Examination of Witnesses (Questions 40-59)
MR BEN
BRADSHAW MP, JON
BRIGHT, RICHARD
BAYLY AND
THOSS SHEARER
30 MARCH 2009
Q40 Chairman: Coming back partly
to that point, London is in the middle of all this and skews all
the regional figures. If you take London out, the funding and
investment across the regions is not hugely dissimilar, and the
gross value added starts to look a bit more balanced. London is
clearly going to be arguing very heavily at the moment that the
financial sector has been hit, and it also has some manufacturing.
How do the regions around London make their case, because London
has a fair amount of clout? With its profile, it is quite capable
of arguing above its weight and leaving the south-west batting
below its weight.
Mr Bradshaw: My experience is
that both the National Economic Council and the Regional Economic
Council take a careful analytical overview of the figures. From
memory—obviously, I do not follow London as closely as I
do the south-west—the figures do not show what you have
just implied, which is that London is being disproportionately
hit. In fact, there was certainly a three-month period—if
it is not still happening—where, in terms of the percentage
increase in unemployment, the south-west was the worst affected
region, because we were coming mostly from a low base. In parts
of Dorset, for example, and in many other parts of our region
where unemployment had, to all intents and purposes, been eradicated,
if just a handful of people are added to the jobseeker's allowance
register, you then have a much bigger percentage increase than
you do in some of the inner-city areas that still maintained a
certain level of unemployment throughout the good times.
Q41 Chairman: But we are talking
about percentages. Yes, the percentage is rising faster in the
south-west, but the numbers are significantly smaller none the
less, and there will be those who argue the numbers rather than
the percentages. How do you deal with that?
Mr Bradshaw: Clearly, Government
nationally must take a view on where to focus the help available,
must it not? The Government help that has been made available
and brought together in the very useful document "Real Help
Now" is available nationally. When it comes to big strategic
decisions about sectoral responses, as we have seen with the motor
industry, for example, Government may feel that there is scope
for doing something because of the strategic national importance
of that particular industry to the UK. However, the south-west
has been just as hard hit and would benefit just as much from
that kind of help, because, with the exception of Swindon, other
regions have more of an automotive sector than we do. A lot of
the suppliers are in the south-west, and for aerospace it is even
more significant.
Q42 Kerry McCarthy: You have mentioned
that the south-west is more dependent on small businesses than
any other region. Obviously, it also has some quite remote rural
areas. In your role, how do you strike a balance? Swindon is an
obvious example of a place where there is a critical mass of employment,
and it is easy to identify where the difficulties are in terms
of the automotive industry and so on. How do you keep a balance
between 50,000 people in a critical mass in Swindon and 50,000
people spread across Cornwall and Devon who all work in small
businesses but might equally be at risk of losing their jobs or
have difficulty accessing finance? How do you reach those people?
Mr Bradshaw: At the monthly economic
task group, we receive real-time, up-to-date information on figures
and specific businesses that are in trouble. Clearly, if a major
business such as the automotive industry in Swindon announced,
as it did before Christmas, that it was reducing its working hours
and closing down for a period, that is an issue in which, if required,
we would get BERR nationally engaged on that specific manufacturer.
If it is a generic problem of small businesses saying, "Well,
it's all very well; you're telling us that you've told the banks,
in which you now have a majority stake in some cases, that they
should be lending, but it's not happening on the ground,"
then that is not necessarily a specific business issue but a general,
generic issue with lending—although BERR has set up a designated
hotline for businesses having particular problems either with
their bank's lending policies or with accessing some of the help
that the Government have already announced. You can do both those
things: you can deal with the generic problem, and you can point
people in the right direction and give them advice as to what
to do if they have a problem specific to their business.
Q43 Kerry McCarthy: In terms of
bringing forward capital investment and proactive Government measures
to try to keep people in jobs, particularly in the construction
industry, how is that working across the south-west?
Mr Bradshaw: Again, there will
be the impact of decisions made nationally, such as to bring forward
£1.2 billion of investment in housing to the current financial
year, which will benefit the construction industry in the south-west
as much as anywhere else: in fact, relatively speaking, probably
more so. I think that I am right in saying that we have the biggest
pot for capital spend for social housing of any of the regions
in England. At the same time, one of the pieces of work that the
regional task group is doing is to identify specific capital schemes—housing,
transport and others—that might be held up because of the
credit crunch or problems with one or another of the agencies
involved in progressing such schemes, and seeing if we can unblock
those. I think that I am right in saying that we have had some
success in recent weeks in unblocking five significant capital
schemes in the region, meaning that they can now go ahead. They
are a mixture of housing and transport.
Chairman: There were some nods at the
end there. Is there anything that you would like to add to the
Minister's comments?
Thoss Shearer: I can confirm the
figure. Regional agencies are working together and looking at
how existing funds can be redistributed, or used more imaginatively,
in order to meet the changed conditions impacting on each project.
Those need to be taken on one by one to be solved.
Q44 Kerry McCarthy: Is this going
to happen quickly enough to make a difference? In Bristol, I am
always incredibly frustrated by how long it takes to deliver on
projects. That is sometimes because there seems to be endless
consultation and sometimes because of the planning process. Now
we are seeing developers pulling out of some projects. It might
be happening more quickly than it was scheduled to, but will it
be quick enough to make a difference to the country in 2009-10?
Mr Bradshaw: We are focused on
trying to ensure that any capital spending that can be brought
forward to this year is brought forward and that any schemes that,
for one reason or another, are not progressing, are progressed,
if they can be. Two of the schemes to which I just referred are
in Bristol: first, the former Blackberry Hill hospital—now
Southmead hospital—is the site of 355 new homes, 2,000 sq
m of employment space and a new district hospital; and secondly,
the Hanham Hall, Bristol carbon challenge scheme, which includes
195 homes and 2,000 sq m of employment space. The other four schemes
are as follows: one is the Dolcoath regeneration scheme, in Cornwall,
which will include 390 new homes and 14,000 sq m of employment
space; another in Devonport will have new apartments for the elderly;
another in Devonport, Plymouth is Vision @ Devonport, which will
include 463 new homes and nearly 10,000 sq m of employment space;
and finally there is a scheme at Yeovil involving 717 new schemes
with Barratt as the private partner. We are constantly on the
lookout for any schemes where there might be a problem or uncertainty
because of—inevitably—the economic climate, especially
when it comes to private sector involvement, to see what we can
do, as public agencies, to help to move those forward. We think
that it is vital, at this point in the downturn, that we do not
let up on investment. Making these investments, and keeping jobs
and skills in the economy, will not only help us now, but put
us in a better position to benefit from the inevitable upturn.
Q45 Mr Drew: Traditionally, the
south-west has been seen as two sub-regions—the east, which
is fairly well-to-do and the major economic driver, and the west,
including Cornwall, which with objective 1 status has needed a
great deal more support. From all the evidence, the east is doing
disproportionately badly in this recession. How do you convince
people outside the region that the traditional growth zones, such
as Gloucestershire—my county—and Dorset, might need
particular help at this time, because they are the ones stalling?
That might be because of the manufacturing issue that we were
looking at earlier, but other things could be bringing that on.
How do you convince the Chancellor and those outside the region
that that part of the south-west might need particular help at
the moment?
Mr Bradshaw: They see the figures
just as we do. You are right that the figures so far show that
the most seriously affected parts of the region are Gloucestershire,
Swindon and—to a certain extent—Bristol, but that
is not to say that the global downturn is not being felt everywhere.
It is too soon to say that that pattern will necessarily remain
as circumstances evolve. The statistics on which you based your
comments are the same as those that we see, and the same ones
that the Chancellor and DBERR see when calibrating their response.
Q46 Mr Drew: If the east is not
doing as well as it could and should be, it also has an effect
on the west. Although the impact has been graded less severely,
we have an objective 1 status county—Cornwall—which
takes a disproportionate amount of the resources. To be fair to
Cornwall, it has fewer resources in the region to take, so that
has a negative backwash effect on it. So this is quite a difficult
region to steer at the moment. The normal driving force is not
driving as much as it was, but the other bits will not be able
to forestall some of the difficulties coming our way anything
like as well as would be hoped. Is that the message that you are
giving as a regional team?
Mr Bradshaw: I would say it is
a positive thing that Cornwall gets so much support. Of course,
most of that support, or a significant amount of it, is from the
European Union, which is a good thing for our region. I would
not want to get into a position where the region was fighting
within itself. That is not a constructive approach. One of the
roles that a regional Minister can play is this: when we get sub-regions
within the region making a case for more money, we can have a
look at that, but we can also spell out the regional overview.
You are right that so far the figures show a disproportionate
impact on the north-east of the region, but the caveat to that
is that it is the north-east of the region that has grown exponentially
in the last 10 years, so any impact of any economic downturn is
more likely, in raw figures, to be felt more acutely in that part
of the country. Clearly, however, if there are sectoral-specific
characteristics of that impact, that is something that not just
the regional agencies but the Government would take into account
when calibrating their response.
Q47 Mr Drew: Do you see the region
as a west and an east? That is traditionally the way it has been
portrayed to us, but is that less so now? Are there further sub-regions
that you ought to be looking at?
Mr Bradshaw: I am not sure it
is advisable to generalise in that way. There is no doubt that
there is disproportionate growth and there are, as a matter of
fact, disproportionate levels of GVA between the west and the
east of the region, but there are also big differences within
smaller areas. There will be wide variations within a county such
as Gloucestershire. There will be wide variations in a county
such as Devon. If you try to paint too general a picture of the
gaps within the region, that does not necessarily help you to
make a constructive and targeted response to the needs that the
region and areas within the region have.
Q48 Chairman: There have been
raids on various budgets, which have impacted across the region.
The neighbourhood renewal funding is going, and as a result of
the changes that are following on from that, Bristol, Plymouth
and Penwith are losing out. They are getting some transitional
funding, but that will also impact on those areas. What do you
think the impact will be on those areas as a result of the loss
of that particular pot of funding, or do you get a sense that
it is covered in another way? Richard, are you answering this,
or Jon? You can both have a bite of the cherry. It is all right;
we have time.
Jon Bright: I will start. The
neighbourhood renewal fund, when we had a neighbourhood renewal
strategy, was always intended to be temporary. The idea was that
what we had learned about the interventions that succeeded in
reducing problems of worklessness, crime and so on would then
be mainstreamed by the various agencies. They would change their
practice in response to that knowledge and that would then continue
the improvements that had been created in the various neighbourhoods.
That is what we can do now, principally through the machinery
of the local area agreement. There is an opportunity there for
local authorities to agree indicators and targets with Government
about what will be achieved in terms of tackling disadvantage.
We have the machinery and there is the knowledge to take it further
forward through the local area agreements. We have transitional
funding in three areas now, but by 2010-11 we will not have any
working neighbourhoods fund. However, we can still take that good
practice forward.
Q49 Chairman: But you are confident
there will not be a significant hole as a result of the loss in
those three particular areas in relation to what is currently
being achieved?
Mr Drew: This is in the context of declining
RDA money anyway, which we keep being written to about, so something
in the tool shed is not very happy at the moment.
Jon Bright: One of the major differences
between the working neighbourhoods fund and the neighbourhood
renewal fund is the increased focus on tackling worklessness.
That is what the working neighbourhoods fund would be used for
were we to have more allocations of it in the region. We have
got some excellent examples in the region of worklessness being
tackled effectively, particularly down in Cornwall, with the Cornwall
Works programme. That is a combination of the Jobcentre Plus and
the Learning and Skills Council using European social fund money.
That model, which has been shown to be extremely effective, is
being spread eastwards. That is one way, I hope, that we can hope
to continue to make an impact on those neighbourhoods most disadvantaged
by high levels of worklessness. It will not happen automatically.
We have got to ensure that the pressure is on to ensure that the
replication of good practice continues.
Richard Bayly: This has not, historically,
been a major area of RDA investment, but one of the areas where
we have been concerned that the transition should be smooth is
around the impact on the third sector. There, we have been focused
very much on the procurement practices for mainstream programmes—money
coming out of the Department for Work and Pensions and the LSC,
and the new ESF programmes—to try to ensure that the capacity
that is being developed in the third sector is tapped effectively
to support the sort of results that Jon has been talking about,
particularly around worklessness. We have seen improvements in
those areas, which we think will be helpful in making that transition
smoother than it might have been.
Q50 Mr Drew: I want to talk about
an area that I asked the RDA about—I will come back to the
overall budget in a minute because it is important and I want
to try and nail it down. When I was talking to my businesses on
Friday night, they were very clear that the public sector could
lead and help and be vigorous over public procurement, whether
regarding food, the supply chain for manufacturing or the health
service—that was identified as being very helpful, and it
could be more so. How do you see this playing out in this recession?
Again, public procurement could be a driver of job retention.
Contracts could be maintained or rejigged to ensure that there
is an opportunity for firms in the region to be able to meet the
demands of the region rather than them having to seek contracts
from outside.
Richard Bayly: There is a lot
of potential, I think, but, on the whole, the successes come not
by starting at the procurement end, but at the supply end, and
working with partners to build up the supply chain capacity and
the ability to use the procurement processes that are available
strongly. Business Link is investing in that now. We have seen
very successful examples around land-based industries building
up the ability of people to bid-in to supplying for supermarkets
and that sort of thing. At the end of the day, whatever we do
has to work with the grain of the rules on competitive procurement
and the inability to be unfairly discriminatory, but there is
no reason why people cannot work with the supply side to build
up the capacity of businesses, particularly smaller businesses
who may be intimidated by the scale of some of the contracts.
We could work out how they can be made more accessible for them.
Mr Bradshaw: The most important
principle is that we maintain the investment that allows that
procurement to happen. Certainly as far as the health service
is concerned, over the next two years, we see the capacity for
investment and procurement at the highest levels ever because
we have maintained and increased the level of investment in health
care. The same is probably the case for most of the public sector,
certainly for education. There is potential in the health service.
We have seen this from the local food procurement that the Cornwall
NHS pioneered. We are looking at rolling that out nationally.
The public sector, including the health service, is committed
to playing its part in increasing the number of apprentices over
the next year or two—I cannot remember the exact figure,
but the chief executive of the south-west strategic health authority
told us at the last task group the number of apprentices to which
he was committed to providing in the NHS across the region over
the next year.
Q51 Mr Drew: The other moan I
heard last Friday—I might as well share it with you—was
the problem of late payment. The public sector, certainly PCTs,
were not immune from criticism. What mechanism have you got in
place to make sure that all Government agencies are paying on
time—if possible, paying early? Again, it is this churning
of money, besides the help that we now expect from the banking
system, which means that businesses can stay viable and can actually
go out there and contract for new business; because if they do
not get paid they cannot do any of that.
Mr Bradshaw: Well, as I am sure
you appreciate, the Government have reduced the period within
which we expect—
Mr Drew: They are not all obeying it,
Minister.
Mr Bradshaw: We have made quite
clear to public service, certainly as far as the health service
is concerned, that that is the expectation, and if you would like
to bring, not necessarily in public, but privately, to my attention
any primary care trusts or acute trusts that are not stepping
up to the mark, then I would be happy to have a look at it; but
I think our feedback is that most, if not the overwhelming majority,
are.
Q52 Kerry McCarthy: Are there
any positive advantages from the current economic situation that
you are looking to build upon—I mean particularly the exchange
rate? Is that giving you scope to attract more inward investment
to the region?
Mr Bradshaw: I do not think it
could really be said that there are advantages to what is an economic
crisis unprecedented since the 1930s. However, I think there are
sectors we can focus attention on. Tourism is one where I think
there is potential to benefit from the current exchange rate and,
although the signs are mixed at the moment, there are reports
of quite healthy bookings in some parts of the tourism industry;
there is certainly a drive nationally with the £6.5 million
of extra marketing expenditure to market the UK to foreign visitors
this year.
So we are looking for what opportunities
we can amid the current very gloomy situation, and I think we
are also using the current downturn to refocus on the sectors
that the south-west, in the medium to long term, can really benefit
from significantly. One I heard mentioned by the RDA earlier is
the whole marine area. Also there is renewable energy and green
jobs, where I think we can be in the lead of regions. One of the
pieces of work which the regional task group is doing at the moment
is to become an exemplar for the UK as a whole in renewable energy
and green jobs. Another is the potential we have to benefit from
the Government's "Digital Britain" strategy, which is
expected to report finally later this spring, which has potentially
huge benefit for rural areas, in terms of improving business competitiveness
and access through the fibre optic network.
So those are some of the areas, I think,
where we are thinking very hard about how to, when we get through
this period, make sure the south-west is in the strongest position
possible to benefit from the new jobs that are going to be created,
and, indeed, are now being created, in some of these industries
of the future.
Q53 Chairman: You are confident
that we are really encouraging innovation and bringing forward
ideas at a very basic stage within the region?
Mr Bradshaw: Yes, I think we are.
Chairman: Because ultimately that is
where the new businesses will come from.
Mr Bradshaw: We have also got
very effective partnership-working with our higher education sector,
which is vital if we are going to exploit fully the potential
that there is in our region to benefit from these industries which,
because of our characteristics as a region, I think we are uniquely
positioned to benefit from— particularly renewables and
green jobs, and environmental technology as well. We have a very
strong higher education sector; we have a very strong SME sector
already, and a lot of potential to grow that, both during the
downturn but particularly when the upturn comes.
Richard Bayly: There is a very
strong consensus in the Minister's task group that the management
of the recession needs to look beyond, to the challenge of the
recovery and the global market the region will still be in, and
the importance of continuing to invest in innovation to build
up productivity during that period.
Q54 Chairman: To come back to
David's point, clearly the recession has a cyclical pattern. From
the figures that we have been presented with, some regions appear
to be slightly ahead of us. For example, I am looking at Hometrack's
figures on new build just for flats. We are still in a position
where there is some new build, while other regions are having
no new build at all. Are you confident that the measures introduced
to encourage innovation, development and working with the universities
will, in fact, help us not to be behind everybody else in coming
out of the recession? We seem to be slightly behind in the level
of unemployment and the way in which it is growing, and other
impacts of the recession, but we do not really want to be behind
when coming out at the other end, because we would then lose an
advantage. Are you confident that we are doing everything we can
to ensure that we are best placed to come through this, perhaps
next year some time?
Richard Bayly: That has been given
very high priority. In our earlier discussion about the challenge
faced by advanced manufacturing in the north of the region, one
of the things that concerns us is exactly the kind of world-class,
high-skilled manufacturing concern that the region has been aspiring
to build up. It adds to the importance of being able to find ways
of retaining that sort of top-level skill base within our economy,
so we can respond to the opportunities of recovery.
Mr Bradshaw: I also think that,
because of the mixed nature of our economy, it brings with it
a certain underlying resilience that we are not a regional economy
that is solely dependent on one or two sectors. We are strong
in a number of areas and our economy is very mixed from agriculture
and fisheries—some of the more traditional land-based industries—to,
as Richard just said, some of the really high-tech manufacturing
and technological industries, and everything in between.
Q55 Mr Drew: One of our advantages
is that the most counter-cyclical industry at the moment is agriculture.
In a sense, the south-west is ideally placed to ride the benefits
of that, but also look to the future. It is pretty obvious that
we shall have to raise the level of self-sufficiency in agriculture
because of all the threats and difficulties that we have seen
with rising food prices. How does this industry feature in the
current recession obsession, if you like, looking to the future,
where we could look at bolstering it—having more rather
than less agriculture—and turning it back in terms of employment,
with some land being given over to agriculture? Is that part of
the task group's forward-thinking agenda?
Mr Bradshaw: That may be something
that you want to raise in more detail with my ministerial colleagues
at the Department for Environment, Food and Rural Affairs, but
you are right to identify agriculture as one area of the economy
that is doing counter-cyclically at the moment—not just
counter-cyclically, but also benefiting from the exchange rate
in terms of prices that are generally being received for goods.
Because of that, it is important that we do not take our eye off
the future development of agriculture and what it has to offer
in respect of the region's overall strategy. Particularly going
back to my point about the potential for land-based industry to
contribute to renewable energy, that is certainly something that
we are actively considering as part of our paper on green jobs
that we are presenting to the National Economic Council.
Q56 Mr Drew: I said that I would
come back to the RDA budget. Clearly, it is of concern in the
region, particularly at the present time when we need to see public
sector leads and investment that will help us to turn around the
corner. What representations have you made at least to look at
the RDA's concern, which has been expressed to us on a number
of occasions, that the budget has now been cut away to an undue
amount? It will be difficult to review that further without taking
out some of the growth areas and doing some of the maintenance
work that must be put in place.
Mr Bradshaw: I think the RDA has
made Peter Mandelson and the Treasury well aware of its concern.
This issue is not specific to the south-west region; it is a national
one. One may argue about whether that was the right thing to do;
I believe that it was, given the absolute priority of getting
investment into housing schemes quickly as part of our fiscal
stimulus. The money must come from somewhere, but I am sure that
Alistair Darling will hear the representations on RDAs' funding
generally, and south-west RDA's funding specifically as part of
those that he will hear in the run-up to his Budget.
Q57 Kerry McCarthy: You mentioned
a paper on green jobs. What happens to that? It goes to the National
Economic Council to be discussed, but is it intended that that
will feed into wider Government consultation, or is it part of
the pre-Budget preparation?
Jon Bright: The work has been
commissioned by the regional task group. It is still under way
and the consultants are still working on it, but it is likely
to focus on energy efficiency and generation in terms of renewables
and nuclear, and on sustainable food and farming. Those are three
areas where there will probably be a heavy focus.
The idea is that when the task group is
comfortable with it, we can then present it to the Council of
Regional Ministers and perhaps the National Economic Council.
It will also be routed through the RDA and Government office networks.
I think we are the first region to have commissioned such a piece
of work. There is real scope for it to help to accelerate our
thinking about what to do when the recovery comes. There is a
lot of interest in it.
Q58 Kerry McCarthy: A rough time
scale? You said, "when the task force is comfortable with
it".
Jon Bright: I am talking about
a couple of weeks to improve the quality of the product before
sharing it more widely.
Q59Kerry McCarthy: Obviously, the RDA
and representatives from the local authorities have given evidence,
but who is in the driving seat in trying to ensure that the south-west
is as well placed as possible to survive the recession? Is it
the regional Minister and the Government office, is it the RDA,
is it the regional assembly, or is it the leaders board? How do
they fit together? Is there not a danger that with so many different
players, no one will be sure whose responsibility it is to take
things forward?
Mr Bradshaw: I imagine that that
is exactly the reason for the Prime Minister establishing the
regional economic task groups, because that is the forum in which
everyone meets, including the RDA representatives who were here
just before us, local government representatives, including Rob
Bluh and the chief executive of Devon county council. The reason
is to ensure that we have an opportunity once monthly, at least,
to spend a morning ensuring that we hear from business representatives
on that group—such as the Federation of Small Businesses,
the CBI and representatives of the chambers of commerce—what
is happening on the ground in businesses, the latest up-to-date
information, their latest concerns and whether the concerns that
they raise are acted on, and that the resulting action regionally
and nationally is fed back through the economic task group. I
hope that I have answered your question. I would not claim that
we are driving, but the task force is certainly fulfilling the
important function of ensuring that everything is pulled together.
If we had not set it up, it would have been much more difficult
to track concerns raised and action taken, to prioritise, and
to send clear messages in both directions to national Government
and back to the region about what is happening and what needs
to be done.
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