UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1034-i

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

YORKSHIRE AND THE HUMBER REGIONAL COMMITTEE

 

THE WORK OF YORKSHIRE FORWARD

FRIDAY 16 OCTOBER 2009

(LEEDS)

 

TONY CHERRY, ALAN HALL, ANDREW PALMER and NICK PONTONE

 

Evidence heard in Public

Questions 1 - 46

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Yorkshire and the Humber Regional Committee

on Friday 16 October 2009

Members present:

Mr. Eric Illsley (Chairman)

Mr. Clive Betts

Mr. Ian Cawsey

 

Examination of Witnesses

Witnesses: Tony Cherry, National Vice-Chairman, Federation of Small Businesses, Alan Hall, Regional Director, Engineering Employers Federation, Andrew Palmer, Regional Director, Confederation of British Industry, and Nick Pontone, Director of Policy, Yorkshire and Humber Chambers of Commerce, gave evidence.

 

Q1 Chairman: Mr. Pontone, Mr. Hall, Mr. Cherry and Mr. Palmer, welcome to the first public meeting of the Yorkshire and the Humber Regional Select Committee. As you are aware, this is a reconvened meeting from our previous attempt; thank you for bearing with us and for your attendance today. Hopefully, we can have a worthwhile and valuable exchange of information about the work of Yorkshire Forward, which is the subject of the Committee's inquiry.

We have a full brief of questions and limited time in which to discuss them, but does anyone first wish to make a short opening statement about the subject of the inquiry or their role within it? Okay, we shall go straight into the questions.

Gentlemen, we have had the benefit of reading your written evidence in relation to the work of Yorkshire Forward. It raised some interesting points. As business representatives in the region, will you explain the unique economic challenges that face the Yorkshire and Humber region compared with other regions in the United Kingdom? Our proceedings are relatively informal this morning. The question is open to all four of you or whoever wishes to answer.

Alan Hall: Not touching on all the issues, a unique challenge for Yorkshire is the scale of the region's geography, which leads to a huge rural agenda alongside that of developing conurbations. In that context is the balance of skills of the work force, which faces a major economic challenge. There are success stories, but some groups are left behind by the fact that they do not possess the skills or do not have the appropriate skills. Another corollary is the fact that, in some areas of economic activity, the wage awards for the groups that I am describing are not at the level of the success stories of the finance sector in Leeds, for example.

Tony Cherry: Given the diverse nature of the region, its sub-regions make more sense to a lot of people because of their nature. That links to the fact that some sub-regions, such as South Yorkshire and East Yorkshire, have a limited enterprising spirit or one that is not as strong as other parts of the region. It is therefore unusual for people in South Yorkshire to consider self-employment or starting small businesses. That is a major issue bearing in mind that, since 2002, 84% of the private sector work force has been employed in new jobs in small businesses.

Andrew Palmer: I agree with your geographical point about the spread of industry and manufacturing within the region, and the build-up of the SMEs and their funding.

Nick Pontone: We agree about the high proportion of manufacturing. I am not sure that Yorkshire has too many totally unique issues; I think it is a blend of them in the regions and the particular characteristics that we have. The two big regional priorities that we have had, as a group of chambers, have been around skills and transport. I think that the region, for different reasons, has not been able to improve its record of skills and infrastructure at the same rate as other regions, which has given us a problem for productivity-if you look at the figures, there has been a relative decline of that in Yorkshire compared with other regions. That is something that we need to address for the future under a very different set of economic circumstances.

 

Q2 Chairman: On the question of business start-ups, I take on board the point entirely because, in my region, this is always a criticism that is levelled at the economic performance in the South Yorkshire region-we do not have enough entrepreneurship and people who want to start up businesses. Is there any glaring reason for that, such as educational levels?

Tony Cherry: I think that we still suffer from the historical background of people having jobs for life in major industries, such as steel and coal, in South Yorkshire and, perhaps to some extent, East Yorkshire. It also links to the fact that enterprise is not particularly embedded within the education system. I think schools throughout the age range-from primary on-do not understand how enterprise can link into the curriculum. Even though we have, in Yorkshire and Humber, the Young People's Enterprise Forum, which is a trailblazer in the UK and has done an awful lot of work, we still have a long way to go to ensure that enterprise is embedded within the school curriculum.

Andrew Palmer: Drawing on private expertise would be a very good thing to do.

Tony Cherry: Indeed.

Andrew Palmer: To maximise effectiveness.

 

Q3 Chairman: Turning to Yorkshire Forward, what do you see as its role in the region? Do you believe that that role is sufficiently understood?

Nick Pontone: The role of regional development agencies, when they were established as strategic and providing leadership and strong business involvement in their boards, and as being able to do things at an effective level of both local authority levels, was well-supported by us at the time, and I do not think that has really changed. I think there have been some hurdles along the way, some new responsibilities and new economic challenges, but the central role, going back to 1999 when they were established, remains the same.

I think that the one area that is less clearly understood regarding the roles of Yorkshire Forward and all other RDAs is whether they exist to reduce the economic gaps between regions. Whether we characterise it as a north-south divide or something else, it always struck us as rather odd. If that was the purpose of RDAs, why was one established in every region? I think that that is the central question for them going forward-whether they are there to manage and deliver services to businesses and economic-related services at a regional level, or whether they are there to start closing productivity and prosperity gaps.

I think that that question has made it very difficult for RDAs to prove their effectiveness. They have hit all their output criteria, delivered some very good projects and brought some new thinking, but if you look at the figures in terms of the region's performance over those 10 years, it is very difficult to assess the actual difference that the RDA model has made. I think that is the big difficulty for them.

Alan Hall: I agree with Nick about the original remit. Some of that remit has been blurred by the addition of successive powers over the 10 years over which we are looking back. In line with what Nick was saying, when you think it is to do with trying to rebalance the economy, it is strange that you end up with RDAs in the nine regions that we know have been applied. That blurring also has brought the RDAs somehow close to the question of community and disadvantaged groups, and it gets difficult to know what the RDA can do in the context of that. It gets more into a social arena, rather than an economic regeneration arena that has been their natural territory. However, I think there is a health warning that needs to go with where we are, because powers have been added. I am saying that it has blurred things for the average business person knowing what the RDAs do, and if further powers were to be added, that would become even more compounded, in my view.

Tony Cherry: One of the benefits of Yorkshire Forward and bringing together partners within the region has been to allow them to work on much larger projects than local authorities individually might have done. It also manages to bring together partners that would not otherwise have the influence that they have had, so the business community is very much involved in the work that Yorkshire Forward has done. The board of Yorkshire Forward and its activities have been very much business-led, and that has benefited our relationship within the region.

Andrew Palmer: When the RDAs were being set up, one of the things that the CBI was very strong on was that you would need a business lead, and certainly quite a lot of them have had a business lead and ideas useful for economic policy and advocacy. There are also perceptions about the overlap between the regional Government office, the regional UKTI and lots of other organisations. Businesses are sometimes unaware of where to go and what to do because the message coming out has not always been clear.

Tony Cherry: I think they have also suffered due to their accountability role-obviously when people use the argument that it is not directly elected at times to stop it from delivering strategies within the region-so they have felt very much that they have had to tread on eggshells and not be as proactive as perhaps they could have been.

 

Q4 Chairman: In what way has Yorkshire Forward supported the business community in the Yorkshire and Humber region? To what extent is it different from your point of view? Has the support been diluted or not been as good as it could have been? Following on from that question, what has happened within the Yorkshire and Humber region as a consequence of Yorkshire Forward that might not have happened? Are there examples of initiatives that have gone forward but might not have done so had it not been for Yorkshire Forward?

Alan Hall: Without the impediment that the RDA might see through the democracy angle, I think it has been able to show remarkable leadership in terms of economic development. Examples such as the renaissance projects have been outstanding achievements that I do not think would have happened if it had not been for Yorkshire Forward. From a manufacturing standpoint-from an EEF standpoint with manufacturing-the advanced manufacturing part, to me, symbolises exactly what RDAs should do to try to help manufacturing. You could not do better as an exemplar project for manufacturing, and for that to be achieved in Yorkshire is a real feather in the RDA's cap.

Andrew Palmer: And a strength of crisis management as well. The response in the region to job losses-perhaps mainly in HBOS-was exceptionally good. That crisis management is something that it has been exemplary, both for leading and co-ordinating with all the regional players.

Tony Cherry: Good examples of that include going back to the foot and mouth crisis when it worked very closely with the FSB and others. We, with Yorkshire Forward, very quickly set up a mobile unit visiting the villages and towns that were affected and supporting businesses. Then in 2007, with the floods, again it was very quick at providing grants and support for small businesses.

Andrew Palmer: And big businesses.

Tony Cherry: And big businesses-helping them to get back on their feet very quickly. I know that it has been very much involved in the access to finance issue for businesses during the current economic crisis.

Andrew Palmer: To the extent of the RDA grant for SMEs.

 

Q5 Mr. Betts: Can I follow up with something to put you all on the spot? There are proposals in some parts of the political arena to abolish RDAs. Will you be lobbying to keep Yorkshire Forward if that discussion comes into Parliament?

Alan Hall: I think it's for you, Mr. Betts, or whoever is elected to office, to decide what to do, but we would work with any regional-type body like the RDA. We think that the RDA-certainly in its original concept-is a very good model. It has achieved things, as we recognised in our remarks to you this morning. It could be reshaped and revamped in some way, but changing geographical boundaries, for example, from a Yorkshire point of view would be a fairly fruitless exercise since you would have to spend a lot of time carrying out re-engineering around that revamped body. We are very supportive of the idea of a regional agency of that sort. We think it is, and has been, a good thing. If you decide to revamp it in some way, or others decide to revamp it, that is fine. If they abolish it, I think it would be a mistake, and EEF thinks it would be a mistake.

Nick Pontone: The CBI would concur with that. Business would certainly be worried as devolving RDA powers to local authorities would give businesses little confidence that there would be sound economic leadership.

Andrew Palmer: It goes back to the original idea of what RDAs are for. The task is probably even greater now than when they were established, so there is not a strong logic behind abolishing them at the moment. The critical point is about what happens to the budget, because the £2.5 billion a year invested in RDAs in England is a substantial amount, and if that resource is not there, it will start to erode the ability of RDAs to make a difference. Businesses will work with whatever structures are there, but the critical point is to protect those budgets to help businesses to deliver the renaissance programme and to make long-term investment in the region that will make an economic difference and help us get the economy back on track in future years.

Tony Cherry: We have a similar position: we will work with whatever structure the Government put in place to ensure that small businesses survive and prosper, but we are concerned about whether the partners in the region have the infrastructure to be able to work as closely with 22 local authorities as they currently do within the region. Many of the activities that are currently carried out in the region would continue on a Yorkshire and Humber basis, so whatever the name is, there will be something there.

Nick Pontone: The reasons for the calls for abolition seem to be about the localism agenda and devolving powers to local areas or city regions. We support that as well, but we just do not think that it should be an either/or situation. The area with the most devolved powers in England is London, which has an RDA as well as the elected Mayor, so some changes are needed to clarify roles, but there is a bit of a false choice if that enters the debate about local structures or RDAs. In our view, the trick we have missed throughout the sub-national review is that we have not actually got any more powers devolved from Whitehall to elsewhere in the region or localities. That is the bit we miss because Whitehall still makes far too many decisions about transport schemes and infrastructure investment in the region. That is really where we would like to focus our attention.

 

Q6 Chairman: I have a couple of final questions on that section and in relation to evidence from individual chambers of commerce, and your comments will need to be brief. Do you think that there has been a loss of business focus in Yorkshire Forward, given the additional responsibilities since '99? What are your views on whether the RDA has now become a delivery agent, rather than a commissioner, because that comment featured, in particular, in your evidence?

Nick Pontone: That is a point we made in the evidence. I think that there has been a degree, not so much of dilution, but of the additional powers perhaps detracting a little from the focus on economic development, and the expectations of lots of different partners in the region have added to that as well. We all want Yorkshire Forward to do slightly different things, so it is quite a difficult job. The point we made about strategy v. delivery is that the added value of an RDA for us, as we said earlier, relates to big projects above local level that can make a real difference to the economy. We have noticed a shift towards direct relationships with individual businesses and to the delivery and management of services, which is probably just missing the point of the RDA, because what it can do really well is make a big difference, using evidence, bringing partners together and providing leadership on big projects, and I think that that focus has perhaps shifted a little over 10 years.

Alan Hall: From the EEF's point of view, I do not think that there has been a loss of business focus during the period we are talking about, despite the fact that powers have been added. EEF's view is that the RDA has managed a very complex agenda well. The important thing is that there is a delivery agent that the business person can recognise called Business Link and that, in terms of the difficulty the RDA has interfacing with so many businesses in the region, that delivery vehicle is there at the business person's fingertips to give that point of contact in the region. It is about trying to get the balance right between that strategic position and giving practical points of contact for the business person who wants to do something in Yorkshire and Humberside.

Andrew Palmer: I would agree with that-and they have improved exponentially their relationship with business by appointing a new head of business development from the private sector, which has worked very well.

Tony Cherry: The budget of Yorkshire Forward, with regard to its activities on development within the region, has been clear cut, and that may give the perception, at the same time, that the visible partnerships and the big events are not taking place at the moment because of the loss of the regional assembly. That did play a big part in the relationship and the way it worked, through the partners of the assembly, with Yorkshire Forward. But I think the relationships and its focus on business is still there, certainly.

 

Q7 Mr. Betts: Could I follow that up? Perhaps there has not been an absolutely unanimous view within the business community in the region. I think that the Sheffield chamber, for example, has had concerns about the service it used to offer directly to businesses being taken away, and that the replacement services-for example, Business Link through Yorkshire Forward-have not been as effective. Is that a more general concern? I know that that has been very strongly expressed in Sheffield.

Nick Pontone: It has, and there are other local examples of where that's happened. Without wanting to go into the rights and wrongs of those individual examples, I think it comes back to the point that, if it's Business Link services, for example, which pre-existed the RDA, and the RDA's got responsibilities in 2004-05 to manage those services, and it did them in a slightly different way, if you asked our members whether they feel that business support services in the region are better now than they were five years ago, I'm not sure that they would say that they noticeably are. So, the conclusion that we might draw is, "Has the RDA's strategic added value to business support services made a really noticeable difference to businesses on the ground?" We just don't see the evidence for that as we do in programmes like the Renaissance agenda. That's the point that we're trying to make.

Tony Cherry: That's quite interesting because, obviously, small businesses have a slightly different viewpoint on that. Obviously, one of the issues was the independence of Business Link for people who were not members of the chambers of commerce. I think that that has seen a difference in perception in the last year. Also, I think we've seen a change in the focus of the support that's been offered through Business Link, so it's now delivering more small, bite-sized support for small businesses, and it started entering into support for sectors that weren't covered in the past, such as retail. We're actually now seeing them offer more support for more businesses, but perhaps that support isn't there for the larger businesses as it was before.

Andrew Palmer: The improvement in business engagement has included elements of a professional account management system which brings together local authorities and business.

Tony Cherry: Of course, the big issue for all businesses is the point of contact: it's been far too complex and far too fragmented in the past.

 

Q8 Mr. Cawsey: I want to move on to the composition of the board of Yorkshire Forward. Nick, I know that the submission that came from the chamber said that whilst it was recognised that there are private sector members on the board, it was not the chamber's view that it was business-led, and that it has got weaker in that regard in the time that the agency has existed. I wondered what your aspiration for it was and why you feel that's the case. This is an opportunity for some of your colleagues to put on record whether they share that concern.

Nick Pontone: There are two points to make on that: one is the definition of whether it is business-led or not, and we totally recognise it has a business chair who is very well respected-both the first chair of Yorkshire Forward and the current chair-and it has a number of business people on its board. That is something we absolutely welcome. The point that we made in the response was that if you look back at the original board in 1999, the composition, in terms of the number of business members, local authority members and so on, is broadly similar, presumably by the regulations that set out the RDA board, but that the membership from business at that point were very senior figures from companies like BT, Yorkshire Electricity, and later on Northern Water and the chairman of Northern Foods-really big hitters in the region.

The comment that we made is absolutely no reflection at all on the current board membership of Yorkshire Forward, because we have some excellent board members from right across the groupings, and certainly in business. However, the actual strategic leadership of those really big companies-credible, respected business leaders in Yorkshire and Humber-has changed over that 10 years. We do not think that it is quite as strong now as it was 10 years ago. That might be because those figures are not applying for the Yorkshire Forward board-I don't know. As I said, it is not a criticism of current members. It is that it is a very different complexion if you look at who was on the board 10 years ago and who is on it now, in terms of their background and the companies. It is more of an observation, rather than anything else.

Tony Cherry: Nick is right that we are not seeing as many business representatives on the board now. Perhaps a slightly contentious statement would be to say that the positive discrimination that is taking place to make sure that it is a balanced board often excludes a lot of people that we would like to put forward to try and represent the business community on that board, and others within the region.

 

Q9 Mr. Cawsey: Who is not getting through then?

Tony Cherry: I think quite often because they are trying to be balanced across the whole of Yorkshire and Humber, trying to make sure that they have the right balance of ethnic minorities and women, and all the other sort of balances, that often might exclude people, highly placed within the region, who can offer input into that. I know that we suffered with that recently with the board of the Learning and Skills Council. Again, most of the people who applied for that were white, middle-class, male people.

Mr. Cawsey: I think that some people who could add up would interest them.

Tony Cherry: Another point is that we often struggle very much to make sure that small business voices are heard, because they find if very difficult to deliver and give the time.

 

Q10 Mr. Cawsey: That's the other side of the big hitters, isn't it? I agree, after Nick, that having big hitters makes a big difference, but you don't want to lose that voice either, do you?

Nick Pontone: I think the balance has gone from one to the other. When it is somewhere in the middle, that will be the ideal scenario.

Alan Hall: I would disagree with my colleagues on this. I know that there are constitutional matters here, and I think that there is question of balance that has been referred to already, but I do not see some loss in the board now consisting of fewer big hitters. These people may be very strategic and able to take a different view of the Yorkshire scene than perhaps more junior players, but there are characters on the current Yorkshire board who are very good and highly respected business people. I admire the fact that they have found the time to give to this.

The point that I would make, which I think is a hurdle to involvement on the board of Yorkshire Forward, is the recruitment process. The average business person-him or her-has an awful lot of hoops to jump through to be able to get through to that eventual position of being appointed. You may, with that machinery, be denying the best calibre of people from coming through on to the board-through the deterrent of the recruitment process. The board as it sits has to have some balance-there has to be some balance on the lines that Mr. Cherry was talking about-but I think that it is still a strong board and it is still business-led in my view.

Andrew Palmer: Definitely. I have written down that the bureaucracy of the process switches off my members who apply-the process is just too bureaucratic for them.

 

Q11 Chairman: How would you like to see the board selected?

Nick Pontone: We made a proposal in our submission, and it comes back to the point about scrutiny and accountability, which we may come on to later. Wouldn't it be good if we could find a way of selecting board members within the region-appointing the board member there, at this level? There could perhaps be a process managed by the Government office, involving Members of Parliament and other stakeholders, who could form some sort of panel to select ideal board members from the region, instead of the current case of appointment by Ministers. Devolving that process would help the scrutiny and accountability of Yorkshire Forward and other RDAs. It would certainly give the board members of Yorkshire Forward a higher profile and a better link to the region's business community. It is something worth considering.

Tony Cherry: Again, perception-it needs to be an open and clear process, which people are aware of, how it is panning out and how inclusive it really is.

 

Q12 Mr. Cawsey: Thanks for that. Let us move on to the regional economic strategy, which Yorkshire Forward leads on. To a certain extent, you may feel that you commented on this at the opening question that Eric put to you, but what should be the priorities for the region under a regional economic strategy?

Alan Hall: There was nothing wrong with the original plan that was set out. It is to Yorkshire Forward's credit that it used the more recent publication to try to revisit some of this agenda and to put new priorities on it. I do not have an argument with some of those priorities that have been set out in this revised document, which was produced a few months ago. It seems that it has taken stock of the change in economic circumstances. Staying with the original agenda from the 2006 to 2015 RES was not right because it was not fit for purpose. I admire the fact that it has acted swiftly and revisited some issues. I think that there are some very good priorities in the revised strategy.

 

Q13 Mr. Cawsey: Is that a generally shared view?

Nick Pontone: Yes, I think that the regional economic strategy is one of the things that Yorkshire Forward has done best. That is what it exists for and it has done a really good job throughout its 10 years. It has come out and not only engaged with businesses but all of the other organisations in the region with an interest in what Yorkshire Forward does. I think that that has been its key strength, particularly because it has given the business community confidence that the investments that Yorkshire Forward then makes on the back of that regional economic strategy will make a difference because they are grounded in proper priorities and based on evidence. That has made a real difference to the region, which is very positive.

When considering the cost differences between the regional economic strategy and the corporate plan, we see that the corporate plan has been amended to take account of the different economic circumstances, but we have the same regional economic strategy that was agreed two years ago, or whatever period it was. The one concern that we might have with the new integrated regional strategy is that because it is incorporated with spatial planning, it will take until 2012 to get a new proper, full economic strategy in place-that is not Yorkshire Forward's fault by the way-which is rather too long when we need a new fleet of foot economic strategy to get the economy moving in very different economic times ahead.

 

Q14 Mr. Cawsey: Is it just that you agree with the strategy, and that you think that it has got it right, or did you feel that as business representatives you had good involvement as it was going through the process of creating it?

Alan Hall: From an EEF standpoint, we felt short-changed in the process. We were trying to offer involvement with it. In spite of our non-involvement or minimal involvement, it seems to get a lot of things right from a manufacturing standpoint, but we did not feel as included as we thought we should have been in that process. The RDA may say that it had a lot of partners to work with, but we did not feel that we were properly engaged in that process.

Nick Pontone: I think that we felt very well involved and that we came out with broadly the right conclusions, which have also stood the test of time over the past decade.

Andrew Palmer: We certainly were very well involved.

Tony Cherry: I think that the region has been well served by the fact that the partners within the business community accept that their input is only part of what is happening within the region and the success of the region. Therefore, we do not expect to get everything that we would wish to, but it is a case of balancing that off.

 

Q15 Mr. Cawsey: So, in more general terms would you say that as a business community you have good engagement with the RDA? Here is your open goal. Is there anything that you would like to be done to improve that situation? Is something not happening that is a bit of a bugbear?

Alan Hall: From an EEF standpoint, the RDA has possibly responded to the criticism that we made of some of this process that we are talking about. To respond to the economic slow-down and to the point that we are touching on, the EEF has been very heavily involved in the manufacturing taskforce group, which the RDA has set up. We feel very heavily engaged in that, albeit that that is more to do with responding to the new economic circumstances than the wider issue of strategy.

Mr. Cawsey: Thank you.

 

Q16 Mr. Betts: We touched a little bit on that. Everybody's take on things has been changed somewhat in the last 12 months, not least Yorkshire Forward and how it has responded to helping business in very difficult times. How has it done that? Has it done it effectively and well? Are there ways which you feel that it could have done it better?

Nick Pontone: From our point of view, it responded very, very quickly, setting up a new unit and trying to divert resources where it could. Some of the things that it made available through the Business Link financial health checks are really helpful for lots of business, particularly because it gave them something that they could take to their bank to help them access finance. So I think that was very good, and it followed a model that was mentioned earlier in terms of its approach generally to crisis management, which has meant it is quick to respond and has the flexibility to do so. It has done that very well. The challenge will be-particularly as its budget starts to take a hit from the next financial year-when it turns the tap from crisis management. Where does it make the investments for long-term growth? That will be a real challenge for it, when it faces budget pressures.

Alan Hall: I agree with Nick about the way in which it has responded to this economic slow-down. Financial health checks are one example. Another example relates to a special fund that was set up to help manufacturing. It tried to use the Manufacturing Advisory Service to provide a mentoring service to companies that might not have been through a recession before. Living with the manufacturing community in the region as I do, I know that there are some younger managers who have never experienced anything like this. To have a mentor there to help you through this, is nothing but a good thing.

I also support Nick on the question of how long the recession will last. From where we are now, there have been some good quick interventions and good responses to the new situation. But I think the slow-down will take some time to recover and I strongly support the point that, whether it is at an RDA or Government level, if you were to start to withdraw the sort of intervention funding we are considering here-RDA-led funds or otherwise-you could find that the economic slow-down is strongly adversely affected by those sorts of moves.

Today we are concerned with the Yorkshire picture and what might happen at RDA level, so there is a health warning there. But, equally, in terms of the slow-down, from a manufacturing point of view, the sector is in something of an anaemic state. It is getting better-things are getting better-and it will get better, but it will take a long time. If the various interventions that we are recognising in our remarks this morning were to be withdrawn, I would have a concern about the possible impact of that.

Tony Cherry: On many occasions, we have talked about its flexibility and ability to move quite quickly at times. A good example of that has been through its work on the economic delivery group, which the Regional Minister chairs. Again, it has brought together a number of the major influencing parties within the region, and it has worked very quickly and used its economic taskforce, which I forget the exact name of. Again, that worked very closely in the region with the banking industry and the business community. It was also able to come up with projects that were able to help-for example, a procurement project to help small businesses in the construction industry to try to secure contracts in the public sector. Again, that was put together very quickly by Yorkshire Forward, following an economic delivery group meeting.

Andrew Palmer: I do not really have much more to add to that, except that, to go back to the original question about how it has dealt with the crisis, it certainly did respond to job cuts and looked at greater targeted funding for training and retraining. That was something that it was very good at. Again, on the economic delivery group, what it needs to do now and what we need to look at is a long-term picture for the region to make sure it comes out of recession. We have been looking at short-term fixes, and now it is time to look at the long-term picture.

Tony Cherry: Again, it is observatory of the drawing together of the statistics, facts and what is going on in the region, and it works very closely with the business community on that.

 

Q17 Mr. Betts: May I pick up on that point about the link between the short term and the immediate crisis, and the need for help and the longer-term strategy? Is there a danger that the focus is so much on helping in the short term that not enough attention is being given to the longer-term strategy? Indeed, does the regional longer-term strategy need to change to reflect the events of the past year?

Alan Hall: If you take an example of where the RDA has shown a lead on this, it is in doing the short-term stuff that we are acknowledging in our remarks this morning. In tandem with that, it is looking at things such as low-carbon development, which shows it is still keeping the eye on the long-term horizon. That will take some years to come to fruition, and shows that there is not simply a short-term approach; it is also looking more strategically.

Nick Pontone: The point of timing is very difficult for it. On the example of where the RDA has managed to switch some of its resources, which I believe were saved from the enterprise budget to boost start-ups, moving that to keeping people in work and the initiatives I have mentioned was absolutely the right thing to do.

The point that you should go back and reinvest in your enterprise strategy will be crucial because if we can assume one thing about the future-although the last 18 months would suggest that we should not assume anything-it is that the economy will be based less on debt, easy credit and easy money. That has helped big investments in city centres, retail projects and housing projects. We cannot rely on that, just as the country cannot rely on financial services for its growth any more. So, what is the alternative? Export-led manufacturing and enterprise are two areas that I think we will have to focus on more in the future. Yorkshire Forward is able to switch resources back towards those agendas. It has not stopped investing in them, but it can flick the resources back to them. That is a really delicate piece of timing and an important issue.

Tony Cherry: The challenge the RDA has for the future is that it has played a part in bringing forward quite a number of projects and it has funded them earlier. That will leave quite a gap at a time when we need to invest in growth within the region.

 

Q18 Mr. Betts: Nevertheless, the view I am getting is that people feel that in its immediate response to the crisis, the RDA has had an impact in helping business in very difficult times. Given the global nature of the meltdown, are RDAs just a pinprick in dealing with this or have they really had an impact?

Tony Cherry: We should bear in mind, as we said earlier, that they work in partnership with Jobcentre Plus, the NHS and other major employers and spenders within the region. That is integrated into the strategies that the region has as well. It is a case of not always working with just their own budgets, but being an influence within the region.

Andrew Palmer: In a way that does not duplicate the work of other organisations.

Alan Hall: Mr. Betts, to be very candid, even though we recognise some good strategic interventions, the size of the RDA's budget means that there are a lot of manufacturing companies in the region that feel that the RDA has not touched them at all. They have managed their own difficulties throughout the recession. It is wrong to expect the RDA to be all things to all people. It is operating on a limited budget and cannot do that. What we are trying to recognise in our replies is that it is looking at what it can do within the resources it has available. For example, the financial health checks were a successful intervention, as Nick mentioned earlier, as was the mentoring scheme. Those are the things that the RDA can do because they are within the limitations of its budget. When companies want to tap into those things, there is a real benefit to their business.

Nick Pontone: I totally agree with that. The question of whether RDAs, or somebody else, have saved the world is fair. Within the context of what they are able to do and the resources they have, they responded very well and quickly, as did others. The effects of interest rates, quantitative easing and some of the other stimulus measures look as though they have had some sort of impact. Yorkshire Forward has been a part of that and should take credit for it.

 

Q19 Mr. Betts: Finally, I think another message you are giving is that it is too soon to start withdrawing those measures, because the recovery is only just beginning and is very fragile.

Andrew Palmer: Yes.

Tony Cherry: Yes.

Alan Hall: Yes.

Nick Pontone: Yes.

 

Q20 Chairman: Gentlemen, could I ask a couple of questions in relation to targets and measuring effectiveness? As you are probably aware, the PricewaterhouseCoopers report was drawn up in December 2007. In 2008, the Yorkshire Futures "Progress in the Region" report was published. Do you believe that the PricewaterhouseCoopers report gave an accurate picture of Yorkshire Forward's performance and effectiveness?

Alan Hall: In my opinion, it did. The report was very careful to exclude those areas that it was not considering, but it was thoroughgoing in the areas that it looked at to try to assess the very point that you are asking us about.

Nick Pontone: Yes, I think that it was a fair reflection. A number of the benefits that were talked about in the report were yet to be accrued, such as long-term investments that will have an impact in the future. The only point we made in our submission that the report did not tell us about was the difference that the money had made-the £2.5 billion or whatever that Yorkshire Forward has had. If that £2.5 billion had been spent in other ways, through other bodies, it may have had an effect as well. So I think it was a very useful report, but it did not necessarily actually provide the strongest evidence that it was only the RDA that made that difference. It was the money that made the difference. That is not a criticism of Yorkshire Forward, because it spent that money well to deliver a positive impact. But that report only took us so far.

Generally, it is very difficult to work out what you measure Yorkshire Forward on, because it can be accountable to Government for its output targets on jobs created and whatever, and that is important, but actually it is the outcomes of the difference made in the overall economy and our relative performance that is the key task, and it is, as we said earlier, very difficult for it to be able to disentangle the impact that it has had, as opposed to what would have happened if it was not there or if that money had been spent elsewhere. So it was a good report, as far as it went, but it is not a full picture.

Tony Cherry: I agree with all of that. The biggest problem is trying to measure the long-term benefit of the projects and activities that Yorkshire Forward has carried out and also the trickle-down effect on the small business community, because quite often, obviously, there is not direct support for small businesses, but they benefit from quite a lot of the larger projects that have taken place.

 

Q21 Chairman: Mr. Hall, in the EEF evidence, you suggested that the RDAs have made little direct impact on the regional economy. Would you like to elaborate on that?

Alan Hall: I think if you look at the RDA's budget, it is something like 1% of the spend within the regional economy, in terms of public spend. That gives you an indication of how much impact it can have, and that really is the point that was being made in that part of the report.

 

Q22 Chairman: We touched on this in my initial questions. The Chambers of Commerce suggested that perhaps the RDA does not lobby sufficiently for the region as a whole. I was interested in your comments earlier, Nick-I think it was you-when you said that if you are going to have an RDA in every region, it is not going to improve the imbalances in the north-south divide or between regions, some of which have more prosperity than others. Do you want to comment a little bit more on that-on the lobbying issue and whether Yorkshire Forward should do more to try to uplift our region in comparison with others?

Nick Pontone: Going back to the key role we see RDAs having in strategic leadership for the region and bringing people together, that is something that we very much support. The point that they only spend 1% of total public spending in a region shows that the only way they can make a difference is by influencing others. The point we made in the submission was that one of the biggest frustrations in the business community is transport and the lack of transport investment that Yorkshire and Humber has attracted over a long period of time, which really does impact on individual projects right across every part of the region.

We know it is not Yorkshire Forward's job-or was not, until recently-to develop or lead on transport issues, and certainly not to deliver them, although it has made some small investments, in rail infrastructure particularly. We just felt that the region's voice has not clearly been very well heard in Whitehall, because we have not had a good deal on transport expenditure. It is a key business priority. We know it is not Yorkshire Forward's main job, but we would have hoped that it could have exerted more influence to get a better deal for Yorkshire and Humber.

Alan Hall: I think it is a difficult call for the RDA. I think it comes down to a much wider political consideration as to whether, on the rebalancing of the UK economy, you would have nine RDAs and whether, with all that London enjoys by way of business success, you would need an RDA in London alongside those in other parts of the country. It is a very difficult call, from a political standpoint, as to where you would say there would not be an RDA.

I would certainly reference the Northern Way project as an example. Given the constraints, and bearing in mind that RDAs have to be careful where they do get too political in their behaviours as a development agency, to try to give the RDA a vehicle like Northern Way, which is to enable the Manchester conurbation, our Yorkshire and Humber region and the north-east to come together on the set areas that have been set out for Northern Way-that is an example where I think they have punched above their weight, those three RDAs, in trying to do some of the rebalancing that John Prescott invited them to do. But I think if you are really serious, from a political standpoint, in saying you want to see the UK economy rebalanced, then I think more than the political clout that the RDA from this region has in Westminster is needed to call, at senior Government levels, which regions will have RDAs and which will not. In my view, there is a case for saying that some parts of the country do not need the economic injection into activities that I think is needed in regions like Yorkshire and Humber.

Tony Cherry: I think that within the constraints the RDA has had, it has acted as a good champion for this region. You also need to bear in mind that until earlier this year, we had the regional assembly, which carried out quite a bit of the role, within the political sphere, of trying to represent the region, but of course in partnership with Yorkshire Forward. That partnership was very, very close. I think at times, though, it does struggle with that part of the role that it has-again, that goes back to the fact that it is often challenged on its accountability as a quango, as people call it. At times, it needs to develop that role, and of course it has changed and keeps changing.

 

Q23 Chairman: Thanks. Turning to the budget, how are the reductions in the Yorkshire Forward budget affecting business support in the region?

Nick Pontone: It looks as though the big hit will be next year. I think I am right in saying it is about £80 million less next year, mostly from the capital budget. We think it is totally unsatisfactory that the RDA was given a budget-I accept there are financial pressures-but then to lose quite a significant chunk of that to pay for a scheme elsewhere within Government, when we see the RDA has been able to invest in long-term projects and been able to commit resources on the basis of reasonable expectation that it is going to get those in from the Treasury, I think was very disappointing.

Mr. Betts: This is on switching to the housing budget?

Nick Pontone: Yes. It will have an impact. I am not quite sure yet where within Yorkshire Forward's profile spend that will mainly hit next year, but I would imagine it will be, in light of the capital budgets, the physical infrastructure-type investments that it would make. That is very disappointing. I suppose, while understanding that there are budgetary constraints, what we would want to see from Government is them actually sticking to the commitments that they make to RDA funding, to allow it to get on with the job.

Alan Hall: I support Nick's remarks on this. I think we have yet to see the signs of it, for the very reasons that he has given. It is something that is happening in the new year and has not impacted as yet.

Andrew Palmer: The CBI was not critical of the way that the money for housing was given to public agencies, given the need for them to play their role in belt-tightening.

 

Q24 Chairman: Do you think there is sufficient flexibility within Yorkshire Forward for spending the budget, or do you think it is too tightly constrained by Whitehall?

Nick Pontone: I think, in general, it has got more flexibility, certainly since 1999, when the single pot was created. I think that was a very positive thing. There is the example, which will interest Mr. Betts particularly, of the arena funding at the moment.

Chairman: Don't get us on about the arena.

Nick Pontone: And there is the issue of whether there should be a delegated limit of £10 million before you actually have to go and ask central Government whether to commit that investment or not. Putting the issues of the arena to one side, there is the question of whether that is something that Whitehall should get involved with, or whether it devolves the budget, devolves the accountability and sets targets and lets the RDA get on with it. In principle, I think there probably is still further that Government could go to let Yorkshire Forward make the investments that it wants to make, taking due account of the processes that it needs to follow to get the projects through to the approval stage. Perhaps they could go further.

Alan Hall: I think the RDA has been nimble within the constraints that it has, and I think it should be credited for the additionality: the additional funds that it has pulled in on the strategic investments that it has made. I have not seen statistics to see how it compares with other RDAs, but I think the record is quite impressive, as to what it has been able to extricate in trying to get strategic investment into the region. I think we would need to talk in more detail, in terms of day-to-day operations, with people like Tom Riordan on how he finds life under the constraints that you have, but I think, going back to one of the earlier points that we made this morning, that there still is a very strong stranglehold by Government on what you will let happen out in the provinces. I think some releasing of that, whether it is through the RDA machinery or otherwise, is something we would welcome in the region. It would give the region a lot more autonomy-a difficult call from the Westminster point of view, clearly.

Tony Cherry: It is quite interesting: I am not sure what the RDA's opinion is of how it will change the way in which it works over the next year. Partly, that is because it is very positive rather than negative and tries to work within the restraints it has.

Andrew Palmer: Yes.

Chairman: I am still thinking about the arena-and, given what has happened in Leeds recently, about whether we ought to take that bit out of the records.

We will move on to the sub-national review.

 

Q25 Mr. Betts: I will be helpful and not mention the unmentionable.

The single regional strategy obviously proposed changes to how things are done at regional and sub-regional level from Government. What is your general view? Do you support the concept of a single regional strategy? Do you see any advantage in it? Or do you see problems on the horizon?

Nick Pontone: I think it started with very good intentions, the sub-national review; and the actual idea of bringing together the economic strategy with the spatial strategy, to streamline the process, ticks all the boxes in terms of logic. So it certainly had our support at that time, and still does, to an extent. I think the difficulty was something that I mentioned earlier, in that when you align an economic strategy to spatial planning, it necessarily, for the processes that the planning system needs to take on board, means that it will be 2012 before that new document is in place, whereas it might be that the regional economic strategy could do with a serious refresh in the next 12 months. So whether that will have an impact or not, and whether the good intentions of streamlining might just get crushed by the planning system and the possibility of disputes between regional local levels over things like housing numbers-that would be a real shame, when what we really want to see is a strong business-focused economic strategy, which works for the region. There are just some concerns that have come in over the past year, since this has been working out, that perhaps the bringing together might actually cause a little bit more complexity, rather than streamlining things.

Alan Hall: I think this Government should be credited with the vision to create the RDAs in the first instance and I think the danger in the sub-national review is that you are spoiling what was a very good piece of interventionist machinery that we have been talking about this morning. Whether it is with the complication that Nick has just talked about or whether it is with the leadership boards that are going to be there, I think there needs to be proper democratic accountability of these public bodies. They need to be held to account for what they are doing, and things like the National Audit Office report need to be there, or reports from PricewaterhouseCoopers; but if you keep adding and adding to their responsibilities and then make governance even more complicated, you are in danger of spoiling what has been a very strong model of economic development over the 10 years that we are considering here this morning.

Tony Cherry: We've touched on the big projects within the region and we do have a concern about whether those projects would still take place-whether local government would have the confidence to be able to invest very large sums of money in big projects. A problem that we also then have, particularly for the small business sector, is the engagement with 22 local authorities within Yorkshire and Humber. As an organisation we are very much business-led, even though we are the biggest business representative body for small businesses in Yorkshire and Humber. Historically our links with local authorities are not as strong as the relationship that we have within the region, and the way we have managed to influence activities within Yorkshire and Humber. So the current infrastructure that is in place would not allow that small business input to the level that we think needs to be there.

Andrew Palmer: I agree with that, Mr. Hall, and we were broadly in favour of the Government's aims and intentions in the sub-national review of enhancing the powers of RDAs, and so on, but we do have a serious concern about the proposals to give local authorities quite a lot of sign-off power.

 

Q26 Mr. Betts: Can I just pick two separate issues, then? First of all, in terms of new responsibilities for the RDAs, some concern has been expressed about focusing away from the key job by looking at planning, spatial issues, housing, and so on. Presumably you are all quite supportive of the new role on transport matters, because that really is a key economic issue, as you have, I think, identified on several occasions in what you have been saying to us. Is that something that the RDAs should now want to link into their industrial focus and try to drive on?

Alan Hall: The idea of this wider remit-supportive, transport, spatial-has the constraints that Nick was talking about. It gives a very complex role to the RDA body, but the idea of trying to give economic development as a remit and not to include things like transport and planning seems to be a wrong-type model. Incrementally, you have enhanced the powers of the RDA and this, in broad form, is a good move, but it gets to the stage, as I tried to say earlier, where it gets over-complicated. You have added a lot for the RDA bodies to do over the 10 years that we are considering, and you might say that you must put transport and strategic planning in there, but you might decide to strip out some other elements that would try to keep the remit simply around economic development.

 

Q27 Mr. Betts: May I pick up the second issue, which several of you alluded to-an enhanced role for local authorities, or groups of local authorities, at sub-regional level, looking at issues to do with transport, travel-to-work areas, skills, and those sorts of issues? There have been some concerns expressed about diffusing responsibility, overlaps, having many more bodies involved, and whether local government has a wider remit, but is there not another issue? Yorkshire and Humber is not the only example, but it is one to begin with. As a region, it is little more than a marriage of convenience. It is not a real economic area in many senses, and what we ought to be focusing on in some ways is the sub-regional level and travel-to-work areas, which are real economic areas.

Alan Hall: The city region concept is very interesting, and there is merit in trying to design a model around it. But what you have created in the administration is the ability to look at Yorkshire and Humber as a region. Against that remit, and looking at the priorities that the RDA has wrestled with over the 10 years, I think it has done a very good job for you. If you take it down to city regional level, there is the danger of parochialism creeping in inevitably. We all want various developments in various pockets within the region, and the RDA has been particularly good at trying to make economic sense of those and to decide that we can have a strategic investment here and a Renaissance development there. Again to its credit, it has had dialogue with the local authorities that are impacted to try to buy into it and equally to try to placate those areas of the region that have not benefited from some of these developments.

I am not saying that the city region concept is wrong; it is a very interesting concept, as I said a few moments ago, but it takes things to a different level from that which you created with RDAs. I think there is a real betterment of the RDA model operating at this regional level and with the strategic approach that we have described in all our remarks to you this morning.

Tony Cherry: Were you to ask the question of other RDAs, my answer would be very different, but in Yorkshire and Humber, although we have sub-regional issues, we tend to work for the good of the region, and quite a number of projects have been allowed to happen that would not have happened if we had gone down just to the sub-regional level.

Nick Pontone: This is a big job. If we throw in business development, urban regeneration, housing, planning, transport, climate change and such issues, it is a big job, and there is room for local devolution to local authorities. We very much support strong local authorities that are able to make a difference to their local areas-that is positive-but it does not necessarily mean the exclusion of the RDA and the regional tier. It might need to change, but that does not necessarily mean that it has to disappear. The absolutely critical point for us is that there is absolute clarity of roles and on who is doing what, so that those involved are not tripping over each other and having rows about governance issues and the formation of boards, but spend time talking about the issues and how to make a difference.

The one thing that sub-national review has made more difficult, certainly in the short term, and particularly around the point about the future roles of RDAs under a possible change of Government, is that it has clouded the issue. We want clarity so that everyone can get on with their respective jobs in a sensible way.

 

28Mr. Cawsey: What is quite interesting is when the RDA dips in and when it does not, and what is local and what is regional. That is the judgment. My constituency comes under the Hull-Humber sub-region. Ever since it has existed, the big issue there for the business people and local authorities has been the Humber bridge and the sheer level of the toll-£2.70 a time for cars and much more for business vehicles. They think that is a really big bar on economic growth in the area and they have commissioned some work that supports that. It is quite interesting now that, for the first time, Yorkshire Forward has come onside to say, "Actually, we see it as something that perhaps has a regional significance as well." Is that the kind of thing that Yorkshire Forward can do to support those sorts of local endeavours?

Nick Pontone: Absolutely. It is a good example of where a really strong local campaign has come together, bringing business organisations, local authorities and many others. If a regional body can come and support that, that is all well and good. I suppose on the point you make-just being clear about what is a regional issue and where it can add value-there are things like inward investment, business development and big projects, whether it be low carbon or various other agendas, that can complement what is going on in a local area and not compete with it. That is the key that we need to get to.

Alan Hall: There is another point about this issue of governance that we are looking at-sorry, more democratic accountability, I should say. Against the critique that it is too complicated to have it through this leadership board, what I think should perhaps be considered is giving it to the Regional Minister. Rosie Winterton does an awful lot of work already with the RDA and works very closely with the region generally. You may feel it was too much to give it to her individually-maybe the end accountability-but you may decide that, along with a Select Committee panel such as the one this morning, Rosie Winterton with a small group of others may be able to give that strategic assessment of whether the right things are being done, rather than devolving it down to a leadership board, for the reasons that we are giving. We think there are complications that might undermine what you are trying to achieve here through democratic accountability.

 

Q29 Mr. Betts: That was my next question, so you obviously had the brief and, indeed, the extra question as well. There is this issue now that the regional assembly was there to hold the development agency to account to some extent, isn't there? You referred to the close working relationship, but there were people on there who could ask questions and scrutinise. That's gone; it's now not going to be there. Are there any other ways in which accountability can be improved? We talked about the appointment process earlier for Yorkshire Forward board members themselves. I suppose we're here this morning in an attempt to do a bit to improve parliamentary accountability. You've mentioned the Regional Minister's role. Are there any other ways in which you think Yorkshire Forward can be better held to account by stakeholders in the region?

Alan Hall: My advice would be not to go beyond the sort of machinery that we're talking about. For the size of the RDA and the sort of spend we're talking about, you already make it quite well accountable, as should be the case-it needs to answer to elected officers. I do not see anything wrong with the machinery and I think it doesn't need anything further, beyond what we're describing to you. I'm just making it clear that I think the leadership board might be a step too far.

Tony Cherry: I was very much involved in the scrutiny role of the assembly on Yorkshire Forward throughout eight or nine years, being involved in the very first scrutiny panel for business birth rate strategy all the way through to the very last one, on investment within the region, and I must admit that I feel as though the baby's been thrown out with the bathwater. Yes, it's right and proper for our elected representatives to make sure that they are scrutinising the work within the region, but there is also a role for the customers of those bodies to have that input and question what's going on. At the moment, we have that gap and it would be useful to feel that we might develop something that would allow us to try to make sure that we've had best value for money, limited duplication, better communication and so on.

 

Q30 Mr. Betts: Can I pick up on one issue that came partly out of the discussion we had a few minutes ago about regional responsibilities and boundaries and transport in particular? Coming from Sheffield, in the south of the region, sometimes the issues that affect us cross regional boundaries. I'll just take one example-the midland main line, which we think is terribly under-invested in. We have had long campaigns to try to get it improved. It's important to business-the links to London in particular. It often seems to be the East Midlands Development Agency that takes the lead on this and pushes it, and there is not all that much joint working between that RDA and Yorkshire Forward. I wonder whether that is an issue that your members come across. Is joint working something that could be done better in the future? The northern way is a good example of joint working between RDAs, but it does not always happen.

Alan Hall: I would say that this is an area of criticism. I think it is difficult, given the ambit that the RDAs have. There is cross-RDA co-operation-you have given an example, Mr. Betts, from the midlands area involving Advantage West Midlands and Yorkshire Forward. As I understand it, a lot of dialogue does take place at the chief executive level between RDAs. The example that you have given is a good one. It illustrates that, against the many things that they do well, the dialogue that takes place between RDAs, as best I know it, is not as good as it could be.

To answer your specific question about whether the issue is of concern to manufacturers in the region, unless they were actually to get on the case of the midlands railway link that you are talking about, it would not immediately concern them. It would not be a matter of concern to them, but it is an issue for RDAs in general.

Tony Cherry: Interestingly, I think a good example was the Robin Hood Airport Doncaster Sheffield. The pressures from the Leeds Bradford Airport, Manchester and other influences was that we should not support that within the region, but I am aware of the fact that Yorkshire Forward and the RDAs did support it, even though it would affect and benefit only one part of the region. There are times when they look at some parts of the region rather than the whole. However, I take it on board that there are occasions when Yorkshire Forward is not good at cross-border issues. Sheffield has quite a number of issues, and there are challenges with the Sheffield city region as well, which will be quite interesting for the future, coming from Sheffield.

Andrew Palmer: Some of my members would certainly wish that there were a little bit more cross-border lobbying and discussions, especially if you have operations down the east coast in different geographical areas and those that just border. There is a need to have a little bit of talking between regions, especially about planning and transport.

Nick Pontone: It is a good example. I suppose the positive would be that there is a good opportunity for Yorkshire Forward to do some joint working with its RDA colleagues further north and south. With something like high-speed rail, we know that it has operated at Northern Way level and has done some very good work there, but there is a real opportunity to speak powerfully for the region and bring people together on a campaign to make sure that if there is major high-speed rail investment, it will serve Yorkshire properly. We are slightly concerned that our regional needs are not really reflected at the moment.

Mr. Betts: That's something where Sheffield and Leeds do agree, actually, which is a good thing.

Alan Hall: Just a further point on that. I think it's the case, as in business, that if something gets measured, it gets done. That might spur some different behaviour along the lines that we are talking about. However, we should not be seen to be throwing the baby out with the bathwater, because against the model that we are talking about this morning, there is a real value in focusing on this regional area. If you were to try to blur regional boundaries, for example, or redraw them-we made this point earlier-it might be a retrograde step. It goes with the model.

Chairman: The low-carbon economy, and pudding. Ian Cawsey.

 

Q31 Mr. Cawsey: While all of us in this room would agree that we live in God's own kingdom, I think we also accept-this was mentioned earlier-that the area has had a lot of heavy industry and energy production, and, consequently, a high level of CO₂ emissions. I thought about that in the past week when I went to see a screening of "The Age of Stupid", which is a movie that predicts where we will be in 2055. Pete Postlethwaite comes out of a time capsule. He is one of the last remaining humans. We had all the evidence but did so little about it, and hence we all lived through the age of stupid. It was food for thought.

Given that most people accept that we have to do something, who is leading for this region on issues surrounding a low-carbon economy?

Nick Pontone: There are two key areas where Yorkshire Forward can play a leading role. One area of activity that is already under way involves developing technology and infrastructure around, for example, carbon capture and storage, where there is real potential for the region. Yorkshire Forward is doing some good work there. The other one links to its business support agenda, where there are clear implications for every business and organisation trying to hit the 80% reduction target. We don't yet know how that will work out over the decades but we know it is coming. Businesses will need help and assistance and, in some cases, incentives-be it advice or practical support-to make that adjustment. There is a prize for the region if it can get ahead of the game in being a low-carbon economy because every other region and part of the world will have to make that transition to a different extent over time. An organisation with some expertise in this, such as Yorkshire Forward, has a strong role helping businesses to do that. There will be other organisations with a role to play but in those two key areas there is potential for Yorkshire Forward to have a very strong role.

 

Q32 Mr. Cawsey: What are they doing? Carry on a bit please. What is Yorkshire Forward actually doing with the businesses that you represent to promote this?

Alan Hall: Well, in the report, as we have referred to already, it took a fresh look at things with the slow-down. The moves on low carbon featured in there. They are taking a strategic lead in the way that we have credited them several times this morning. They are showing the leadership and initiative that you would expect of a good RDA. There are also smaller, intermediate bodies that can help move this agenda forward. If you look across the spread of manufacturing, typically in Yorkshire, as with other parts of the country, energy and energy production is still in dynamic mode. It has not felt the impact of slow-down that has happened in other parts of the economy, such as construction.

Against that background, it really is a Westminster issue. With respect to you gentlemen and your colleagues, we are talking about putting down a clear national energy policy. You would find the private sector in manufacturing that I referred to, starting to roll up their sleeves once you gentlemen and your colleagues set out a clear strategy on energy for the UK. We can't ask more of the RDA at this juncture than to show the potential of low carbon as a business opportunity as they perceive it-and the private sector would agree with that. Again, with the idea of carbon capture and storage, they are trying to see as much as they can achieve within an RDA remit. They are on the case. The energy policy is the key to unlock all of this and the RDA would then be able to play an even stronger part.

Andrew Palmer: I agree. They are also not just looking at investing in new skills for new technologies. They are looking at how the existing work force of the region can be adapted with new skills to take on some of this low-carbon agenda, which is very positive.

Tony Cherry: It is clear that this is an area that the chief executive of Yorkshire Forward is keen on. That influences the work of Yorkshire Forward and we have to applaud them for what they have done on that. My concern is that 99.3% of businesses employ fewer than 50 people. Therefore, the challenge is how to engage with the vast majority of businesses in this region and whether we are going to be able to invest the money that is needed to make a real difference. That is a major challenge.

 

Q33 Mr. Cawsey: That is key. Al, you said earlier that lots of the people you represent have never had any contact with Yorkshire Forward. So how does that enable them to lead on an issue such as low carbon?

Nick Pontone: Because they may be investing in initiatives, for example, through the Business Link network or Carbon Action Yorkshire or whoever, on resource efficiency advice and support to businesses, small and large, which helps them to be more competitive and to reduce carbon emissions. By making those investments, they can make a difference.

 

Q34 Mr. Cawsey: Is it simply an impossible dream for the Government to say to Yorkshire Forward, "Your political priority is economic growth in the area. However, you have got to have a low-carbon result."?

Alan Hall: I don't think they are incompatible. I really don't. You could give them that remit. It is a big ask but it is not impossible. One of the things we will perhaps come on to later is the question about the importance of technology. A lot of research is going on already, and there is more that the RDA could sponsor through universities in the region. There is a big technology agenda, and to me, one of the major ways out of this slow-down is through technology developments of the sort that we are talking about.

Tony Cherry: It is achievable if there is a level playing field, but a lot of that is out of the gift of Yorkshire Forward. It is about central Government and how you create a climate that allows small businesses to achieve the same thing as a large business. Bearing that in mind, if you have to pay to join an organisation, and it costs a plc and a one-man band the same amount of money-as it often does-then that is not a level playing field. That is often the case in a lot of initiatives.

 

Q35 Mr. Cawsey: I agree with the technology point, particularly the idea that we could invest in universities and so on. Is not the simple truth that the problem is here and now, and that that will probably involve too much long-scale thinking?

Alan Hall: It concerns me how quickly we can react to it. You are right-the problem is here and now. The climate is changing but we have to start somewhere. There is no time like the present.

 

Q36 Mr. Cawsey: I think you are right on energy policy and national Government, but if the Government step in, as they have done, and come up with all sorts of planning guidelines for local authorities on things such as wind farms, everybody jumps up and down and says, "This is terrible; the Government are forcing this issue and taking the localism out of it." It is damned if you do, and damned if you don't as far as I can see.

Nick Pontone: It is a good example of how difficult it is going to be. This balance between economic development and reducing emissions probably is achievable, but it will be difficult. Sustainable economic growth as an overarching target for Yorkshire Forward and the integrated regional strategy is a reasonable objective, but as to how that is done and what it will mean over decades-it will be difficult to achieve. Wind farms are a good example. Seeing quite how much and how quickly we are able to shift towards clean energy production is going to be a real challenge. The energy sector is still hugely important in the region. It needs to be tackled, but it will not be easy and we need to work together to try and make that difference.

Alan Hall: Mr. Cawsey, I will give you a very simple example of where these things could start to make a difference. It would apply in the small businesses that Tony has been talking about this morning. There is no reason at all why, perhaps with university collaboration, a meter could not be designed to tell a small business, or a household, what the consumption of power through their house is. I apologise for repeating my remarks, but what gets measured gets done. You could suddenly see how much your electricity is costing in a small business operation or in a domestic environment. That piece of technology, which is a simple illustration of what we are talking about, could transform this. We are all much more conscious about what is being used and how much carbon is. Perhaps the meter could tell us how much carbon is being consumed alongside the cost of the electricity that is being consumed, using electricity to illustrate it. There is no reason why that example of technology-a very simple device-could not be designed and made in Yorkshire, and made available to businesses worldwide.

 

Q37 Mr. Cawsey: And you see Yorkshire Forward as keen to drive that sort of idea forward?

Alan Hall: What Yorkshire Forward has done, and where it comes into this, is by saying, "We think that this is a future for us." It then spurs people on to think further about it. You might get Yorkshire Forward engaging with universities in the region to say, "How can we get this thing working? Give me 10 examples of how we can transform this into actual, practical ways forward"-things like the little meter example that I have given. It is not for the RDA to do it, but it shows a lead to say, "This is the way that we think we should go." That spurs further action, perhaps in the universities as I am illustrating, and then it is up to businesses in the region to try and pick up on that lead.

 

Q38 Mr. Cawsey: It is trying to get across what I think they call "The valley of death", where somebody has got a very good technology, but if they want to get to the commercial product there is a big gap in the middle. It is about how to get across it.

Alan Hall: I have not heard the valley of death expression, but I think I know what you mean.

Mr. Cawsey: I probably just made it up, in which case I think I'll claim copyright.

Nick Pontone: What has been described sounds like a smart meter, to which the Government have already made commitments with regard to domestic supplies. Coming back to your question, I am not quite sure what the RDA role might be, but if it had one, it could be to champion and try to extend that scheme to businesses, which I am not sure is part of the current plans. It is a good example, and if there is a role for the RDAs, it is one we would certainly support.

Andrew Palmer: We need to see some national policy statements, for instance on planning for renewables, to help these processes as well.

 

Q39 Mr. Cawsey: Can we move on? This is linked; the consequence of not getting it right, and we have seen some of this already, is an increase in severe weather incidents. Flooding is the prime example, which, sadly, in 2007, hundreds of businesses in the region had to deal with the consequences of. The lead on those incidents used to be the regional assembly in terms of flood risk. As we move to the intergraded regional strategy and Yorkshire Forward become involved, are you confident, in terms of representing your members, that we are well enough prepared and people know who will do what to try to avoid, plan out and deal with the consequences of future flooding?

Alan Hall: I acknowledge the lead that the RDA took on the flood issue. In our remarks this morning, we have made clear that we applaud what was done there. I do not have knowledge of all the machinery, such as the Environment Agency. I clearly see the role of the local authority and then the RDA. I do not quite know how all the wiring looks behind the scenery. All I know is that it was well handled. It was very responsive, albeit people closer to it than I would say, "You don't realise how close it was to being a bigger catastrophe". It is difficult to say that the RDA did not do what it could, from its point of view at that time. You would assume that it would be there again if there were another eventuality-touching wood and saying, "I hope it doesn't happen again."

 

Q40 Mr. Cawsey: I accept that. The point that I was trying to get to was that there is a difference between doing a good clean-up and doing something about addressing the risk in the first place. Would it be better if the RDA did more about working with others?

Nick Pontone: I suppose the point would be that it is difficult to know, but that is the point of having an integrated regional strategy, rather than a range of separate strategies. There is the opportunity now in the region to try to ensure that links are made between the various agencies involved. We will find out over the next couple of years as the integrated regional strategy is developed.

Tony Cherry: Of course, it depends also if your question is that we should try to stop floods in the future. If that is the case, it cannot do that; it does not have the budget to do that. It is very easy to spend £300 million a year just on flood defences.

 

Q41 Mr. Cawsey: It is nearer to £700 million.

Tony Cherry: Much more. Or if you want it to manage the catastrophe when it arrives again. If that is the case, there are lessons to learn from the previous flood. Communication was an issue. It still has to, on occasion, realise that organisations such as those represented here today have a very quick method of communicating with their members. I think that there were occasions in which things could have been done better.

 

Q42 Mr. Cawsey: I find this all quite interesting. It strikes me that there are two particular issues here. There are-for want of a better phrase-"internal infrastructure issues". You get surface water floods, which a lot of these ones were, which is simply to do with capacity being different at different times. There is so much more development, extreme weather and water going in very quickly. That is a difficult enough issue anyway. We have the classic rising river levels, which the Environment Agency particularly deals with. Of course, it is looking, not just at building bigger banks, although that is part of it, but also at things like making space for water, which is an overall DEFRA thing. That becomes controversial because you get farmers who rightly say, "Food security is important as well." Do you see that, even though that is a classic Environment Agency issue, the RDA ought to have input as well, because it changes the shape of what we are in the future?

Alan Hall: In my opinion, it should have input. If we go back to the Sheffield example, which you mentioned a few minutes ago, businesses were lost through that. There is a real, strong economic dimension to this. While all of us would see that there is a budget to address those various issues, whether you are talking about agriculture, the domestic situation or business and industry, you cannot solve all of this. There is a difficulty around priorities, but I think that the RDA should certainly have a say.

Tony Cherry: I certainly think there is still a need for a regional body to bring together those other organisations, including private sector ones such as Yorkshire Water, and to try to make sure that they work for the good of the region.

Chairman: Colleagues, have you any further questions-in any areas that you think we have not covered?

Mr. Betts: No.

 

Q43 Chairman: Gentlemen, is there any area that you think we have not covered adequately, any further information that you would like to give to us, or any issue in this morning's brief that we have not covered and which you would like to raise?

Alan Hall: There are a couple of issues that I would raise. I touched earlier on this question of technology. Constructively criticising what the RDA has done in the Yorkshire region, I am not sure that it has done enough regarding technology, partly for the reasons we were talking about, concerning low carbon and carbon capture and so on. Also, from a manufacturing standpoint, a lot of the answers to the future success of the manufacturing sector in Yorkshire and Humberside will be in technology. Even though I accept and acknowledge that the RDA has taken some steps on this agenda, I do not think that is enough as yet, not for the huge economic benefits that could flow from the right sort of technology interventions in our region. That is one issue.

The other issue is to acknowledge that the RDA already seems to be on the case on the question of skills. I think that there is a very big skills agenda for this region, and in this latest approach to the economic slow-down it seems that a sum of £48 million has been set aside, of which the RDA has contributed, I think, around £10 million, to try to look at skills and skills enhancement within businesses in the region. I applaud that initiative and look to see more of that. Within the budgetary constraints that there will be-we have talked about them-that sort of intervention by the RDA on that skills agenda is a very good way of trying to secure long-term economic health for Yorkshire and Humber.

 

Q44 Chairman: When you talk about technology, do you mean technology within the so-called green industries, building on the low carbon economy, or just technology in general?

Alan Hall: I mean both. The green agenda is one that we have talked about, but I could give you an illustration of companies that have had a really rich interface with universities in the region; the university team and the business have gone on a journey together and there has been product development. One particular company I have in mind, which happens to be Sheffield based, is a world-beater in terms of its products, but we need many more examples like that. The RDA cannot do that itself, but it can act as a catalyst to try to oil those wheels-

 

Q45 Chairman: Technology transfer, from university on to the shop floor. This is Ian's valley of death argument, isn't it?

Alan Hall: There is an interface there, but it is an impoverished one. It is nowhere near as rich as it should be, and some of that is due to not understanding each other. Businesses say, "Well, universities are something else", and universities say, "Well, business too", so there is a great need for some bringing together of things. There have been initiatives to try to achieve that, but much more needs to be done.

 

Q46 Mr. Cawsey: Plastic electronics is a very good example, isn't it? Plastic electronics was developed completely in this country and is now manufactured in Germany. The reason for that was that somebody knocked down the Berlin wall. What actually happened was that Germany then tapped into all sorts of support mechanisms-about the reconciliation of the east and the west-and was able to offer companies in Germany huge amounts of money to turn that idea into a commercial product. We could not do that. Isn't it the simple truth that if we want to do that kind of thing, Yorkshire Forward will have to play a role, through Government, in attracting funds that could help the development of new technologies into commercial products? That is the problem.

Alan Hall: Yes, I agree.

Tony Cherry: I think that we are in a position in which far too much is still outside of the influence of the region. We try to criticise or challenge Yorkshire Forward on so many activities. It has taken control of more and more items such as Business Link and more of the work that the Learning and Skills Council did. We do not always particularly recognise that a lot of it is out of Yorkshire Forward's hands. What we also need to do is to try to strengthen the way in which that body communicates, and to work with the business community more. Of course, that has changed considerably in the past year, with the loss of the regional assembly and so on. It is a major challenge for us all to achieve that.

Chairman: With that, I draw the meeting to a close. Again, I thank you for your attendance and for the way you have answered our questions this morning. That has been extremely helpful and will go a long way towards influencing and formulating our report. Thank you very much.