Whitehall in the East Midlands, in this case. Has anything changed? If it were to go, how disastrous would that be? And if you feel it is disastrous, what would you replace it with?

<Lyndsey Bunn:> I think EMDA can now be considered as one of the larger employers in the region, so if it were to go there would be an awful lot of people made redundant, I guess. That would be a particular concern regarding where those individuals then go on to seek further employment. As for EMDA's role, particularly in providing that regional umbrella-type organisation for economic development, it has been incredibly successful. There has been perhaps too big a remit for them to take on rather than just addressing market failure, or just trying to look at economic growth and increasing economic growth and productivity in the region. They have perhaps been sidetracked, as have all the RDAs, by looking into other issues that perhaps would fit most appropriately under other regional organisations. If it were to go, perhaps it would just be replaced by a more streamlined version. I do not know whether that is Government thinking. In the climate that we have at the moment, there could be a general election and then who knows what will happen to the regional scenery? So your guess is as good as mine in terms of whether it will go and what it will be replaced with.

 

Q<52> <Mr. Laxton:> Sorry to interrupt, but I wanted your guess. My question was: if it went, would it be disastrous? If you felt that it was partially, wholly or critically disastrous, what would you want to replace it?

<Chairman:> We ask the questions. I am not offering a view. I have a view but I am not offering one.

<Lyndsey Bunn:> It would be disastrous in terms of the number of employees that it has and the number of agencies that it funds.

 

Q<53> <Mr. Laxton:> No, not the employers and the organisation. I am talking about the region.

<Lyndsey Bunn:> It would be a loss to the region-that is what I would say. Yes, I believe that there should be an organisation that is looking at economic development across the region, and developing economic growth and productivity and supporting businesses to generate productivity and wealth. That is about as much as I would like to say, if that is okay with you. I am not sure I have answered your question.

<Mr. Laxton:> Well, if you believe your answer is deficient-that is your opinion. I don't have an opinion-I just wanted to know your view, that's all.

<Stephen Woolfe:> I've let you off the hook now, haven't I? EMDA has done a lot of good for the East Midlands. One of the really good things it has done is to start making the East Midlands think of itself as a region. The world is a big place. Leicestershire, Nottinghamshire, Derbyshire and Lincolnshire-don't forget Rutland-haven't got a terribly large standing in the world. The East Midlands is small enough as a region. Some people say it should be the Midlands we talk about. I think the East Midlands is a good region to come together. If EMDA were to disappear, what would be one of the biggest downsides? I think perhaps the loss of our ability as a region to pursue a regional approach and strategy would be a huge loss. What would come in its place? Hopefully, EMDA mark 2. If I take your analysis of GOEM, which is Whitehall in the regions-I am not sure it is right, but that is certainly how GOEM has been perceived-I think the region wants something rather more strategic than that. It wants to be able to feed through a body and feed down to London and make its impact that way. I have no doubt whatever that we will need EMDA mark 2.

<Adrian Axtell:> Overall, it does do a good job, for two specific reasons. One is that the east, from my understanding, and certainly from a trade union perspective, has always been the poor relation to the west. Coupled with the East Midlands it is very easy, again from an industrial base, to be Derby and Rolls-Royce-based, but it is a bigger and more important and more diverse region than that. I think it would be a loss, to a degree. What would take over? I think it needs an EMDA mark 2. Perhaps more direction should be given to the stakeholders that are involved. As was said earlier about being involved at the start and right the way through the process, that is from a broad perspective, or however you want to take it. I think it is all a bit in the auspices of being open and so on, but perhaps it doesn't necessarily attract people. We were classed as natural leading players, from an industrial perspective in that environment, to hold that discussion and tackle some of the issues that affect the East Midlands.

<David Jeffery:> Just briefly, we said in the beginning that we agreed with the analysis that EMDA did of the region. It is sophisticated and highlights the differentiation, as a colleague said earlier. We have something as distinct as the East Midlands now. That is good, and we can build on that.

<Mr. Laxton:> Paddy, I feel ever so guilty. Can I just say what my view is? I once had a conversation with someone who was a permanent secretary-a top-notch civil servant in the Department for Environment, Food and Rural Affairs-who was in the business of handing out big gobfuls of money-billions here, there and everywhere. I was talking to him about Derby, and he said, "Derby, Derby, Derby. Oh, I know Derby. I went through it once on the train." I thought, "My God. This is an individual who has some influence in terms of where money, influence and power to shape industry and the economy are located and directed." I thought, "God, you must always follow the money. You have got to get a little bit closer to it, rather than having a view as remote as that." You know where I stand in terms of my enthusiasm for the regional agenda. I hope that makes you feel better.

<Chairman:> I think we had better get this permanent secretary to come and give evidence. Thank you all very much for coming; it has been really helpful. I have an apology to make, as I have cut people off at various points. It is clear that there is a lot more to be said about the matter. So when you are on the bus, those of you who are sustainable-I got the impression that you are not very sustainable-or if you are going back in a car, and you think, "Gosh, I wish I could have told them that," perhaps just three or four key points that we haven't had the chance to talk about with you, don't hesitate to let us know what you think. Thank you all very much indeed.

 

Examination of Witnesses

Witnesses: Councillor Martin Hill, Leader of Lincolnshire County Council, Chair of Local Government East Midlands Improvement and Efficiency Partnership, Councillor David Parsons, Leader of Leicestershire County Council, Chair of East Midlands Regional Assembly, Chair of the Shadow Local Government Leaders Board, and Martin Traynor, Managing Director of Leicestershire Chamber of Commerce, Chair of the East Midlands Regional Assembly's Regional Scrutiny Board, gave evidence.

 

Q<54> <Chairman:> Welcome, David. Thanks for hosting our meeting today. The Select Committee has been keen to get out and about in the region. We have been in Nottingham, we are here in Leicestershire today, and we are going to Tupton fairly soon.

We all know each other, but it would be helpful for the record it you would introduce yourselves. The way to do that, I have been reminded, is to push the buttons when you speak. Shall we start with you, Martin?

<Martin Traynor:> Yes, I am Martin Traynor. I am an ESEP member of the Regional Assembly and I chair the Regional Scrutiny Board.

<David Parsons:> I am David Parsons. I am Chairman of the East Midlands Regional Assembly and I am also Leader of the County Council in Leicestershire.

<Martin Hill:> I am Martin Hill. I am Chairman of the Regional Improvement and Efficiency Partnership and also the Chairman of Local Government East Midlands. When I am not doing that, I am Leader of Lincolnshire County Council.

 

Q<55> <Chairman:> We will try to finish at 12.30. There is a lot to cover, so we need to be fairly quick. Let me cut straight to the chase. How do you think EMDA is doing?

<David Parsons:> If you want me to start, I will. In our submission to you, Paddy, we have tried to be fair. We think that there are pluses and minuses. There are positives where EMDA has achieved, certainly in its help for business organisations. It is good on that. It can point to coalfields renovation. Everyone has probably been to The Avenue coking sites. It has personally helped me an awful lot on the East Midlands China Business Bureau. We have long-standing links with west China here in Leicestershire. Because we did not want to just visit on a civic basis, we decided to try to develop trade links and business links. EMDA took that over. It also ran with the India desk, and has developed the links well. I am happy with that. I have also been involved in European funding. It has been incredibly competent on that.

On the negative side, an update of the regional economic strategy at a time when the economy has changed significantly is something that EMDA really ought to have been on earlier. I don't want to be unfair to EMDA, but there is a job of work to be done there, particularly as it serves on the Regional Economic Council with me, as it happens, and others to try to help in the current economic downturn. We need a coherent strategy on attracting and retaining foreign direct investment. We need to do something about tourism here, which it needs to grasp with both hands and develop. But I wouldn't say it's a mixed picture-by and large, it is certainly one of the better development agencies. It has been very helpful. We have tried to help it as well, but there are areas that it could and should develop.

 

Q<56> <Chairman:> Do you think that the organisation is well known in the region? Has it permeated down? Let me test you a bit. For example, there has always been a view that EMDA may not focus enough on Lincolnshire.

<Martin Hill:> Yes. I was going to mention that there has always been fear about the famous golden triangle and that, if you aren't within that area, you will lose out. I think that things have improved. I have certainly challenged people in EMDA that there are other areas. Again, as David has said, there were certain issues years ago when EMDA was first created when there was very much a focus on the Nottingham, Leicester and Derby triangle. Efforts have been made and, although I am not totally reassured, I am reassured that it is scrupulously fair with how the money is allocated while at the same time making sure that it is not just giving money away for the sake of it. Tourism is one area that it has improved. Relations are better. It is an area where there is a view, certainly in Lincolnshire, that possibly tourism does not receive the importance that it should have within the region. On whether EMDA is well known, it is well known obviously by those who need to know it, but whether the general public know of EMDA, I very much doubt.

We have had SSP issues. Frankly, it was overcomplicated to have all the different SSPs, which overlapped into different county boundaries. There was an issue there. Those who need to know, know who they are, but I don't think that anybody else does, particularly.

The issue with development agencies is that they are allocating Government money, so the question that you could ask is, "Could anybody else do it, or could it be done differently?", because the money is coming anyway. We're not sure how much money will come in future, but they are doing that. The key question I would ask is whether it could be done a different way.

 

Q<57> <Chairman:> Can we pursue that? How far do you think that EMDA is a voice for the region, and that in a sense you own it and you are part of it, and how far is it, as you put it, the agent for the Government?

<Martin Hill:> Eight of us-sorry, Martin, seven of us-are elected, so you have that focus. It is difficult to say that you are the voice of the region when, frankly, you are all appointed, although there are obviously people on the EMDA board who are also elected. I think that it is more difficult to claim that you are the voice of the region when you haven't got that democratic accountability. We know that democracy is having a bit of a rough ride at the moment, but there is that legitimacy where people can go forward. If someone has gone out on an electoral mandate and the people have supported that mandate, it gives you that powerful voice to say, "This is what we think because we have tested it with the public." That is one of the issues where you need that democratic element.

There have been issues under the new structures. There is a bit of culture clash, because obviously EMDA has a more focused, narrower, "We'll get the job done, let's just get on with it" approach, whereas as we all know as people who have been elected it is much more clumsy and long-winded-but at least people hopefully feel that everybody has had a say about how it should happen.

<Chairman:> We will get on to that governance issue towards the end. David, do you want to say something?

<David Parsons:> I think that EMDA is a voice for the region. That is not to criticise EMDA; the way in which it has been set up is that it is not the voice for the region. There are several voices: the leadership group which is being set up is clearly one, which will liaise with EMDA. The regional assembly has been one, and it has been effective in a number of areas. It has been incredibly effective in getting regional funding allocation for local roads, for instance-roads into Nottingham, and roads between Widmerpool and Newark and so on. That is clearly a voice of the region as well. You could say it is not the voice for the region because it lacks a sort of democratic element which should be there if it was to be the voice for the region, so you would want a structural change, but in being a voice for the region I don't think that it has done too bad a job in the fields that it has got involved in.

<Chairman:> Bob, you wanted to ask about responsibilities?

 

Q<58> <Mr. Laxton:> Local authorities and local government have always been absolutely, directly engaged with EMDA and well represented on the board. Do you perhaps sometimes think that it is maybe a little bit too business orientated? Also, do you think that because of the chunks of additional powers-in grant-giving and various other areas-that have been handed over to EMDA over the past 10 years, in part it has sort of diverted them and they have lost some sort of focus?

<David Parsons:> A couple of comments on that-first, on it being too business oriented. I am not sure that they are and I think that they ought to look at the structure of their board. One of the criticisms that I have seen is that they say that they are business oriented but, actually, the people on their board-I have to be very careful with what I say here-

<Mr. Laxton:> I understand the sensitivity.

<David Parsons:> They could be even more representative of local business than they are now. Obviously, as a democratic politician acting regionally, I am going to say that I think that their proceedings would be improved enormously if they took a huge account of what people like me and Martin said. I think that that would give them more legitimacy. Actually, on the current board, getting that message across-this is a criticism of EMDA, I think-has not always been easy.

 

Q<59> <Mr. Laxton:> How do you feel about that, Martin? I'm not wanting to drive wedges in, but from a business perspective?

<Martin Traynor:> I think there is a difference between people representing business and people with a business background. Quite clearly, people are selected for the EMDA board on their business experience. That does not necessarily mean that they represent the wider business community. There is a distinct difference there. I would not contradict anything that David said. The bit about democratic accountability is an important one. Certainly going forward, as SNR flushes out, that needs to be looked at. Your points about when the RDAs were set up and the growth over the past 10 years-

<Mr. Laxton:> Changed quite dramatically.

<Martin Traynor:> It has. As Peter will recall, when we were looking at housing the RDA-probably in about '99-

<Sir Peter Soulsby:> We remember it well.

<Chairman:> We do.

<Martin Traynor:> We all have the scars from those days.

We were looking at a team of about 40 people, but if you look at EMDA now it is well in excess of 200, but that is because over a period of time Government have given them additional responsibilities. When the RDAs were first set up, it was very much about an economic development organisation or agency that would be fleet of foot and able to make the right sort of interventions far more quickly than local authorities at the time. The argument was that local authorities were tied down with standing orders, etc. The difficulty that we have found over the years-something that must go back to BERR, or the DTI as it was in its former life-is the interpretation of things like state aid rules. The processes that EMDA has to undertake to make sure that it is compliant with state aid rules are making the whole process laborious. That then dispels the argument about being fleet of foot. This is not a criticism of EMDA, it is the way the system has worked. You have a situation now in which the SSPs have an application form of something in the region of 65 pages-whether for £500 or £5 million, which is of course ridiculous.

The other difficulty that EMDA has is getting its projects through. You are looking at a minimum of 20 weeks from an expression of interest to the potential first payment. That is far too long. That is not of its making, that is the interpretation that BERR has put on it through state aid rules.

 

Q<60> <Mr. Laxton:> Do you think that they are effective at holding the ring? If they were not around, one of the views was that you would end up with, say, inward investment squabbles between you pair: "It should be in Leicestershire," "No, it should be in Lincolnshire," "No, it should be in Derbyshire." Those are the sort of battles that used to go on and maybe still go on-of course they still go on. Do you think that they are good at holding the ring and taking clear, targeted decisions about where particular projects should go?

<Martin Traynor:> Clearly there are certain activities that are better delivered at a regional level. What we have seen through the development of local area agreements and, certainly, the multi-area agreement now in Leicester and Leicestershire, is that there are a lot of things that I believe could be delivered far more effectively by local agencies. If you go back to the establishment of the SSPs, that is what they were set up to do-to be far more engaged at a local level, looking at the smaller economic development investments.

Something like inward investment, one can argue whether that is a regional activity or a national activity. I know that your colleagues on the BERR Select Committee looked at the issue of inward investment-Peter Luff's team concluded that the difficulty we sometimes have is that RDAs compete for the national market, which, again, comes back to your point about counties competing for the same thing. My experience of working with China and India is that they are looking very much at UK plc, whether East Midlands, West Midlands or whatever, and I do not think that that particularly interests them. That is where we have to get the balance between what we do at a local and multi-area agreement level-what we can do reasonably to co-ordinate-and what we should be doing nationally.

<Chairman:> Let us move on-sorry.

<David Parsons:> I was simply going to say that I don't believe-call me naive if you like-that they have a holding-the-ring role. I hope you don't think I'm boasting, but we have particularly sophisticated politicians, certainly in charge of what we call the nine Cs-the five counties and the four unitaries. We have always helped the development agency in its role when it has had difficult decisions to make; and I have personally put my head on the chopping block, not least in my own party, on a number of occasions to try to help the development agency and the regional institutions in their work.

<Chairman:> That was really helpful. Peter wants to move on to talk about relationships with local authorities.

 

Q<61> <Sir Peter Soulsby:> You said earlier, David, that there was considerable room for improvement in the extent to which EMDA can be held to account by those who have democratic legitimacy in the region. I wonder whether you think that requires some sort of structural change, or whether only an attitudinal change is needed.

<David Parsons:> If I might say so, Peter, given the new arrangements I think you've hit the nail on the head. There is a sort of strategic accountability that now comes from parliamentary procedures, but what we had before was the scrutiny of EMDA in detail, and in some detailed projects, which is something that we will lose.

It may be that Parliament wants to take over that role, and if so that is what will happen; but if it doesn't, we will have lost a huge amount of detailed scrutiny and the detailed recommendations that could have been made to the development agency on how it could have done things better. I believe that if one message goes out from these meetings it should be that we need to deal with that particular problem. We have some ideas, obviously, and we would be happy to air them, but it is a problem that needs addressing.

 

Q<62> <Sir Peter Soulsby:> In broad terms, what sort of model do you think might be appropriate?

<David Parsons:> This is completely off the cuff, but at the moment you have some sort of executive behaviour between the regional leadership forum and the development agency. My own view is that you could use a successor to the regional assembly or the body that now represents local councils, which will probably be called East Midland Councils; it would have a sort of scrutiny role, to look at how the executive arrangement is working.

 

Q<63> <Sir Peter Soulsby:> Interesting. I see Martin nodding. Is that a view that you share?

<Martin Traynor:> Yes, I do. I have done scrutiny for about six years, and it has been an interesting activity. We have been able to look at specific areas of work that the development agency has undertaken. Our approach to scrutiny is about taking a very positive approach, and making positive recommendations. We have said when they have done things well, and we have highlighted areas that could be done better. That role should go forward in another form.

I would also say that we have benefited from the ESEP members of the assembly. Our approach to scrutiny is this: as opposed to setting up a panel of members of the assembly, we have asked one of our regional assembly board members to chair the panel, and we brought in four or five people from outside who have expertise in the areas that are being investigated. As a result, some good reports have come out. They are not politically biased; they say, "Right, these are the sort of activities that you should be undertaking in order to move things forward." It has been based on the recommendations of people who know the subject.

<Martin Hill:> Just coming on to accountability, it is quite clear that EMDA is a creature of the Government, and is appointed by Government. We are all devolutionists now, and we accept the need for regional development agencies. However, we are being encouraged to devolve not only the money but the responsibility. There is a clear expectation of ministerial accountability, back from the chief executive of EMDA, and they rightly say, "It has been made quite clear to us that we"-the chairman and the chief executive-"are going to be made accountable by the Minister for this money."

You don't need to be a genius to work out where the real accountability is and where the answers will go. It isn't a devolutionist structure; it is a command control. So you can't blame EMDA if they say, "Yes, we listened to what was said by the sub-regional areas and by councillors and business people, but frankly we have to keep the Minister happy." That is the fundamental problem. All the rest is just fluff. If that is what they are being told-that they have to be accountable to the Minister-they will be, because, frankly, they are being correct as they see it.

 

Q<64><Chairman:> I know that you two council leaders are busy until 4 June-

<Martin Hill:> Yes.

<David Parsons:> You have been particularly helpful.

<Chairman:> Just on this more detailed scrutiny point, will you write to us and just sketch out your thinking on that?

<David Parsons:> I am certainly happy to do that. I will get the chief executive of the regional assembly, who knows all about these things, to do it.

<Chairman:> Let us move on to talk about the regional economic strategy. Judy?

 

Q<65> <Judy Mallaber:> You have already touched on this to some extent in the first contributions, but I would like you to expand on it a bit. You described yourself as consultees to the development of the regional economic strategy, rather than joint authors, and in your evidence you sounded slightly peeved at that. What exactly was your input into the development of the strategy?

<David Parsons:> Our submission says that we were regarded as preferential consultees, rather than people who were consulted because we needed to be consulted. You could argue that there is an artificial boundary between the old regional economic strategy and the regional spatial strategy. We in the East Midlands were first, I think, in having an integrated regional strategy, which was one of the reasons why the Government went down this line in the first place. Of course, they need not have done that in the East Midlands, because we already had an integrated regional strategy. I am looking forward to the future. I hope that I am not rambling too much, but the group of leaders and the development agency, as I understand the new arrangements, will have a joint responsibility in drawing up that integrated regional strategy. That is welcome. I think that it is a move on. In answer to your question-I hope this is okay-I think that it bodes well for co-operation between the two sets of institutions in the future, whereas in the past we did not feel that we were particularly well consulted as an equal player at the table, if you like.

 

Q<66> <Judy Mallaber:> Do you have any reservations about the economic strategy as it was drawn up? You have made a number of comments specifically about how it should have been updated now, about tourism, which I have lots of sympathy with, and about foreign direct investment. I think those were the main points that you were making earlier, but in broad terms were you happy with how that was set out and what is in it-the priorities? Also, having said you think it should be updated, how would you do that process? What do you think should be being done now to update that strategy?

<David Parsons:> I am not an economist-some of those things are things that I would take advice on. The one you didn't mention where we would also have liked better performance was the relationship with the sub-regional partnerships, which was mentioned by Martin early on. I think I would take some advice. In the regional assembly, we took an early opportunity in the economic downturn to say that these arrangements should be revisited. I am told that that hasn't been a particularly vigorous process. I am getting individual representations from firms that in the economic downturn are trying to relocate in the East Midlands and that say that they are not finding things easy because of the lack of a robust approach from the development agency. There are a number of detailed issues there on which I would ask my chief executive to advise, but taking advice from the regional assembly, looking at the economic downturn and seeing how this could change practice-perhaps Martin has detailed stuff to say on this-is the way in which I would see it going forward.

<Martin Traynor:> The point we were making back in July was that we were just starting to see the early signs of the recession biting. What we were trying to achieve was a shift of focus away from business support to business survival, because the application and the support of that is very different. Companies were starting to struggle with things like cash flow. One of the difficulties a lot of small companies have is that they have been set up since 1992 and have never lived or worked through a recession. Take it from me, when you are running a business through a recession, cash is king. A lot of companies are not used to that, so we were trying to get to a stage where we said, "Look, these are the difficulties that we are having. We need to move from business support to business survival." At the time, we were seeing extraordinarily high fuel costs for petrol, gas and electric. We are now trying to move from a situation where that is referred to in the RES to one where it becomes a priority. Clearly, things like energy will be very expensive commodities going forward-the days of cheap energy are over. Companies need to start looking at their processes and systems and at how they can bring their costs down. Again, that is about moving the focus. I would not have wanted to see a massive rewrite of the RES, because we would probably still be doing it now. What we were looking for was a light touch and more emphasis on the areas that I mentioned. In fairness to EMDA, it has moved in that direction, but I would have liked to kick things off earlier.

 

Q<67> <Judy Mallaber:> So are you saying that it is more to do with making sure that the mechanisms are appropriate and in the right place than with the overall strategy?

<Martin Traynor:> Yes and no is the answer to that one. Clearly, you need the strategy to show which direction the agency is going in. From the strategy come the actions for the delivery agencies such as Business Link, so it is important that there is a policy priority. The East Midlands economy is somewhere around £90 billion a year, but EMDA's resources are £180 million. In the scheme of things, that is petty cash. What you have to do is use the resources that you have most effectively. As we moved into the downturn, we needed to refocus that, and we needed to align the strategy to make that happen.

 

Q<68> <Judy Mallaber:> It is hard to see what EMDA could do about energy costs, which are one of the big issues affecting people, but which are the areas where it could be more helpful? In my area, the economic development officer is linked to the sub-strategic partnership and is giving businesses specific help in relation to the banks and so on. In which areas could EMDA and the other agencies concretely provide the most help at this stage?

<Martin Traynor:> Clearly, it is through advice. It is through using the Business Link contract and through refocusing Business Link activity to provide that type of support. Coming back to energy, the issue is, again, about providing advice. Various projects are being run with our universities, which have gone into businesses to help them look at whether they can carry out production far more economically through things such as lean management. There are lots of different activities that the agency could undertake to support small businesses.

<Chairman:> We have already talked a bit about the sub-national review and the change of infrastructure. Will you delve into that a bit more?

 

Q<69> <Sir Peter Soulsby:> Yes. I wanted to ask you about the single regional strategy, which you referred to earlier. Will EMDA be sufficiently well geared up and resourced to deal with the responsibilities that it will have? What arrangements will there be for bringing the relevant expertise together?

<David Parsons:> I have not heard that EMDA is not well geared up to perform that role. I might be out of touch, and I might seek some advice on that. One place where you might say that resources are needed is the local authority leaders board so that it can make a meaningful contribution to the process. My complete off-the-cuff reaction is that EMDA is probably reasonably resourced to do the job it is being asked to do. More resources are probably needed to get a good and robust response from local authority leaders.

<Martin Hill:> There is a particular issue with planning. EMDA obviously has no expertise in that, and we understand that there was some interesting, lively debate as the Bill went through-you probably know much more about that than we poor councillors do. An uneasy, strange creature has emerged. We have EMDA and the leaders board. From the assembly side, we are trying to put support in-I sit on the regional transport planning board-to help joint working. I do not think that EMDA particularly wants to take on a huge planning role. There is expertise out there in the sub-regional areas. EMDA would not like the extra resource on planning, but then there is the ability to draw on the expertise.

That comes to the clumsy arrangement whereby, if the leaders board and the EMDA board agree, everything is hunky dory, but if they do not, there is a strange arrangement, then it will go to the Secretary of State, whom I presume will agree with his EMDA board. That compromise has come out of the system-frankly, we have lots of debates about all sorts of things. In my time on the assembly, there has been broad agreement about the way forward-you can argue about some of the detail-but if there is a big difference, it does not look as if it would work too well. Hopefully, it will not get to that stage, but it is a bit of donkey.

 

Q<70> <Sir Peter Soulsby:> Do you think there is sufficient clarity about what is likely to sit at EMDA, sub-regional level and local authority levels?

<Martin Hill:> There isn't clarity. Do you want things set in stone or can you work through? In Lincolnshire, we are having useful discussions with EMDA. We are having a pretty good relationship at the moment and working through some of these issues. We would argue that we would expect more to be devolved and with less strings and all the rest of it, but we are working through the system.

There is a little bit of a rationalisation going on with the SSPs, which is long overdue, and we are hoping that that will work well. Even if you are not sure about the system you will try and make it work. There is not clarity, but hopefully we will try and work through and get the job done in the best interests.

<David Parsons:> I am perfectly happy not to have clarity from national Government-it would give us a lot more leeway. Given that we are reasonable people in the East Midlands, if we can negotiate our own way of working, I would seriously prefer it.

 

Q<71> <Chairman:> I think that is right, but just challenging Martin a little bit, do you think a situation will arise where EMDA and the leaders board will fall out? Is it not in everybody's interest to resolve it locally or regionally?

<Martin Hill:> Yes. There is the example of the regional transport allocation. It could have been a nightmare with all these competing road schemes but, somehow, it was not. If somebody scrutinised it well, they would probably come up with all sorts of issues, and it was not ideal. There is a common interest, so things would hopefully not get to that situation. It is only when you get to into a situation that somebody says, "Why did we get to here?" that there could be issues on which there is disagreement, but we hope not. I am not foreseeing that, but it seems to be a strange arrangement.

 

Q<72> <Mr. Laxton:> I was going to use the word "view" but it is more like a commitment to sweep away the whole paraphernalia, to use that expression of RDAs. If that happened, would you shed a small tear of nostalgia or scream in frustration? In essence, if there is a great void, what would you wish to see replacing it, or would you be content to see decisions taken in Whitehall or a mix of Whitehall and GOEM or whatever? What are your views?

<Martin Hill:> You could allocate the money that EMDA gets through the sub-regional areas-frankly, we are all devolutionists now, so we all believe that decisions should be made at the most local level. I firmly believe and always have believed that you should get as near to the ground as you possibly can, because the local managers and the local elected people probably know better than a civil servant, frankly, who is sitting in London or who is probably thinking what the Minister might think.

I would not shed a big tear for the demise of EMDA. We have got things like the MAAs now. All the parties are talking about not having these rigid structures. Certainly, in parts of the region, there is always this issue of the boundaries. In Lincolnshire, we are looking towards Peterborough or Grimsby or Derbyshire. There has always been an iron wall that has been difficult. You cannot overcome those issues. People would work together. There are obviously some issues about major routes and economic issues, but people would work together in their best interests. But again, you need to avoid people bidding to get the business in, as happened before, to one part of the country or another. There would need to be some loose structure, but on an ad hoc basis and on particular issues.

<David Parsons:> There is one thing that worries me. If you get rid of bodies that are funded for the region and give us a sub-region or, in the case of my party, voluntary clustering arrangements, what happens to the money? National politicians in my party have said to me, "Well, voluntarily cluster." I don't mind doing that, but where-if you will forgive my language-is the bloody money going to come from? As long as it isn't seen as a money saving exercise per se, I could go along with different arrangements.

<Martin Traynor:> When the RDAs were set up it was absolutely the right thing to do because there was an argument for looking at how we could deliver things on a regional basis. As we have seen now with the SSPs and the creation of a multi-area agreement, there is a better understanding of how we can get clusters or groupings or whatever you call them. I think the optimum size is probably about 1 million people, which would be Leicester and Leicestershire or Nottingham and Nottinghamshire. That is quite an interesting economic unit. It is about the right size for regeneration at a smaller level.

There is still some form of regional activity but-it comes back to this earlier debate about foreign direct investment: are you supposed to do it regionally or nationally?-we need to get the balance right. Going forward, I think the co-operation in Leicester and Leicestershire around economic development is leading the way. That is the model we should probably be moving towards.

<Chairman:> Can we talk about the rural-urban nature of the East Midlands?

 

Q<73> <Judy Mallaber:> I always find this a bit difficult because we keep being told that it is rural-urban, but as far as I am concerned, it is rural-urban and semi-rural, which is much more complex. In broad terms, do you favour EMDA's approach of rural mainstreaming?

<Martin Hill:> What does it mean? We could have a great discussion about this, but what do we actually mean? I think you've got to scratch under the surface. This is something that somebody puts on reports and tips their hat to. What has actually happened? What does it mean and has it actually changed anything? I am a little cynical. I think that the intention is there, but I am at a bit of a loss. Can somebody give me an example of when rural mainstreaming-whatever that might be-has actually delivered something?

 

Q<74> <Judy Mallaber:> So you are not seeing any difference in how it operates?

<Martin Hill:> I don't know what the term "rural mainstreaming" means, although I come from a rural area. I shall be fair to EMDA though: it is making a genuine attempt. It feels that it needs to ensure-and certainly has been over recent years-that it is providing support. It would say, "If you come up with the schemes, we will support them." That is fair, and we have tried to do that. It would claim that, in the past, schemes coming forward from rural areas have not stacked up in comparison with those in urban areas. I don't know what "rural mainstreaming" means. I think that it is up to local areas to come up with sensible schemes, the infrastructure and frameworks so that businesses, including small businesses, can prosper. I think that "rural mainstreaming" is just a term to keep the rural peasants happy, frankly.

 

Q<75> <Judy Mallaber:> I assumed that it just meant that there was not a specific rural stream, and that every policy was meant to include the rural dimension and analysis.

<Martin Hill:> Within our council, we have this mainstreaming. Somebody looked at it, and when they started digging-"What do you mean?", "What are you actually changing?"-there was little evidence of anything changing. I am not getting at EMDA; we are all doing it. However, are people actually changing what they are doing, or does it just look good on paper?

 

Q<76> <Judy Mallaber:> Do you think adequate resources are spent on rural priorities? You said that the argument back to you was that perhaps not enough viable projects are coming through from rural areas. What is your take on the way in which resources are spent on rural priorities?

<Martin Hill:> I would hesitate to answer that. I would not want to comment on whether I feel that there are enough resources. The other thing that we need to accept is that, in the future-certainly for the foreseeable future-resources will be very limited because of the state of the national finances. I do not know whether there is enough. However, there has certainly been an attempt to address it. But that is really all I would say on that.

<David Parsons:> Our publication, "Flourishing Rural Communities?", might have helped EMDA. If I remember rightly, the key thing in that was-well, first, we backed its mainstreaming approach. That is the regional assembly's position. We suggested that it needed better evidence on what was happening in rural areas; and we specifically mentioned social enterprises in the report. We also mentioned something that I would have thought is very important in Lincolnshire and certainly is in Leicestershire-migrant workers, their skills and any resulting stresses on local rural communities. The county that I know-Herefordshire-has that dynamic as well. We have supported EMDA in its mainstreaming approach, but a number of details remain that it could profitably investigate along the lines that I have said.

<Martin Traynor:> We need to look specifically at rural areas, because central Government and their agencies are urban-centric. That is down to critical mass: if you start using things such as the index of multiple deprivation and allocate funding on that basis, quite clearly the large cities will come up, because that is where most of the deprivation is concentrated. However, what it does not do, of course, is deal with the issues of deprivation in rural areas. Very often, there are quite wealthy district areas so deprivation doesn't show, but that doesn't mean that rural deprivation doesn't exist.

We must also recognise that it is easy to go into larger areas and deliver contracts for business support or whatever, because there are a number of businesses around that area. It is easier to get to them when you have a large critical mass. As our report said, we need to do some more targeted work around rural areas. Over the past 18 years, in Leicester and Leicestershire, we have established the Leicestershire Rural Partnership, which brings together many of the statutory agencies along with the county council. We looked specifically at how we can help some of the smaller businesses and rural communities. We have established in Leicester and Leicestershire an economic development company that will quite rightly be looking at driving forward the overall economy. I wouldn't really expect that board to concentrate on the local post office in Sowerby, but an agency such as the Leicestershire Rural Partnership should. There is a division there; somebody needs specifically to look after those rural areas.

 

Q<77> <Judy Mallaber:> Would any of you argue for a specific percentage of overall funding being spent on rural areas?

<David Parsons:> No.

<Chairman:> That is unanimous.

<David Parsons:> That is not our line, and we must stay on message.

 

Q<78> <Sir Peter Soulsby:> One of the five statutory functions of EMDA and the other RDAs is to promote sustainable economic development. To what extent do you think that EMDA has focused on the sustainable bit, rather than economic development?

<David Parsons:> This is quite a tricky one. I have been doing some work on the Sustainable Communities Act 2007, and it is a tricky one. EMDA is not just looking at economic development; it is looking at the sustainability of plans that it is putting forward. I am suggesting my overall impression-this is somebody who looks up sustainability in different dictionaries and finds a different definition in every one. I think that sustainable economic development is in the mind of the development agency and it is doing its best to focus on that. One eco-friendly project up in Nottinghamshire springs to mind. So it has a track record.

 

Q<79> <Sir Peter Soulsby:> It was very clear when EMDA gave evidence that it was pointing to some excellent projects that it has supported. Is there any evidence that the challenge of climate change has been reflected in any of its priorities or policies?

<Martin Hill:> Yes, I would think so.

 

Q<80> <Sir Peter Soulsby:> Such as?

<Martin Hill:> Oh dear. Well, I certainly think that it is supporting the events centre on the show ground, which the county council also supported. That is a sustainable new building for conferences and so on. Sustainability can be defined in all sorts of ways. Are we talking about economic sustainability? I would argue that that should be the main focus. The more we start saying that this, that and the other should happen, the more we will probably fail. Economic sustainability is not about trying to support those industries that will decline over years; it is about the small businesses, the start-ups, and about putting an infrastructure and framework in place so that businesses can flourish and thrive. That is where the focus should be and I think that that is what it does. I cannot think of any examples of environmental sustainability off the top of my head, but that is certainly an issue. Flood defence is, of course, a big issue in the eastern part of the region.

 

Q<81> <Sir Peter Soulsby:> But could it be argued that pointing to some specific projects is different from having something that is an integral part at the heart of the strategic approach?

<David Parsons:> Yes, I think you are right. I could think of specific projects-I was racking my brains and no doubt we could provide you with a list. The problem in the economic downturn is that economic sustainability might go out the window in favour of jobs or the relocation of new industries. If I were offered a moderately sustainable new industry that provided 2,000 jobs in the economic downturn, I wouldn't be too awkward in asking about environmental sustainability. I would probably be more awkward if we had an economy that was flourishing more.

There are a number of projects and they are based on environmental sustainability. In my meetings of the regional economic cabinet, that issue has not figured particularly highly so far in relation to the projects that have come forward and the work we are doing, in which EMDA takes a big role. However, it is like that everywhere at the moment.

<Martin Hill:> I was a little bit surprised when I went to EMDA's AGM last year. It claimed that 4,000 jobs had been saved in the region, but 2,000 of those were at a particular project in Lincolnshire at Siemens, which we have managed to retain in the county. I am not blaming EMDA, as the project could have gone to another part of the region, but it was mostly the county council which engineered and facilitated that. Although EMDA had to be neutral because it could have relocated to somewhere else in the region, I thought that it was a bit cheeky to claim to have saved those 2,000 jobs. Quite frankly, that would not have happened had the county council not done its job. I would say that, but I can prove it.

 

Q<82> <Chairman:> You make some interesting points in paragraph 2.8 of the written evidence. It talks about EMDA's ability to influence things strategically, and goes on to say that its influence is through contracting and commissioning. It goes further to say that it has actually been putting its foot into areas that perhaps it should not, such as skills or regional planning. The bit that caught my eye was, "This has led to challenges to develop a genuinely Team East Midlands' approach." What do you mean by that? There is some feeling there.

<David Parsons:> Perhaps it has unilaterally extended its remit. That comment has been made to me. If it is a unilateral extension of a remit, that is not helpful. However, it may be the case that it is an extension of a remit where there has been some level of consultation. This matter has been mentioned to me and is in our written evidence. We would like to have seen EMDA-this is a criticism of it, I suppose-genuinely engaged in the areas that we have given to you in our report.

<Martin Traynor:> One of the other difficulties is the scale. If you look at EMDA's budget of about £180 million a year, there is an influence that EMDA gets involved in the skills agenda. If you look across the region, the LSC's budget is just under £1 billion. Therefore, the LSC in itself is able to influence that agenda far more than EMDA can. You can see the sort of tension between the two. Quite clearly, you can't look at skills without economic development and you can't look at economic development without skills. That, I think, is the challenge going forward.

 

Q<83> <Chairman:> I just wondered, behind your comment, whether there is a view that the partnership is on EMDA's terms rather than on terms agreed across the region.

<David Parsons:> It certainly has strong views about things. Sometimes, it is not always easy for me to get my views across to EMDA. I will say this of EMDA, though: it will listen to me-there is never a question. If I ask to be heard, I am heard. But I think you are dealing with the slight structural problem in how EMDA is constituted-that it doesn't have to listen and take things on board. Having said that, every time I, or the chief executive of the regional assembly, wanted to meet it to make points, it has been fully co-operative.

<Martin Hill:> I agree with that. There is a sort of-I don't think arrogance is quite the right word-"We know best" attitude. It will listen and take action, but there is that element of "We know best and that's it. We have a job and we'll do it as we see fit."

 

Q<84> <Chairman:> Thank you for coming and spending so much time with us. We play a party game in the Tipping household, which is that you can have a final comment. Is there anything that you haven't said that you want to say? We'll start with you, Martin.

<Martin Traynor:> As this economic downturn is with us for the next 18 months or so, I would rather the agency concentrate on looking after the businesses in the area than worry about things such as sub-national reviews and moving various lectures around. We spend far too much time now worrying about structures and delivery. It is my belief that the focus now should be on supporting businesses.

<David Parsons:> I think I just echo that. I am after output for a given area. It happens to be the East Midlands at the moment. I suspect that in the future it might not be. We want to get the best act for the least administrative input. We have a way to go on that, and only time will tell where we go.

<Martin Hill:> I want to say a similar thing. The dilemma is that public money needs to be accountable, but it also needs to be more nimble of foot. There is a big issue about the length of bureaucracy before things happen, and frankly, that should go. You must keep the long-term view, but also loosen up a bit from the centre to let people make decisions on the ground. Otherwise, it won't work.

<Chairman:> You are talking to a body of people on this side of the table who agree about loosening up. But we won't get into that discussion, or somebody will read my comments, and my phone will ring. Thank you very much for coming. It has really been helpful. If you could drop us a note about scrutiny, that would be helpful. If there is anything else that you want to include that you don't think has been said today, we will be very pleased to receive it. Thank you very much indeed.