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Memorandum from Yorkshire and Humber Chamber and Commerce (YH 14)
Introduction
1. Yorkshire & Humber Chambers of Commerce (YHCC) is the umbrella body for the seven local, independent Chambers of Commerce in Yorkshire & Humber which are run by business for business.
Summary of key points:
2. A summary of key points are as follows:
· Yorkshire Forward have spent £2.5bn over the past decade, and whilst it can point to a number of achievements, the constraints put upon RDAs by the Government, and its lack of powers over transport and skills, have limited its overall effectiveness. · Yorkshire Forward have brought a more business like approach to economic development and it works to a sound, evidence based strategy. However, its funding processes remain longer and more complex than the business community would like. · It has shown a genuine commitment to work with business stakeholders in the development of the RES and other strategies. This must continue as IRS is developed. · RDAs have moved significantly away from the original concept of business-led, strategic, economic focused bodies. Too often they have been asked to manage national programmes rather than have the freedom to shape activity regionally. · We do have concerns that the Sub-National Review could well confuse rather than resolve regional governance, which risks distracting the necessary economic focus of the RDA. · The economic circumstances and model of economic development will be fundamentally different in the next ten years to the past decade. The IRS is an important opportunity for a major policy rethink to rebuild enterprise, business growth and employment and Yorkshire Forward have the expertise to lead this strategic development for the region.
The role and responsibilities of Yorkshire Forward;
3. The roles and responsibilities of Yorkshire Forward are defined by the Government and Parliament, and we believe there should be more regional determination of RDAs role and activities. Yorkshire Forward explain their role as follows:
"RDAs are business-led organisations, and provide strategic leadership to promote and co-ordinate economic growth and development, enterprise and regeneration, tackling economic differences within their regions as well as driving up the performance of the regions as a whole."
4. We are supportive of Yorkshire Forward in taking forward this role and this brief clearly differentiates them from local government and other public organisations involved in economic development at a regional level. The role it has played in developing a well respected Regional Economic Strategy, establishing Yorkshire Futures, raising the bar on 'urban renaissance' and promoting new technologies and industries such as carbon capture and other energy infrastructures are roles that an RDA is well placed to lead.
5. We do not believe RDAs have been given the responsibilities they needed over the past decade to make a genuine and lasting difference to regional economies. The two key regional business policy priorities over the past decade have been transport and skills, and Yorkshire Forward has had a very limited role in both. It is therefore not surprising that very modest progress has been made about reducing regional disparities over the past decade. This should have been the central objective of RDAs.
6. Despite its initial good intentions, we believe the Sub-National Review has confused the role of RDAs who are becoming increasingly tangled up in 'regional governance', and seen as a 'competitor' for resources and responsibilities with local government. The outcomes of the Sub-National Review in Yorkshire & Humber, which is effectively 'power sharing' between the RDA and local government, is fragile and confuses the respective roles of RDAs and democratically elected bodies. Businesses are less concerned about structures, but they do want clarity on the roles and responsibilities of the public bodies responsible for economic regeneration. The region has taken a backward step in this regard. This is not the fault of Yorkshire Forward, but is a reflection on the Government's lack of clear direction on regional policy since 2004.
7. The original RDA concept has been quite significantly diluted over recent years and they are becoming more like 'programme managers' (e.g. European funding) and delivering national policies (e.g. business support), rather than being given more flexibility and responsibility to shape policy at a region level. They are in danger of being turned into the Government Office. The chart below lists some of the new responsibilities RDAs have been asked to manage. We would prefer RDAs to be given the target/outcome, with suitable resources or powers, rather than a pre-defined national programme for regional delivery.
Source: 'Impact of the RDAs - National Report', March 2009, PWC
8. We do have some concern about their role to engage with partners locally and sub-regionally. We fully recognise that Yorkshire Forward is a regional organisation but its sub-regional offices are underpowered in terms of wider stakeholder engagement. The Sub-National Review makes it even more important that Yorkshire Forward has strong relationships with both local authorities and partners, including business, at a local level and at present this is too inconsistent across the region.
9. Yorkshire Forward also appear to be moving more towards service delivery, when we believe its primary role must remain strategic. This is most obvious in its roles and responsibilities for business support, for example the restructured Business Link Yorkshire which has been positioned as 'Yorkshire Forward's Business Support Service'. Its website invites businesses to sign up as 'members', it runs an increasing number of events and provides business news (not merely news about Yorkshire Forward and its activities). We recognise that the distinction between strategy and delivery can easily become blurred and we support organisations providing useful help to Chamber members across the region, however, we firmly believe Yorkshire Forward should remain strategic and should not position itself as a body with a day to day delivery interface with individual businesses or as a provider of business support services.
The mechanisms by which Yorkshire Forward is held accountable;
10. YHCC welcomes the measures Yorkshire Forward have taken to become more transparent and accountable, e.g. the publication of Board agendas, minutes and papers before meetings. We are satisfied that Yorkshire Forward are fully aware of their need to be accountable for their decisions and put in place the necessary steps to achieve this.
11. Businesses are often unclear about what Yorkshire Forward is accountable for. We want to see RDAs openly accountable to their regions for the impacts they have had, not merely accountable to Government departments for spending its money and meeting narrow output targets.
12. Government could take further measures to improve accountability, for example by allowing regions, not Ministers, to appoint the Chair and Board Members of the RDA. This would need to be managed carefully and should include Ministerial input, but it would make the RDA Board more accountable to the regions they serve rather than Whitehall which appoints them.
13. Whilst we recognise there are private sector members on the Yorkshire Forward Board, including the Chair, we do not share the view that the RDA is 'business-led'. Although there are some excellent Board members, more of them should have direct experience of running businesses. The private sector membership of the Board is generally weaker than a decade ago and their links to the main business representative organisations are insufficient.
14. The Regional Assembly's Scrutiny Board was imperfect, but had improved and was a useful, formal mechanism for regional partners and local authorities to hold Yorkshire Forward to account. We believe it was a mistake in the Sub-National Review to remove all formal scrutiny from the region and some form of revised regional scrutiny arrangements are required to ensure Yorkshire Forward's policies and activities are accountable to the wide range of partner organisations in the region. A new system should take into account the new regional arrangements which came into effect from 1 April 2009, and include scrutiny of the work of the new Joint Regional Board.
The process by which the Regional Economic Strategy (RES) was drawn up and the level of involvement of regional stakeholders in that process;
15. Yorkshire Forward have consistently been open and inclusive about the way in which they have drawn up consecutive Regional Economic Strategies. We are satisfied with the level of involvement we have had in previous consultations and believe Yorkshire Forward have done a good job given the many different priorities and perspectives offered during such consultation periods.
16. Looking to the future, the Sub-National Review is worryingly vague about the involvement of partners in the new regional arrangements. However, we do believe that Yorkshire Forward are fully committed to working with partners such as Chambers and many others to build upon the successful RES process as the new Integrated Regional Strategy is developed. We strongly welcome this and would ask that the Committee explicitly support this inclusive approach.
17. We would like to commend Yorkshire Forward on its establishment of Yorkshire Futures which has been a real asset to the region in collating and understanding evidence which is essential to good policy development and decision making. This work should be continued into the future.
The effectiveness of the RES for Yorkshire and the Humber in delivering against its targets;
18. YHCC recognises that Yorkshire Forward has consistently hit its key output targets, although we also believe this is an achievement of many partners in the region, not merely Yorkshire Forward. Yorkshire Forward does not itself create jobs or businesses it helps companies and entrepreneurs to do so. This is a vital distinction, and it one rightly recognised publicly by Tom Riordan but rarely comes across in the sometimes overly self-justifying marketing and communications of the RDA.
19. The 'Impact of RDA Spending' Report published by BERR in March 2009 provided a fuller analysis of Yorkshire Forward's performance. We would surely expect any organisation to have an impressive list of achievements and outputs given the £2.1billion spent between 1999 and 2007. The report does not clearly demonstrate that the RDA model itself delivers real impact and value for money, as opposed to the £2.1bn spent by any organisation(s). It is vitally important that Yorkshire Forward can demonstrate their effectiveness so that their credibility and sustainability can be secured.
20. Yorkshire Forward has not been successful in all areas of its activity and Chambers would highlight a number of examples such as the provision of business support where real frustration has been expressed. Too few international trade and enterprise services have been put out to open tender, as has been the case in other regions, and this risks eroding the capacity of the region to hit targets, especially when resources become tighter in the coming years. Business Support Simplification has at times rationalised and reduced useful support previously available to businesses. Yorkshire Forward also funds a number of 'business membership' type organisations which risk competing with existing business organisations such as Chambers.
21. Yorkshire Forward could have been more successful in lobbying for the region. Figures show total public spending in our region has grown the slowest of any English region over recent years. For example the regions transport spending allocation has been amongst the lowest whilst traffic growth has been growing amongst the fastest. We recognise RDAs have limited transport powers but we are very disappointed that Yorkshire Forward have not been able to exert more influence over central Government on transport, which is a real business priority. Transport investment is much more likely to reverse the regions worrying record on productivity than a range of business support schemes which too often have a marginal net economic impact.
The effect of the current financial and economic situation on businesses, including the effect on different sectors and on skills and employment in the region;
22. This is a very broad question and we would be happy to provide the Committee with specific data from our economic surveys as the picture is complex, but the overall picture is that the recession is hitting almost every sector hard and manufacturing is especially vulnerable. Our measures of sales, orders and employment have hit record lows and a slow recovery in anticipated. The two key issues are credit and confidence. Both will need to return before a recovery can begin.
23. One point we feel it is important for the Committee to take on board is that business confidence started falling in the second half of 2007, a full year before the bank bailout of October 2008. This was a result partly of the early phase of the credit crunch, but also because of rapid increases in raw material costs and particularly oil prices. We are also concerned inflation and interest rates could rise substantially as the global economy recovers. These problems are likely to constrain growth long after the credit crunch ends.
24. There will need to be major rethink at a policy level. The region has been trying to solve entrenched problems such as deeply rooted unemployment in some communities, low levels of productivity and skills and underinvestment in transport for the past decade. Only modest relative progress has been made despite the rising economic tide and unprecedented Government spending. With less funding available and a new set of challenges helping businesses recover, rebuilding enterprise, restarting regeneration programmes and tackling rising unemployment the challenges will be much more difficult. The next ten years will be totally different from the past ten.
25. The model of regeneration with a housing boom driving forward residential led redevelopment, allied to a consumer spending bubble promoting massive investment in city and town centre retail schemes, is unlikely to return quickly, if at all. The regeneration model will need to change, as will the public sector interventions to support economic development. Strategy must concentrate on supporting both enterprise, businesses development in key sectors and a return to export led manufacturing. Yorkshire Forward will need to retain a sharp economic focus to lead this change.
The role of other Government agencies such as the Government Office for Yorkshire and the Humber, and of partnerships between Government agencies, local government and the private sector, in delivering the aims of the RES;
26. As noted earlier, the roles of RDAs has changed and is becoming less distinct in relation to both Government Office and local government. It is too early to tell how the new regional governance arrangements will work, but businesses are concerned that there is a fragile 'balance of power' shared between Yorkshire Forward and LGYH. The lack of clarity in roles does give us cause for concern that IRS will take too long and be insufficiently focused.
27. The Sub-National Review made regional governance more complicated and contested, when it should have streamlined it. Settled arrangements about what is done at which geographical level are needed to provide the decision making structures needed to make good decisions for business. Businesses will not be impressed by squabbling and petty power struggles within the public sector when businesses and people need a proper strategic direction and effective delivery.
28. There are specific issues which we do not feel Yorkshire Forward has satisfactorily managed its relationships with other partners such as the provision of international trade support. In our view, Yorkshire Forward has not been strong enough, particularly with central Government, on the role of UKTI in the region. Yorkshire Forward's expensive restructure of Business Link services last year was based on a shift to providing only information, diagnostic and brokerage (IDB) services to businesses to avoid duplication and competition with other providers. We believe UKTI should be subject to the same IDB role and believe Yorkshire Forward should be stronger in making this happen in the region.
The move towards a regional integrated strategy and the likely effect on
the work of Yorkshire Forward;
29. The IRS provides an opportunity to ensure that planning, transport and skills can be much better aligned to the main policy areas covered by the RES. There are dangers that the debate over planning e.g. housing numbers, could overshadow the economic focus to the IRS, and risks prolonging the strategy development. The regional economy is at a critical point and we will need a new strategy before 2011 or 2012.
30. We believe Yorkshire Forward will approach the IRS in the spirit of partnership, and local government must demonstrate this commitment as well. Yorkshire & Humber has a good record of regional partnership working, and this must continue.
The extent to which Yorkshire Forward has the capacity and expertise to
address all the elements which will be contained in the new integrated
strategy, including in relation to transport, planning and housing; and
31. The development of the IRS is very much a joint effort between Yorkshire Forward and local government. Business expects them to share capacity and expertise and work in a positive manner to develop an IRS which can deliver for the region.
32. Neither Yorkshire Forward nor local government have a monopoly on expertise and knowledge. They will also need to work very closely in consultation with partners such as business to ensure all relevant evidence and perspectives are properly understood from the outset. The current stakeholder involvement in the new arrangements is insufficient and is too dominated by local authorities.
The role of Yorkshire Forward in promoting a low-carbon economy in the region and in addressing regional issues concerning climate change and flooding.
33. Yorkshire Forward has a potentially major role in helping the region move towards a low carbon economy and tackle climate change particularly in helping the region develop some of the new technologies and infrastructure such as carbon capture and renewable energy. Planning for such infrastructure goes well beyond local or city-region boundaries. A regional agency with a commitment to sustainable economic growth makes them ideally placed to play a leading role in this agenda and offer something local areas cannot achieve acting alone or together.
May 2009
Yorkshire and Humber Chamber of Commerce 34-38 Beverley Road Hull, HU3 1YE www.yhchambers.org |