Examination of Witnesses (Questions 160-173)
GOVERNMENT OFFICE
FOR THE
SOUTH EAST
AND SEEDA
6 JULY 2009
Q160 Mr Smith: I was not suggesting
it was simply a question of boundaries—whatever the boundaries
are, they are as they are—but do you think that the question
of perception of identity and the extent of common purpose and
ability to learn from one another and collaborate for collective
success has been informed by the regional economic structures?
Jonathan Shaw: I do not meet so
many people who say, "I am a man" or "I am a woman
of the South East" as someone from the North East might say,
for example. It is a much smaller area and it has more of a natural
regional identity. Leaving that aside, in terms of the evolution
of the RDA, and what that has meant in terms of co-operation between
that body and the local authorities and business, I think that
it has been informed. It's a funny old chunk but that chunk is
recognisable by both organisations that I have referred to. So
that in itself means that there is a better identity and one that
lends itself to co-operation.
Pam Alexander: Can I give an example?
Out of the last regional economic strategy came the idea of Diamonds
for Investment and Growth, and that has been taken up in the regional
spatial strategy as well. We are now working very much together
to create an implementation plan focused on those city-based areas,
which will deliver more than half the growth that the region is
seeking. We led some work with the Diamonds to look at their ecological
footprint. All the political leadership of all eight diamonds
committed to stabilising their ecological footprint a year earlier
than the regional economic strategy proposed. I do not think that
that would ever have happened without the framework of intellectual
discussion of the evidence base followed by policy development,
which the RES provided. Nor do I think that it would have happened
without some sort of ongoing process of monitoring and evaluation
that enabled them to come together and say, "Well, unless
we do something together, this will not happen". It would
not have happened without the tools either. The mechanism that
we produced is a toolkit that says, "Okay, here are some
easy ways of reducing your ecological footprint." All of
us as citizens, let alone as members of organisations, have been
crying out for that. That is an example of where we have achieved
critical mass and policy focus at the regional level, but we are
not doing it as the South East. We are doing it as eight places
that have real identity in their own terms.
Q161 Mr Smith: Thank you. I have
another question for you, Pam. In Brighton, the view was put to
us that, whereas the process for drawing up the South East plan
had been about engagement, the process for drawing up the regional
economic strategy was more about consultation. Do you recognise
and agree with that view? How have you changed, or are you changing,
how you talk with, and listen to, interested parties since drawing
up the 2006 RES?
Pam Alexander: I have read what
Ross McNally said on behalf of the Chambers of Commerce, and I
must admit to being quite surprised. 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. We had very eminent people come and talk about where
the global markets were going and what sort of problems there
were likely to be if we have income polarisations, as we believed
we were seeing in the region, with many highly paid and low-paid
people, but very little in the middle. 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. I think the sort of process that we are looking for in
the future will be very different, because the integrated regional
strategy will have the same statutory function as the regional
spatial strategy, and that requires it to have a very different
process that will inevitably take longer and be very much more
formalised. My worry will be that unless we get a mix of the two,
it will take as long as the regional spatial strategy has, which
is really quite difficult for any sort of dynamic process of engagement.
Q162 David Lepper: Mr McNally
made another point when he answered our questions, on behalf of
the chamber of commerce, a couple of weeks ago. He said that,
although the RDA is supposed to be business led, his organisation
thought that its members were losing the voice that they thought
that they had in the past in relation to affecting decision making,
particularly with the demise of the regional assembly. I am sure
that you have read the transcript. He actually said that:"the
opportunity to directly influence and have a vote at the table
has gone. We will live with that, but what we would like is a
protocol, a template if you like, agreed and formulated at regional
level, whereby local authorities, county councils and the region
somehow engage the voice of business, and other stakeholders as
well". I would be interested to hear the comments of SEEDA
and the Minister particularly, and also of the Government office
on that view described by Mr McNally.
Pam Alexander: You will remember
that my chairman, when we put our last piece of evidence before
you, set out the discussions on the sub-national review as they
went forward, and made clear our position, which was that we would
have liked a lot more stakeholder engagement in the regional partnership
board as we go forward than there has been. That has been a process
of discussion, negotiation and agreement with the South East councils—as
it should be as a partnership. We have got to where we have got
to on that, which is two stakeholder representatives on the strategy
board. That won't be the end of it, and it will certainly not
be the end of it as far as SEEDA is concerned. We have a number
of committees that engage with business separately from, indeed,
the South East Economic Delivery Council itself, which I am sure
the Minister will talk about. We want very much to make sure that
business's voice is heard loud and clear. We see our own board
members as representing that voice on the partnership board, the
strategy group and the delivery boards, but we very much want
to make sure that it is kept to the forefront, and we will find
ways of doing that.
Jonathan Shaw: It is interesting
to note those people who champion the regional assembly. I wonder
what their original words were when it was first set up. Perhaps
they were not quite as effusive as they now are since its demise.
If we believe in devolution and local decision making, we cannot
have a Whitehall blueprint for the way that local authorities
and local business engage. It must be one that they develop themselves.
What we did do—it is part of my role—in terms of some
of the SNR implementation was to obtain some changes. I spoke
to local authorities and businesses, and there is now a statutory
duty to engage with the business community about developments.
That is there. As Pam said, there is the strategy board, and that
is only one of many different forums in which there is engagement.
The statutory duty is important. That is one that I recommended
to the Secretary of State arising from discussions in the South
East. You could say that might have happened anyway, but I am
not so sure it would if there had not been a politician in place
having that close contact.
Q163 Chairman: Jonathan, may I interject?
I hear what you are saying, but under the previous arrangements,
there was a formal process for engaging stakeholders that included
the business community, the trade unions, and the third sector.
By definition, if there are only two seats now on the board, one
of those will be missed out. Assuming that you have the trade
unions and the business community there—two parts of commerce—the
third sector is not being consulted any more. I hear what you
say—that there is a statutory duty to consult—but
on the face of it at least, the evidence suggests that those three
groups will not be consulted as well as they used to be consulted.
Jonathan Shaw: The stakeholder
group nominates the two people to sit on the board. It is a smaller
board, and there is a type of focus. Is it what it was? No, it
isn't, but it is certainly an improvement on the original decisions
taken by local authority leaders. We were able to influence that
and shape the debate, and this is what we have arrived at. I know
that it isn't seen as being as good as what went before, but if
we believe in devolution and local areas developing their own
consultative processes, we can't have tight prescription from
the centre. The relationship varies from region to region, but
as I said, there is a statutory right to consult and engage, and
this is not the only forum in which there is discussion. It is
an important one, but as Pam said, the South East Economic Delivery
Council has business representatives, trade union representatives,
local authority representatives, and public sector delivery bodies.
That is one of many.
Colin Byrne: I can add to that
from practical experience, because I had the dubious pleasure
of sitting on the various committees of the regional assembly
as they drew up the South East plan for about five years and I
saw the engagement in practice. Clearly, there was a level at
which political decisions were made, which was generally the South
East assembly, where everybody had a vote. At the time, the key
debate was about housing numbers, and of course the business sector
said, "Look, we're disfranchised here," because all
the local authorities gathered together and plumped for a series
of housing numbers that were much lower than business thought
was appropriate and, indeed, the Government thought was appropriate.
But where the majority of the work went on was in the technical
working groups that sat some way below that big assembly meeting.
It covered the 95% of issues that were not politically contentious.
The business representatives, voluntary sectors and environmental
partners played a very important role in thrashing out those issues
at that level. The expectation is that, under the new arrangements,
there will still be that engagement with the business sector and
the environmental sector to thrash out those issues. It is an
important point, when it comes to the actual decision making,
that there is a link back into the democratic role. That is why
the partnership board is made up of leaders of local authorities
alongside the RDA. I think that is probably appropriate. But at
the working level, there will be enormous amounts of engagement
that will be similar to the engagement that took place in the
production of the South East plan.
Q164 Gwyn Prosser: We have talked
about priorities already, but within the priorities of the RDA,
is it not a fact that with the recession we should be calling
for more intervention and more work from the RDA, and also, at
the same time, your remit is expanding in terms of planning, spatial
issues and so on? Going beyond the comments you have made so far,
Pam, is there any more paring down you need to do to meet your
real priorities and is there a danger that issues with regard
to the protection of the environment might be squeezed out of
bed, so to speak?
Pam Alexander: As I said earlier,
in relation to many of the very important elements of the RES,
our job has been to get other agencies working to achieve them.
I see that as something that was always about not intervening
ourselves, but making sure that we built the capacity in other
organisations and agencies, and the focus, direction and commitment,
to make sure that they delivered on those agendas and that, in
our agendas, we took them very much into account, so that we were
looking at sustainable growth. Yes, I think you are right and
I think it is generally known that I am about to launch a very
major restructuring of the agency, which will not be about trimming
bits off everything. It will be about refocusing very clearly
on those things that will enable us to have the economic research
and analysis to underpin where we make our own interventions and
also to contribute to the spatial and economic planning that will
underpin the work of the regional partnership board. We did refocus
a substantial amount of our attention and financing from last
summer as it became clear that businesses needed different things
and, in listening to what businesses said was needed, we have
refocused our resources accordingly. For example, we have brought
Business Link to focus on free health checks and 11,000 businesses
have had those since last October. We asked Finance South East
to create new funds that would enable businesses that could not
get finance to access finance to enable them to continue to grow.
That has been very successful and has now been overtaken by the
work that the Government are doing to create new venture capital
funds and also loan guarantees. So we have already done some reprioritising.
We need to make a really major shift to focus on those sectors
and businesses that will bring us out of the upturn, whether it's
in the areas of the region which have both university and private
business focus on really world-class, collaborative research,
or whether it's those parts of the region— [Interruption.]
Jonathan Shaw: Has someone put
the kettle on?
Pam Alexander: —whether
it's those parts of the region that are looking to create new
opportunities. So, yes. And it won't be, as I think I read somewhere
in one of the transcripts, something called SEEDA-lite, which
was a bit of paying for everything. It will be about really defining
where our focus is.
Q165 Gwyn Prosser: In terms of
that help, you've told us about the input into helping businesses.
What is the output? Are you able to tell us how successful or
otherwise those efforts have been? Have you got any benchmarks
or results to show us yet?
Pam Alexander: The most recent,
of course, is the impact evaluation framework, which gave us some
quite detailed evidence on the impact of our different interventions.
As I said earlier, 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. We will be learning lessons from
that. One of the things that I think we'd want to take very carefully
into account is that that was very much focused on creation of
jobs, and there is other work that we do which may take longer:
for example, investment in skills may need to be a longer-term
investment. Certainly, investment in physical regeneration, as
I think each of you know from your own constituencies, is a long-term
business. We mustn't be discouraged by the fact that results are
not instant. I think if we look to the long-term returns on investment,
we will see substantial ones, such as in Hastings, where we've
already seen, over the first five or six years of that programme,
an increase in the average wage in Hastings and Bexhill from 69%
of the regional average to well over 80% of the regional average.
That's tangible for those people. We've seen rents double in Hastings
due to the new work that's been done to create not just new floor
space but new businesses and new skills, so I think that there
is some real, tangible evidence on the ground of impact, and what
we're going to be doing is majoring on that in the future.
Q166 Gwyn Prosser: How do you
feel about your particular RDA, SEEDA, having the smallest budget
of all the RDAs?
Pam Alexander: Well, obviously,
I'd much rather it had a much bigger budget. At £20 per head
for the region that is the engine of the UK economy, I think we
could be investing a lot more. Having said that, because we don't
have large budgets, we have to invest the skills and time of our
people, because that's how we try to create capacity elsewhere.
That's the point about getting other agencies and other organisations
to work more effectively together.
Jonathan Shaw: Some of the work
that the RDA does that isn't always easy to quantify and to measure
is the work that it does under the radar. One of the examples
from the economic council has been to bring the banks together.
We've been able to successfully do that—to get them in the
same room with businesses—which is vital for them to understand
each other. Not least of all, they challenge banks about delivering
on what their national leaders say that perhaps some of them feel
isn't always borne out at a local level. That's an important bit
of work that's been undertaken, as well as the Enterprise Finance
Guarantee Scheme, under which I think in the region of £50
million has been loaned to businesses. It is being the provider
of information, and also ensuring that companies take advantage
of things like time to pay, which isn't the most catchily named
scheme but allows businesses to delay their tax payments to the
Government. To take our region, 24,550 businesses have had a delay
on their tax returns, and that's kept £432 million in the
South East economy. Mr Prosser's county has £62 million alone.
That's a huge sum of money, which you've delivered on your own,
of course.
Q167 Gwyn Prosser: I am grateful
for that, for your highly successful visit to Dover and for last
week's Dover ministerial summit, which everyone is still talking
about. My last rather cheeky question, which I did not compose
myself, reads, do you think that SEEDA is focusing too much on
the needs of places like Chatham and not enough on business development
across the region?
Jonathan Shaw: Absolutely not,
I would say that it hopes enough for Chatham. Where the RDA has
been able to concentrate its efforts has been up to some of the
partners. The RDA cannot do everything on its own. It requires
local authorities and business, and co-operation from other public
delivery bodies. Where you see success happening, you will see
a cemented partnership. What you have just referred to, Gwyn,
and the work you are doing in Dover is an example of organisations
coming together on the same page and having a clear focus. Where
that has had some time to bed in, the fruits are evident. Pam
has referred to Hastings, which is a good example. There are others
around the region. They cannot be in every place. Some of it is
about partners and other bodies making some of the running as
well.
Q168 Chairman: I think that we
will try to make a bit of quick progress because I want to keep
you for only another quarter of an hour. Given what you said,
Pam, about the need to prioritise, one of the concerns I have
been asking about in our sittings, as I am sure you have seen
in the transcript, is that there are a number of business parks
that do not have businesses yet. There is a beautiful service
business park on the edge of my and Gwyn's constituencies called
Betteshanger and another beautiful business park called Eurokent
in the centre of my constituency that have no businesses. And
yet, incubator units, which you have also funded, are completely
full. My question is, how are you deciding to make those sorts
of investments? How long do you envisage it taking to fill them
up? What are we doing about making the little businesses that
go into those incubators grow big enough to be able to move out
on to those business parks, as well as pulling major inward investments
in from overseas to fill the business parks?
Pam Alexander: That is absolutely
part of the purpose. Taking the question more generally, it is
absolutely crucial that in making investments like that we are
working with the business community and the local authorities
in any area to understand the immediate objectives and the long-term
prospects. It would be true to say that looking to the future,
we will be looking to invest in business-critical infrastructure—those
elements that really would be needed by business today. Hopefully
we can grow and find spaces for small endogenous businesses so
that they can move on. That critical move-on stage is vital. We
also need to have the sort of world-class business space that
we can attract businesses to from around the world, as you have
suggested. That will not always happen instantly, but we need
to have enough to produce them, particularly in those parts of
the region that do not automatically have an attractive offer.
We do not have any difficulty in attracting certain businesses
to the sectors and clusters that already exist in parts of the
western side of the region, but we have to create those sectors
and clusters of attractiveness in the eastern side of the region.
It is right that we should try to do that and have tried to do
it. What we need to do is make sure that the business support
lines are absolutely developed so that we can create routes to
the future both from our internal businesses and external ones.
I do not want there to be any places where we have built something
that will not be filled, but I want us to recognise that regeneration
is often a long-term business. Unless you take the first few steps,
you will never create the tipping point that will bring those
businesses—perhaps with one or two core businesses to cement
the opportunity—to the places that currently do not have
as much thriving business as we would like for the future.
Q169 Mr Smith: You touched on
this earlier, Pam, in relation to restructuring given the changing
role of the RDA; how far do you have the staff with the skills
and expertise in areas like spatial planning and the environment
who you are clearly going to need when drawing up the single regional
strategy? How are you planning to shift the balance of your staff
between those with those sorts of skills as compared with economic
generation experience?
Pam Alexander: I am trying to
shift the balance of the staff towards economic development and
business needs, but that is because we are able to work with others
to achieve what is needed on the regional strategy. We will very
much be working as a virtual unit with the staff who have been
involved in the past with the regional assembly in creating the
spatial strategy, so we'll be putting together our experts in
economic development with their experts in spatial planning. We
are not going to try to duplicate or in any way double up; we're
going to create a virtual team that is able to do both. There
will be new skills needed in there, I have no doubt, and we'll
need to make sure that we develop them or, if necessary, buy them
in, but your reference to the environment leads me to say that
we will not try to do everything ourselves. As I think I have
said already this session, we really need to be working with those
who are the experts. Our job is to build the capacity and make
the partnerships work by bringing people together to lead on those
areas, rather than by trying to become the experts in everything
ourselves.
Q170 Mr Smith: I take the logic
of that approach. How will sufficient coherence to the whole process
be ensured? Perhaps that is a question for the Minister as well.
Pam Alexander: The process of
regional planning?
Mr Smith: Yes.
Colin Byrne: May I answer that?
Pam has mentioned the virtual unit, which brings together the
planners who used to work in the South East England Regional Assembly
Ltd alongside experts in SEEDA—
Q171 Mr Smith: Sorry to interrupt,
but who will be employing the spatial planning and environmental
people while they are collaborating with you in this virtual unit?
Colin Byrne: Technically, they
are employed by SEERA Ltd, which was a stand-alone body which
provided that service to the regional assembly, which will now
be providing that service to the partnership board—the joint
local authority SEEDA board that oversees this production of the
strategy. The plan is that SEEDA and the local authorities will
recruit a director of this new virtual unit, who will be responsible
to a small executive board on which Pam will sit, along with Chris
Williams, the chief executive of the Buckinghamshire authority,
for the local authorities. They will report into the strategy
board and the partnership board of the new arrangements for producing
the strategy. Ultimately, it's for the partnership board to take
the strategic decisions that will influence the direction that
the strategy will go in, and the members of the team will follow
those strategic decisions.
Pam Alexander: Perhaps I should
say this is already happening. We've already had several meetings
of the executive steering group which Chris and I chair jointly.
We have already brought together our own teams within SEEDA with
SEERA Ltd, which is reporting in a sense to the South East England
councils, but definitely working together with my staff to create
the joint effort. Also, we have the first meeting of the regional
partnership board later this month. This is coming together, and
that cohesion is already evident.
Q172 Chairman: Before you go on,
Andrew, may I take you back to something I was asking about earlier—consultation
and stakeholders. Stakeholders such as businesses, trade unions
and the third sector have said to us that under the old arrangements
they had officer resource to help them formulate their ideas,
but that officer resource has gone. If we can take SEERA Ltd and
move it into this new group reporting in the local council leaders
board, as you suggested, why can't we also make sure that some
officer resource is provided to those stakeholders so they can
continue to have their say?
Colin Byrne: I believe that the
offer from SEEDA and local authority leaders is to give stakeholders
some support and to provide them with the back-up to make an input
into the process. I believe that the stakeholders are considering
how they should make best use of that resource.
Jonathan Shaw: I agree.
Q173 Mr Smith: Related, a follow-up
question to the Minister. Do you think that the way SEEDA's performance
is measured will need to be changed to reflect the social and
environmental considerations in the single regional strategy?
Jonathan Shaw: I think that we
will have to look at how we measure the RDA. If it is changing,
we need to look at what value it is adding—gross value added.
We need to be sure that it is outcome focused and that it has
a good rapport with stakeholders. We can measure certain things—gross
value added, and so on—but it is reputation as well. 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, whether in a sub-regional
organisation like PUSH, the other MAA that is being developed
in north Kent, or in assisting with the ambitions in Dover. As
we see the regional strategy emerge, it is important for us to
have that wider debate within the region. What do we want from
it? How are we going to measure that? It is not just ourselves
and politicians—be they local or national—but it is
important that the business community and other stakeholders have
an input into that debate as well. It will most certainly be different.
Quite how it will land will be determined in our region.
Pam Alexander: May I add that
I think that in some ways that difference will be building on
what we currently have? We will increasingly try to measure the
outcomes that we deliver in terms of gross value added, as the
impact evaluation framework did. But the plans that we produce
are not there just as pieces of paper. Clearly, as a statutory
framework, which then cascades through the planning system, it
is crucial that it is an effective plan that is owned by the region.
As the Minister says, that is absolutely something that people
believe in. We also need to provide the framework through which
we argue for the investment that we need, and through which we
work together to deliver the investment that we need—whether
it is for the growth of the appropriate housing for the region,
the transport infrastructure, the skills infrastructure, or the
business support. That is how we will measure whether the work
on the integrated regional strategy is successful, and by whether
it creates a framework that enables us to drive sustainable economic
growth and a better quality of life through the region.
Colin Byrne: Can I just add that
a single regional strategy will be the judgment of whether we
have sustainable development right in the region? Public examinations
of the drafts of that will be led by the planning inspectors.
They will form a judgment on whether, as a result of the engagement
processes that have gone on, we have got it right. They will also
come to a judgment about how effective the consultation and engagement
processes have been, as part of that process. So, at a point in
the cycle of producing it, we will have some quite clear evidence
as to how we have gone about producing that strategy.
Chairman: I am quite content to wind
things up now, unless anyone is desperate to say anything else?
Thank you all for coming. This has been quite a marathon session
for you. I am very grateful and we will discuss our report with
you at some point.
Jonathan Shaw: We look forward
to receiving it.
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