UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 516-i

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

SOUTH EAST REGIONAL COMMITTEE

 

South East England Development Agency and the Regional Economic Strategy

MONDAY 11 MAY 2009

(AYLESHAM)

PAM ALEXANDER, JIM BRAITHWAITE and PAUL LOVEJOY

COLIN BYRNE, SHEILA CARROLL and JANE VAUGHAN

 

Evidence heard in Public

Questions 1 - 62

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the South East Regional Committee

on Monday 11 May 2009

Members present:

Dr. Stephen Ladyman (Chairman)

Ms Celia Barlow

David Lepper

Gwyn Prosser

Mr. Andrew Smith

 

Examination of Witnesses

Witnesses: Pam Alexander, Chief Executive, Jim Braithwaite, Chairman, and Paul Lovejoy, Executive Director of Strategy and Communications, South East England Development Agency, gave evidence.

 

Chairman: Welcome to the first public evidence-taking session of the South East Regional Select Committee. Welcome to our guests. Would you like to start off by introducing yourselves?

Jim Braithwaite: I am the Chairman of the South East England Development Agency.

Pam Alexander: I am the Chief Executive of SEEDA.

Paul Lovejoy: I am the Executive Director of Strategy and Communications at SEEDA.

 

Q1 Chairman: It is good to see you all. Thank you for coming. Thank you for submitting evidence to us. Do you want to start off by making a statement or would you rather just go into questions?

Jim Braithwaite: We are happy to go into questions. The only thing I would say is that I am really delighted to be sitting here in front of some of our local MPs. It has been one part of the architecture where we needed more accountability. It would be better if there were more from other parties. As we know, that is not to be. SEEDA is here to serve.

 

Q2 Chairman: You will not get any argument from us. Maybe that is a place for me to start. I will come to your responsibilities in the region in just a moment. In the evidence we have received there have clearly been mixed feelings. Some authorities said that SEEDA is dreadful, they do not like it at all and they do not want to have anything to do with it. Others have said that it is a wonderful organisation. There seems to be a party political split there. How are you trying to overcome that split? Do you find that some councils will not have anything to do with you and others are only too happy to see you, or are even the ones that are publicly antagonistic privately helpful?

Jim Braithwaite: I think you have really summed it up. We have 74 different councils in the south-east. That makes us quite special as a region. We have district councils, unitary councils and we have county councils. We try to be a bridge between our councils and central Government in the things which the whole country is trying to achieve in terms of the growth of the economy. We have spent a long time working with hostile councils who did not want anything to do with regional architecture. But here in Kent, for instance, we have been able to work with councils of all different shapes and sizes to achieve the end. If you look at the results we have been able to achieve, they are pretty pleased even though they may moan on the sidelines. Those of a different political persuasion can still be very pleased. I am happy with that.

Pam Alexander: One of the things we have seen through our work with the regional assembly which unites us all is our understanding that the south-east is both the engine of the UK economy and a hugely diverse region and that we have something to bring by working together will those of all persuasions in all sectors. I would agree absolutely with what the chairman said. Clearly sometimes we disappoint those of all complexions as well. For us the main thing is to get across our focus and ensure that we are working to enable partners as well as to support them.

 

Q3 Chairman: We will come back to the sub-national review and how you are going to engage with people a little later on. Maybe that just leads us into the question of just how you see your key responsibilities. We know what it says on the brief and on paper, but what is the role of SEEDA in the south-east region? How do you see it might differ in this region from in other regions?

Jim Braithwaite: We are the largest region, with over 8 million people, and we have a very diverse economy. As Pam has just said, we are the leading economy in the UK, the real locomotive. Sometimes that is challenged by London because of the City, but you can see that when the City has a downturn we still have to keep going. We provide 400,000 people who go into London every day, a very important part of their work force, but our job is to get the economy of the south-east. We help with the planning; what we are trying to do is to work with business organisations to improve their performance, to work with central government to let them know what the south-east needs, and to work with our local councils to deliver on the economy. That is even more important now that local councils are being tasked with making their local economies grow.

Pam Alexander: If I may add to that, I would draw out two differences between us and some of the other regions. First, we have a very, very, very small budget in the context of a very, very large economy. Therefore, it is really important that we do not just see ourselves as a bank to support projects, but that actually we are about working to create partnerships that draw mainstream funding and, through such things as the regional funding advice and the money that we draw in from Europe, actually leverage more public sector and private funds into the work that we do.

Secondly, because we have such high economic activity rates in the south-east we are not simply looking to create jobs, we are looking to create high-value jobs and to increase the skills of people, particularly in those parts of the region that are under-performing in comparison with the average. In a sense, we are a microcosm of the whole of the UK in that there is as much diversity between the richest and most deprived parts of the south-east, as there is between the greater south-east and the north of the country.

 

Q4 Chairman: So would you say that the south-east is unique, or are there things that you can learn with other regional development agencies? Do you have discussions with other regional development agencies about best practice?

Jim Braithwaite: Yes, we do. One the strengths of the RDA movement is that we have always had a very close working relationship with other regions and we look to co-operate, we look to have best practice. In fact, I will not speak for chief executives, but I know that one of the topics that is always on the agenda at chairs' meetings is best practice. Each region at each meeting has an opportunity to present to the other eight exactly what they have done which is worth looking at and worth copying. We have had some very good co-operation between ourselves and the north-west, for instance, on energy policy; and with Yorkshire and the north-east on science. So we do try to work together. London, ourselves and the eastern region are very strong; the greater south-east works very closely together.

 

Q5 Chairman: You have painted this picture-as I imagine we all have around this table-of the south-east as the economic powerhouse and a key part of the UK economy, but equally it has areas of severe deprivation, as we can see here in Aylesham, which is hardly a wealthy community-not far from my own constituency, large parts of Thanet, Hastings and Brighton. What are the challenges in dealing with those sorts of issues? In your evidence, as well, you have suggested that the polarisation is becoming greater and not smaller.

Jim Braithwaite: One of the things that I am most proud of is the growth that we are beginning to see in deprived areas in the south-east. You have them in Oxford, sitting right where Andrew lives in Blackbird Leys. Also, we think of Surrey as being leafy and wealthy, but I have visited some estates there that have got the same deprivation problems. Unfortunately, when you are poor in the south-east in relation to the rest of the economy, it is a lot worse. I am from the north-west and have visited areas of the north-east and you do see a vast contrast. SEEDA has tried to focus on that, and one of the tenets during the first five or six years of our existence has been to try to raise the economic game of those poorer areas to at least the average of the south-east. SEEDA'S board felt that that was the most important thing for us to do, but it is a difficult trick, particularly if you do not have all the tools that are needed.

As a comparison, Kent, East Sussex and the Isle of Wight have together got around 2.4 million people, which is about the same size as the whole north-east region. We have £200 million on average to spend on 8 million people, but I would suggest that the north-east has a lot more to spend on its 2.4 million people.

 

Q6 Chairman: We will come to some questions about budget in a moment, but are you consciously trying to focus your existing budget on areas of deprivation, and have you done any analysis of how your investment pattern merges with the deprivation pattern in the south-east?

Pam Alexander: I think it is quite hard to do that because, as Jim has already said, a lot of the deprivation is actually dotted around areas that appear to have great prosperity. Parts of Oxford and urban south Hampshire, for example, are diamonds that contain great diversity within them. I think that the different regional economic strategies that we have had over the past 10 years have had different approaches to the issue. We started off with a very clear identification of priority regeneration areas across the south-east, and much of our physical regeneration investment has been directed at the coastal areas and some of those particular pockets of deprivation in our cities. As we have taken the second and the third RES further forward, we have focused increasingly on how we make our mainstream programmes. Business support, for example, reaches out to hard-to-reach groups to create enterprises in deprived areas and look at ways of using our skills to upskill the work force who already have jobs there, so that there is an opportunity to increase average incomes and bring higher-income jobs into those areas.

One of the biggest lessons that we focused on-of which Hastings is a good example-is the importance of treating skills as the first route to better jobs before trying to bring in better businesses, so that local people can actually achieve those jobs. During the five years that we have been working in Hastings, the average incomes have risen from 69% of the regional average to 74%. Although the index of deprivation still shows that there are still very serious problems there, that is the sort of trend that we hope to see.

 

Q7 Chairman: I presume that you do not do that sort of work in isolation, so who are your key partners, and how do you identify the partners that you need to work with? Are they third sector partners or council partners? How do you pull all those strings together to get that sort of project moving?

Pam Alexander: We always look first to the local authority, because we would not go to an area without having a collaboration of willing partners in the local authorities. We then look to be business-driven, because that is the nature of our own ability to bring to an area links to the private sector and, working with the community, the voluntary sector. We always try to put that together. One of the key characteristics of our approach to regeneration has been to try to look across to a comprehensive approach. In the early days, it was very much about building physical infrastructure, but it is now very much more about working with all of the public, private and voluntary sector partners who can increase an area's well-being.

 

Q8 Chairman: You said you would only work with willing partners, which brings me back to the councils that just don't like you on political grounds. Are they short-changing their citizens because you cannot work with them?

Jim Braithwaite: I don't think so. I think that when we were first on the ground, over 10 years ago, there was a great deal of suspicion from everybody about why we needed a regional development agency. As a businessman in Sussex, I had been very engaged with the TEC movement, and I remember thinking, "Why do we need yet another grouping?". There was suspicion and everybody suffered from that. However, SEEDA has made itself very useful. Although it did not have a large budget, when it had money it could spend it without fear of contradiction, and it was very good on its promises and made itself useful.

Pulling together an economic strategy for the region was one of the first things that it did. People started to look at that and to see how ambitious we could really get. I think that because of that we made ourselves useful to councils both hostile and friendly. If the board looked at what it has done over the past 10 years, you would hear quite a debate going on around the table-"We have spent half our budget in the east of the region, in the Kent area and the Sussex area, why is that?" It is because they were the deprived areas of the region, but then we see how we have balanced that by investing in science and innovation to the west of the region, where they do not need as much direct help from the agency, but do need help for businesses to find new markets or bring on new products. That is what we have tried to do.

 

Q9 Chairman: To what extent do you look at national priorities when you are trying to decide regional priorities?

Jim Braithwaite: I always say that we are a bit like Janus, we have to look in both directions-up to Government and down to the region. For a long time we led the RDAs on science and innovation, and we still do. What was very apparent was that the Government were very keen to increase the amount of economic development that we got out of our science budget and to look at how we were spending on things. There was a national policy that had to be translated into the regions. In the south-east, we have tried to make sure that research and development were not just something that we did but was a business that could produce the GVA-the growth-that we were looking for. We have tried to do those types of things and to work with the Government to translate policies into local activities.

 

Q10 Chairman: Could you do us a little note about the efforts that you have made in terms of science? You said that you are the lead agency in the country on science. I would be interested to read a little more about what you have done in that respect.

Jim Braithwaite: Delighted.

Pam Alexander: We can cover both angles. We lead for the Department for Innovation, Universities and Skills now, and, clearly, there are priorities set by Government that we are linking into for the RDAs. Of course, we also have our own science, engineering and technology advisory council, SESETAC, for the south-east, which advises us on how best to focus our work.

Chairman: On these general issues, does anybody else want to come in before we move on to questions of budget?

 

Q11 David Lepper: In the early days of the RDAs there was a criticism that they would only focus on urban areas and rural areas would miss out. Is that a criticism that you still hear and what would you say about that early criticism in terms of SEEDA's work?

Jim Braithwaite: Yes, I think that there was this idea that business people don't understand rural areas. On every committee that I have served on, before and since I became chairman, there has always been somebody from the rural side and we have always had big discussions. In fact, the RDAs fought tooth and nail to make rural things a main part of what they did. I remember Lord Haskins producing a report that eventually gave the economic performance for the regions in their rural states to the RDAs. It was a great celebration at the time.

We used to hear a lot of complaints about rural policy from the Government. I do not think that you hear those complaints now, given the economic side of things. Farming goes up and down. If you are in livestock farming at the moment, you are up. This time last year, the cereal farmers were in good voice. In our region, however, farming is very, very small, compared to the business that goes on in the rural areas. We have more than 100,000 businesses that are in rural areas. That is the way we live. Our housing is very much the same. It is part of that mainstream activity. So I don't think we have short-changed rural life at all. I think that we have done very well by it and we continue to do so.

Pam Alexander: It might be worth mentioning that there are several substantial programmes that have focused specifically on rural areas, for example the market towns initiative. We also work with Europe on its rural development programme. Of course, even in terms of our sector consortia, which are the seven groups that cover 25% of the businesses in the south-east and are focused on driving new products and new markets through our most high-growth sectors, we are working very closely with the land-based sector, to see how we can support it in terms of diversifying rural economies. Alongside some of our physical programmes for investing in rural buildings, that has enabled quite a large impact to be made in small ways that trickle out into the surrounding economies.

 

Q12 Mr. Smith: In terms of the overall impact and the overall difference that SEEDA can make, partly because our region is so diffuse and so large, with a very big economy, and you are a relatively small body, SEEDA may seem somewhat remote and perhaps marginal to many people's everyday concerns. To our constituents, if they were here and able to ask you in the round what difference you have made, how would you sum up the difference that you have made to the region?

Jim Braithwaite: In Oxford, for instance, we have been very much concerned with the skills levels in some of our more deprived areas, such as Blackbird Leys. We had very early investment just in reading and writing. One of the first surveys that SEEDA did on the skills of the region showed that some of our basic skills were not there. That was not something that was being addressed very well by the Government at the time. Those skills have improved since then. SEEDA invested a lot of money to do that. Why was that? It was because we could see the jobs that were going to be needed in the Oxfordshire area. BMW had come to us to talk about the expansion of the Mini and about what they were going to invest; the local people had to rise to that.

Those were some of the things that we have done. We have the same situation here in the coalfields, where we are looking not only at skills but at business opportunities, including new places where people can set up their own business. One of the business parks that we have developed just outside Canterbury is full now, and you would never have guessed that there would even be a demand for something like that. However, it is there.

Pam Alexander: If we are looking at it more generally, we would say that, whether you are a business, an individual, a local authority or a group, we are here to help you to improve your performance, in terms of economic growth, and to do it in a way that gives due respect to quality of life and all of the things that make us value living in the south-east. So we would point to the number of jobs that have been created as a result of our programmes, the skills that have been improved and the employment that is being created through physical regeneration projects, which have changed the infrastructure of places to enable them to perform better. All of those projects add to opportunity and capacity; we believe we have added to those things.

The impact evaluation report, which was recently published, suggests that you can translate all of that activity in the last five years into about an additional £2.6 billion to the economy. However, 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.

 

Q13 Gwyn Prosser: On the issue of supporting new business, you do most of the work through Business Links and so on. The anecdotal evidence that other MPs and I get in meeting business people who are venturing into a new area or starting up a new business is that so many times when they have had their first interviews or meetings with Business Link, your agency, they say, "We didn't quite meet the criteria," or "All I was offered was a training course," or "There was no actual real support to fill the gap that I have." Usually, the gap includes some measure of funding. What is your response to that?

Jim Braithwaite: The problem with businesses is that you cannot please them all the time. Sometimes, the act of saying, "You need to do a bit more homework on this business idea before you get investment" doesn't go down too well. We have tried to improve the performance of Business Links. They have been under the direct control of the RDAs for a couple of years now. Although the budgets have not gone up, the performance of the Business Links certainly has. We are trying to see more businesses than ever before.

When we do our surveys, both nationally and locally, of how Business Links are perceived, we get responses in the high 80s, percentage-wise. The average is in the 90s. That is much better than Marks & Spencer gets and other national organisations would be delighted with it, but I am always disappointed when I hear that we have not pleased everybody. As a businessman, I feel that we should be doing better, but we are not always able to meet the needs of companies. We try to review that and work as hard with the FSB and local chambers. In fact, a local chamber will be opening up in Dover soon. I will go along personally and talk to local businesses to ensure that we are trying to meet their needs. You are not always able to meet those needs, but we try our best.

 

Q14 Ms Barlow: You mentioned Business Links. There have been criticisms in Brighton and Hove of Business Links taking a lead in ways that are virtually competing with other local business. What criteria do you use for Business Links? Do you work only with people who come and ask for your help?

Jim Braithwaite: I have not heard that criticism in Sussex-I know a little bit about the architecture in Sussex, as you would expect. The core chamber down there is also the contractor for the Business Link. It has always been very integrated in Sussex. Whether it competes with other business organisations is always up for grabs-they are businesses in their own right. SEEDA has to be very careful that it contracts the right people to deliver the Business Link service and that they deliver good value for money.

I believe that Sussex, so far, has been one of the better-performing Business Links, but we are always interested to hear what people have to say. We have recently had some conversations that we can do better at to ensure that other business organisations are supported, but I go back to what I said to Gwyn. It is sometimes hard to please business. You are sitting in Government at the moment so you know what it is like: even when you are doing the right things, businesses can often find a reason to complain.

Pam Alexander: If I may add, it might be relevant that the task of Business Links has changed substantially through the new business support simplification programme. They are now focused on being a signposting service of information and diagnostics. They then broker those into the companies that will provide the services. Over the last few years, since 2005, they have extended their reach to about a fifth of the businesses in the region and more than doubled their intensive assist to those businesses.

Your particular question was how they reach businesses. At the moment, there is a strong campaign to try to get businesses to go to their Business Links, particularly to get the free health checks which will enable them to take a view of what other support they then need to go further. We are very pleased, actually, that a campaign that they ran increased the people coming to them by 70% over that period. They have already given over 8,000 health checks since October. We believe this is absolutely fundamental to helping businesses to survive the current difficulties. If they can then be brokered on to those who can provide them with the services, whether it is for creating business plans or knowing where to go for finance, it is very important.

We have never worried very much about SEEDA getting credit for the work that we do through other organisations, whether Business Link or Finance South East. One thing that we have probably realised is that that regional architecture needs to be more transparent so that people know where to go for what. Finance South East is a very important part of that picture, because it now has a funding escalator of £20 million that can enable businesses to access finance at any stage of development. That is a particular signpost that we are very keen to encourage Business Link to give.

Jim Braithwaite: It reminds me of another point on reaching out to people. In Brighton, for instance, the Business Link set up a desk in the Western Road shopping centre to ask people to have their free recruitment diagnostic check. It took people several visits to believe that the service was free. When they eventually realised, it worked. We have completed many thousands of those in the Brighton area and they have been well received.

Chairman: Since you are giving away things for free, I will ask Celia to ask you some questions about the budget.

 

Q15 Ms Barlow: That leads in quite nicely. On the overall budget, you are funded by several Departments, and the money goes into one large pot. Does this mean that you can be completely flexible about how you use your money, or does each Department give you specific requirements so that you have got to spend money on what we are giving it to you for?

Jim Braithwaite: That is a knotty question. I think that in the original idea of RDAs, there was no extra budget, so the budget had to come from Departments. Each Department was asked to contribute and the ones which did so were largely the Office of the Deputy Prime Minister, which is now CLG, and DTI, which is now BERR. Business and community budgets came in and some of the other spending Departments gave some budget, but it was very difficult, because civil servants like to give you lots and lots of reasons how they want the money spent and delivered, but they didn't take account of what we were seeing in the regions and how we would like to see the money.

I remember that, when I became chairman, I used to walk around to meetings with Ministers and civil servants with two boxes of foolscap paper, which were the briefings that we got on how the money should be spent. I remember that I gave it to Mark Gibson, who was the director general in charge of RDAs and managing our relationship with Government-he is retired now. I gave them to him, and when he picked them up, I think he got the point. It then got a lot simpler and we got a single pot. The money goes into it, but then the RDAs are allowed to take on the targets and to spend the money where we feel that we could make it work.

Pam Alexander: There is a two-way process too, because, increasingly now, with the single pot, our contract with Departments is that we will help to support them to achieve their PSA targets. That means that we have the opportunity to feed into those policies about how we feel that the PSA targets need to be developed in order to support us. For example, our region has one of the highest research and development in the country. If we want to support that and if we want the country's investment in R and D to increase, we need to do it in ways that work for our businesses.

One of the areas where we have gained most in flexibility recently-in theory at least, although we still have to test the practice-is skills, where we really need to be able to invest in higher-level skills, not just in level 2 and below. We were very pleased to get the Train to Gain flexibilities that enable us to give level 2 performers who already have a level 2 the opportunity to change their focus and retrain. We need even more flexibility to invest in higher-level skills, but we have been able to feed into that policy and identify how the PSAs need to be changed, if they are to deliver for the country's broader objectives.

 

Q16 Ms Barlow: The overall budget-the single pot-is decreasing over 2007-10. Do you have plans to compensate for this lack of funding?

Pam Alexander: May I explain first why it is decreasing and then what we are doing about it? There are four relevant points regarding the cuts that we are facing. First, all RDAs faced cumulative 5% per annum cuts in the last comprehensive spending round, so our corporate plan starts with reductions on our previous levels of spend. We have had money taken from our budgets to fund some of the Government's investment in the needs of the recession, in terms of housing and business support. We have lost about £27.5 million to those programmes. We have a very substantial shortfall in our capital receipts, and-frankly-planning forward we are not anticipating planning receipts over the next two years. Hopefully, we can perform better than that, but in terms of prudence, we take the view that we should assume that we shall not. So that is £17 million of our corporate plan budget, and then another £8 million that we were hoping that we would get anyway.

 

Q17 Chairman: Just for the sake of the recording, you said £27.5 billion?

Pam Alexander: Million. I would love it, Chairman, if it were billions, but sadly it is not.

We have lost about £52 million off the corporate plan budget; and at the moment we are working out how we should address that. In the past six months, we have also refocused our budget very substantially to ensure that we really are putting the necessary focus on helping businesses struggling through the recession. In particular, we are investing in coming out of the recession ready for the upturn. That has required much refocusing of our business support budgets and some very substantial cuts across the board in the budget. We are very clear that we will not renege on legal commitments to our partners, but we are having to face serious disappointment in some projects and programmes that, in all good faith, we have been discussing for quite some time. The board has been discussing that over the past few months. It will take a revised corporate plan to the Department at the end of this month.

Jim Braithwaite: Sometimes you can see where councils might be disappointed with us; we have had to make some really tough decisions. I feel very bad about Southampton, for instance, which has a major impact on some of the things that it would like to do and that we encouraged it to do. However, we cannot meet the ongoing commitment, because we do not have the budget. There will also be things that we used to do-involving small amounts of money that were within our gift and area teams that would find little projects to do-that we can do no longer. We must focus very much on major strategic input, where we can have the biggest bang for our buck. That affects people's view of SEEDA. I hope that it is the right thing for us to do, but it does have an impact.

 

Q18 Ms Barlow: Can you say a little more about the decreasing commitment-£115 million last year to £33 million next year? You mentioned Southampton. What is the decrease made up of? What were the expectations of the people you planned to support? Why does that not meet up with your corporate plan, and how will you manage the disappointments or meet the expectations?

Pam Alexander: I didn't quite recognise those figures, so perhaps we could clarify them with you later. We had a three-year plan, and we planned ahead. With the sort of long-term investment that SEEDA has always tried to make, we have been heavily committed to projects. The extent to which other projects can be brought forward will be reduced substantially by cuts if we do not intend to cut into commitments already made. We are looking at projects that have not yet been committed but which we may have been working on for some time. Our focus is on ensuring that we invest in bringing businesses through this recession and in a successful upturn. That may mean that some of the more community-based projects are no longer able to be a priority. As the Chairman has just said, we are also very focused on those programmes that will have a transformational impact. In other words, we want to get as much bang as we possibly can for our buck. That includes those projects that can leverage in substantial funds from Europe. Those are the sorts of criteria that we would be applying as we consider the priorities. We will look at investing in the upturn and in keeping businesses going, and ensuring that we can improve their productivity to see them through the recession and that our programmes have transformational impact.

 

Q19 Ms Barlow: In 2007-08, your other funding came from the DCLG. The previous year it came from a variety of sources. Is this funding unpredictable?

Pam Alexander: From Departments?

Ms Barlow: Yes, and how unpredictable is the funding? You say that you work on a three-year plan.

Pam Alexander: The single pot is allocated through the comprehensive spending review, so, like most other Government agencies, we get the three-year programme. I think that it would be true to say that the BERR Select Committee commented that our funding has been targeted by various Departments. Perhaps that is because we are less their children than some of their other direct agencies. We have quite regularly faced cuts in our budget that have been difficult to predict. We hope very much that it is recognised generally-I believe that Chairs in their meetings with Ministers feel it is-that we have faced too many cuts and it is important that we are able to focus our budgets on the tasks in hand. We do not have to negotiate which part comes from which Department; that is done centrally. The difficulty is that each individual Department, as it makes its own difficult decisions in the current circumstances, may look to that as marginal spending.

Jim Braithwaite: I think that for a long time, RDA budgets, once they became this single part-time deal, were ring-fenced. In the last couple of years, we have managed our budgets very well. We have never overspent-even between ourselves-and we have put the money where it is needed. We have seen some people who can manage. We are business led so, whatever the budget is, we have managed to make it work. That meant that when these cuts came along, they were painful but we tried to redress what we were doing to meet the budget. It is not always the right thing to do in my opinion. When the Committee is considering other things that go on in the region, as it will do from time to time, it can look at the impact of what we do and what we could have done if we had the money, particularly in the south-east; that is very important.

Chairman: We have a series of questions now about the current economic situation.

 

Q20 Mr. Smith: You have anticipated one or two of these points in talking about your budget, but in the round, how would you say the recession has affected the south-east compared with other regions?

Paul Lovejoy: Perhaps I could make a few observations. First, there is no doubt that we have seen the most serious reversal in economic conditions in the 10-year history of this organisation. To a degree, a number of commentators last autumn were predicting that this recession would have a distinctive shape, in that we would see an upside-down pattern, with the impact most directly felt in the south-east. If you looked at those sectors that were immediately and most directly impacted-financial services and travel, for instance-you could see where that view comes from.

As things have panned out, it is plain that the south-east is not experiencing disproportionately the impact of the downturn, although that is not to say that there are not very serious impacts in particular sectors and localities. We think the explanation for that lies partly in the degree to which businesses in the south-east have been competing effectively in international markets and partly in the degree to which they tend to be in the higher value and more resilient end of the value chain.

Right now, we do not see a disproportionately great impact on the south-east. The latest forecasts that we draw on, which assume a 3.5% reduction in GVA in the UK as a whole this calendar year, translate into a reduction in the south-east of about 3%. That is very serious, but it is not as disproportionate as some said it would be six months or so ago. It is important to remember that, in that context, we are still seeing a very significant resilience in large parts of the business base in the south-east and a persistently high employment rate. There is no doubt that the conditions have turned very markedly for the worse in the past six to nine months, but in that context, very large parts of the south-east are continuing to perform strongly.

Jim Braithwaite: Anecdotally, as I go around the region, I am beginning to see that people are fed up of the recession in the south-east and the talk is that we need to improve.

I was in Milton Keynes two weeks ago where we had the South East Economic Delivery Council, which is chaired by our Regional Minister, Jonathan Shaw, and me. We were just taking a sounding from local businesses. They were saying that the recession was not as bad as you get to hear from the press and they were looking at new ways of making things happen. As I go around the region, I am beginning to hear more of that talk, which has got to be good news for the south-east and national economies, but it does not mean that you are not going to lose your job if you are in construction, house building or some banking organisations. We feel very disappointed about that.

People in places such as Tunbridge Wells are finding unemployment for the first time, and different types of people are going to their jobcentres to ask for help. That is difficult. The jobcentres themselves have come under pressure. A lot more people are asking for things. You do not usually see that in the south-east. I reported that to Jonathan Shaw wearing his Department for Work and Pensions hat. We are seeing not only more recruitment on the front line, but also more help for those people who are facing up to it, because they need to be trained to cope, which is a different situation for the south-east.

 

Q21 Mr. Smith: How are you engaging with business leaders across the variety of sectors affected, particularly when it comes to discussing the recession and what can be done?

Jim Braithwaite: Just recently, we held a conference in the QE centre in Westminster to talk about how to cope with housing. Getting housing back even to what we hoped it would be is going to be a major problem, never mind keeping it as it is at the moment. You imagine that housing in the south-east is a bellwether of how people feel about the economy, but it is also an activity in itself-8% of the economy is to do with construction. We have made sure that business leaders and councils were there-anyone who can help to bring that part of the economy back to fruition and plan for the future, whether on skills, land or doing deals. The question how we do that is important.

Pam Alexander: More generally, there are at least three examples I could give you of different ways in which we are trying to ensure we are hearing what businesses are telling us and reporting it to Government and across to local authorities and our partner agencies that are supporting businesses. First, we have a regional intelligence report, which Paul co-ordinates each month, for the Government. That looks at all the statistics coming out and also draws on all our business forums, whether the economic partnerships or member organisations such as the CBI and the FSB. We get a monthly report on what their members are saying and pass that through, upwards and sideways, and also across to the agencies we are working with, such as Jobcentre Plus, so that we know where to put it.

 

Q22 Mr. Smith: What is the most surprising thing coming out of that?

Pam Alexander: For me the most surprising thing in the first few months was the huge number of women falling out of the employment rate. It looked as though the huge increase in female employment was the first to be hit, but that has now levelled off and it has not been shown in the statistics for the last few months. Another very surprising thing was that Milton Keynes was a hot spot of unemployment, through the redundancies we were told about by Jobcentre Plus, and we had not spotted that because they were all below the radar of the 20-plus employees businesses that report in to the Government. Putting together a load of different statistics gives us a much better understanding of what is going on.

We have also set up some forums that we had not needed in the past. For example, Jim has been meeting one to one with the leaders of each of the banks, who, we were rather surprised, would not come into a room together to talk to us. We understood fairly quickly that that was because they are of course competitors who do not want to tell each other about their businesses. But I think that since the small business finance forum was set up, which Peter Mandelson chairs and I sit on for the women's enterprise taskforce, the banks have been much more willing to work with us. We are now setting up a south-east finance forum, which will bring the regional managers of the banks together as regularly as we need to talk about the difficulties businesses are having. I think that the member organisations that have been part of the forum with the regional Minister, to which Jim referred, the South East Economic Delivery Council, have found it very helpful to be able to hear what is going on in that way.

We had Peter Ibbetson from the Royal Bank of Scotland talking at the last meeting, and I think that there was a real understanding of mutual difficulties, which probably had not existed before. There is no doubt that we have been working in ways that have been quite different from some of the things we have had to do in the past, as well as from the things Jim referred to, such as helping Jobcentre Plus to see how to help people who have never crossed their doors before.

 

Q23 Mr. Smith: Do you see the recession causing a fundamental need to revise the regional economic strategy, the 10-year strategy going forward to 2016, or is the recession an interlude after which we will get back on track?

Pam Alexander: We have talked about that-Paul might want to add something here-because it is perfectly clear that we are not going to achieve the targets by 2016. For example, 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. We have had two RES partner conferences since the summer, and at both our partners across the region said the last thing we need to be doing is spending our time reviewing targets, because 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. We all believe that global competitiveness and productively growth, which is shared across all the people in the region, and a real attention to quality of life, in terms of both community and environmental outcomes, are absolutely what we need to be focused on. We may miss some of the specific targets, but we will miss them even further if we do not keep going in that direction.

Paul Lovejoy: There is certainly no doubt that the economic context within which we are now working is very different indeed to the one in which the economic strategy was reviewed in 2005-06, but I think that the clear and settled view of our partners, and of ourselves, is that the central challenges named in that strategy have been able to compete successfully in an integrated global economy. Those challenges are: focusing on a type and pattern of growth that focuses on improving productivity; innovation and spreading the benefits of that as widely as possible in the region; and ensuring that that is an economic trajectory that not only adheres to but actually takes real advantage of the principles of sustainable development. They remain absolutely the right ones to carry forward.

In terms of where we go next, we are clearly of the view that when the task comes to start reviewing that regional strategy, this time through the mechanism of an integrated regional strategy, we will need to start from a base that does not simply project forward historical trends in a straight line but asks some really tough questions about the alternative scenarios, and the consequences that may flow from that, that this region and its economy now faces.

Jim Braithwaite: I have to say that I am a bit of a cheerleader for this economy, as you know, and we have a global regions programme where we go and look at other regions around the world, which are equivalent to the south-east. If I am looking at Kanagawa in Japan, or the greater Washington area in the States, or Shanghai, and some of the growth patterns, even in established economies, we thought we were pretty good if we could get to 3% growth. I have to say that greater Washington grows at 7% per annum. I do not know what their figure is for the downturn, but you can bet that it will be a lot more ambitious than ours.

 

Q24 Mr. Smith: Do you think people in the south-east really want to grow that fast?

Jim Braithwaite: I always say that people in the south-east want to be rich but not ugly. They want to keep their green and pleasant land, and it is surprising that we have a third of the whole country's area of outstanding natural beauty, soon to be a national park in some parts. We like our villages and we like the money. That is why people are here. It is finding ways in which we can do that in a sustainable way that is important. I think that is important for all the people in the south-east.

 

Q25 Mr. Smith: I always take the view that we are a rich and smart enough part of the world. We ought to be able to have green growth, which has a positive appeal. Notwithstanding revisions, do you think that our land-use planning policies remain a constraint on achieving those high levels of growth?

Jim Braithwaite: I think to a certain extent they do. It is not because we do not want to use the land. Often it is the time that it takes for us to make a decision about use of land, so it is not that we want to encroach. We are always accused of being the built-up south-east, but we are not at all. Less than 30% of the land has ever been built on and we do not want to increase that, even with more housing. We want housing in the right place for the jobs that are being created so that communities can benefit from that. But everybody wants it green and pleasant, whether you are in the garden of England here in Kent or in Oxfordshire. It does not really matter. What matters is that when we make a decision we get on and make it happen.

Pam Alexander: On the green growth point, I think it relates back to the RES targets. We believe in our RES very clearly that sustainability is an opportunity for jobs, exports and innovation. That is at the heart of what we now believe is the way out of this recession. The low-carbon strategy is something that we were putting in the RES three years ago. We believe it is absolutely right to keep it central to what we are trying to do.

 

Q26 Mr. Smith: Thank you. We can wrap up this section of questions. I have asked about the regional economic strategy. In terms of your own corporate plan, are you reordering priorities and making changes in the light of the recession? How have you responded to Lord Mandelson's statement about sharply focusing measures on steps to help the region through the recession?

Pam Alexander: Sorry to have anticipated that question a little. We believe that the focus on key sectors to bring us out of this is very important. In reshaping SEEDA and its budgets, we are looking at how we identify not the winners but how we enable the potential winners of the future to have the infrastructure that will enable them to grow, expand and innovate. That means looking at low-carbon as a very important sector for the future, at broadband infrastructure, which is something that Jim has always been passionate about and which is absolutely crucial to driving our information and communications technology and some of our creative and digital industries, and at such things as assisted living and the biosciences. Those are all sectors in which our strategic advisory panel, SESETAC, which I mentioned earlier, has identified the region's strengths in our universities and research businesses to make sure that we are driving those global companies into the future.

On the corporate plan, the other end of it, of course, is our business support programmes, which apply not only to Business Link, but also to the ways in which we develop innovation and growth teams, which are focused on the 2,000 most fast-growing businesses in the region, and the way in which we lead and develop supply chains and skills bases around them in a way that drives that growth. We are very aware that if this region does not grow faster than 3.5% per annum, there is no chance of the UK growing at that average rate. We believe that the collaborations that Jim talked about at the beginning, whether they are across the greater south-east or are with universities in different parts of the UK, as with our aerospace programmes, are absolutely crucial to getting that upturn to look like the V shape we want it to be, rather than a U or L shape.

Chairman: Do you have some questions, David, about targets and effectiveness?

 

Q27 David Lepper: Certainly. I want to focus on the PricewaterhouseCoopers report, which focused not only on your achievements, but on RDA achievements in general against their objectives. Will you briefly summarise the report's findings in relation to SEEDA? Do you think those findings paint an accurate picture of SEEDA's work, and do they reveal any areas in which you feel you could be more effective? What will you say in your report to Lord Mandelson on PricewaterhouseCoopers' review of SEEDA?

Jim Braithwaite: I will let Pam and Paul deal with the detail of the report. For me, it was quite interesting and a great exercise for the RDAs to go through. I think that, in terms of evaluation of what we do-I am speaking in general about Government investment in various areas-it is always good to see what we are getting for our money. When I look at areas such as this, where we have spent some money, I think that it is too early to see the real benefits that will come along. Regeneration was seen at the lower end of our value for money; we got returns, but they were not as great as some of the areas in which we helped businesses directly.

We have to be very careful that we don't stop doing things like this, whether it is this or another agency that the Government task with regeneration, because I think that in 10 years time, areas such as the Kent coalfield will be transformed and doing different things. We have already begun to see that in Chatham where we have been involved for over 10 years. Chatham has a university and has new types of jobs coming in, but it takes some time to do that sort of regeneration work. If we spent all our money just on helping businesses directly, we would get a very good return, but don't let's stop doing everything.

Pam Alexander: The top level message, which we are very pleased with, is that we have delivered £5.60 for every pound we have spent in terms of value added to the region.

Jim Braithwaite: That is the average, is it?

Pam Alexander: That is the average across the five-year spend from 2002 to 2007 that was looked at. As I said earlier, the consultants developed a methodology for measuring value that looked at the net jobs we had created and turned that, through an income assumption, into a GVA impact for the region of £2.64 billion. We felt that that was a good demonstration of value, but, as Jim says, it needs to be carefully looked under. One of the interesting findings, for example, was that only a fifth of the jobs have so far been created from our investment, which emphasises for me the long-term nature of what we are trying to do to change economies, which is not just about producing new jobs in one year but about producing year-on-year improvements and long-term benefits for the region.

We were pleased to see that almost all of the work that was analysed-a general 80% of our investment and 25 programmes were looked at-demonstrated substantial net benefit. Additional benefits would not have been impacted without us on jobs, on businesses assisted, on new businesses created and on people getting new skills. I am sure you have already got all of those figures and we can pull them out for you if they would be useful.

But there were some lessons in there. There were some interesting lessons about methodology. For example, we targeted many of our skills programmes on people who were already in work. That meant that we were looking for benefits not in terms of numbers of jobs but in terms of improved skills and increased productivity into the future, and that does take time to come through, as Jim suggested.

Also, our physical regeneration programmes have tended to be comprehensive regeneration; looking at the creation of jobs and new economic value over long periods of time. Therefore, there were some lessons for us. They very much drive the focus of what I was describing earlier, looking at specific sectors and areas where we can get maximum impact for our programmes. They look at partners with whom we can work, where we can drive their programmes to deliver those things, whether it is the diamonds where we are looking at areas of growth that will impact on whole economic sub-regions, or whether it is innovation and growth teams who will be looking at high-value businesses and trying to drive that impact down through the value chain.

Those lessons produced some very interesting ways of looking at how the output, which we have always measured and been asked to measure, actually needs to be translated into outcomes in terms of value. That is something that we certainly want to pursue. There was a lesson for all of us in the importance of consistency and coherence in how we evaluate different programmes. We tended to look at them one by one and see whether we were getting what we wanted out of them, rather than trying to add them all together and looking at overall impacts. That will certainly drive our approach to appraisals and evaluations in the future to make sure that we are making that broad link to GVA and how we can look at additionality, which was something that we had not measured in the past.

 

Q28 David Lepper: One of the findings of the National Audit Office independent performance assessment was on staff numbers at SEEDA. I think the comment was that the ratio of staff numbers to budget is high compared to other RDAs. I am assuming that that is accurate.

Jim Braithwaite: It is.

David Lepper: What do you have to say about that?

Jim Braithwaite: We have had a high staff number because we have spent most of our time influencing other people to do things in the region. We have not had budgets that a region of this size would command and therefore would spend. So what we tended to do, certainly in the early days of setting up SEEDA, was to get out there and get our people talking to other partners in the region to get them to do things. We are reducing those numbers because that is required of us under Treasury guidelines. I do not know what impact that is going to have on our achievements over the last 10 years. We will have fewer troops in the field. We will not be around as much in some of the areas where we have been. We will not be in some of the villages and other places where you have seen SEEDA-whether people knew it was SEEDA or not-having an impact through our area teams. We will be very focused on doing strategic things that we have agreed with partners are the areas we are going to get involved with. We will see.

 

Q29 David Lepper: So could that impact on the effectiveness of some of SEEDA's investment?

Jim Braithwaite: I think it might; I am not saying that it will, but I think it might. I think the influence SEEDA has had on capacity within the region is not always appreciated. Sometimes the capacity is not there. Even in a region of this size, some councils do not have an economics department, for instance. We have often played that role for them and now that their PSA is very much focused on the economy-never mind their PSA, just their very well-being is focused on the economy-we do not necessarily have the people to do that.

Pam Alexander: I think it has been very hard to measure that. The PWC report was measuring the impact of our spend; we argue that it is the impact of our engagement that has been of most value, and added strategic value, to our relationships. For example, we brought together partners-as we did in Hastings and Bexhill-who had not worked together before but who, working round a table, have created a real impact for their locality.

Jim Braithwaite: Against three different political parties as well.

 

Q30 David Lepper: So are you saying that it is difficult to sustain what one report is asking you to do while conforming to what the other report is asking you to do?

Jim Braithwaite: Yes. I hope this Committee in its report will be able to search out evidence to see where the region could be helped in forward policy because this Committee can influence how Government think of RDAs in the future.

Chairman: We are going to keep you for another 10 minutes, I am afraid, before we wind up this part of the session. We have questions about some more practical matters. Gwyn.

 

Q31 Gwyn Prosser: Jim, in your opening remarks, you mentioned how pleased you were to come before the Committee and what a good idea it was to set up these new Regional Committees. We will be inviting you to come before the Committee again in July after the publication of the corporate plan. That will be a useful exchange of views, especially regarding some of the disappointments you describe. I am a great supporter of RDAs and SEEDA in particular, but what do you say to critics who look at the amount of money that comes in? They might have studied the PricewaterhouseCoopers report, the strategies and annual reports, but they look at the amount of money coming and at the outputs. You have mentioned already that a great deal-something like a half of all the investment-has gone into the east of the region. I know from other meetings that a great proportion of that has come into east Kent, indeed into the east Kent coalfields. One reason we invited you to the Committee's inaugural meeting here is that this splendid hall was a dilapidated burnt-out shell some years ago. It was typical of the deprivation after the closure of the coalfields in villages such as Aylesham and elsewhere. You know all those stories. What do you say to those who say that you have failed in specific projects? The Chairman might like to mention Foulmead before our time is up, but in respect of Snowdown-a stone's throw from where we sit-after a lot of investment, studies and meetings, what could have been a good project which local people were beginning to support was withdrawn. We know that something has come in its place. The outcomes from the new project in Aylesham village should come close to matching the originals, but can you understand the disappointment in communities when that happens?

Jim Braithwaite: I do understand it greatly, and it is disappointing when you cannot go through with things. There are many programmes of this type across the region that both local people and we think are good ideas. The Brighton centre is one we would have loved to have put money into-a real live project. We get second-guessed even about where we spend our money. We have to meet value-for-money targets. We have to make sure that any money that we spend is there. We also need willing partners to do the things at the time we have the money to spend. Snowdown is one of those projects. I hope people are not disappointed with the overall impact we have had in east Kent because we have tried hard. This place is a great example of what we have done. It is the first time that I have been in it, though I have opened another community hall not far from here, just the other side of Canterbury-again part of the coalfields. It is a fantastic place and we have done other things. Not all the miners lived as close to the pithead as this one. They lived in places like Margate, which have had to be looked after. We have done lots of things to help east Kent. There is a lot more to be done. We are not always able to do every project when we cannot get it to add up and we cannot get the partners to come in and support us. Yes, SEEDA takes the blame and we have big enough shoulders to do that.

 

Q32 Gwyn Prosser: We all know that regeneration on the coast will always be harder because of catchment areas and other reasons, so is there not room in terms of policy-it is not your policy but central Government's policy-to vary value for money according to the difficulty of the area, deprivation and need?

Jim Braithwaite: That is right. I mentioned at the top of the interviews that we have the north-east right here in this part of the south-east. Yet when you consider the moneys that we have had, the building that my colleagues occupy and how those slag heaps were reconditioned, it is fantastic. It would have made two or three Snowdowns, but we do not have the budget to do that. The Committee may want to look at what gets spent where, but we also have to have that value for money and we have to have partners locally to support these things. If all of those three things are not there, we cannot go ahead.

 

Q33 Gwyn Prosser: You have a partnership in this area-I speak as a Labour Member of Parliament-in Dover district council. It is Conservative-controlled, but I support much, if not all, of its regeneration plans. Have you found the council to be a willing and participating partner?

Jim Braithwaite: It is one of our best partners in the region-it wasn't always. Our first confrontation with it was over Dover town centre. We thought its plans to go forward were crap. [Interruption.] Pam will get me for that afterwards. We said it to them at the time.

Chairman: Left something to be desired.

Jim Braithwaite: Yes, thank you. We worked with them to look at that. Now you look at the plans for Dover's future and you see some of the ambitions that are there, and it's fantastic. We have worked very well with that council. I think we will continue to work well with it.

Pam Alexander: I think that what we have done in the east Kent coalfield has been perhaps some of the most difficult regeneration work. That is not just ourselves. Having private owners for two out of the four coalfields is pretty unusual in the whole National Coalfields Programme. If we try to do really difficult things we will always have disappointments and failures. If you're running a business and you never have any failures, then you haven't tried hard enough. That doesn't make it any the less disappointing. I was very pleased with the PWC evaluation of our coalfields programme. It suggested that we had achieved excellent value for money, but, more important, real impact for local people in terms of jobs and new businesses, and that substantial GVA was generated too. That was much higher than I would have expected, so we should be pleased about that and about the 2,700 jobs that it is seriously anticipating will be produced.

When there are too many things against you, not just the value for money but the difficulty of doing it, at some point you just have to accept that you need to try another route if you are going to get the outcomes that you seek in a time that is deliverable. We were keen to see some deliverables. We are very pleased that, with the Homes and Communities Agency's commitment, we will be able to bring forward employment sites and new jobs to a reasonable time scale, which simply was not looking possible. Some things are disappointing, but nevertheless we have some good outcomes.

 

Q34 Gwyn Prosser: Lastly from me, are there any other area-we have touched on one already-of Government policy on funding of RDAs which would support the difficult areas that Pam has just described? What message can we take back in our report? We all want more funding, yes, and we have talked about the different value-for-money ratio. Anything else?

Pam Alexander: There is no doubt that we, and all the RDAs, would like to have more flexibility and greater delegation to make our own judgments about value-for-money benchmarks. We have to comply with those benchmarks, and that is absolutely right, because we have to justify it when we are doing something that is particularly expensive. There is another example that Jim has already alluded to. We feel that having to go to the centre for spending over £10 million constrains us from helping the region in the way it wants to be helped. We would like to see greater flexibility. We think that part of the deal that we thought was being done when the IPA was doing its report was that the RDAs that are performing particularly well-and we are performing strongly-should be given greater flexibilities, but we have not yet seen what those are.

 

Q35 Chairman: One final question for you, and may we have a succinct answer if you don't mind, because we are running out of time. SEERA has gone, and we have new arrangements for oversight: the SEEDA. There are some criticisms from some stakeholders-the CBI and the TUC-that their voice in the region has been ignored in the sub-national review. How do you see SEEDA in the new world over the next year or so?

Jim Braithwaite: SEEDA has fought very hard for the people who were members of SEERA-all the bodies-to have their voices heard. It was the local councils that had a different view of that, which they have always had. I do not understand why participation in decision making in government should not be something that is encouraged, but it is something that SEEDA has always seen as important.

 

Q36 Chairman: Is it something that SEEDA can do for itself as far as possible?

Jim Braithwaite: We do, and we have fought very hard for at least two members of the new working committees to be from that stakeholder group. It should have been more, in my opinion, but two was what we were able to get the council leaders to agree to. I think we have done a good job there. We will continue to take our own soundings, particularly when you are talking about the business community, because it is our lifeblood. We are here to serve, and we want to ensure that they get what they need in terms of land use planning in their localities, because that leads to better innovation and productivity. Also, working with councils to deliver what they need in terms of their economic push is something that SEEDA is looking forward to doing under the new sub-national review. I don't see us taking six years to come up with a plan, which I don't think has been reported on yet.

Pam Alexander: It was published last week.

Jim Braithwaite: It was published last week-thank goodness for that. I think it is a call to action. What we want to do is to ensure that the same way we treat the rest, we treat strategic planning altogether.

Chairman: I thank the three of you for coming. If we have any more questions, we may write to you to ask. Thank you for your time today. I am going to adjourn for five minutes for a comfort break. Then we will start the final evidence session of the day.

 

Examination of Witnesses

Witnesses: Colin Byrne, Regional Director, Sheila Carroll, Regional Governance and Partnerships Team Leader, and Jane Vaughan, Economic Support Manager, Government Office for the South East, gave evidence.

 

Chairman: Welcome. Colin, would you like to introduce your team?

Colin Byrne: I am Regional Director of the Government Office for the South-east. Jane Vaughan has been working on the impact of the economic recession, and has been supporting Jonathan Shaw in that regard. Sheila Carroll has been working on the BERR agenda within our Government office, particularly on the relationships with SEEDA.

 

Q37 Chairman: Do you want to make a statement or just answer questions?

Colin Byrne: If you find it helpful, I could tell you about the Government office and what we do.

Chairman: That was going to be the first question.

Colin Byrne: The Government Office for the South-east is one of nine regional offices. We work as a network, pretty much like the RDAs do. We have about 200 people, and will be going down to 160 over the course of the year. That is from a historic position of about 340 people. We have three main roles in life. First, to strengthen national policies within Whitehall by bringing a local perspective to those national policies. Secondly, to help integrate regional strategies and, thirdly, to drive local delivery. I will give you a few examples of the sorts of work that we do in relation to those aims. We work in the region for 12 different Government Departments, so we have a wide span of responsibilities. In relation to strengthening national policies, my fellow regional directors and I sit on PSA boards in Whitehall. I sit on the PSA board that covers housing, delivery and planning. We have a direct interface with the Department for Communities and Local Government, the Department for Transport and other Departments that sit on the PSA board to help them to understand the delivery of their policy in a regional and local context.

In relation to each of the individual Departments that we work for, they all have different methods of delivery and different delivery chains. We have a part to play in those delivery chains. In respect of planning, for instance, we advise the Secretary of State on things such as call-in policy; that is, whether to call in a major development for planning purposes. We advise local authorities on the introduction of their new-style local plans, called local development frameworks. As was mentioned in the previous evidence session, we have produced the final version of the south-east plan, which is the planning policy at a regional level.

With the Department of Children, Families and Schools-I keep forgetting if that is the right title, because the titles change so quickly-we work very closely with it on safeguarding issues where local authorities have been judged as inadequate in their safeguarding duties, such as in Hackney or in the Baby P case. Within the south-east, we have four local authorities that are judged to be inadequate and we work with the intervention unit of the Department to try to bring those local authorities back on track.

We also work with the Home Office, for instance, on crime reduction programmes-on its knife crime initiative, for which we have a number of pilots in this region; on the recent burglary initiatives, and more generally on reducing local crime. So we act as this interface really between central Whitehall and the localities or regions. It is all summed up, I suppose, in the sort of catchphrase that we are central government in the regions and we are the regions within central government.

 

Q38 Mr. Smith: Can I ask how you provide your support for the Regional Government Minister? How does that work?

Colin Byrne: We have set up within the office a small team, which we have sort of modelled on Whitehall terms, and we call it the regional private office. There, we provide Jonathan Shaw with briefings on the meetings that he wants to go to and speeches. We advise him on the interventions that he makes across the region, saying what will work where and that sort of thing. So we have a very small team that co-ordinates that work across our office, providing him with that direct support.

 

Q39 Mr. Smith: Is it working well?

Colin Byrne: It is, actually, I think. I hope that Jonathan would say that, too.

Mr. Smith: I will ask him. I am sure he will say so.

Colin Byrne: The introduction of Regional Ministers has been a real bonus, from my perspective in particular, because it gives the region a political "in" to Whitehall. As regional director, I can talk to the bureaucrats in Whitehall and I probably have as much difficulty talking to them as you do, in terms of their willingness to interact and work with us. So, having that ability to go in at a political level has been a huge advantage to us in the Government office, but I think it has also been a huge advantage both to our regional partners and to local authorities and so forth. I think that people of all political persuasions in the region would say that the Minister has been really helpful.

 

Q40 Mr. Smith: I did specifically ask that question at my last meeting with Oxfordshire county council, and the council was complimentary.

I was also going to ask about feeding information from the region back into central government, and making sure that what needs to count counts there. How do you do that and how well does it work?

Colin Byrne: We do it in a number of different ways. Most Departments will have a group of people from the Government offices that they call upon for help, first, in devising new policy and, secondly, in the delivery of that policy. So, if I take the example of CLG, which is my parent Department, I chair a meeting of people from the Government offices, along with people from CLG. In those meetings, we have talked about what sort of interventions CLG should make in the housing market as a result of the recession, and what the mortgage rescue scheme should look like and how it can work in practice. That will be replicated across the 12 Departments. Some take it more seriously than others, but generally, there will be that type of input into Government.

In the context of the recession, our SEEDA colleagues mentioned that they provide an intelligence report once a month into the centre, which we do. We supplement it with what might be called more local flavour information that we pick up from our contacts with local authorities and others. We use it to brief Jonathan Shaw for the meetings of regional Ministers, which happen roughly once a month. He will feed that in through those meetings and meetings of the Council of Regional Ministers and, ultimately, the National Economic Council. We have quite good data inflows into Whitehall. From time to time, Departments will ask us to specifically go out and find them a bit of information in relation to a particular topic.

 

Q41 Mr. Smith: Could you give an example or two of things that you think have materially changed as a consequence of your feeding back information and advice from the local areas?

Colin Byrne: I will give two very recent examples. First, there was the sub-national review and the Government's final policy. You may recall that, initially, the proposal was that the single regional strategy would be produced by my RDAs with input from local authorities. It was quite clear in the south-east that the local authorities felt very disfranchised, mainly because they, as democratically accountable planning authorities, viewed that an element had been lost in the new arrangements. We explained that to the CLG and BERR officials and Jonathan explained it to Ministers. We made some suggestions as to how they might span their two objectives of having a single strategy which was much faster in its production than the spatial strategy while, at the same time, with Hazel Blears' whole community empowerment agenda, maintaining local authorities' role in that important level of planning. We made a number of suggestions which I like to think are reflected in the final policy.

The second example is something that we picked up from Jim. We have taken the South East Economic Delivery Council, which Jim and Jonathan chair, to places in the region. Some of the feedback from that was that businesses were having real difficulty in relation to credit insurance and, indeed, the Budget has done something to try to alleviate that. I do not say "cause and effect", but it is interesting that the messages get through.

 

Q42 Chairman: Can I ask one other question? The Regional Ministers at the moment have got other jobs. Would you like them to be Regional Ministers only? Would that make things more difficult?

Colin Byrne: That is an interesting question. As a civil servant, one is always slightly reluctant to say that Ministers should have more time, but Jonathan puts a large amount of time into his job as Regional Minister. I don't know what the split is, but he certainly spends 50% of his week on Regional Minister stuff.

I think there is probably an advantage in him or any Regional Minister having two ministerial jobs. Part of the importance of the role is understanding how the Whitehall machine cranks and being able to work it. For instance, if Regional Ministers are viewed as junior roles, we miss out on the experience of Regional Ministers being able to crank the Whitehall machine.

 

Q43 Mr. Smith: As you mentioned, you represent 12 central Government Departments in the region. Is the Department for Innovation, Universities and Skills one of them?

Colin Byrne: No.

 

Q44 Mr. Smith: Bearing in mind its responsibilities for skills and further education, do you think that it ought to be?

Colin Byrne: Yes, very much so. We have made that point to the Department. We cannot do any of our work without an understanding and knowledge of the skills agenda. Essentially, we do that, but it does not pay us to do it. Each Department has to contribute to our running costs, but the DIUS does not, and that is a bone of contention with us. However, we continue to engage with it and to ask it for a contribution. You are right though: we cannot do our job without its agenda being central.

Mr. Smith: That is something that we can consider as well.

 

Q45 David Lepper: During its lifetime, what has been the relationship between the Learning and Skills Council regional office and the Government office?

Colin Byrne: This is my second term in a Government office. When I first joined-

Chairman: You must have been a bad boy in a previous life.

Colin Byrne: I love this job actually. I don't think there's a better job in central Government.

When I first joined, acting for the then Department for Education and Skills, we set up the LSC. On behalf of the DFES, as it got going, we changed the appointments of panels and sat on all the sub-regional learning and skills councils-as they were for a time. Then we tended to withdraw from that body, especially when it moved to a regional version of the Learning and Skills Council. When I returned, it was a slight shock to me to see that the whole process, some five years on, was being wound up. We do not have a direct role in the wind-up, whereas we did with training and enterprise councils, but we do have a role in trying to broker some of the replacement arrangements-alongside the regional director for LSCs-particularly the sub-regional groupings of local authorities that will take over some of the functions of the LSC.

 

Q46 Gwyn Prosser: Colin, you said how useful it is to have the new ministerial structure in place; the Regional Minister is very useful to us as well. In fact, since 1997, all five of us have campaigned to put in place a Regional Minister, not just in this area, but everywhere. It has been a long time coming. It is very useful to us because it gives us a focus. You will know, through your own connections, that the important Dover summit is taking place next month, which you have been very helpful in brokering. It will take forward and project some of our ambitious regeneration plans that Jim mentioned earlier. However, I must ask about the RES steering groups. Can you tell us a bit more about them? In particular, how would you choose who goes on them? Give us a flavour of who represents local authorities, trade unions and business people, for example.

Colin Byrne: This is the regional economic strategy steering groups? It is actually a creature of SEEDA, which I guess selected the people on it, rather than us. However, we sit on it, and I know that there are trade union representatives and different levels of local authority representatives-county, unitary and district-along with some of the other major players, representatives, major employer organisations and people such as the Learning and Skills Council.

Sheila Carroll: If it is helpful, I can tell you a little more about the membership, as I have one of the lists in front of me. It includes the chairman of the leaders board, representatives from the CBI, culture, the voluntary and community sector, other business organisations, the Sustainable Futures Group and other government agencies, such as Jobcentre Plus and the Environment Agency.

 

Q47 Gwyn Prosser: And the trade union movement-who represents that?

Sheila Carroll: Megan Dobney of the SERTUC.

Colin Byrne: And I guess Phil Wood, who sits on the SEEDA board, will also be there.

 

Q48 Gwyn Prosser: In your written submission, you mentioned the South Hampshire MAA-under the auspices of MUSH, is it? This is all completely foreign to me, but there you are. Could you tell us what role GOSE has in multi-agency work?

Colin Byrne: We are essentially the broker between groups of local authorities that want a multi-area agreement and the central Departments, which will be granting what used to be called the freedoms and flexibilities to be encompassed in the MAA.

There are two examples in the south-east. One is the Partnership for Urban South Hampshire, which they call PUSH as opposed to MUSH, partly because it is slightly more complimentary. We sat down with the partners, when they were thinking of doing an MAA, and briefed them as to the sorts of things that central Departments might consider or might be more flexible on. We helped them go away and work up the proposal. We then brokered the meeting with the central Whitehall Departments and, on the individual elements, we would broker with a particular Department. On transport, there was an issue around the Highways Agency and how the motorway-the M27 down there-is managed. We brokered that between the PUSH people and the Highways Agency and Department for Transport, and tried to get some form of agreement between the two sides. Finally, we recommended to Hazel Blears whether to sign it off or not, on behalf of the Government. We do the individual bits, then we try and draw it together so that it has some sort of coherence.

 

Q49 Ms Barlow: If the sub-national review calls on local authorities-that is, the county councils and unitary authorities-to do any economic assessment in their area, do you think that they are up to doing that?

Colin Byrne: I think most of them will be up to doing it. Whether they will be up to doing it in a consistent way, in a way that SEEDA can make sense of and try to draw together into the regional economic strategy, is slightly more questionable. I know that SEEDA is working with Oxfordshire to do it on a pilot basis, so that that learning can be spread among the other local authorities that have to do it. Hopefully, we shall get a good bit of learning spread across and a reasonably consistent product.

As for the focus on economic development, most local authorities are much more engaged than perhaps they were some years back. Some local authorities have always had economic development at their heart, but for others-just because of budget pressures and other things that they were tasked with-their eye went off the ball, so to speak. The general climate, not just because of the recession, but other things, has drawn them back into it. The weakness is really at district level-many districts are of small capacity to do this sort of thing.

 

Q50 Ms Barlow: It also creates statutory sub-regional authorities for economic development-the economic prosperity boards. What will be their role and how will that compare with multi-area agreements and local area agreements, for example?

Colin Byrne: I don't think we have any further plans to go for that particular option in the south-east. There is a range of things that Government have been offering, starting with city regions, which Manchester and Liverpool took up. Our local authorities have not taken up the idea of the economic prosperity boards, but I think that the boards will be very similar to MAAs. Local authorities working together will see that they have common issues, such as the level of skills that they have in their communities, or places of high worklessness will see that they have common issues, and by working together they can do more than by trying to tackle those issues individually. Some will go down the MAA route and some will possibly go down the economic prosperity board route, but I think that there will definitely be quite a lot of similarity between the two.

 

Q51 Chairman: You say that none of our local councils have taken up the opportunity.

Sheila Carroll: Not yet.

Colin Byrne: There is a second MAA in north Kent that is being worked on, but I don't think any of them have taken on-

 

Q52 Chairman: Do you think we are missing something by not having those sorts of things?

Colin Byrne: There are a number of other initiatives of course, and the Diamonds for Growth initiative that SEEDA has been pushing has elements that are not dissimilar to the MAA economic prosperity board-type approach. Indeed, PUSH is an MAA, and is also a Diamond for Growth. It is not duplicating; it is using its Diamonds for Growth initiative to drive its MAA. So it may be that because they have this initiative, which is sort of home-grown within our region, it does not see going for the economic prosperity boards as necessarily adding a great deal. But all these things take time to generate a bit of momentum.

 

Q53 Ms Barlow: What is your role in formulating and supporting agreements such as MAAs?

Colin Byrne: With MAAs, it is very much about trying to facilitate and advise and then make the marriage between the central and the local, which we do with LAAs as well. That is very much our role in LAAs.

 

Q54 David Lepper: To clarify, where there are MAAs, or if economic prosperity boards were to be set up, are the Government devolving to those boards decision-making authority regarding spending money?

Colin Byrne: Part of the MAA process is to devolve more local flexibility away from the centralised decisions, so that agencies such as Jobcentre Plus can work with the local authorities to do things that are slightly different or outwith the normal rules, to reflect the local circumstances. So the idea is that you can gain that flexibility by entering into that sort of agreement, and I expect that economic prosperity boards would be the same-that you would be able to shape programmes differently to the national prescription.

 

Q55 Gwyn Prosser: Earlier on, with SEEDA, we had a discussion about value for money, and the criteria and how strict it was. Are you allowed to express a view on whether the policy would be better directed to allow flexibility in terms of value for money, according to the location and the difficulties?

Colin Byrne: In so far as I am allowed to express a view as a civil servant, I think that the Government fully accept the idea that the more things can be tailored to local circumstances the more they will be effective and therefore represent better value for money. Different Departments buy into that general prescription to differing degrees, and I think you will all be familiar with the fact that certain Departments can be extremely prescriptive and others less so. Generally, I think that the policy is to try to do it at as low a level as possible.

 

Q56 David Lepper: Leading on from that, does that have possible future implications not just for SEEDA but for RDAs generally?

Colin Byrne: I think that the whole idea with the SNR was to ensure that the RDAs acted at the most strategic level and that in working with local authorities they can jointly plan programmes, where much more of the decision making is at a local level, so they will set a framework. Of course, the accountable officer has a responsibility to ensure that money is spent properly, but the decision making within that framework could be on a whole other level.

 

Q57 David Lepper: Could I ask just one thing about part of our region? We are soon going to have a new strategic-I suppose-authority in the region, for the South Downs National Park. What thought has been given at GOSE to how the South Downs authority will be integrated and become a stakeholder along with the other agencies that are already working?

Colin Byrne: The South Downs National Park authority, when it is set up, will be a member of the South East Councils-the body of local authorities driven together to be the planning authority, along with the RDA-as part of what is planned. It is already envisaged that they will form part of that future group and therefore be able to influence regional strategic issues. In the same way that we now have a relationship with the New Forest National Park, we will, undoubtedly, have a relationship with the South Downs National Park, but it will be complex. It will probably be the most complex national park in England because it covers, I think, 13 local authorities and there are particular issues over the planning role where the national park straddles some local authorities. The bottom half of east Hampshire is in the PUSH sub-region, the middle bit is in the national park and the top bit is in northern Hampshire looking north, but the local authority has to deal with the three different elements and that is going to be difficult for it.

 

Q58 Chairman: Can I come back to the issue of the potential of MAAs? We have had representations from a number of local authorities that basically boil down to, "We don't like SEEDA because SEEDA is doing things that we think that we should be allowed to do, so we ain't playing." Since you have said that they are going to allow the devolution of decision-making powers, not only from Whitehall, but from other organisations again, wouldn't that be a constructive avenue that local authorities could use to regain some of the decision making that they think has been taken away from them?

Colin Byrne: I have to say that I don't recognise the general picture in the south-east of local authorities not playing ball with SEEDA, or indeed with us. I think that Jim alluded to how difficult it is working in the south-east because of its political complexion. I would not want to overplay that difficulty because, at the end of the day, there is an awful lot of coherence between what local authorities and central Government want-I think that Andrew Smith mentioned that. If you look at LAAs, the big surprise for many people was that Government could agree 35 targets or priorities with local authorities, and that was done right across the country. There was no big falling-out over what are supposed to be the biggest priorities for local authorities. I do not recognise that there is big tension in delivery either in the south-east or more broadly. When you get down to the practicalities, most local authorities-

 

Q59 Chairman: What you are saying to me is that most local authorities are saying one thing and doing another.

Colin Byrne: I would not want to accuse any politician of doing that. I think that the reality is that the south-east is very much a can-do region, and that local authorities play their part in it. Whilst the politics is up here, the practicality is that people work together.

 

Q60 Chairman: Anybody else? Then I shall continue to use the Chairman's prerogative for a moment. You mentioned that some authorities don't have the wherewithal or the skills to do economic assessments, and that instruction on economic assessment has been to county councils and unitary authorities. So, do all the county councils and unitary authorities in our region have the skills set to do the economic assessment for the whole of their council areas, even those where the district councils do not have those skills? In other words, are we going to find any gaps left at the end of this process?

Colin Byrne: I think I don't know the answer to that, in reality, and I don't think we will know for a little time-until we get into the process. Once the Bill is passed, central Government is going to bring out some further guidance about how to do an economic assessment. When we have had the results of the partnership working between SEEDA and Oxfordshire, we will be in a better place to see whether there are gaps. There is a mechanism for filling those gaps through what is known as the RIEP. I was trying to remember what RIEP stood for, but I shall tell you what it does rather than its name. The DCLG has put money into the improvement and efficiency of local authorities-about £25 million in the south-east-which is run by an organisation called the RIEP, which is essentially local authorities working with some partners. Where there is a need for local authorities in general, or individually, to improve a particular type of service, the RIEP can step in and do some funding to bring about that improvement. Certainly, if the result or the analysis was, "There are some gaps here in the region," then we would look to work with the RIEP to try to fill those gaps.

Sheila Carroll: RIEP is the Regional Improvement and Efficiency Partnership.

 

Q61 Chairman: Let me ask one final question. Some areas of the south-east have European objective 2 funding. What is GOSE's role in administering European funding for economic purposes?

Colin Byrne: Our role differentiates between whether it is old programme or new programme. Let me deal with the new programme, because that is the one that I know the most about. The new ERDF competitiveness programme is run by SEEDA, but I chair the performance management committee, which decided its operational programme and which oversees the funding of that programme. In European terms, it is a small amount, in our region-£26 million over six years-so it is small in comparison to other regions.

 

Q62 Chairman: But a big chunk of it gets spent on my constituency.

Colin Byrne: Indeed. The Kent person on the performance management committee is very vociferous about the needs of Kent. The old programme that ran up to 2006, we had a much more direct role on, and we are currently in the closure phase of that programme, which means that for all the projects an evaluation has to be carried out and they have to be audited, and we have to write a closure programme by September for submission to the European Commission. We have to demonstrate to it that the money spent fitted the criteria in the programme, so that is what we are currently engaged on.

Chairman: Anybody else? No.

Thank you very much. You don't know this yet, but we are going to invite you back for a further evidence session later in this inquiry, after we have gathered more evidence from some other people, so we will see you again, I think. Thank you.