Memorandum submitted by Engineering Employers
Federation (SE 17)
SUMMARY
EEF in the South East has a good strategic and
operational relationship with SEEDA being part of their main stakeholder
groups which provides good communication links between SEEDA,
EEF and our members. Current regional economic activity has shown
that businesses are reporting mixed fortunes during the recession
with some unaffected, some in difficulties but most being cautious.
Although broadly fit for purpose at the time the Regional Economic
Strategy could have had clearer objectives focussing on the impacts
achieved rather than outputs and the whole process should be much
shorter. We welcome aspects of the sub national review but it
remains to be seen how the expertise from the business community
will be retained but we hope that the established regional business
forum (SEBUS) will be engaged within future arrangements.
ABOUT EEF
1. EEF, the manufacturers' organisation
is a trusted partner to thousands of employers around Britain.
We work on behalf of over 6,000 companies, in manufacturing, engineering,
technology and beyond. Together they employ close to a million
people. Our regional network brings us much closer to the 670
business sites that we support whilst our offices in London and
Brussels stay equally close to government—influencing the
way policy is made and alerting our members to any changes in
legislation that might affect them.
IMPACT OF
FINANCIAL AND
ECONOMIC SITUATION
ON BUSINESS
IN THE
REGION
2. The downturn has contributed to very
difficult trading conditions for large parts of manufacturing
in the South East. The global nature of the recession and significant
contraction in world trade flows over the past six months has
led to a particularly sharp contraction in new orders for export-focused
companies in the region. While few sectors have been unaffected
by the economic situation, some sectors, such as electronics and
medical equipment have been faring better, given their greater
reliance on government spending. However, there is a degree of
uncertainty about the medium term for these sectors.
3. The most recent survey showed that manufacturing
output in the South East continued to decline in the first quarter
of 2009, and a balance of companies were expecting both output
and orders to contract further in the next three months. Companies
also reported further deterioration in profit margins and the
squeeze on cash flow had also intensified. Many continue to report
difficulties when dealing with the banks eg tighter lending and
financial review processes and problems with credit insurers.
Our next survey will be published in June and we shall share this
with the Committee.
4. As a provider of business services, EEF
is also able to track calls to our helpdesks as a way of assessing
issues affecting the sector. Since autumn 2008 we have continued
to notice increasing requests for assistance in making redundancies
or moving employees to short-time working.
THE PERFORMANCE
OF SEEDA
5. The Regional Development Agencies (RDAs)
divide opinion. Many people argue that they are unaccountable
and unnecessary quangos. EEF has a number of concerns about the
RDAs, but we believe that they provide a focus and critical mass
for promoting regional economic development. Put more simply,
they are better able to address what are often region-wide economic
issues than central government (too distant) or local authorities
(too fragmented). Critics who propose abolishing them completely
have yet to come up with a credible alternative.
6. Nonetheless, EEF believes that RDAs need clearer
objectives, a greater focus on outcomes rather than outputs and
often need to work more closely together to overcome artificial
geographical boundaries. In most cases RDAs should also be commissioning
bodies, rather than delivery agents.
7. In terms of their performance, EEF published
a report in 2007[53]
which found little direct evidence of RDAs having made a major
difference to regional economic development. However, RDAs have
made a major contribution to urban renewal and have come into
their own in coordinating responses to regional crises, such as
the foot and mouth outbreak or the closure of the Rover plant
in the West Midlands.
8. EEF South East has a strong strategic
and operational working relationship with SEEDA and believes that
they are working well within changing priorities and, more recently,
challenging times.
9. We are impressed with their approach
to stakeholder relationships. EEF is represented on a variety
of SEEDA-led regional consultative groups, such as the Regional
Economic Strategy Steering Group, South East Economic Delivery
Council, and Business South East. Through these fora we provide
intelligence from employers on the economic situation and in turn
we are able to feedback information and sources of support to
our members. We have been consulted on a variety of other issues
on a regular basis eg SEERA regional select committees and Business
Link procurement post 2010. We are also fortunate to benefit from
quarterly reviews on the state of trade with senior SEEDA personnel
and the EEF Region Director.
10. We have welcomed SEEDA's recent recession-inspired
attempts to re-focus its efforts on help for business. The publication
of, Open for Business—A Guide to Business Support in
the South East listed new and enhanced grant funding eg Transition
Loan fund, Commercialisation fund and a rapid response programme
to try to help prevent businesses closing. Anecdotal evidence
suggests that some of the new initiatives have helped, for example
the transitional loan fund. However more needs to be done on raising
awareness of all these initiatives and it is too early to comment
on their effects with any degree of certainty.
11. In addition we welcome the expansion
of the "Grants for Business Investment" (GBI) initiative
beyond assisted areas to the entire South East. Nonetheless feedback
from our members suggests that the eligibility criteria may still
be creating barriers.
REGIONAL ECONOMIC
STRATEGIES
12. The process by which the RES was drawn
up and agreed, although very thorough, was over consultative and
took too long to be agreed resulting in an outdated strategy.
More needs to be done to make the process quicker and involve
less paperwork and should be replaced by a rolling plan which
is evaluated yearly. We were pleased to see that SEEDA included
specific measures for manufacturing as a key factor for regional
growth.
13. We agreed with SEEDA's aim that all regional
stakeholders should own the RES and that it should be delivered
on a partnership basis where possible.
14. The content of the RES was broadly fit
for purpose at the time it was written, but is now certainly challenging
due to the changed economic climate. This is particularly the
case now because targets, for example to increase GVA, were set
prior to the recession and funds have been diverted for other
purposes eg previously for the housing recovery and latterly recession
support.
CHANGES TO
REGIONAL POLICY
FOLLOWING THE
SUB-NATIONAL
REVIEW
15. EEF welcomed many aspects of the recent
Sub-National Review (SNR), in particular the proposals for new
Single Regional Strategies (SRS) to bring together the Regional
Spatial Strategy and Regional Economic Strategy.
16. With the failure of the Regional Government
agenda there was a clear need to address the question of local
accountability for, and scrutiny of, the economic strategies.
We recognise that the new arrangements agreed in the Local Democracy,
Economic Development and Construction Bill, with RDAs and newly-formed
Local Authority Leaders' Boards taking joint responsibility for
a SRS, rightly addresses this issue.
17. However, we are concerned that a SRS
could become subject to costly delay either because of disagreements
between RDAs and the Leaders' Boards, or indeed division within
the Boards themselves. There is a safeguard to avoid this, through
the ability of Ministers to force the process, but it remains
to been seen how effective this will be.
18. Stakeholders have a critical role in
informing the SRS process. Where previous arrangements of stakeholder
engagement have worked well, they should be maintained as far
as possible and used as examples of best practice elsewhere.
19. In the South East, EEF has been represented
at Regional Assembly level for some years via the Social, Environmental
and Economic Partners (SEEP) group which has vigorously lobbied
for real engagement within the new SNR infrastructure rather than
merely as a consultee as originally proposed. However subsequent
debate has resulted in representatives of SEEP gaining two places
on the Strategy Board, but with observer status only. It remains
to be seen how the Local Authority Leaders Board will take advantage
of the existing experience and knowledge of SEEP, particularly
those members from the business community with their knowledge
of what needs to be done in support of economic development.
20. Whichever future arrangements are agreed
it is important that the existing strong liaison between SEEDA
and the business community is maintained and developed. We therefore
hope that SEEDA will continue to see the South East Business Forum
(SEBUS), which comprises most of the business representative organisations,
as a valuable link for business engagement.
53 EEF (2007), Improving Performance?-A Review of
the Regional Development Agencies. Back
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