Memorandum from the South West RDA (SW
11)
IMPACT OF THE ECONOMIC DOWNTURN ON THE SOUTH
WEST AND THE REGION'S RESPONSE
1. SUBMISSION
TO THE
SOUTH WEST
REGIONAL SELECT
COMMITTEE
1.1 On 30 March 2009, Sir Harry Studholme,
Chairman Designate, and Stephen Peacock, Executive Director of
Enterprise and Innovation gave oral evidence to a meeting of the
South West Regional Select Committee. The RDA would now like to
submit supplementary written information to feed into the Committee's
inquiry into the economic downturn in the South West. In particular,
the Committee has requested additional information on:
— Support to new start-up businesses.
— Interreg IVC—public procurement
of local produce.
— Promoting the South West as a base for
Aerospace.
2. THE ROLE
OF THE
SOUTH WEST
RDA
2.1 The South West RDA is a business-led
organisation, created and funded by Government, to improve the
economic performance of South West England. We promote the development
of a sustainable economy in the South West of England, investing
to unlock the region's business potential. Our statutory purposes
are to:
— further economic development and regeneration;
— promote business efficiency, investment and
competitiveness;
— enhance development and application of
skills relevant to employment; and
— contribute to sustainable development.
2.2 Our 2008-2011 Corporate Plan, published
in Spring 2008, sets out our corporate strategy for delivering
these purposes, which is focused on:
Creating the conditions for productivity-led
growth
We aim to help improve the competitiveness of
South West business—focusing on skills, innovation, resource-efficiency,
enterprise and transport and communications infrastructure.
Developing a low carbon economy
To ensure that the South West is in the vanguard
of the transition to a low carbon economy, we want to help the
region's economy adapt and its businesses take maximum advantage
of the new opportunities that will be created. To reduce our own
and the region's carbon footprint, we are going to work to make
our overall annual interventions zero carbon by 2013.
Creating successful places
A strong economy is built on successful places.
We will help key places in the region develop so that they are
ready to maximise business opportunities to adapt to change in
the future and accommodate growth; to make a difference we concentrate
our efforts in priority places rather than spread the jam too
thinly.
3. RESPONDING
TO THE
ECONOMIC CLIMATE
3.1 The South West RDA is helping the region's
economy emerge from the current challenging economic circumstances
in the best possible shape. We are working with a range of regional
partners to develop or expand initiatives to help businesses and
the wider economy, and then chart a course for recovery.
3.2 The regional response to the crisis is being
steered by the Regional Economic Task Group, chaired by Ben Bradshaw,
the regional Minister (see www.swretg.org.uk). There are four
strands of work being taken forward by the group: help for business;
people, employment and skills; infrastructure and construction;
and resiliency of public services.
3.3 The RDA's contribution ranges from helping
coordinate a "rapid response" to company closures and
tuning the advice and support for individual businesses, to specific
initiatives including establishing a business loan fund, and investing
more in grants for innovation. Further details of our activities
are provided below.
4. WORKING WITH
JOBCENTRE PLUS
AND THE
LEARNING AND
SKILLS COUNCIL
4.1 The South West RDA is working with regional
partners to help employers and people cope with the consequences
of the economic crisis, ensuring there is a well coordinated public
sector and supply side response.
4.2 In partnership with Jobcentre Plus, the Learning
and Skills Council, union/third sector partners and others, we
are integrating the existing and new support available, providing
a better service to employers and people. Our aim is to communicate
these offers in a joined up manner, making the messages as simple
and as accessible as possible. Our work is informed by expert
analysis of the latest economic data and intelligence so that
we can identify the policy and delivery implications and highlight
issues for discussion and decisions that need to be made by partners
and national government.
4.3 Under the auspices of the RETG, partners
are leading the work on people, employment and skills and are
focussing on five main areas:
— helping businesses avoid making redundancies;
— helping those at risk of redundancy (eg
access training);
— helping those who are made redundant;
— helping those who are furthest from the
labour market; and
— helping those who are new entrants into
the labour market.
4.4 There are also four key areas where
new work is being taken forward in order to respond to the particular
needs of people in the South West:
— talent retention—working to keep
the workers in key sectors in the region;
— apprentices—putting arrangements
in place for when businesses close so that apprentices can complete
their training;
— older workers—looking at ways to
support older workers and encourage mentoring; and
— personal debt/finance—looking at
financial literacy and other issues.
4.5 Eight Area Action Forces have been set
up to work with businesses when they are dealing with redundancies
and closures. The action forces convene all the local public sector
partners (eg Business Link, JobCentre Plus) and put together a
package of support which can include training. Staff can be trained
for new jobs in new sectors, or for different jobs in the existing
company. Re-training may be one way that a company can survive
the recession by moving into new markets/opportunities. See Section
6 below for further information on the work of Area Action Forces
in the South West.
5. PRACTICAL
ADVICE TO
BUSINESS
5.1 The RDA is responsible for a wide range
of business support, through a combination of direct engagement
with business and by funding delivery partners to provide support
through contracted agreements.
5.2 Delivery partners include Business Link and
the Manufacturing Advisory Service (MAS-SW). Business Link provides
an information, diagnosis and brokerage (IDB) service to over
100,000 SMEs a year.
Business Link
5.3 Through a combination of their website
(www.businesslink.gov.uk/southwest), telephone service and direct
one-to-one meetings, Business Link's advisers work with a business
to understand their needs and then direct them towards the appropriate
support; sometimes this may be financial, other times it could
be more general such as training. 88% of businesses using the
service state they are "very" or "extremely"
satisfied with the service they receive. In the south west, Business
Link is provided through three delivery partners operating a seamless
service under one brand.
5.4 Support for new start-up businesses is provided
through the Business Link "Starting a Business" service,
which comprises web based information and self help materials,
telephone hotline support and workshops. For those businesses
from underrepresented groups or with the ambition and potential
to grow rapidly, additional one-to-one mentoring support is available
around a number of key themes including business strategy, finance
and market understanding.
5.5 The RDA has worked with Business Link
to tailor services to the needs of businesses in the downturn.
In October 2008 Business Link launched the Health Check service.
This gives a business an in-depth review from a Business Link
advisor to help identify the key issues and therefore the relevant
support available. As such it is a natural fit with the core Business
Link operation. To date (21 May) 4,356 businesses have received
a Health Check.
5.6 Feedback from these Health Checks also
goes into the RDA's intelligence reporting to help develop a clear
picture of the region's economy. These intelligence reports in
turn feed the monthly Regional Economic Task Group (RETG). The
Health Checks consistently show that the key issues for businesses
are in the area of strategy & planning and finding new customers
and markets to offset the impact of the downturn.
5.7 Business Link has also been central
to the RDA-organised road shows that have been held across the
region over the past two months. 500 businesses have received
advice and support from a wide range of public and private sector
partners. Continuous RDA dialogue with the main banks (see 5.11
below) meant they also supported these events.
Manufacturing Advisory Service: MAS-SW
5.8 MAS-SW works with the region's manufacturing
SMEs to help improve their efficiency through activity such as
introducing lean manufacturing techniques. Since 2002 MAS-SW has
helped 500 companies make savings of more than £50 million
and provided advice and information to 2,000 businesses (source:
MAS-SW). MAS-SW is also an integral part of projects such as Supply
Chain 21 (SC21), working with the West of England Aerospace Forum
(WEAF—see section 8 below) to help aerospace and defence
companies compete more effectively in the global marketplace.
The RDA has provided WEAF with £500k so MAS-SW can offer
a free review to help companies identify areas for improvement
and opportunities for innovation and to explore how supply chains.
5.9 MAS-SW has also launched the Downturn Readiness
Review which offers specific advice to help manufacturers to survive
and continue to grow through the recession.
Business Loan Fund
5.10 In April the RDA launched its £10
million business loan fund. The RDA has leveraged ERDF money into
this joint fund, which provides loans of up to £250,000 to
viable businesses with growth potential and is a key tool in helping
to unblock finance for South West businesses. This is the first
time the current ERDF programmes have been used in this way in
England. To date 135 businesses have enquired about the loan with
12 formal applications received, to a value of £1.6 million.
Working with Banks
5.11 The RDA has regular dialogue with the four
main banks (HSBC, Barclays, Lloyds Banking Group and RBS) to develop
ways to improve provision of business support, particularly relating
to the availability of finance. Our intervention has led to the
banks agreeing to provide more advice to Business Link advisors
on what they are now looking for from businesses seeking finance
and has also seen the banks support the recent regional road shows
(see 5.7 above).
Working with Business Representative Organisations
5.12 In December 2008, to formalise and build
on our good working relationships with the main business representative
organisations, the RDA established the Regional Business Forum
(RBF), chaired by a member of the RDA Board and attended by the
CBI, FSB, SW Chambers of Commerce and the Institute of Directors.
The RBF provides a valuable way of developing thinking in response
to the recession. For example, in February the Regional Directors
of the banks were invited to the Forum which gave the representative
organisations the opportunity to question them on their lending
on behalf of their members and from this discussion several actions
were developed, such as those mentioned above.
Solutions for Business
5.13 In conjunction with BERR, the RDA has worked
to help reduce the number of separate business support products
from over 3,000 to 30 product groups, all accessible via Business
Link. The portfolio was launched in April, with transition to
the S4B line-up being managed over the next 12 months.
Support to exporters
5.14 The Agency has helped to lever in ERDF funding
to expand UKTI trade services by £2.1 million over the next
three years, and has also approved additional funding of £490,000
this year to fund six global business advisors who will work in
areas of sectoral specialism to include Aerospace, Marine, Environmental,
Food, ICT and Bio Medical opportunities for international growth.
High Growth business coaching
5.15 Later this year the "Coaching for High
Growth" service, supported by the RDA and ERDF, will be available
region-wide offering tailored, intensive business coaching to
those companies with exceptional potential to grow rapidly.
R&D and Innovation
5.16 The RDA administers the Grant for Research
and Development scheme which offers financial support to businesses
involved in the creation of new products and processes.
5.17 Start up businesses can also receive support
and advice from the Enterprise Europe Network, part funded by
the South West RDA, which can help companies find European partners
with complementary technologies. It will also give guidance on
EU R&D programmes and advice on Intellectual Property issues.
5.18 In a new initiative, the South West
RDA is setting up innovation networks (iNets) in the five key
sectors of creative industries, ICT, biomedical, aerospace and
environmental technology. The iNets programme will provide and
develop innovation and knowledge transfer resource for business
and industry in the SW, extending the reach and scope of the Technology
Strategy Board's Knowledge Transfer Networks.
5.19 Agency support for research and development
is exemplified by that offered to Apitope Technology. Investment
from the RDA, UKTI and the Technology Strategy Board has enabled
this Somerset-based company to sign a multi-million pound drug
licensing agreement that will soon be transforming the lives of
multiple sclerosis (MS) sufferers worldwide. Before Apitope's
groundbreaking vaccine gets to market—the time to market
for biomedical products is often lengthy—the company expects
to have generated revenue from a diagnostic test for MS, developed
with the help of a £75,000 Grant for Research and Development
(Grant for R&D), administered by the Agency.
Green technology
5.20 The RDA funds Regen South West (www.regensw.co.uk)
which gives specialist support to the renewable energy & energy
efficiency sectors. Their mission is to speed up the transition
to a low-carbon economy in South West England and there are three
key pillars to this:
(i) Input into national and regional policy,
providing independent advice to decision makers as well as acting
as a sounding board for policy developers and feeding key policy
information to businesses.
(ii) Research to help businesses develop capability
and understand the market, eg the Road to 2020 report which showed
what the opportunities could be for the SW in achieving 20% of
energy from renewables by 2020.
(iii) Direct support to business such as investor
readiness advice.
5.21 The RDA is leading on the Wave Hub
project off the north Cornish coast and is one of the public sector
bodies working on the nuclear opportunity in the region. Both
these strands offer significant future potential for innovation,
green technology and start up businesses in the region.
6. AREA ACTION
FORCES EXPLAINED
6.1 The RDA has a statutory role to respond
to economic shocks. And as such the Agency is well used to bringing
partners together to co-ordinate responses to large company closures.
In the increasingly uncertain economic environment the RDA is
strengthening this capability and adopting a more proactive approach
by working with other regional and local bodies to ensure that
companies in difficulty receive support which is coordinated.
6.2 Area Action Forces (AAF) have been set up
(or existing area action forces strengthened) across the region.
Currently there are 8 AAFs covering the following areas:
— Bournemouth, Dorset, Poole (BDP).
6.3 Up until 8 May the AAFs have engaged
regionally with 253 companies. The sub regional split is as follows:
— Bournemouth, Dorset and Poole—7.
6.4 The diagram in Annex 1 sets out a spatial
breakdown of business engagement by Area Action Force.
6.5 Each AAF is linked in with the Sub-regional
Economic Partnership and/or local Employment and Skills Board
as appropriate. Where such structures are not established or are
in their infancy, the AAF activity has been a good way to help
develop partnership structures for the longer term. The AAFs also
have a direct link to the Regional Employment and Skills Partnership.
6.6 All the AAFs have the following key
objectives:
— to respond to the anticipated increase
in redundancies and company closures as a result of the current
economic crisis;
— to ensure the public sector response
to redundancies and company closures across the sub region is
co-ordinated with relevant partners sharing information to avoid
duplication of effort and to maximise resources;
— to develop a more co-ordinated approach
to identifying those companies, individuals who are most at risk
and deploying relevant resources in a proactive, pre-emptive way;
and
— to feed back information and intelligence
to regional and national partners to influence future service
delivery, resources and policy development.
6.7 Each AAF is comprised of a range of
key partners that can provide support to businesses and individuals
including Jobcentre Plus, Learning and Skills Council, RDA, Business
Link, Local Authorities, Sub Regional Economic Partnerships, Unions,
ACAS, Citizens Advice Bureau, Federation of Small Businesses,
Connexions/Next Steps, GOSW, Chambers of Commerce, Business Councils
and Train to Gain.
6.8 Key activities in the development stage
of AAFs have been:
— Ensuring partners are up to date with
each others' offer to businesses and individuals. With significant
flexibility and re-allocation of resources taking place throughout
many organisations, partners have to be kept up to speed with
what each partner can bring to the table.
— Developing protocols for sharing where
possible and acting on what is often commercially sensitive information.
— Identifying gaps in provision to be discussed
at regional level in terms of additional or flexible resources
if required.
— Ensuring a seamless system of cross referral
between partners to ensure the customers' needs are met by the
appropriate party.
6.9 AAFs are focussed primarily on redundancy
and company closure situations. Their role is to minimise the
impact of such activity and identify opportunities and sources
of support to provide a co-ordinated response to both the company
and the individuals affected.
Redundancies
6.10 Redundancy situations will in the majority
be led by Jobcentre Plus with support from a range of partners
(Local Authorities, Business Link and Trade Unions) both in terms
of intelligence gathering and in supporting the company and the
workforce. The Area Action Force will ensure that available resources
are co-ordinated, maximised and targeted where most effective.
Company Closures/Large Scale Redundancies (either
confirmed or anticipated)
6.11 Company closures and large scale redundancies
will in many cases (depending on scale and impact) need a special
company focussed task force set up. Membership will depend on
this size, scale and impact. Leadership of the Group will also
depend on these as well as capacity. We may find that company
task forces will cover more than one at a time. They will be linked
to the appropriate Area Action Force (in most cases it will be
a sub group of an area action force but could also include the
company, MPs, sector bodies if appropriate, local college or university).
6.12 The decision on whether a Task Force needs
to be set up will be taken by the Area Action Force if within
a sub-region or by the RDA (and regional partners) if the situation
covers more than one sub-regional area. Normally the RDA, SEP
or local Authority partner set up and chair the taskforce (this
can be agreed by the AAF). In future, depending on the numbers
of company closures, the same taskforce may cover multiple companies.
6.13 Key areas that will need to be addressed
with company closures and large scale redundancies include:
— People and Skills—this is
support for the workforce being made redundant and encompasses
all the areas listed in the Redundancy section above.
(JCP lead with partners support)
— Supply Chain—working with
the company to identify what the impact is on their supply chain.
Identify those businesses that will be affected most by any closure
to help them identify new market opportunities.
(Business Link lead with partner support)
— Site issues—work with the
company and local partners to explore issues in relation to the
site—future uses, new tenant etc. Identify possible inward
investment opportunities.
(SEP/Local Authority lead with partner support—HCA
or RDA if priority location)
— Local Impact—PR, encourage
investment, morale etc.
How does it work—a practical example
6.14 In the West of England the Area Action
Force is known locally as the West at Work Action Group. It was
formed out of an existing West at Work Project Board which delivers
an integrated employment and skills project across the sub region.
The partnership's terms of reference were amended and membership
has been expanded to incorporate this additional activity.
6.15 The West at Work Action Group reports directly
to the West at Work Programme Board which is the Employment and
Skills Board for the sub region. The Action Group has extensive
partnership working experience having recently (September 2008)
provided a joined up recruit and train offer for employers in
the Cabot Circus Development in Bristol (4,000 jobs) as well as
intensive support for those out of work or claiming JSA to secure
jobs at the development. That partnership experience is well placed
to help co-ordinate activity around redundancy and company closure
activity.
6.16 The Area Action Force meets face to
face on a monthly basis. Some partners also hold a weekly telephone
conference (JCP, RDA, West at Work, Business Link, Union rep)
to share intelligence and co-ordinate engagement on recent announcements.
6.17 In May 2009 there are two large scale
company closure "task forces" in existence: the "Cadbury
Response Team" is an action group working on the closure
of the Cadbury site in Keynsham (500 jobs); a task force was also
recently convened to deal with the RSA (Royal Sun Alliance) announcement
that they are closing their office in Bristol with 400 job losses
(500 redundancies). Both have direct links to the AAF.
7. INTERREG IVC—PUBLIC
PROCUREMENT OF
LOCAL PRODUCE
7.1 The Interreg IVC programme offers the
opportunity for public bodies to enhance, improve and expand existing
practice, whilst creating tools and mechanisms to ensure the spread
and development of best practice. The FoodTURE-S project was submitted
under the second call of Interreg IVC and is currently going through
the appraisal process which will be completed by October 2009.
If the bid is successful, the project will run for three years
from the end of 2009 through to late 2012.
7.2 The participants in the proposed project
are seeking to develop new and innovative approaches to food as
a strategic area within their administrative boundaries and thereby
to foster food systems that contribute to sustainable economic
and socially cohesive territorial development.
7.3 For the South West of England the project
matches perfectly with the work currently being undertaken by
the South West Public Sector Food Procurement Project and allows
extension of this strategic sustainable food policy development
work into other channels of the food and drink sector.
7.4 The project partnership brings together
governments from 9 cities (Amsterdam, Rennes, Munich, Malmö
and Ferrara) and regions (SW England, Scotland, Basque Country
and Andalucia) across Europe that are committed to advance policies
in this relatively new area. Current policy experiences tend to
be fragmented and are not easily disseminated to other cities/regions
which face similar challenges. The exchange network established
by FoodTURE-S in this respect provides a context to learn from
each other and transfer replicable best practices between regions/cities.
Likewise, innovative policy approaches frequently require coordinated
cross-sectoral action in different relevant policy fields—FoodTURE-S
brings together best practice of regions/cities across Europe
in these fields and collates these into a model integrated Sustainable
Food Policy Toolkit.
7.5 A key element in this approach is the
development of an integrative food policy framework that builds
cohesion between different measures within the region and strengthens
and reinforces a sustainable and healthy food culture at regional
level. This in turn would act as a means to mobilize relevant
stakeholders and citizens to adjust their collective actions and
individual behaviours, and strengthen regional capital and cultural
assets that may be utilised as resource for sustainable and balanced
economic development in the food sector.
7.6 Project Objectives:
— Development of a model integrated policy
framework that will contribute to the protection and enhancement
of regional food systems, and utilise and exploit this asset for
sustainable regional economic development.
7.7 Project Activity Objectives:
— Identification and assessment of current
policies and practices.
— Diagnosis of areas for policy improvement.
— Exchange of best practice between partners
via peer reviews and strategic exchanges, thereby improving regional
capabilities and capacities through exchange visits.
— Audits and appraisals by policymakers
and regional experts.
— Transfer of policy best practice based
on the developed toolkit.
7.8 Outcomes:
— Individual regional action plans based
on best practice.
— Development of regional food policies
that promote food systems assets.
— Design of a collective model policy framework
with tools and guidance for transfer and adaptation throughout
Europe.
8. PROMOTING
THE SOUTH
WEST AS
A BASE
FOR AEROSPACE
8.1 Aerospace is a key sector for the South
West which has an estimated 27% of the UK industry and is home
to the HQs or major facilities of 9 of the UK's top 11 aerospace
companies. The company has contacts with the prime contractors
(Airbus, BAE Systems, Agusta-Westland and Rolls-Royce) and many
of the 1st and 2nd tier supply chain companies including GE Aviation,
Thales, Cobham, Messier Dowty and Boeing.
8.2 The Agency has invested heavily in this sector.
As part of the National Aerospace Technology Strategy, the Agency
has spent over £11 million and committed another £8
million on major R&D projects which have strengthened the
UK's expertise in composite materials, fuel efficient engines,
UAVs (civil unmanned air vehicles), energy efficient landing gear,
and advanced design technologies. These have leveraged around
£140 million of external R&D funding and safeguarded
and created hundreds of jobs in some of the highest value added
parts of the UK economy.
8.3 The Agency has facilitated engagement
between leading companies and universities which have resulted
in very significant investments and the development of valuable
IPR and attracted heavy investments from EPSRC.
8.4 As well as funding for technology projects,
the Agency has in the last five years funded networking activity
through the West of England Aerospace Forum (an affiliate of SBAC),
lean manufacturing programmes (through WEAF and more recently
MAS), a supply chain initiative and established a skills forum
which together amount to over £8 million.
8.5 Currently the RDA is working closely
with the UKTI overseas offices to promote this sector internationally.
This activity will include imminent visits to the overseas HQs
of:
8.6 In addition to this, members of the
International Business Team will be attending the Paris Air show
in June along with the West of England Aerospace Forum (WEAF)
and will be meeting with prospective investors. Later in the summer,
the RDA will be hosting a visit from a delegation of Japanese
aerospace and composites companies and academics.
Annex 1—Area Action Update
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