Written evidence from David Butcher, MD
of FD Outsourcing Ltd
EXECUTIVE SUMMARY
1. I am responding to the Parliamentary
Select Committee enquiry for Local Enterprise Partnerships as
a businessman in the Gatwick Diamond economic area. I wish to
bring to Parliament's attention the business led collaboration
in this area, called the Gatwick Diamond Initiative, which has
resulted in a step change in the way that six District and Borough
Councils, two county councils, SEEDA, the Diamond's business community
and other public sector stakeholders such as the LSC's and Business
Links have approached economic development through true business
consultation, successfully crossing county boundaries over the
past seven years.
2. I declare an interest in the Gatwick Diamond
because I am actually the businessman who, back in 2003, was asked
to lead an Initiative to improve the economic performance of the
Area over a 10 year time frame. At the outset I was given a budget
of just £10,000 from West Sussex County Council to do so.
3. My motivation for agreeing to lead the
Initiative was because I felt that no level of Government, whether
that be national, regional, county or local had addressed or was
addressing the economic needs of this Area. In SEEDA's South East
Plan we were just white space on the map. There were just two
mentions of Gatwick Airport in the text. No mention was made of
Redhill, Reigate, Leatherhead, Dorking, Horsham, Haywards Heath,
Burgess Hill, East Grinstead or indeed Crawley. As far as the
Counties were concerned, we could not be further from County Halls
at Kingston and Chichester. The two HE colleges (East Surrey and
Crawley) were operating independently of each other with little,
if any, regard to the requirements of the Area's economy. The
two Business Links (Surrey and Sussex) were operating independently
of each other with fundamentally different support available depending
upon whether your business was based in Surrey or Sussex. Whilst
there was a limited amount of consultation between the Chief Executives
of the three West Sussex local authorities, there was little,
if any, cross County boundary consultation. Business was frustrated
that decisions were being made with respect to planning, infrastructure,
transport, housing, education, business support and economic development
without any coordination, proper consultation with the business
community or consideration as to the impact on the local economy.
Traditional county and council boundaries were getting in the
way.
4. It has not been an easy task to create
an effective public/private sector partnership. At the outset
there was a high degree of cynicism and scepticism within the
business community that this would be just another public sector
talking shop, achieving nothing and making no difference whatsoever.
Now, seven years later, I believe we can justifiably be proud
of what we have achieved. Not only are we being able to attract
continued funding from SEEDA, the two County Councils and the
six local authorities, we are also attracting private sector funding,
not just in time being contributed by many private sector businesses
(large and small) but also financial contributions by the private
sector eg Gatwick Airport.
5. From the outset this has been a Business
led Initiative, focussing on the actions that Business believes
will make a real difference to the economic performance of the
Area. I believe we have proved what can be done with minimal funding.
At no stage have we tried to create a new organisation, we have
simply tried to co-ordinate the efforts of all our private and
public stakeholders to maximise the effect of their existing budgets
for the benefit of the local economy.
6. Today, more than ever, the vast majority
of the investment needed by the local economy will have to come
from the private sector. Over the past seven years we have sought
to persuade all businesses currently within the Area to invest
more in it, whether that be upgrading facilities, staff training,
product development or whatever. We have also sought to encourage
inward investment. Our efforts have met with significant success.
Major professional services firms such as PwC, BDO and Thomas
Eggar have relocated their South East Regional Offices to the
Diamond. Major employers have invested significant sums in upgrading
their facilities. A leading example of this is Thales, who have
invested some £100m in rebuilding and upgrading their existing
facilities.
7. Whilst I support the new Government's
proposals to create Local Enterprise Partnerships that reflect
real economic areas, at present my biggest fear is that their
arrival will result in the splitting of the Gatwick Diamond economic
area in two once again, should the new LEPs revert to county boundaries.
Everything we have worked so hard to achieve over the past 7 years
may be lost. Information regarding the new LEPs has been vague
and has resulted in rumour and conjecture which has not been helpful.
I would encourage government to decide exactly what a new LEP
should look like as soon as possible.
8. In my opinion and the opinion of many
hundreds of businesses in the Gatwick Diamond area, the Gatwick
Diamond Initiative is already a perfectly formed new LEP. I commend
to the Select Committee that it be used as a model to show how
it is possible to effectively bring together the public and private
sector.
9. For the first five years of our existence,
The Gatwick Diamond Initiative was led by the Gatwick Diamond
Steering Group which I chaired. From January 2009 we managed to
agree new governance arrangements with the local authorities and
SEEDA that resulted in the Steering Group being replaced by an
Overview Forum that meets twice yearly (chaired by Paul Gresham,
Senior Partner at KPMG, Crawley) and a Management Group that meets
every two months or so (chaired by myself).
10. In addition to this Written evidence,
both Paul and I would be prepared to give oral evidence to the
Select Committee. I can be contacted at 30 Basepoint Business
Centre, Metcalf Way, Crawley, West Sussex RH11 7XX, telephone
01293 817710 and at david.butcher@fdoutsourcing.com
HISTORY
11. The Gatwick Diamond has a GDP of £13.3
billion, a population of over 600.000 and a workforce of 343,000.
It has become a functional economic area for two principal reasons—firstly
the A23/M23 transport corridor linked to the M25 and London. Secondly
the central role of Gatwick Airport in linking the area both internationally
and with London through Gatwick Airport Rail Station. Gatwick
employs directly 23,000 staff and another 13,000 indirectly. However,
despite such assets, the area is underperforming. For example:
— Relative to other European and North
American airport focused international business locations the
area is only mid ranking or lower despite having the worlds 11th
busiest airport. Earlier decisions taken by BAA and BA have resulted
in Gatwick airport only having 30% of its flights used for business
travel and being predominantly a tourist departure point. This
compares poorly to Heathrow which has 60% business travel. Businesses
need more business locations served from Gatwick Airport if they
are going to trade successfully internationally.
— There is a deficit in knowledge economy
related assets and levels of investment. The absence of a university
presence means that knowledge based businesses and start ups are
attracted elsewhere.
— There is a real need to improve education,
learning and skills needs to meet future business needs.
— The area's towns do not have the identity
and quality of place that will attract the talented people needed
to secure high added value of growth.
— The area needs to improve its infrastructure
to grow sustainably and connect the economy to global value chains.
12. Although government is talking about
new LEPs, I feel it is important to understand how business and
the public sector in the Gatwick Area managed to drop boundary
and local prejudices to work together for the single aim of economic
growth. I believe it inevitable that new LEPs will go through
these founding pains and it could take a number of years before
mutual trust and cooperation is properly established. The Gatwick
Diamond Initiative is very fortunate in having long since moved
on to the `getting things done together' stage.
13. In selecting new LEPs I would advise
government to choose very carefully with respect to the areas
covered by each LEP. It is critical that they reflect genuine
economic areas, not area's assembled together to enable the councils
involved to comply with governmental guidance as to the likely
required size of an LEP. Where relationships between neighbouring
councils are forced or simply for convenience led by hope of additional
funding, I believe the relationships will not be sustained. Genuine
business will be reluctant to engage. The relationships will be
too fragile and will eventually founder. Whilst funding is obviously
important, relationships will be so much stronger if the Councils
involved genuinely see the benefits of working together. They
will understand how this will enable them to be more cost effective,
avoid duplication, plug gaps and have a far greater positive effect
on their local economy.
14. I would also advise the government to
consider very carefully the nature of the business involvement
in the LEP's. It is one thing to have "business" being
represented by business membership organisations (CBI, IOD, FSB
etc) or semi-retired businessmen/women. It is another to achieve
the direct involvement of individual businesses, large and small.
The high level of business involvement in the Gatwick Diamond
Initiative is because these businesses do genuinely care about
the Area. They relate to it. They feel part of it. They understand
that by improving the economic performance of the Area we will
all benefit. If the Government opts for larger scale LEP's by
combining several economic areas together, I believe that the
"local" element of the LEP's will be lost. It will only
be the business membership organisations that find it worthwhile
to be involved. I believe that the direct involvement of individual
businesses in the Gatwick Diamond Initiative has been fundamental
to our success.
15. As indicated above, the Gatwick Diamond
collaboration begin in 2003 when businesses in the area had become
frustrated with decisions being made by the public sector which
paid more attention to local government and county boundaries
and a desire to prevent a second runway ever being built at Gatwick,
than to actual business activity or needs.
16. In Autumn 2003 we held a facilitated
meeting of business leaders and major stakeholders to ascertain
what actions they felt could be taken to improve the economic
performance of the Area. Number 1 on their list of priorities
was for the Area to be recognised as an economic area in our own
right. To have our own image and identity. This was closely followed
by the need to improve skills, infrastructure and add value within
the economy whilst minimising any adverse impact on the local
environment and the Green Belt.
17. With other businesses I pulled together
the public sector agencies, worked with the Local Authorities
and helped to indentify the duplication, gaps and inconsistencies
that we were facing.
18. In the Summer of 2004 we launched the
"Gatwick Diamond" identity. At the time we were told
that we could not do this without a £500,000 marketing budget.
We have proved otherwise. Now there are about 155,000 mentions
of the Gatwick Diamond on Google. At last year's Non Domestic
Ratepayer consultation held by Crawley Borough Council, 92% of
those attending said that they were either "aware" or
"fully aware" of the Gatwick Diamond Initiative, prior
to them attending the meeting.
19. As activity increased, we managed to
secure additional funding from SEEDA, the two County Councils
and the local authorities. This enabled us to pay for high quality
research to be carried out, in particular benchmarking, regionally
and locally. The result in 2007 was the launch of a Futures Plan
which made clear the challenges facing the economy. This paved
the way for a business plan to be developed which laid out how
these challenges would be met and overcome.
20. As the local authorities became more
involved and contributed greater funding, they requested Elected
Member representation within the Governance Structure. Accordingly,
in January 2009, a revised governance structure was agreed. This
consists of:
— An Overview Forum which meets every six
months and is chaired by a leading businessman, Paul Gresham (Senior
Partner—KPMG Crawley). The Forum consists of the CEO's and
Leaders of the six borough and district councils, the principals
of the two FE colleges, Gatwick Airport, business membership organisations
and a selection of businesses, large and small. The Overview Forum
provides strategic direction and oversight of the Gatwick Diamond's
financial and performance management.
— A Management Group chaired by myself,
meeting every couple of months, reports into the Overview Forum.
This group oversees the operational management and coordination
of the Gatwick Diamond action plan and performance manages the
four thematic workgroups.
— The four thematic workgroups, with 50%
business representation and with considerable achievements already
are:
20.1 Inspire—this group brings
together the business community with key representatives from
the education and skills sector. The group leads on the establishment
of an improved education and business offer linked to business
needs. This group has already succeeded in preparing a successful
bid to the previous government to implement a university centre
in the Gatwick Diamond which would educate 250 students in the
first year. This was a bold initiative led by Brighton University
to plug the enormous gap in higher education which exists in the
Gatwick Diamond. One of only six successful bids, it quickly became
clear that the promised funding was not available. This group
will now strive to plug that higher education gap through improved
provision at the two Further Education Colleges.
20.2 Connect—this group brings
together key transport providers, statutory authorities alongside
business representatives. Its objectives are three fold:
(a) to lobby for improvements
to the infrastructure in the area and, outside if necessary, to
improve accessibility and support continued development and investment;
(b) to support a modal
shift towards more sustainable modes of transport; and
(c) to achieve the highest
level of broadband connectivity to meet business needs.
This group has a large number of transport
projects waiting for funding. Achievements already include the
improved local bus and bus-rail-airport interchange facilities
which has resulted in an increase from 23% to 37% of airport staff
commuting to work by public transport. The Group facilitated the
UK's most successful and national award winning car sharing scheme
(EASIT). The group also managed to secure public/ private sector
matched funding for the desperately needed upgrade of Gatwick
Airport Rail Station but unfortunately the funding for this project
is presently on hold.
20.3 Grow—this group brings together
senior officers of all the local planning authorities and business
partners involved in development, design and construction. The
group leads on efforts to achieve "smart growth" with
a focus on high value added activities, quality of life and quality
of place. It seeks to facilitate greater coordination of local
authority strategic planning and to deliver town centre regeneration,
improvements to infrastructure including transport networks and
economic development initiatives. A recent achievement of this
group is to bring the six planning authorities together with business
to plan an integrated sub regional spatial strategy to support
sustainable growth for the area which will be published in October.
20.4 Marketing and Communications—this
group leads on marketing and promotion to create a strong identity
and voice for the Gatwick Diamond. This group has succeeded in
promoting the Gatwick Diamond as an area without an advertising
budget by allowing free use of the logo to businesses and encouraging
them to mention the Gatwick Diamond whenever they can in their
own presentations and publications. A measure of the recognition
we have achieved is that a Google search will currently produce
about 155,000 internet results for the Gatwick Diamond.
RESPONSE TO
COMMITTEE CONSIDERATIONS
21. What should be the functions of
the LEPs and how will value for money be ensured? I believe
that the functions of the new LEPs will be influencing, lobbying
and sharing in the decision making by the business community with
the councils to allocate funding to the projects most appropriate
for business needs ensuring economic growth. Identifying those
projects where limited public sector investment will unlock significant
additional investment from the private sector. Once the decisions
have been made, the actual implementation of funding in those
infrastructure, planning, housing and transport projects should
remain with the local authorities. Value for money from the LEP
should be ensured by minimising back office overheads. Big offices
and high head counts are not necessary when the shared public/private
sector role is largely voluntarily led. Businesses are prepared
to invest time and energy in decision making which will help grow
their economy, as long as they feel that real benefit is being
achieved as a result of their efforts and that the public sector
is making a corresponding financial investment.
22. What will be the funding arrangements
for the Regional growth fund under the LEP system? It is not
necessary to waste funding on large back office structures and
processes which mean that money "sticks to the sides"
as it flows down to delivery. Funding arrangements should be kept
simple and transparent. The local authorities should be awarded
the funding and allocate sufficient and as agreed to the LEPs
to enable a simple structure of governance which provides the
accountability necessary to influence, decision making according
to business needs.
23. How will coordination of roles between
LEPs be ensured? This could be in a similar way to the current
Local Government Association coordination of roles. In addition
a neighbouring LEP could ensure that a representative sits on
adjacent LEPs to share knowledge, best practice and minimise duplication.
24. What arrangements will there be
for coordinating regional economic strategy? Again this could
be along the lines of the Local Government Association on a regional
basis as currently. There is no need for another additional structure
as seen by regional partnership boards. However, businesses from
each of the LEPs need to sit on such regional coordinating structures
to ensure the business voice.
25. What will be the structure and accountability
of LEPs? Limited by guarantee companies would be the best
structure. However, Articles must ensure that any public funding
obtained will return to the Local Authorities and/or government
in the case of closure. I believe the governance structure adopted
by the Gatwick Diamond Initiative works well and is a model that
could be followed elsewhere. Each LEP should be accountable straight
to the Department of Business Innovation and Skills. This provides
a good balance with the Local Authorities reporting to the Department
of Communities and Local Government.
26. What should be the legislative framework
and timetable for converting RDA's into LEPs, the transitional
arrangements and liability of RDA's? The timetable should
be quick both for legislation and for the transition. The current
uncertainty is having a detrimental effect which will only get
worse until the position is clarified. A long delay will discourage
business interest. Implementation should be achieved as rapidly
as possible.
27. How will funds be procured from
outside bodies under the new arrangements? LEPs can bid for
funding from the EU for example on their own or in collaboration
with other LEPs depending on the project. This does not need to
be a complicated arrangement as long as the decision is taken
by the LEP partnership that the funding being bid for is appropriate
to the area's objectives and business needs. Private sector contributions
could be paid to the LEP directly if it is structured as a company
limited by guarantee.
BACKGROUND
Prior to founding FD Outsourcing Ltd(FDO) in
1992, David was Group Financial Controller of the BIS Group—an
information services group employing some 2,500 staff in 34 worldwide
locations. Since founding FDO, he has worked extensively on a
voluntary basis for the benefit of his local economy. He is a
Past President of the East Grinstead Chamber of Commerce and a
past director and Chairman of CADIA (now the Gatwick Diamond Business
Association). In 2002 he became a founder director of the West
Sussex Economic Partnership. In 2003, at the request of West Sussex
County Council and the West Sussex Economic Partnership, he founded
the Gatwick Diamond Initiative. From 2003-2009 he led the Initiative
as Chairman of the Steering Group. In 2009, following adoption
of new governance arrangements, he became Chairman of the Gatwick
Diamond Initiative Management Group.
13 August 2010
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