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

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

EAST MIDLANDS REGIONAL COMMITTEE

 

EAST MIDLANDS DEVELOPMENT AGENCY AND THE REGIONAL ECONOMIC STRATEGY

MONDAY 29 JUNE 2009

(WESTMINSTER)

PHIL HOPE, TOM LEVITT and JONATHAN LINDLEY

 

Evidence heard in Public

Questions 157 - 218

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the East Midlands Regional Committee

on Monday 29 June 2009

Members present:

Mr. Bob Laxton (in the Chair)

Judy Mallaber

Sir Peter Soulsby

 

Examination of Witnesses

Witnesses: Phil Hope MP, Regional Minister for the East Midlands, Tom Levitt MP, Deputy Regional Minister for the East Midlands, and Jonathan Lindley, Regional Director, Government Office for the East Midlands, gave evidence.

 

 

Q157 Chairman: Good evening. Thank you for being here. May I apologise on behalf of the Chairman of the East Midlands Select Committee, Paddy Tipping, who is not very well at the moment? Hopefully he will make a speedy recovery. We will keep him up to date with proceedings. It might be helpful-not for our benefit because we know everybody apart from Jonathan-if you could briefly introduce yourselves for the benefit of the public.

Phil Hope: First, may I associate myself with your remarks and wish Paddy a speedy recovery? I hope that he will continue, from his hospital bed or wherever, to take an interest in these proceedings. I am Phil Hope, Member of Parliament for Corby in east Northamptonshire and Minister for the East Midlands. I will make a few opening remarks after my colleagues have introduced themselves.

Tom Levitt: I am Tom Levitt, Member of Parliament for High Peak and parliamentary assistant to Phil in his capacity as Regional Minister, which basically means I deputise for him every now and again when necessary. I also attend the Regional Economic Cabinet.

Jonathan Lindley: I am Jonathan Lindley. I am the Government Office regional director for the East Midlands.

 

Q158 Chairman: Good to meet you. Minister, would you like to do a bit of preamble and general position setting?

Phil Hope: First, let me talk about my role. As Regional Minister I see myself as being a voice for the region in Whitehall, listening to the concerns of people and organisations and making sure that the Whitehall machinery responds positively and directly to the concerns that are specific to the East Midlands. Secondly, I provide leadership within the East Midlands, hence the creation of the Regional Economic Cabinet, which is a specific vehicle for us to take through partnership working through the economic downturn and in other ways I provide leadership to organisations right across the region. Thirdly, I represent Government interests in the region to talk about and to convey the key issues and policies that the Government are putting forward. So there are three major roles that I play and I do so with the support of Tom, who is my assistant and deputises for me.

I particularly want to mention the Regional Economic Cabinet because this was an important development that I put into place knowing that in these exceptional economic circumstances we needed to pull together all the partners to up their game and to challenge those partners, both as individual organisations in their own right to perform better in terms of the challenges ahead, but also to work better together and to challenge each other about the partnership working. On the Regional Economic Cabinet we have private sector organisations and the business community represented, public sector organisations represented, such as the learning and skills council, for example, and the trade union movement represented through the regional TUC. The cabinet has developed over time, so we have now invited the Homes and Communities Agency to join because the issues around jobs, homes, the construction industry and all that seemed to be key. In future meetings we are inviting the East Midlands university organisations to come and present to us the contribution that they make to this partnership to ensure that we have a strong and vibrant economy with jobs and growth in the region, both getting through the downturn, but more importantly perhaps, being ready to manage the upturn when it comes.

When I first began, I identified five major priorities for action, which included not only jobs and skills, but social exclusion for those people furthest away from the labour market in particular. We wanted to make sure that we were reaching out, ensuring that organisations were responding to the needs of people-those with disabilities, for instance, those with mental health problems, and offenders-who would normally find it difficult to get a job at the best of times and finding out what more could we do to ensure that those people were engaged with.

We set up two sounding boards, one around PSA 16, which is those particular groups, and giving them a job and a home, but also a housing sounding board. I have been delighted; with all the busy things that we have to do, it has been great having Tom available. He deputised for me in chairing those two sounding boards recently.

Lastly, by way of my opening remarks, it is about partnership working. It can be an overused word, Chair, as you will know, but it involves people getting together, looking at what they can do and how they can work better together to make their service more seamless-whether it is to the business community in terms of financial practical support, or whether it is to individuals and the work that they do. That is crucial.

We want to ensure that we punch our weight as a region in the East Midlands. I do not like to be too competitive with the other regions, but the more we can beat the West Midlands the better-but I shouldn't say that, should I? I think that we have moved a long way. We have local authorities in the Regional Economic Cabinet. There has been a lot of change going on, both political but also structural, to ensure that we have the right structure in place in the region to ensure real leadership among local authorities in this shared agenda on improving public services and ensuring that we have sustainable jobs and growth for the future. I shall leave it there by way of introduction.

 

Q159 Chairman: Thank you. That was useful and helpful. I have a couple of questions. You are a very busy Minister at the Department of Health. What is the mix of time that you spend in terms of your ministerial responsibilities vis-à-vis the time that you are able to spend purely on undertaking the activities associated with your role as Regional Minister?

Phil Hope: It will vary from time to time, depending on the pressures that emerge at any one time, but I roughly spend about a fifth of my time as a Regional Minister-I am sorry, it is about one quarter to three-quarters; it is in that range. That is physical time, if I can call it that. In fact, today I was in Derbyshire. I was in your constituency at Derby University; and Judy, I was in your constituency earlier with the company that makes composite manufacturing. I hope you knew about that.

Judy Mallaber: No, I didn't know. I am shocked.

Phil Hope: You should have known. I did wonder. That is why I mention it now, because you should have known. I shall check with my officials whether you had been told. I shall come back to you later on that.

I was in Derby today looking at examples of organisations working together to provide jobs and mobility for the future. I tend to spend about that proportion of time in the region-all around the region, and visiting all parts of the region-and we hold the Regional Economic Cabinet in different parts of the region to ensure that they have a chance to be heard and to see what is happening. It is roughly that sort of ratio.

 

Q160 Chairman: Do you think that that is enough time? If you had a personal choice, would you prefer to have the facility of spending more time there? I understand that Tom deputises for you, but notwithstanding the role of your deputy, do you think that it is enough time in a physical sense?

Phil Hope: It is a minor question about whether there should be full-time Regional Ministers. Isn't that behind what you are saying?

Chairman: Yes.

Phil Hope: The Government and the Prime Minister have decided that this is the way that we want to introduce the ability to have someone to take an overview of the region, stand back from the silos of different organisations, and look at the connectivity, particularly at this time, on the issue of jobs, skills and growth in the region. It is a valuable role for me to hear the different concerns in different parts of the region and from different organisations about the support that they are getting-or not getting-and going back to Whitehall to make that clear. We are providing regional leadership by creating the Regional Economic Cabinet and having the sounding boards and, of course, involving Tom at every opportunity to deputise for me when I cannot be there. We get a much more high-level presence in the region.

 

Q161 Chairman: Do you think that your view in any way impinges on the role-perhaps this is a question for you, Jonathan-traditionally undertaken by GOEM in the East Midlands? Do you feel that you are both perhaps covering the same territory at any particular stage?

Phil Hope: I will say one thing, and then Jonathan can come in. Very clearly, the priorities that I have set have been those that the region has told me should be my priorities-the ones that I outlined. The economic circumstances have clearly made them a priority-

 

Q162 Chairman: Sorry, did you say that you set have set the priorities, or the region has set the priorities?

Phil Hope: I have taken guidance from the Government Office and from other organisations that I have talked to. I asked them what they think my priorities should be. I then made my own decision about what I thought those decisions should be, as the Regional Minister. Of course, GOEM covers a whole lot of territory doing the work of government in the regions that goes on outside of my priorities, and quite rightly so, because I am trying to focus my attention on what I believe to be those regional priorities. Jonathan might want to say a bit more about that.

Jonathan Lindley: As the Minister says, our priorities go across the 12 Departments that sponsor us. They range from Communities and Local Government through to Culture, Media and Sport-the two extremes of the size of Department. We support the Regional Minister in delivering against his priorities; they are the regional priorities. Something like skills is of huge importance for the future of the region, and it would be very difficult for us not to be trying to do things to improve the skills base of the region. I see that there is a huge opportunity for us to do in our day-job business to support your priorities and the regional priorities.

 

Q163 Judy Mallaber: I am utterly shocked, as you can understand, that you have been in my constituency today. Was it today?

Phil Hope: It was this morning.

Judy Mallaber: I didn't even know about it.

Phil Hope: I am shocked as well.

 

Q164 Judy Mallaber: I am completely shocked. But for me, it also raises the question as to when you are deciding where you want to go and visit. Why is it just a question of you maybe telling us afterwards? Would you not think that there was some role-both for GOEM and for you as a Minister-to consult your colleagues on where it would be best to go?

I don't know whether, whatever company you visited today-if it was a composites one, I have some idea-that was just because they invited you. It might not necessarily be the best company for you to go and visit. I might have other views on what that would be. I would have thought that, given the relationship, it is slightly different from other areas. Do you think that there should be a relationship with the local MPs to talk about what would be useful areas to go and visit-and from GOEM as well?

Phil Hope: Yes, and the procedure is that every MP that I visit, either as a Regional Minister or as a Health Minister, is told beforehand.

 

Q165 Judy Mallaber: What about consulting them beforehand?

Phil Hope: I will just explain what the procedure is, which is that that should have happened. I do not know why that hasn't happened, but it is standard procedure that MPs of any party or persuasion are informed in advance whenever a Minister visits.

Secondly, it would be helpful to consult Members, particularly as Regional Minister, about where they thought it might be good for me to see-either where problems might exist or where success and opportunities exist. It would be very useful for me to do that. We have mechanisms-both formal and informal, and this would possibly be one of the formal mechanisms-for sounding out where opportunities are for emphasising key priorities that we are trying to pursue.

In this case, it was a company that I think is at the cutting edge of producing technology, which is not only providing jobs today, but which has the potential for many more jobs in the future. It was a good opportunity to emphasise the importance of investing in companies of that kind, as it was in Derby University.

I apologise if that has not happened on this occasion, but it is a standard part of Government procedure, which is to inform as well as consult.

Chairman: Tom, you wanted to come in.

Tom Levitt: I just wanted to comment that, as Jonathan has said, there are 12 Departments represented through GOEM. It is not really the job of the Regional Ministers to second-guess the activities of other Ministers in other Departments. In many cases, if a local Member has a local issue, the departmental Minister concerned should really be the first port of call.

The events that I attend tend not to be individual constituency visits. They are cross-cutting events, such as conferences, or visits to something like the Business Link headquarters-something which is of regional, rather than local, significance. That tends to guide Phil's way of choosing which visits are the most important, from our point of view.

Chairman: Okay. Our inquiry that we are undertaking, as part of the process that we are going through, is looking at EMDA. Thanks for the scene setting, but perhaps I ought to steer the discussion towards the direction of EMDA, so on to Peter.

 

Q166 Sir Peter Soulsby: I will come to that, except to say that the line of questioning does raise some questions that you may wish to ask in a Regional Grand Committee, if we get it, about how we can ensure that our Regional Minister is effective in being our voice in Whitehall and how we can assist him in that role. I know that on previous occasions, I wanted to get him to visit my constituency in Leicester in his role as Regional Minister. So far I have been unsuccessful.

Returning to EMDA's role in the region and following up on the question you asked, Chairman, the East Midlands Regional Assembly described EMDA as an agent of Government, and I think that Councillor Martin Hill put it very starkly when he said, "It isn't a devolutionist structure: it is a command control." He saw EMDA very much as an arm of Government. Do you think he has a point?

Phil Hope: I think that there are two aspects to what we see EMDA doing. One is making sure that it effectively supports the economic strategy for the region as a development agency. In that regard, it will be absolutely vital that it uses the money the Government allocate it to invest according to the regional economic strategy, which it is doing well at the moment. We are of course developing the new integrated regional strategy over the coming months.

So it is absolutely vital that EMDA responds to and delivers that which is important and relevant to the region and that it represents the region and ensures that the resources given to it by Government do that job. It is an independent organisation and an arm's-length body, so of course it would also have the job of not only doing what is there for the region, but feeding up into Government and, indeed, talking to Government about the needs of the region and how Government policy nationally might best reflect and meet the region's needs and interests.

I guess that every regional development agency is doing a similar thing, and it is up to the Ministers to whom those regional bodies are accountable to ensure that there is a coherent policy across the piece nationally that allows for national policy to be reflected differently in different regions, because different regions have different needs, so I do not regard it as being a command-and-control structure at all. I think that there needs to be clear accountability and transparency, because it is spending a great deal of public money in the region, but the actual decisions and priorities must be led from and within the region. I think that that is what you see in the regional economic strategy.

 

Q167 Sir Peter Soulsby: But is there not an inherent tension between its role as the agent of the Government in managing Government funds and spending very large sums of money and its role in promoting the region's economic interests with a degree of independence?

Phil Hope: The purpose of EMDA is to take Government money and ensure that it is spent properly and effectively on the regional economic priorities. That is its raison d'être. It is not about someone in Whitehall saying, "We're going to spend something in the region on this" and EMDA going and doing that. I do not see it as that kind of relationship. Indeed, there is its effectiveness to consider, as every £1 of EMDA's spend generates between £4.50 and £9 of investment in the region. It has had a huge impact in that way, which is very effective and very efficient. Businesses I talk to-you will be speaking to them yourself-tell me that they think EMDA does a good job. They are pleased with the service they get and see it as an agency that is responsive to their particular needs in the region.

 

Q168 Sir Peter Soulsby: I will perhaps return to the question of budget in a few minutes, but before passing on from that point, I want to ask Mr. Lindley about the relationship between GOEM and EMDA. To what extent are they similarly subservient to you in your role?

Jonathan Lindley: They are not subservient to me in my role at all. We have different roles that complement each other and we work very closely together, but I do not have any formal line management role in relation to EMDA. I do play a part in the effective Government management of it, as I am consulted by the sponsoring Department, the Department for Business, Innovation and Skills, about its performance and have a role in the appraisal of the chief executive by discussing that with the chairman. I have a role, I hope, as an informed observer, but I have no formal part in the direct line management chain. We work to complement each other's activities, which are slightly different.

Chairman: Over the last 10 years, RDAs have undergone an evolving process, and I think that Judy wanted to refer to that.

 

Q169 Judy Mallaber: RDAs keep taking on more functions, so they are now administering regional development grants and ERTF. They have responsibility for parts of the rural development programme and play a part in manufacturing advisory services. We can obviously see those all as one role, in terms of economic development, but do you think that they are trying to do so much that it is hard for them to really keep a strong business focus and a strong commitment to their basic core functions on economic development and regeneration? Are they getting so caught up in a number of other administrative functions that it is quite hard for them to do that, particularly with a budget that will be falling, rather than increasing?

Phil Hope: I do not get that impression from them. Their performance has been outstanding in the way that they have taken the resource they have had, the way they have worked in partnership with other organisations and the way they have undertaken a very thorough-going economic analysis of the needs of the region and then responded by developing an economic strategy that responds directly to those needs. The fact is that the region is very diverse, with cities, rural areas and so on; they have had to take that into account. I know that although 30% of the population is rural, 38% of the spend is going into rural areas because they see the centrality and the vitality of the rural agenda as well as the urban agenda for the region's economic development.

Turning to the range of tasks and activities that EMDA have to undertake, I think that if they were not undertaking the range that they currently do, they would be criticised for failing to take into account the diversity and complexity of a region that spreads from Northamptonshire right up to the edge of Sheffield. They are able to take a helicopter view of that, to understand its complexities and to respond to the individual needs of sub-regional priorities by covering a range of opportunities-supporting businesses through Business Link, through investment in key industries and sectors and understanding what those are, and through promoting the skills agenda in particular. They have got that combination right and I think they do it well.

 

Q170 Judy Mallaber: As you have mentioned the rural issue, I shall take that up now. I was struck when I read the evidence that you only talked about urban and rural. Most areas, such as mine, are actually semi-rural; they have towns with rural areas. That is an important divide. You have talked about the divide of resources and have gone into rural priorities. Do you take that into account as showing a greater diversity than simply big city and rural?

Phil Hope: Well, Chair, to answer the question I shall take market towns as an example. These are not villages; they are hubs for economic regeneration and economic activity within a rural area. There has been a whole strand of work that EMDA have been involved with to ensure that resources are applied to these market towns. I think of Welland Valley in my own area as a good example of where they have worked with local partners to understand the complexities of an area. Working through those they have built sub-regional partnerships to ensure that the nuances and the complexities of different areas-whether they are rural, semi-rural, market towns, suburban or urban-can be embraced within their strategy. I think that is what they have attempted to do. I dare say that individual Members may desire more resources in their area; that is understandable. Deciding where priorities lie is a difficult series of judgments to make. I think we are getting the priorities right, and I think we can see that by virtue of the outcome that they have achieved in supporting, across the piece, the fully rural village communities and the market towns, the edges of the urban centres and the urban centres themselves.

 

Q171 Judy Mallaber: Do you support EMDA's policy of mainstreaming rural work? Or do you think there is a danger-I say this with Members for two of the three big cities here-that that can give too much emphasis too easily to the three big cities?

Phil Hope: I don't want to get into a debate between Members, but there is a difference between the sustainable development agenda and the rural agenda. EMDA is doing a good job in understanding the need to support rural development, including the complexities and uniquenesses of that. It is working with the farming community and the environmental organisations.

If we were to take the case of sustainable development-in other words, an environmental approach to everything that is going on-that needs to be mainstreamed. We need to understand that a sustainable future for our region involves, frankly, what we do in cities as well as in rural areas. I can think of excellent work that is being done in sustainable development from when I visited Loughborough university, which is developing hydrogen cell technology for electric cars. We need that kind of forward thinking about where the future lies for our economy and we must make sure that the East Midlands is in a good place by investing in that kind of innovative technology so that when the upturn comes and the motor industry starts to recover, we will be ahead of the game in those sorts of technologies and able to take advantage of those companies.

I am trying to answer your question. I think that it needs to have a rural strategy, but it also needs to mainstream sustainable development-if I can put it that way-as part of what it does across the region for all organisations. If I may, I will call that the green agenda.

 

Q172 Chairman: Can I start to address with you the issue of the board? What is your specific role with regard to EMDA? What role do you want to take in appointments to the board, as Regional Minister?

Phil Hope: Board members are appointed not by Regional Ministers, but by Ministers in the Department for Business, Innovation and Skills. I am consulted, but the decision is made by the relevant Minister in that Department.

 

Q173 Chairman: What weight do you think is given to your opinions?

Phil Hope: I would like to think that people listen to my views, but it is not my decision. Those decisions are made by the Minister at the Department for Business, Innovation and Skills. In practice, when names are suggested to that Minister, they are put in front of me and my comments and views are sought. A decision is always made on the basis of the selection criteria and on merit. I look at the recommendations and give my comments on which people I think are best for the job on the basis of the information before me. They all go through to the Minister in the Department for Business, Innovation and Skills to make the decision.

 

Q174 Chairman: I ask because we have had some witness evidence in which people have raised their concerns regarding the make-up of the board. They feel that they are chosen for their individual skills and what they bring to the table, rather than as representatives of organisations. There are concerns about that. Do you think those concerns are valid?

Phil Hope: It's both/and, isn't it? The board comprises people who represent specific sectors, such as local government, businesses, trade unions and so on. Within that, people are selected on merit so that the board is made up of all the key players as well as having the best people for the job. As we all know, the job of those people on the board is to be there operating in the best interests of the board, and not necessarily batting for their particular sector. They bring the sectors' perspectives and insights into the contributions that they make.

 

Q175 Chairman: Which do you think should have the priority? Which does have the priority-the skill or the representative role? If you have a divergence, you could have someone who is-

Phil Hope: As I say, the structure of the board means that you have different sectors represented so that it is making good decisions in the round, knowing that people are speaking with the insights from their particular sectors, whether it is business, trade union or local government community. Those individuals have arrived there because they have applied to fill that vacancy in that sector. There is then a proper process of selection, recruitment and so on. People are interviewed. Those decisions are then made by Ministers in the Department for Business, Innovation and Skills. Along the way, I will offer my comment on the two or three people who have been shortlisted for that job. It is for the individual Minister then to make the decision. It is a combination of representing the sector's insights because they come from that sector, but being the best person for the job because these jobs are often competed for by individuals within a particular sector. That gives the best of both worlds: the sector is represented and the best person for the job with the right skills and so on is represented.

Chairman: Jonathan, you wanted to come in.

Jonathan Lindley: Yes, if I may, Chairman. Once appointed, part of the induction process of a new development agency board member in the East Midlands involves a discussion between the chair, the chief executive and the newly appointed member about what their broader interests are to draw out where they can best make a contribution on the broader regional stage. So, for example, one of the local authority members is the board's specialist on rural affairs.

Chairman: Okay.

 

Q176 Sir Peter Soulsby: May I ask how board members are appointed? The appointment by a Minister from BIS, as it now is, predates the establishment of Regional Ministers and the broadening of the role of development agencies. Do you not think that there is a case now for that to be reviewed and for the Regional Ministers to take a lead role in the appointment, rather than a secondary role?

Phil Hope: I don't think I do think that. I've not been asked that question as starkly before, but I think it is right that this is an economic development agency-a regional development agency; it spends money allocated to it via the business-

 

Q177 Sir Peter Soulsby: Yes, it will have the spatial strategy and a lot of things that go beyond the BIS remit.

Phil Hope: Indeed, but essentially that's its core task. There are future structural changes going on to do with the integrated regional strategy and the new leaders' board and the way that EMDA and the new leaders' board will work together around some of the broader combinations of economic and spatial strategies combining. But it seems right to me that, as a primarily economic development function, it is the Department for Business, Innovation and Skills that has responsibility and accountability and, therefore, ultimately has the job of appointing the members of the board after a competitive process.

 

Q178 Sir Peter Soulsby: Do you not think that if Regional Ministers are indeed to be seen as the region's voice in Whitehall, a role as crucial as this ought to be given to them if they are to be taken seriously?

Phil Hope: You could argue it the other way. Again, I've not thought about these questions too deeply. The very fact that I don't appoint these people makes our relationship stronger, because I can speak and work with them as partners without them feeling directly accountable to me. We do have a good partnership working relationship. Bryan Jackson, the chair of the East Midlands Development Agency, is my deputy chair of the regional economic cabinet. The regional economic cabinet is jointly served by Jeff Moore and Jonathan Lindley. That is a good partnership and working relationship. Although I can see the direction that the question might take, at the moment I am comfortable with the working relationships and the accountabilities as they stand.

 

Q179 Chairman: Okay. A moment ago you made reference to sustainability. We took some evidence from a wider group of organisations-the Environment Agency, Natural England, etc.-and they made the point, strongly in my view, and pretty effectively, that within the make-up of the board there actually should be a requirement to have a member with specific environmental expertise. There isn't one. There may be a decision taken by yourself, Mr. Lindley, or by other people-perhaps it would be someone who has that brief-but there is not somebody on the board who comes to it with specific environmental expertise and, because of the sustainability issue, don't you think it's about time that that was looked at seriously as an additional function and role on EMDA's board?

Phil Hope: There are many ways that you can address this issue of how we make sure that sustainability is embedded throughout all the work of EMDA and, indeed, all the organisations that operate at regional level that are trying to influence the jobs and growth debate for the region. I think there's quite an important function for EMDA in terms of consulting with those agencies, and there are many of them operating at national, regional and local level who would want to have a say in the regional strategy and the regional economic strategy, as was, and will now want to have a say in the future development of an integrated regional strategy combining the spatial and the economic.

This week, on Thursday, EMDA is hosting a meeting not to talk about the content of the regional strategy, but about the process of consultation and engagement-not least with the agencies that you have named, and many others, who want to engage with this issue. The same challenge is true of the leaders' board that has been created, so that we ensure that the local authorities, similarly, consult and engage with those organisations with that agenda. There are different ways of doing it. They have suggested one way, which is to have a person appointed with that brief. I think there are other ways of doing it and on Thursday we'll look at a variety of mechanisms for consulting widely.

I have to say that, a bit like the third sector, the environmental sector is a loose and baggy monster of a whole variety of people with a whole variety of agendas and issues all of which they would regard as being the priority. I think the key is how that sector, as it were, organises itself and how organisations like EMDA-and indeed the new leaders' forum-actually work in collaboration and consult and engage with that sector, given its complexities and its diversity.

 

Q180 Chairman: Okay. We were told that other regional development agencies have that sort of expertise embedded within a member of their specific boards. Basically, if it's good enough, or deemed appropriate enough for other RDAs, why is-I'm not saying EMDA is an exception, but perhaps it is an exception. If that is the case, is that something that ought to be looked at?

Phil Hope: Again, this is a matter for EMDA, rather than me, to say who it should have on its board, but you make-

Chairman: Yes, but we are taking evidence off you. We're interested in your view. We will have the opportunity to talk formally again, and informally to EMDA, about this issue and perhaps other issues. So I am interested-I think we are interested-in what your take is on it.

Phil Hope: My take is that it is very important that EMDA has a very open, transparent and purposeful engagement with the sector. The sector is diverse and covers a whole range of issues in terms of the way it goes about developing its strategy. I also think it needs to make sure that sustainability and sustainable development is a mainstream, embedded-across-the-piece part of everything that they can see that they are doing-in the same way as you might be rural-proofing future strategies-so making sure that sustainable development is integrated throughout.

I don't have a particular view as to whether a particular person is appointed to represent that sector's interest. I can see advantages. I can also see disadvantages. If there was good practice, perhaps people could examine that and just see what works and what doesn't. The outcome is what really matters and what matters is an effective engagement as we develop the regional strategy for the future, and that it is mainstreamed and embedded throughout what that strategy contains.

Chairman: Tom, you wanted to come in. Perhaps you have a view.

Tom Levitt: I just wanted to put it in the context of the fact that the East Midlands was the first region to publish a sustainability strategy. We published it earlier this year, when Hilary Benn came to Long Eaton to launch it. It's not just about sustainability in environmental terms; it is also about the issue of adaptation to climate change. That process originally grew out of the Nottingham partnership of local authorities coming together to mainstream sustainability into the way they operate. It developed into this regional paper, the first regional strategy of its type to be published, with every local authority in the region-and EMDA-all signed up to it. So there isn't a problem getting the issue of sustainability up high on the agenda and it is one of Phil's priorities.

 

Q181 Chairman: You say that there isn't a problem, but we've got specific evidence from organisations that they see it as a problem. I'd say it no stronger than that.

Phil Hope: I understand that point, Chair, and I just wanted to say that maybe, historically, there have been concerns that the environmental lobby haven't felt heard in the past. That is why the thinking about the future of the regional strategy for the future, in which the first discussion is going to be about the process and making sure that those organisations feel they do have a voice in the development of the strategy, is so important. That is what the debate is going to be about this week, as we take the integrated strategy for the future forward.

Chairman: Okay, well, we'll watch this space.

 

Q182 Judy Mallaber: I put it to you that maybe the reason that EMDA was a bit in advance on environmental things was that, by accident, it originally had one of our leading environmentalists, Martin Doughty, on the board. Maybe we would not have developed the index of sustainable economic well-being, and this work, if we hadn't had an expert in that area on the board. I'll just leave that with you as a thought.

You were talking about consultation. I am interested in your view on how well you think EMDA does in consulting and reaching out and talking to people-this broader network that you're talking about-other than those who are formally on its board. That raised another specific issue I wanted to raise with you.

Phil Hope: I know that there have been criticisms of EMDA's consultation. I think it has listened to those criticisms and, in thinking about the future, is thinking about ways of engaging with a very diverse sector. EMDA, like the leaders' forum, for example, has a real challenge ahead in terms of the wide variety of organisations that will have an interest in the future of the new integrated regional strategy. When you think of the planning issues and so on, there is a huge number of organisations, whether it is from the environmental lobby-those people who are opposed to environmental change-or those people who support it: businesses and so on.

The question is not, "Is there a one-size-fits-all solution to this?" which I don't think there is. The question is, can EMDA develop processes of consultation and engagement in the future in which the various views on a whole range of issues can be heard properly, an overview taken and then difficult decisions made about the right way forward for the future? That, I think, is the critical part of where we need to go from now on. I do hope that their forum, where they are discussing specifically what those processes might look like-because these people will never necessarily all agree with each other, but I think it's absolutely right that they have a real, strong opportunity to have their point of view heard, their evidence submitted, that proper evaluation and then conclusions reached based on evidence about what's best for the region. That, I think, is where we want to arrive at.

Chairman: Can we move on to have a look at the issue of the regional economic strategy?

 

Q183 Judy Mallaber: The question that arises from what we have just been saying goes on into the economic strategy. One criticism that we had when we had the business sector and the trade unions with us at the same time is that although you have trade unionists on the board, the union representatives there certainly thought that it wasn't just a case of consultation. They have a huge amount of intelligence about what is happening in business and where problems are arising in individual businesses that they often have before it comes to the attention of GOEM or EMDA. Is that something that you have discussed with them-how they can take that kind of intelligence into account in terms of us dealing with the credit crunch and the economic difficulties that we have at present?

Phil Hope: There are two things. First, as Regional Minister, I meet with the trade unions-both the regional TUC and individual unions-on particular concerns, and I think that that's extraordinarily helpful to me. As well as having a regional TUC representative, as it were, on the regional economic cabinet, we take opportunities to think about and respond to particular issues as and when they arise.

The rapid response service, for example, when a particular company experiences large numbers of redundancies, has been an absolutely critical part of the partnership working between the trade union movement, the business concern-Jobcentre Plus, for example-and, indeed, the Learning and Skills Council so that when something like that unfortunately happens, a service is put in place.

Of course, a particular company can choose not to access that service, and I know that there have been difficulties with that in some cases, but broadly speaking, most businesses welcome the extra service, response and support they get when they're going through that difficult process of having to lose a number of jobs, and therefore the individual support that is given to individuals on retraining, redeployment and so on to help that business, and indeed to get as far upstream of that decision as possible, so that the business might make different choices in terms of its business decisions, which might mean that fewer redundancies are required when those things happen. So I think they have put in place a good package and a good partnership working when those events happen. Indeed, the trade unions-with their tendrils, as it were, sensitively picking up these issues and feeding into that-have been an important part of the process.

 

Q184 Judy Mallaber: In the broader picture, what input did you have into the development of the regional economic strategy?

Phil Hope: Me personally?

Judy Mallaber: Yes, as a Minister.

Phil Hope: Well, Regional Ministers didn't exist when the first regional economic strategies were produced, so I didn't have any input at all other than as a local MP with my own views. In terms of the development of the new integrated regime strategy, I'm concerned to ensure that there's as comprehensive a process as possible that really does take into account the views of all the stakeholders in the region and a proper debate on the way forward. The original regional economic strategy was well-written and well-researched and had the flexibilities in it to respond to the changing circumstances, so when the economic downturn arrived, it was not in a bad place as a regional economic strategy, but those were its priorities for the future in the first place.

But, of course, since then, I think EMDA have been very good at responding to those particular concerns: for example, Business Link turning away from helping businesses to think about how to deal with problems of growth to providing services to help individuals and businesses cope with shrinking demand and deal with turnover and how they managed their finances, cash flow and so on. The thrive and survive workshops that EMDA sponsored have now been taken up nationally, I understand. So something that EMDA developed as a regional response has been seen as an example of good practice. The original regional economic strategy was well founded and was the right way forward.

There has been a response here and now to the current economic pressures to respond to that and to develop and amend some of the priorities within that in the way that the organisation has worked. Now, of course, we need a new integrated strategy for the future that takes into account what has been going on in the economy and gets us ready for the upturn and the new industries-low-carbon technology and so on. Our region is a good place, in terms of the research base and companies we have, to respond very positively to that new economic landscape we are entering into.

 

Q185 Judy Mallaber: What is the role of the Government office in influencing development of the strategy and the issues that Phil has been talking about in terms of economic circumstances?

Jonathan Lindley: Our role in the current economic strategy was, first of all, to make sure that one was being developed and to make a judgment on behalf of Government as to whether the evidence that it was considering was full and proper. If you like, it was a sort of managerial oversight of the process, to ensure that it was happening and would generate a substantial strategy that was challengeable, representative and would help the region to develop going forward.

Our role as we move into the new integrated strategy is again to make sure that the process happens-and that is not without difficulty sometimes. We will also make sure, on behalf of Government, that the right stakeholder consultation and involvement is taking place, so that it isn't simply the leaders' board, the EMDA board or the joint board strategy-that it is the region's economic strategy. If we have concerns that stakeholder involvement from the environmental lobby or sector, for example, which you raised, has not been properly taken into account, we would advise the Secretary of State not to sign it off. I do not believe that we will get to that position because we are working very well with all the stakeholders to ensure that we will get satisfactory arrangements.

 

Q186 Judy Mallaber: I am slightly puzzled by what is happening with sub-strategic partnerships and why we keep turning structures upside-down. We will come back to some of that on accountability. May I pick that up here, because I have had a great deal of help with some of my local businesses from one of the people employed by the sub-strategic partnership to work with businesses. We have got advice and got Ministers involved in getting the banks off the backs of some of our local companies. I am not clear what is happening to sub-strategic partnerships and how it ties in to the new structures. Could you explain?

Jonathan Lindley: They're evolving. The sub-regional partnerships are currently given money by the development agency and we believe that will continue to happen. It has happened now throughout the region. It did not happen originally because there were some questions about how strongly they were performing. They are now happening across the region and the intention is for that to continue, as I understand it. However, the Bill has not yet become enacted, so anything could still happen between now and enactment.

 

Q187 Judy Mallaber: So we're not expecting when that Bill comes through for it to lead to substantial changes, because we are talking about putting authorities on economic prosperity boards. Is that just going to be the current sub-strategic partnerships on their current boards but just for the statutory function? How would that work?

Jonathan Lindley: That is still for the region to determine. There isn't an expectation that they will simply stop being called sub-regional partnerships and start being called economic prosperity boards. They will have to be fit for their new purpose. However, some of them could be the same. There is not the assumption that they will either be the same or be different.

 

Q188 Judy Mallaber: Is there some indication that they have not been working well or that they have been working well?

Jonathan Lindley: No, I think it is an indication that the world is a changing place and that the new arrangements that integrate the strategic planning, both spatially and economically, will require a slightly different approach and so may require slightly different people sub-regionally.

 

Q189 Judy Mallaber: Phil, you have highlighted a question about skills and learning, which obviously is an absolutely critical factor. This is another one where there are interesting structural issues. Originally, DIUS was not one of the sponsorship Departments of Government offices. Now I assume it is integrated because it is in BIS. Whether that has come in accidentally or on purpose, I am not clear. We also have the LSC operating separately, yet EMDA clearly has an important function in relation to ensuring that we develop our skills. How do you see those diverse organisations having to deal with this area working together? How does it affect our ability to focus on improving skills when we have not had DIUS involved originally and we have the LSC working separately?

Phil Hope: I speak as a former skills Minister and I recognise the complexities of the skills architecture and the wiring, both in terms of the flow of funding and in terms of determining how you identify which skills are relevant for the future and how you ensure you raise skill levels across the board in the region. We have the problem of being, relatively speaking, a low-skill region. There is absolutely no question about it: all the partners-public sector employers, private sector employers and the third sector-have to work together in terms of their work forces to upskill the work force for the future, tapping into the resources that are available through the Learning and Skills Council, but also being guided by some of the economic priorities and the sector priorities that the regional economic strategy and the new integrated regional strategy will identify.

Getting that mix right is complicated at national, regional and local levels. It requires that those partners with responsibility for various parts of the skills system work together so that if an ordinary business, let us say, wants to be able to upskill its work force, it should be able just to tap into a very simple, straightforward system of getting the resource it needs and maybe putting some resource of its own in as well, recognising the benefits, to raise the skills of its work force. Part of that will involve an analysis of its training needs as a company. Of course, there are training needs in one setting and then the economic situation changes and it has to re-equip or think through new products that it has to make that will require new skills. The combination-it is complicated-is about trying to put together the right mix of support and help for a business so that it can just get the resource and help it needs and the analysis it needs of what it is as a business. That may start off presenting itself as a training needs analysis and end up as a capital funding problem.

A business needs to be able to walk through a single doorway-which is what Business Link is all about-to ensure that it gets access to the right resources for it as a business, for its future and its development. Behind that doorway, the Learning and Skills Council, the East Midlands Development Agency and the national bodies-you have sector skills councils and they set their priorities as well-need to work together. It is not easy just to draw a new diagram, because things have grown up for a purpose-to deliver to individuals and to businesses the kind of support they need. Things such as Train to Gain, for example, are a critical part of the new infrastructure, but so is EMDA, with its analysis of the broad sectors that we wanted to see develop in the future.

This is about not trying to double-guess. It is about being responsive to businesses here and now, but it is also about thinking about the future, what that future might look like and therefore where skills development might need to focus itself, and not just at the lower skill levels-level 1, level 2 and level 3. It is also about engaging with the university sector for foundation degrees, higher-level skills and higher-level apprenticeships. There are a number of players that need to work together. That is the important point about how EMDA operates with the other bodies to ensure that those things are integrated.

Jonathan Lindley: I just wanted to add that you will of course know that one of the members of the EMDA board is vice-chancellor of one of the region's universities, so he does represent that sector.

 

Q190 Judy Mallaber: You will know that we met the university sector. You have probably seen the evidence, so you will have seen that they highlighted the fact that they employ 63,000 people in the region and they have a budget of £1.3 billion. They are on the regional economic board. Is there any reason why you have not met them, given their importance?

Phil Hope: I will have met them on a number of occasions previously. Indeed, I met them only this morning at Derby University with John Coyne. We had a meeting of the regional economic cabinet last November-that long ago-when we were discussing what the right way forward was. We invited, at the end of the meeting of the cabinet, a wider group of stakeholders. Quite a few of the university representatives came to that seminar to talk about the specific contribution that the university sector makes, as well as all the other organisations-the private sector, FE, schools and so on-to creating a successful, strong region. Indeed, for the next-but-one regional economic cabinet, we have invited the university sector to make a presentation about the contribution that they feel they can make and that they need to continue to make. I am particularly interested in the relationship between the higher education sector and the business community, because I think we have some excellent examples of those partnerships, when universities offer incubation settings for small businesses to start up, for example. I met one at Derby this morning. Some people had come back to skill-up and do career changes, in this case around photography and that area of media and creativity, and the university actually helped them to set up a small business. They were saying to me that they had just qualified this year and they were now just launching their business on to the great and good, as it were.

That is a good example of the creativity and the new ways of thinking that universities are using. Career development is no longer the milk round, with 21-year-olds leaving university with their degree and getting into jobs. Those days are long gone. Universities need to be out in their communities, working with businesses, the third sector and voluntary organisations, providing opportunities to think about how they are embedded within their local areas.

I was at Derby, so I can speak about that from fresh knowledge. It is particularly rooted in the Derby and Derbyshire community in terms of how it operates. That isn't true of all the universities, but I do think it is an important part of a success strategy for universities in future.

 

Q191Chairman: Can I just reinforce two points, because I think you are absolutely correct-I can tell you from direct experience-about the taskforce role that you referred to a little while ago? After 9/11, Rolls-Royce had a step change in engine orders and 4,500 people went. Everything swung into action absolutely brilliantly, including EMDA and Jobcentre Plus. I was very much engaged on a day-to-day basis with doing some of the work for some of the taskforces and some of the work that was undertaken in some of the working parties. It worked absolutely brilliantly well. It was excellent.

Notwithstanding that, just to stress the point that Judy made, we received evidence from the trade unions from the manufacturing and engineering sector that they feel that they are big organisations in terms of the economic strategy for the whole of the East Midlands, but that they are frozen out of the process. As Judy was saying, they have a lot of expertise and knowledge to bring to the table, and they have antennae so they can tell what is happening in the manufacturing sector maybe months and months before it triggers off, but they believe that it is not being tapped into by EMDA, the economic board or anyone. They understandably feel a little aggrieved about that. You may wish to comment on that or think about it.

Phil Hope: My response would be this: I have worked closely with most of the major trade unions-I am thinking of Unite, but I don't know whether that is the one you are thinking of-

Chairman: Yes.

Phil Hope: -in terms of their insights and contributions and the things that they see going on. Rather than picking one particular trade union, because that in itself can carry difficulties as we know, I have a representative from the East Midlands regional TUC on the economic cabinet-at the moment, that post is vacant because of some job changes that have been going on inside the regional TUC, but we will have a permanent person there in future. Working through the regional TUC has been the primary mechanism. I thought it appropriate to work with all the trade unions across the region, not just those in manufacturing, but those with many other concerns and issues about particular sectors. I suppose my response is working through the normal trade union, TUC structure.

Chairman: I thought it was appropriate to lay down before you how strongly they felt.

Can we move on to the issue of budgets and EMDA's budget?

 

Q192 Sir Peter Soulsby: As I understand it, EMDA has got the expectation of a somewhat reduced budget over the next couple of years, which of course it has planned for-it is difficult, but it can plan for it. But last year, it had quite a raid on its budget, as did other RDAs, for the homebuy direct scheme, as I recall. Do you think that it is acceptable to have short-term raids on budgets of RDAs, and EMDA in particular?

Phil Hope: I suppose the important thing was the Government needing to respond to something that they weren't expecting, which was the downturn in the housing market, and the need to ensure that we could put into the region resources to support and promote the housing industry, and affordable housing in particular. These were difficult decisions, I think, that the Government had to make at the time, but they were taken in response to the need to reallocate resources into, in this case, the housing sector because of-we all know what happened last year-the banks and so on, and the credit crunch, which meant that it was a real challenge for the housing and construction sector as a result of those changes. A decision was made to reallocate resources, not to take them away from the region, but certainly to reallocate them within the region to different purposes and different priorities, given the immediacy of the concerns at the time about what would happen if we hadn't reallocated the resources in that way.

 

Q193 Sir Peter Soulsby: Don't you think it rather undermines the credibility of the commitment to the work of RDAs in general, and EMDA in particular, if they are seen as a source for short-term funding in a situation like that, rather than looking elsewhere for funding?

Phil Hope: First of all, I don't think it would be fair to caricature what happened as being just dipping into somebody else's budget to solve a problem. There was a genuine need to look at where resources were being allocated at that time for that purpose. That was a one-off event. It was, as we all know throughout the country, something that came at us as a result of an economic storm from abroad that wasn't anticipated-I think we know that-and there needed to be a swift response at that time. It was a difficult decision-I am not saying that these are easy decisions-but you make a balanced judgement about what's the appropriate thing to do. This was felt to be the appropriate thing to do. That was an important part of deciding to intervene in the housing market in that way-stepping in and not stepping aside from the consequences for the construction industry, for the housing industry, and for individuals and their homes and families. So it was an appropriate thing to do.

Moreover, EMDA, showing its flexibility and its ability to manage its budgets well, has managed to take those changes. It is now planning for a budget for the future, which we know is set to reduce by 5% over three years, in order to ensure that it works within its budgets, finding efficiency and savings, and allocating resources appropriately to manage its budgets well. They are still very large budgets. The Government are still completely committed to regional development agencies. I think that if regional development agencies hadn't existed, we would have been into a far deeper problem of unemployment and recession in the regions, not specifically in the East Midlands. I think any proposals about cutting and abolishing regional development agencies' spend in the regions in the way that others have suggested would be cataclysmic in terms of the regional economy in the East Midlands.

 

Q194 Sir Peter Soulsby: I understand the point you made, but I think you'd accept what EMDA said to us, which was that the bigger the cuts and the shorter the notice, the harder it is to cope. Clearly it is something to be avoided, is it not?

Phil Hope: I think it is something that every organisation hopes does not have to happen to them. These were exceptional circumstances at the time and exceptional decisions had to be made. It was difficult, but I was pleased with the way that EMDA responded so well to an immediate challenge of that kind. I understand the point that it would not be the ideal way of doing things, but these were exceptional circumstances that required an exceptional response, and I think, with hindsight, we can look back and say that it was the right thing to do. The wrong thing to do would have been to ignore the impact on the construction sector, the housing sector and people's homes, and just let everyone cope with a random series of changes. That would have been unacceptable. I know it was the view of another party that is not present today, but it is not the view of this Government.

 

Q195 Sir Peter Soulsby: Can I take you to an aspect of EMDA's budgeting that it may be possible to have more control over? That is the flexibility that it has at the end of the year to take budgets from one year to another-end-year flexibility. That, as I understand it, was taken away from EMDA and, I assume, from other RDAs a couple of years ago. Is there any positive case to be made for that except that, I assume, it is what the Treasury demands?

Phil Hope: I don't want to enter into too much of the Treasury's territory, because you normally get your wrists slapped if you do that as a Minister.

Sir Peter Soulsby: I am trying to make a positive case for it.

Phil Hope: What has been interesting is that we have been doing, I suppose, the reverse, which is bringing some spend forward. Spend allocated for future years has been brought forward in order to maintain-indeed, increase-public spending at a time when the recession is at its deepest. That has been a deliberate policy, particularly in relation to capital spend.

The region has definitely benefited from that decision, not least in relation to, for example, the Department for Transport and the road infrastructure in the East Midlands. We have benefited from bringing forward the road spend. I hope that decisions by recently elected local authorities don't undermine some of those decisions, because if we don't have support for the tram system, for example, that undermines the case for the road building for Nottingham that we have brought forward.

There are some really important structural, long-term developments in the region that we need to pay attention to. I think that that is right. I understand your point about end-of-year flexibilities-where we started-and about organisations valuing that. No doubt you will make your own representations to the Treasury on those grounds as well. The bigger story is less about that end-of-year flexibility. The more important thing is being able to respond quickly when we brought spending forward from later years. We should make sure that we make the best use of that resource here and now to support people through the downturn.

Sir Peter Soulsby: Which is indeed very positive, but it is not a case for not restoring end-of-year flexibility. Mr. Lindley is trying to get in.

Jonathan Lindley: I was just going to make a point. It is a very topical issue because, of course, part of the bringing forward of capital expenditure as part of the fiscal stimulus package was the £174 million-or £170-something million-from the Department for Transport for the A46 dual carriageway. I believe that the first turf was dug for that yesterday, so it is actually stimulating right now in the East Midlands with a huge sum of money.

 

Q196 Sir Peter Soulsby: But it is the case that the lack of end-of-year flexibility can be really quite perverse in the results that it leads to, is it not, Mr. Lindley?

Jonathan Lindley: That's a matter for Treasury officials, of course, rather than for me. I have to manage an annual budget like anyone else.

Sir Peter Soulsby: Of course, there's no point in pressing that with you.

 

Q197 Chairman: We have more than touched on the recent local economic climate. In terms of that, who took the lead in ensuring that businesses throughout the East Midlands were made aware of the financial support that was available? Who took on board that role-GOEM, EMDA or you, Minister?

Phil Hope: I think that we all played a part in making sure that businesses did know. The first thing to do was to make sure that the services that businesses needed in terms of getting through a downturn were there and that they were responsive and changed to suit their needs. For example, Business Link through EMDA did a magnificent job in responding to the different circumstances in which businesses now find themselves. So, there were different forms of advice.

There was a lot of outreach work that EMDA organised-not least the thrive and survive workshops that went on in late autumn and around that time. That made a big difference. As I said earlier, that has been a model that I know other regions are now using. The rapid response service that I mentioned earlier was something, again, that was co-ordinated through the partnerships between EMDA.

 

Q198 Chairman: That's been around a long while. I am talking about under the current economic climate. Additional money has been made available. Who is responsible for it and how effectively was that information pushed out to businesses?

Phil Hope: A major thing that we did was that we were the first regions to launch the real help now services and the new advice that was available for businesses and, indeed, families throughout the East Midlands. I was delighted to be with the Prime Minister when that launch happened-it happened to be in Corby in my constituency.

We then did a major programme. We've published our own document as a regional economic cabinet, which has been widely circulated. That spelled out the various forms of help and advice that are now available. That has been proven to be very successful, because all the different partners have signed up to it, and it shows the linkages between people. My idea would be that wherever you are-wherever you enter into the system as an individual, a trade union, or a business wondering where the help is-you get steered towards the sort of service that you might need to suit your individual circumstances.

 

Q199 Chairman: Are you pleased with the job that EMDA did?

Phil Hope: I think EMDA did a very good job in responding flexibly and swiftly to the new economic environment in which many businesses were finding themselves.

 

Q200 Chairman: Can I put you behind the eight ball and ask you what has been achieved that could not have happened without your undertaking the role as Regional Minister-either you personally or as Regional Minister?

Phil Hope: Let me give an example of finances in the region. EMDA runs something called the regional risk finance forum, where it brings together some of the key providers of finance in the region and talks about the needs that those organisations have, the support they get and the work they are doing getting lending out into the region. I was getting frustrated, because I was hearing from businesses before Christmas that those regional banks were not giving out the money that the Government had made available to them in the work that we did before Christmas to provide funds for banks to give to businesses.

In addition to the work that EMDA was doing-quite rightly-through its structures and the finance forum to ensure that those lending organisations, the banks and so on, knew what was available, I held my own meeting with those banks and made it fairly clear in no uncertain terms what I, as a Regional Minister, expect their performance to be. We had a full and frank discussion, between myself and representatives of those banks. I was given assurances then, that if there had been any delay in moving money out into the business community, in terms of responding more positively to its requests for affordable loans, for overdrafts that wouldn't be called in and for all those kinds of things that were a problem for businesses, that there would be a real commitment to achieve change.

I think there was a complimentary role between EMDA, providing the professional work, working with-in this case, I am using just one example-the banking community and the political role, if I can call it that, that I played in seeking to put pressure on those organisations to deliver the resources that the Government provided.

I think that that is where the regional economic cabinet has been quite important, which has been to add leadership to the partners working together. As a regional economic cabinet, we spend our time challenging each other about what we are doing to respond to the needs of individuals, families and businesses in the region going through the downturn, to see where there can be areas where we can join up and do joint projects and activities.

To make it very clear, examples of problems that are happening the region are fed back through into Whitehall, so that the voice of the region is heard very loud and clear to influence decision making back at the ranch, as it were. I think that that is effective.

 

Q201 Chairman: There is a formal mechanism, is there, for feeding back into Whitehall?

Phil Hope: Yes, I am a member of something called the Council of Regional Ministers. We have an opportunity at those meetings to talk about particular issues that are arising in our region and to feed those into the centre, where they require a response that might be from the centre-that can happen-or it might be that it gets filtered down through those organisations, and they then respond accordingly.

One of the ideas of Regional Ministers was to unblock, as it were, any logjams that might exist in the system, where one Department is not talking to another, one agency is not talking to another or where there is a contradiction. I had that example today, just talking to how we roll out the graduate traineeship, where organisations were talking to me-this is from the universities today-about, "Here we are. We want to set up these internships for graduates, but we need to make sure that there is a consistent approach among jobcentres and HMRC to the way that the tax and the benefit system delivers to those graduates who are going to do internships this summer." That is a very good, practical example of the added value that I believe I am bringing to the development of the region and its economy.

 

Q202 Judy Mallaber: How do you know that you are making an impact? I had a company that I was dealing with last week that was completely outraged. They are building houses. They have all the security they need, and the bank just pulled the loan out of them and demanded the money back. It is basically blackmailing them to get more money out of them. The bank-it is a respectable bank-clearly had not responded to what you are saying, and I dealt with that through going to the local person who deals with local economic partnership, who links into EMDA.

Similarly, I had a major company-this was right at the beginning-that phoned me up to say that they were just about to go into receivership. I dealt with that by going through Government Departments centrally. Again, that was a problem with the banks, pulling money out of them. So how do you know if you are having any impact? Why has it not occurred to me in either of those examples to come to you, as the Minister, when I have gone through other mechanisms? Maybe that is my failing. Would you be able to help me if I did have a problem?

Phil Hope: First, I welcome MPs throughout the region, if they have examples of that kind, where the sort of work that we are doing that is a real help now-the policies, the programmes, the funding-

Chairman: I might have one for you tomorrow.

Phil Hope: Fine. We'll do that.

Chairman: I'll test the process.

Phil Hope: So we feed them through to see if we can unblock the blockages. We can challenge the institutions, if they are failing to do what we expect them to do-in this case, the banks providing loans or affordable overdrafts and so on. That is part of my function. There is an organisation set up to do that. EMDA is there, and I would expect questions to be taken to it. But there comes a time, particularly now, when we just need to-this is the challenge function. When things aren't working right, or when things are to do with something that is not within the region but somewhere in Whitehall-there is some lack of connectivity-I, as a Regional Minister, want to know about them. I can then take them to the system. I can speak to Lord Mandelson. He tells us he wants to know about individual examples of that kind.

We can sort out the individual example, if it can be sorted out, but also, if it is a symptom of some other wider problem of lack of joint working-whatever it might be-we can sort out the wider underlying problem that created the problem in the first place, so it is both. That is how I see my role as a Regional Minister.

Tom Levitt: I think we'd like to hear about examples of things that work, because they are equally valid. We have had cases where an issue such as you described has come to the attention of senior people in a bank, and they have sorted it out, because that should not have happened, even within the bank. But because we managed to draw it to their attention, it got sorted. Equally, we have banks complaining that people are not coming to them in sufficient numbers to ask for the money that is available.

 

Q203 Judy Mallaber: On those two examples-there are others-for one I went straight to Peter Mandelson's office. He was in fact in India, but it went to the top. On the other, I went to someone local. That goes back to Bob's question about the function of the Regional Minister. I have gone above and below you, as it were, in pursuing solutions.

Chairman: Don't worry, I'll do the test tomorrow. I'll try EMDA first. If that doesn't work, I'll be on to you.

Phil Hope: I want to emphasise the three roles that I play. One is to be out in the region, listening, hearing what the problems are-the kind you describe-and, where appropriate, steering them to wherever they need to be solved, in particular back in Whitehall.

Secondly, on the point about regional leadership, you asked earlier how I know whether I have had any impact. What difference am I making as a Regional Minister? The way that I answer that question is by asking those people with whom I am working whether we are adding value to what they do. The response I get from the members of my regional economic cabinet, which includes members of the opposition, by the way-leaders of Conservative authorities as well as businesses-is, "Yes, we value the opportunity to come together. We can see the difference that it makes in terms of people knowing more about the help that is on offer."

My role to promote Government messages, programmes and policies is having a huge impact. I spend a lot of my time talking to the local media in Derbyshire, Leicestershire, Nottinghamshire, Lincolnshire, Northamptonshire-television and radio stations throughout the region-in order that the messages, programmes and action that we are taking is known about. Then, if people are having difficulties, they will come back to me and say, "That is not working in my area. What can we do here?"

It is that regional leadership and bringing people together, holding people to account, challenging regional organisations to step up to the plate, particularly now, when the pressures are hardest, that is important. I think of the two sounding boards that we created, one on social exclusion and one on affordable housing. I chose two particular areas that I personally thought were big priorities for the region, outside of jobs and growth. They have had a big impact. Those people are working together, and new arrangements are being devised.

The policy that we just published on Valuing Employment Now, which is a Government policy on employing people with learning disabilities, has been informed by practical steps, relationships, learning and people talking about obstacles. In that case, information at regional level fed into Government policy.

I think that we can be proud of what we have achieved in the region in terms of providing a focus, and bringing together regional partners around themes and issues that might not otherwise be addressed in such a sharp and pointed way, given the particular circumstances of the economic downturn that we are going through at the moment.

Chairman: You have a point that you wanted to raise, Peter, about the Council of Regional Ministers.

 

Q204 Sir Peter Soulsby: When asked about the mechanisms in Whitehall for a voice to be heard, you told us about the Council of Regional Ministers. As I understand it, that was only established in October last year, and it is not a permanent structure. I wonder what else there is that enables you to make sure that what you are seeing out there, what you are being told out there, is actually fed back into the structure.

Phil Hope: There is also-unhelpfully named-the national regional economic council, which is a national body on which every Regional Minister sits, along with the Treasury. I think it is co-chaired by the Chancellor and the Secretary of State for Business, Innovation and Skills.

Jonathan Lindley: The National Economic Council.

Phil Hope: Yes, the National Economic Council, to which we are invited. So there is also this broader body bringing together Ministers from different Government Departments, Regional Ministers and external organisations to which we can make our views known and to which, informally, outside the meetings themselves, we can feed in the experience of what is happening in the region. As well, there is the Council of Regional Ministers, where Regional Ministers alone sit and talk in very practical terms about the day-to-day operation of what is going on in regions. We learn from each other. I mentioned the Survive and Thrive workshops run by EMDA, which are now being talked about, and other regions are doing them because we talked about them and shared good practice across the regions.

Jonathan Lindley: There are three bits of national government architecture. There is the Council of Regional Ministers, which is as its name describes. There is the Regional Economic Council, which is Regional Ministers, other Ministers and representatives from outside Government. There is the National Economic Council as well, which is effectively a subset of the Cabinet.

 

Q205 Sir Peter Soulsby: One good way of seeing how much importance is given to these bodies is to have a feel for how much time is given to their meetings and how frequently they meet. Are you able to give us a breakdown of that?

Phil Hope: The Council of Regional Ministers is meeting very regularly right now because of the importance that we are placing upon this. We are talking about monthly meetings of the Council of Regional Ministers. You have to be able to do enough between meetings to make the meetings valuable, so there is a huge amount of work that goes on in between the Council of Regional Ministers meetings as well-sharing information about the development of the economy in the different regions and the different actions that people are taking, and there may be issues where regions abut one another and you need to do joint action and so on between regions. That is a very core part of the system that we operate within.

The National Economic Council-I must get the names right-meets quarterly.

 

Q206 Sir Peter Soulsby: And the Regional Economic Council?

Phil Hope: That is quarterly as well.

 

Q207 Sir Peter Soulsby: A typical meeting-how long for each of them?

Phil Hope: For the Council of Regional Ministers, normally an hour to an hour and a half, depending.

 

Q208 Sir Peter Soulsby: Similarly for the other two?

Phil Hope: No, with those other ones, because they are big meetings, they take longer-they are on a quarterly basis. It is sort of two to three hours' time for those.

 

Q209 Chairman: We are starting to move towards the close of taking evidence from you, you will be pleased to know. We have picked up some of the other issues about sustainability but, in terms of the single regional strategy, how do you think this will have an effect on the region?

Phil Hope: The integrated regional strategy is the most crucial part of the region's development as a region, because it will integrate economic plans with spatial plans, so that we can merge together issues around housing and planning with issues around jobs and employment. I think that it is a crucial part of the region's future for years to come. This is an absolutely central part of the way forward. It needs to build on the very best of our knowledge and experience of the past, the regional economic strategy that we had and, indeed, the spatial strategy that we had-it needs to combine the two together. So, we have an integrated strategy, which has embedded within it all the issues around sustainable development, which meets the needs of a very diverse region in all its shapes and sizes, with its different sectors, and which has ownership and a kind of commitment of all the partners to pursue it. That is why the process of how we go about producing that regional strategy is so important.

 

Q210 Chairman: But it is going to suck into EMDA a whole bundle of work and activity. Do you think that there is a danger of it losing some focus on economic strategic and local economic issues?

Phil Hope: We are pursuing an integrated strategy because only pursuing economic issues in isolation from the spatial issues carries within it the risk that the two do not gel together. That is the reason why we need to integrate the two strategies. I know that it is not easy given that they operate on slightly different timelines and different legislative rules and regulations are in place. The history of how one has developed and how the other one has developed, and how to merge them together is a challenge, but that is what the Government have decided to do and, rightly so. They want to ensure that an economic strategy really does integrate with a spatial strategy for the region as a whole. Without that, there would be a risk that the strategy would not provide us with the best way forward, particularly given the changing nature of the global economy, the impact of climate change, an ageing population and a major demographic change. We need to bring all that together to ensure that people have homes, jobs and places to live in, which they like and want to stay living in, and to which we can attract people in the future.

Chairman: Okay. Are there any other questions that you would like to ask, Judy?

 

Q211 Judy Mallaber: I have a question on accountability. There are some reasons for the changes, but some things we just seem to throw up in the air, but they fall down again. They seem to be working, and I am not sure why we then change them. With the loss of regional assemblies, how will stakeholders in the region be able to scrutinise the work of EMDA and have the role that they have had up to now with broader local government, third sector, etc.?

Phil Hope: This is really important. There will be a joint board between the newly created leaders' forum and EMDA to oversee the development of the regional strategy. That is absolutely vital. Given the size of that task and the range and variety of organisations, it needs to be a well-thought-through plan for engagement so that everyone can see how, when and where they will have their opportunity to look at and influence the plan as it develops for the future. I do not think that there is a straightforward or simple way of doing that because we are trying to do something that is quite challenging, which is to achieve an integrated strategy. That does not mean that we should not do it. It means that we need to be innovative. We need to be using many different ways of engaging the stakeholders to ensure that various views and opinions will be out there. Achieving consensus is where we want to land, and we have a lot of arguing to do before we arrive there.

 

Q212 Judy Mallaber: But some of this is involvement, and some of it is about scrutiny from a broader group of people and those who are making the decisions. That was the point of the regional assemblies, but also in your evidence you said that there would still be scrutiny by individual authorities-I am not quite sure what that means-and regional scrutiny by Regional Select Committees and Regional Grand Committees. I missed the Thursday vote because I was paired with a Lib Dem Opposition Member. We do not have a Regional Grand Committee, so what will happen to our scrutiny? We have lost the assembly in terms of the broader range of organisations, which would be a wider group than just the leaders' board, or whatever it is called, and regional scrutiny from the parliamentary viewpoint.

Phil Hope: I have two or three things to say, the first of which is about scrutiny by individual local authorities. Local authorities now have quite good, tough powers to scrutinise both themselves and other organisations in their area. They can focus on, for example, health and local authorities. The role of local authorities to scrutinise activities is now a commonplace part of the system.

 

Q213 Judy Mallaber: But EMDA cannot visit every local authority.

Phil Hope: No, sorry, I was trying to interpret what I mean by scrutiny by individual authorities of what is happening in their area, particularly as we move into economic development and economic well-being as a rising purpose and a priority for local government.

As for Select Committees, we are here. You are doing your job very efficiently, I might say, in putting us under scrutiny. We are obviously looking forward to the report and your recommendations for the future, which will be very helpful and healthy. Holding regional bodies to account by the work that you do may not have a regional democratic structure of its own but, in terms of the Grand Committee, I expect that there will be another proposal. It will provide you with an opportunity, when you are not paired with whichever Liberal Democrat you were paired with, to exercise your vote to create a Grand Committee.

It was wrong of the Conservatives and the Liberals to vote against the Grand Committee. They have taken out of the picture, albeit briefly, an important part of the democratic structure that we want to see operate at regional level to allow every MP in the region to have an opportunity to quiz me as Regional Minister and to debate key issues of the day. I regret that and hope that when the measure comes back, there will be a cross-party consensus about the importance of having an East Midlands Regional Grand Committee.

Chairman: Or the numbers will be better.

Phil Hope: That is for you, and not for me, to say. I hope that we will have the full options for regional accountability.

Tom Levitt: I think we were unlucky in that it just happened to be the East Midlands vote that did not get through the other night. I don't think it was something specifically aimed at the East Midlands.

Judy Mallaber: I understand that a date was suggested, but that there was no consultation on it.

 

Q214 Sir Peter Soulsby: Can I return briefly to the sustainability issue that we were talking about earlier? While we have been talking, I have looked at what the Environment Agency said to us about the East Midlands compared with other regions. It noted that "it is stark that, in the East Midlands, there is no champion body. For example, there is Sustainability North East, Sustainability South West and Sustainability West Midlands". It goes on to state that "we need to have a place where that senior level debate can happen with the EMDA board and with the Government Office. That is critical." That is fairly clear from the Environment Agency and it sounds quite a powerful case. If other regions can have that focus, there is surely a powerful case for the East Midlands to have it as well.

Phil Hope: Yes. There has been quite a debate in the region about precisely that point. There were a number of surveys last year of some of the regional decision-making bodies and a wider cohort of stakeholders, including East Midlands Environment Link, which was consulted about various options in the paper about how we might take the issue forward. The findings were that any inclination towards establishing an independent champion body had changed in a significant majority of participants who now preferred to mainstream sustainable development through existing and emerging regional structures in support of the new regional strategy. I think that the lack of support for a champion, such as that in the routes that you have just described for other regions, was because participants were worried about resource issues and actually concerned that, rather than making it more of a priority, we would end up sidelining, rather than mainstreaming, the issue. I know that there could be arguments either side of that.

 

Q215 Sir Peter Soulsby: But are there not arguments that when you mainstream or-as you described it earlier-embed things, you in fact end up ignoring them?

Phil Hope: Yes, well, two of you on the Committee have been leaders of councils and others have been leading players in this. You will know the importance the bulk of your spend. If the bulk of your spend is just a little bit of icing over the top-let us call it sustainable development here-that is fine. But it is much better to take the bulk of your spend and see if you can rebake that cake, so that it reflects sustainable development and you get more product. The question is, is that as visible as the layer on top of the cake? Maybe it is not quite as visible, but it is much more profound and impactful to see sustainable development throughout.

 

Q216 Sir Peter Soulsby: The fear is that that is not happening.

Phil Hope: Well, I would challenge that it is not happening in the East Midlands. Tom earlier gave an example of why we launched the first ever adaptation strategy in the East Midlands. I think there is a large and important agenda for sustainable development that has the support of EMDA and local government. It certainly has Government support.

 

Q217 Sir Peter Soulsby: Except that you could argue that if that is actually happening, the Environment Agency would probably know about it, and they were the ones who gave us the evidence.

Phil Hope: Yes, I suppose that we could look at the specifics that individual organisations talk about. I think there may have been some criticism in the past-two or three years ago-when there had been a feeling that they had not been sufficiently consulted. But now, as we take the integrated regional strategy forward and consider the importance of mainstreaming sustainable development as well as the importance of a process for doing that, which will be debated this week, I hope to see much more engagement and much more support for sustainable development being a mainstream, embedded part of our regional strategy for the future.

Jonathan Lindley: Two quick points. First, just to make you are aware, if you were not already, that the Environment Agency's regional boundaries are not quite the same as ours, so there are actually two Environment Agency regions that we have to involve. Secondly, one of those regions-the one that covers the bulk of the region for which I am responsible-has a strategic programme board, although I cannot quite remember the precise name of it, which the regional director has just created and which he has invited me to sit on. If there are any issues relating to strategic planning or concerns from their perspective, or indeed things that I want to bring to their attention, I shall be able to bring those to the Regional Minister's attention as necessary.

Chairman: All I can say is that all this discussion about cake has suddenly reminded me that, at this late hour, it has been nine hours since any food passed my lips. If you have two quick questions, it might be appropriate for us to take them, and then perhaps we can wind up the proceedings.

Judy Mallaber: We put Bob in the Chair because he promised to have it over in an hour.

 

Q218 Chairman: Nothing else? Is there anything that you would like to briefly add to your evidence?

Phil Hope: Only to thank you for your interest and investigations. We look forward to seeing the results.

Chairman: We will make sure that it is a good, hard-hitting report-we hope.