House of Commons - South East England Development Agency and the Regional Economic Strategy

South East England Development Agency and the Regional Economic Strategy - South East Regional Committee Contents

3 Regional Economic Strategy

Purpose of the Regional Economic Strategy

20. The Regional Development Act 1998 required each RDA to formulate and keep under review a Regional Economic Strategy (RES) to provide a shared vision for the development of the region's economy, to improve economic performance and enhance the region's competitiveness. Since its inception SEEDA has produced three Regional Economic Strategies. Pam Alexander, SEEDA Chief Executive, told us that SEEDA had evolved from the English Partnerships which had a legacy of regeneration, and that the first RES had therefore focussed on regeneration projects. The second RES became more focused on lifting up areas of lower productivity and investing in areas of high performance and growth. The third, and current, RES emphasizes innovation, science and technology, quality of life and producing sustainable economic development.[19] It was published in July 2006 and covers the years 2006-2016.

21. The vision for the current RES is that the South East would be a world class region achieving sustainable prosperity, and contained three headline indicators to measure progress against the 'vision'. These are:

achieving an average annual increase in Gross Value Added (GVA) per capita of at least 3%;
increasing productivity per worker by an average 2.4% annually, from £39,000 in 2005 to at least £50,000 by 2016 (in constant prices), and
reducing the rate of increase in the region's ecological footprint (from 6.3 global hectares per capita in 2003 and currently increasing at 1.1% per annum), stabilising the footprint and, ultimately, seeking to reduce it overall by 2016.

22. The RES has three interlinked objectives: global competitiveness, smart growth, and sustainable prosperity, and has fourteen targets to measure progress on these objectives.

RES objectives and targets

Objective Target

Global competitiveness Global Businesses and Foreign Direct Investment

Knowledge Transfer and Business Expenditure on Research and Development

Innovation and Creativity

Infrastructure

Smart growth Enterprise

Skills

Competition and business regulation

Transport

Physical development

Employment

Sustainable prosperity Climate change and energy

Sustainable Consumption and Production

Natural Resources and the Environment

Sustainable communities

Source: RES, The Vision, Values, Targets and Actions Framework of the Regional Economic Strategy 2006-2016, p 46

23. The actions to achieve the objectives are listed in the RES Implementation Plan, along with the organisation with responsibility for each action. These organisations are grouped into four categories: Central/Local Government, Business, Social & Cultural, and Environmental. There are also eight transformational actions that are intended to have relevance across the whole strategy.[20]

24. The RES Steering Group, made up of several of these partner organisations, monitors and supports the delivery of RES targets among the relevant organisation.[21] Progress towards the objectives and targets are assessed annually and published by SEEDA in Monitoring Reports.[22] The last Monitoring Report is from October 2007.[23]

25. The RES was drawn up by SEEDA but was amendable by SEERA. The process enabled the endorsement of those partners represented through SEERA. SEEDA told us that this helped ensure that each of the actions set out in the RES was owned by those best placed to deliver them.[24]

26. An example from the Environment Agency submission explains this clearly. The Agency is involved, as a partner, in projects involving resource management, green infrastructure, low carbon business development and climate change aimed at meeting RES targets. For example, the programme SE Green Infrastructure Framework and Building for Nature Partnership involves SEEDA, the Environment Agency, Natural England and GOSE working on a series of projects that promote the use of green infrastructure and sustainable construction techniques within new developments. This contributes to the natural resources and the environment target which is part of the sustainable prosperity objective.[25] The Agency also sit on the RES Steering Group.

27. The Agency Regional Director, Harvey Bradshaw, told us they believed the current RES recognises sustainability and acknowledges the principle that a good environment supports a prosperous economy, that there is a shared understanding that environmental protection, environmental infrastructure, quality of life, and adapting to climate change sit hand in hand with economic regeneration.[26] He did say that the pace of delivery on some targets could be faster, and that the emphasis was on large scale projects.[27]

28. We support the broad emphasis of the Regional Economic Strategy on global competitiveness, smart growth and sustainable prosperity; and we recommend that the RES should remain as the single framework setting a long term vision for the region.

29. The arrangements that allowed unions, representatives of employers and third sector organisations to contribute to policy discussions and which existed prior to the abolition of the Regional Assembly were widely appreciated by those involved and greatly assisted engagement with key stakeholders. We recommend that following the SNR similar arrangements are put in place, including arrangements to provide these organisations with the support needed to engage fully with future consultations, so that their views and expertise are not lost either to the Agency or the Leaders Board.

Sub-regions, hubs and diamonds

30. The RES divided the region into three broad areas that share similar economic characteristics: the inner crescent around London, the coast, and the rural area. It also identified three growth areas (Thames Gateway, Ashford, and the Milton Keynes/South Midlands area) and, in line with the draft South East Plan, 21 regional hubs as urban centres of economic activity and transport services that can accept further growth. Of the 21 hubs, eight are also called "diamonds for growth", having been identified as potential economic catalysts for the whole region. The plans for each of the hubs and diamonds are coordinated with the RES and the frameworks and strategies for the Inner, Rural and Coastal South East.[28] Pam Alexander said the implementation plan was being focused on the city-based diamonds because regional policy focussed on eight places that had real identity in their own terms.[29]

31. We received a submission from the South East Diamonds for Investment and Growth Partnership (SEDfIG), representing the local authorities that cover the eight diamonds.[30] They pointed out that the region did not have a single centre but rather several places all with significant growth potential, and as such they felt it appropriate to develop a sub-regional focus that reflected this. Consequently, the diamond areas had benefited from SEEDA acting strategically to build sub-regional partnerships to address local needs, relating to both deprivation and opportunities.[31] We did receive a submission from the South East regional TUC that expressed reservations about the sub-regional agenda because they were concerned some stakeholders might be pushed to the sidelines and that "powers devolved to a sub-regional or sub-sub-regional level could be abused for party political purposes".[32]

32. We recognise that the South East region is not an easily identifiable region like some other English regions. As such the Regional Economic Strategy has developed with an emphasis on places with broadly similar attributes and potential. We support the partnership working that has evolved between SEEDA, local authorities and other partners in the diamond for growth areas.

The South East as a world class region

33. SEEDA told us that the vision in the RES was to make the South East "a world class region achieving sustainable prosperity".[33] Most regional development agencies compare their targets against the UK average but as the richest region in the UK, the South East compares itself with other leading world regions. Jim Brathwaite told us that they have a programme where they look at other regions around the world considered to be equivalent to the South East; the examples he used were Kanagawa in Japan[34], greater Washington in the US, and Shanghai in China.[35] Pam Alexander told us the regions they chose also included Silicon valley in California and the "heartlands of Europe". She told us that the South East was slipping down the international league table because there were extremely fast rates of growth in some emerging economies, and the emerging economies of Europe have themselves been offering more challenge than in the past. She said SEEDA needed to be sure that the actions they took kept would keep the South East "at the forefront of global economies".[36]

34. We welcome the ambition of SEEDA for the South East to compete as a region to the highest standards. However, we are not convinced that the regions named by SEEDA are realistic regions to draw comparisons with. We would like to see the evidence base used to justify the comparative regions, and on what criteria SEEDAs performance is measured against them.

Consultation or engagement and the RES

35. We heard a variety of views as to the level of involvement from stakeholders in the process for drawing up the RES. The EEF told us that the RES was broadly fit for purpose at the time but the process for drawing it up was over consultative and took too long to be agreed resulting in an outdated strategy.[37] The CPRE said they felt the consultation process could have been clearer and more democratic.[38] In comparison, the Homes and Communities Agency said they did feel engaged in the RES and, in terms of priority areas and places, there was a shared understanding of where the focus should be.[39] Natural England said the consultation had been extensive and substantial.[40]

36. Harvey Bradshaw, Regional Director at the Environment Agency, said he thought they had been "fully and appropriately engaged". However, he drew comparisons with the way in which the South East plan (the Regional Spatial Strategy) was drawn up which he felt had more of a mechanism to change the dynamic from one of consultation "this is what we think; what do you think about it?" to one of involvement and engagement. He used the example of water efficiency standards that he said would have benefited from relevant organisations being engaged earlier.[41]

37. Ross McNally from the South East Chambers of Commerce said:

There was consultation, but not engagement, and that is a matter of how I define the difference between the two. Consultation is when people say, 'This is what we're likely to do,' and then you can throw darts at it or not. Engagement is when people say, 'What do you need? What would you do in your circumstances?' Then you find that there is a pattern of similarity in certain other sub-regions and you bring things together to maximise the effect. [42]

38. Pam Alexander was surprised at the comments of Ross McNally about a lack of engagement. She described the process of drawing up the RES :

We started the 2006 RES process, back in July 2005, with some extremely open debates. More than 2,000 people were involved across the 15 months that it took to create the RES, which of course is substantially less than it takes to create a regional spatial strategy. Those were very open debates. […] Peter Hall came to talk about the development of cities and the impact that they might have. Sustainability was discussed very openly. We had workshops and working discussions, at which there was no SEEDA prospectus at all. We were simply having very open debates. Then as we went forward with the steering group—that was one of the reasons for creating the group in the first place—some key players in the region took those debates and shaped them into some propositions that we could then consult upon. In my view, we went from very broad engagement to, of course, consultation on some propositions that then became a framework that I think was both clear and targeted, which is what we were aiming to do. Given that we needed to do all that in not much more than a year, I think it was a sensible process.[43]

39. She did say that the integrated Single Regional Strategy will have the same statutory function as the regional spatial strategy so it will require a different process, and that would take longer and be much more formalised. Her concern was to find some mix of the two approaches as repeating the time it took to produce the South East plan would reduce the effectiveness for any sort of dynamic process of engagement.[44]

40. We recognise that there is a balance to be struck between encompassing the views of other organisations and producing a strategy that is timely. However, there are concerns in the region that the consultation process could be improved and that organisations should be able to feed into the strategy at the earliest opportunity. The Single Regional Strategy will have a status that requires a certain level of public involvement. We recommend that SEEDA and the Leaders' Board publish their intended consultation plan as soon as they have decided upon it. We recommend that SEEDA and the Leaders Board provide us with further information as to how they will ensure broad engagement when drawing up the Single Regional Strategy. We further recommend the Government provide a comparison as to the consultation process used in drawing up the South East plan and the Regional Economic Strategy.

Measuring the performance of SEEDA

41. In December 2007, PricewaterhouseCoopers LLP (PwC) was appointed by BERR and the Regional Development Agencies to:

provide an independent assessment of the impact of the spending by each of the nine RDAs and the RDA network as a whole, and
assess RDA's achievements against objectives of both their regional economic Strategies and their Corporate Plans, and each specific programme and project.

The study focused on the impact of the £580 million spent by SEEDA between 2002-03 and 2006-07[45] and reviewed 25 evaluations covering spend of nearly £470 million by SEEDA in the relevant period.

42. The report stated that SEEDA has generated significant outputs such as creating or safeguarding over 39,000 jobs, assisting 33,000 businesses, the creation of more than 2,500 businesses, making fit 216 hectares of brownfield land for development, assisting 6,500 people into employment, helping 66,000 people develop new skills and building 191,000 square metres of commercial floorspace. It concluded overall that there was credible evidence that all the regional development agencies had generated regional economic benefits which exceed their costs, and that for every £1 of RDA spend added £4.50 to regional GVA. SEEDA compares favourably with the RDA national average with every £1 spent by SEEDA during 2002-07 generated on average £5.60 in GVA for the region.[46]

43. SEEDA welcomed the review and quoted the findings to us:

The impact evaluation framework […] gave us some quite detailed evidence on the impact of our different interventions. […] we're going to be focusing on those which have had the greatest return. Overall SEEDA was seen to have produced a return of well over £5 for every £1 we've invested, with a substantial range, up to over £11. That was in the business-focused interventions.[47]

44. Pam Alexander said that all of SEEDA's work documented in the report translated into about £2.6 billion to the region's economy. However she added, "I think that that sum is quite remote from individual people. It is actually the story in terms of new businesses, new jobs and new skills that is really relevant to individuals in the south-east".[48]

45. In 2006 the National Audit Office conducted an Independent Performance Assessment (IPA) at the request of the then Department for Trade and Industry. Overall SEEDA was seen as "performing strongly", particularly in the areas of ambition and achievement. Against the category of achievement it reported that SEEDA had delivered regeneration initiatives across the region as well as a systematic approach to business support and that these had been delivered "through effective partnership working, rural delivery programmes and significant leverage of investment into the region".[49]

46. We are reassured by the conclusions of the National Audit Office and PricewaterhouseCoopers reports, both of which provide a positive endorsement of SEEDA's work and its benefits to the regional economy. We support SEEDA using the reports to inform its prioritisation and restructuring.

47. As described above, the RES has a set of measurable targets and the actions to achieve its objectives. Paul Lovejoy, Executive Director of Strategy and Communications at SEEDA, said that the current economic context differed from when the strategy was drawn up, and the challenge remained to be competitive in a global context. Pam Alexander stressed the importance of maintaining the targets that drove the economy in a particular direction, i.e. global competitiveness, productively growth and quality of life in terms of community and environmental outcomes. Some witnesses were more critical. When asked how effective he thought SEEDA was Ross McNally gave it a five out of ten.[50] Harvey Bradshaw from the Environment Agency made the point that the RES spanned a ten year period and as such it was beneficial that decisions to deal with the economic downturn were being made with a longer-term strategic mindset.[51]

48. One of the RES's main objectives is to achieve an average annual increase in Gross Value Added (GVA) per capita. Pam Alexander admitted to us that "it is pretty unlikely that we will meet the targets for GVA per capita growth, even on the most optimistic forecasts for the next few years" but that they had discussed the situation with their partners and there had been agreement reviewing targets would not be a productive use of time. [52] She continued:

we are very clear that the RES sets us all in the right direction. It has been very important to us that the RES targets are owned not just by SEEDA, but by all the partners who will bring their mainstream activities to making it work.[53]

Reviewing targets

49. There was support for reviewing the targets. David Edwards, from the HCA, thought it would do no harm to review the RES as the economic environment has changed since it was drawn up, "to make sure that we have the indicators and measurements absolutely correct".[54] When asked about whether we needed to change the way we measure SEEDA's performance, Harvey Bradshaw from the Environment Agency agreed that the "degree to which SEEDA will be impeded by the economic situation is an issue" but he thought the RES had an effective routine for monitoring performance of the economic strategy built in and that would pick up non-delivery of some actions.[55]

50. We asked the Minister if he thought the way that SEEDA's performance was measured needed to be changed to reflect wider social and environmental responsibilities as a result of the SNR and he agreed. He said that if the RDA was changing then it would be important to measure what value it added and that the RDA should be "outcome focussed" and have "a good rapport with stakeholders". Performance should also be based on the RDAs reputation and that "stems from its ability to be able to use its resource and expertise to drive forward on the priorities and help different areas to come together, to realise their ambitions".[56]

51. He said that if SEEDA's performance indicators were to be re-evaluated then it should be formed through an inclusive debate with local and national politicians, the business community and other interested parties in the region. Pam Alexander said it was crucial that the Single Regional Strategy is an effective plan that was owned by the region.[57]

52. We agree that the Regional Economic Strategy should be concerned with setting a vision for the long term and as such it should drive direction rather than be reactive. We welcome the move to a combined Single Regional Strategy.

53. We welcome the role of partners in defining targets and note that any decision to review targets must be done with full engagement with partner organisations.

19 Q 157 Back

20 These are: 1) 100% Next Generation Broadband Coverage, 2) Science and Innovation Campuses, 3) Skills Escalator, 4) Regional Infrastructure Fund, 5) Raising Economic Activity Rates, 6) Global Leadership in Environmental Technologies, 7) Education-Led Regeneration and 8) Masking the Most of the 2012 Olympic and Paralympic Games Back

21 RES Steering Group membership includes representatives from SEEDA, local authorities, GOSE, Environment Agency, Natural England, Regional Skills & Productivity Alliance, business groups, third sector, trades unions, Sustainable Futures Group, Forum for Sustainability and the Regional Housing and Transport Boards. Back

22 Ev 80 Back

23 www.seeda.co.uk/RES_for_the_South_East_2006-2016/Annual_Monitoring_Report/ Back

24 Ev 80 Back

25 Ev 50 Back

26 Q 132 Back

27 Ev 50 Back

28 SEEDA, RES 2006-2016, Mapping the South East Economy, p 43 Back

29 Q 160 Back

30 Basingstoke & Deane BC, Brighton & Hove CC, Crawley BC, Medway Council, Milton Keynes Council, Oxford CC, Reading BC, Portsmouth CC & Southampton CC. Back