Memorandum from HM Government (AWM 01)
SUMMARY
1. The nine Regional Development Agencies
(RDAs) have been successfully delivering Government policy in
the English regions for the past 10 years. They were established
under the RDA Act 1998 which states that RDAs should:
— further the economic development and
regeneration of their region;
— promote business efficiency, investment
and competitiveness;
— promote employment; and
— enhance the development and application
of skills relevant to employment and contributes to the achievement
of sustainable development in the UK where it is relevant to its
area to do so.
2. RDAs are a vital part of Government's
support for business. Government recognises the importance of
their work, of keeping a business focus and ensuring they have
the skills, resources and clear direction needed to deliver. Businesses
and their representative bodies have acknowledged the value provided
by these business led organisations. With their in-depth knowledge
of regional economies, RDAs are uniquely placed to help deliver
the Government's strategy for economic recovery and growth.
STRATEGIC LEADERSHIP
3. The RDAs are strategic leaders, bringing
together the views of the people and businesses who live and work
in their region, and combining these with a unique set of business
and economic insights to make the most of the opportunities globalisation
brings.
4. RDAs are strengthening and growing regional
economies, guided by the principles of sustainability, to ensure
a healthy long term future for people and businesses. Each RDA
is working with its partners to build on their region's natural
assets, revitalise places and meet the needs of regional businesses.
5. RDAs are charged with producing Regional
Economic Strategies for their region. AWM launched the current
West Midlands Economic Strategy (WMES) Connecting to Success
in December 2007, together with the West Midlands Regional Assembly.
An accompanying Delivery Framework to monitor and refresh progress
against key milestones was launched in the summer 2008, and this
is updated and rolled forward each year. AWM continues to secure
partner sign-up to the Delivery Framework.
6. Connecting to Success was the
product of extensive consultation and evidence based research.
It was the first low carbon WMES, aspiring to close the region's
output gap by growing the economy at a faster rate than the UK
average, but not seeking economic growth at any cost. The aim
is for growth to contribute to the quality of life whilst respecting
environmental limits.
7. The Strategy sets an ambitious vision:
"To be a global centre where people and businesses choose
to connect". A key achievement of this work was in securing
the alignment of the Regional Economic Strategy with other key
strategies, including the Regional Spatial Strategies.
8. An example of AWM's strategic leadership
is its positive response to the Government's report following
the Review of Sub National Economic Development and Regeneration
(SNR). Here the Agency took the opportunity to forge new partnership
working with local government and business through the establishment
of the Joint Strategy and Investment Board (JS&IB), which
it co-chairs with local government. AWM quickly established a
Transition Team, led by a Strategic Director for SNR, to work
on behalf of regional partners, including the LGA and WMRA to
manage the transition to new regional arrangements from April
2010.
9. The effectiveness of new partnership
working through JS&IB has, in turn, led to the development
of new and stronger regional level working from local government
and business with the formation of the WM Leaders' Board and One
Voice WM respectively.
10. An early success of this joint working
has been the Regional Funding Advice (RFA) to Government. The
detailed work was undertaken by the Regional Advisory Group (RAG),
which was led by AWM, under the guidance of the JS&IB. Key
outcomes of this process were the identification of the twenty
Impact Investment Locations where partners have agreed collectively
to prioritise spend (27% of the combined economic development,
housing and transport funds from 2009-19) and the securing of
approval for the Regional Infrastructure Fund. Partners responded
positively to the challenge from the Regional Minister to demonstrate
how the region would manage delivery of these priorities and AWM
has appointed an RFA Implementation Manager and Director for Infrastructure
to drive this work and to support the RAG and JS&IB in their
robust approaches to monitoring delivery.
11. The Agency also showed strong strategic
leadership in supporting the Regional Minister in promoting the
Region and local partner's case for the redevelopment of Birmingham
New Street station. AWM took its strategic responsibilities very
seriously when challenged by the then Regional Minister to identify,
along with the WMRA and Regional Transport Partnership, the key
strategic transport priorities for the region. AWM took the lead
in driving this work forward and continues to lead the ongoing
work to develop the nine priorities identified.
12. The West Midlands Economic Inclusion
Panel was established with AWM funding in response to the productivity
output gap identified in the West Midlands Economic Strategy.
Chaired by Trudi Elliott, Regional Director for Government Office
for the West Midlands, the Panel brings together leaders from
across the public and third sectors to consider new ways to tackle
the £2 billion productivity gap ascribed to Worklessness;
to identify and champion the wider, and more consistent, deployment
of existing practice, to identify, and propose the means to fill,
crucial gaps in current provision designed to tackle worklessness.
Further information on the work of the panel was included in our
evidence to the Committee's second inquiry.
13. AWM has a demonstrable, evidence based
approach to its activities. The Agency gathers both formal and
anecdotal intelligence to analyse the structure, performance and
prospects for the regional economy. The Agency then uses this
for developing policy, such as the RES and Taskforce priorities
as well seeking to influence the actions of other local and national
partners.
14. The importance that AWM places on evidence
based development is reflected in the resources allocated to the
West Midlands Regional Observatory (WMRO) which acts as an independent
and critical resource both to AWM and other partners in the region.
15. AWM has recently led a key area of evidence
based analytical work on the depth of the issues facing the West
Midlands economy. This has enabled the Regional Minister's Taskforce
to commission immediate interventions to mitigate the impact of
the recession and is leading to new thinking about the policy
interventions that will be needed to address the situation.
16. This analysis of the region's economy
is fundamental to support the revision of the regional strategy.
Under the new Local Democracy, Economic Development and Construction
Act 2009, AWM is placed under a new joint duty with local government
to review, revise, implement and monitor the regional strategy,
and support the delivery of sustainable economic growth in each
region. This strongly reinforces the strategic leadership role
of RDAs for the future.
17. The recently published national Skills
Strategy highlighted a new leadership role for RDAs as lead regional
body for skills from April 2010. They will take responsibility
for producing regional skills strategies working, together with
Local Authority Leaders' Boards, in close consultation with local
partners to ensure that they fully reflect the needs of all areas
in the region. These strategies will form part of the Single Regional
Strategy, ensuring that skills priorities are aligned with wider
economic development. The skills strategies will articulate employer
demand and set out specific skills investment priorities for their
region in line with our new New Industry New Jobs commitments.
The skills priorities in the regional strategies will inform Ministers'
Annual Skills Investment Strategy and how the Skills Funding Agency
will fund colleges and training institutions to ensure an appropriate
supply of skills to meet the national, sectoral, regional and
sub-regional priorities.
ACHIEVEMENTS
18. The results of the independent National
Impact and Evaluation Study of RDAs by PricewaterhouseCoopers
commissioned by BERR (now BIS) and published in March 2009, found
that every £1 invested by the RDAs generated at least £4.50
for their regional economies. AWM's results showed that it generated
an overall benefit to the region of £7.45 for every £1
invested.
19. Between 2002-03 and 2006-07, RDAs created
and protected nearly 213,000 jobs. RDAs helped to create over
8,500 businesses and supported a further 35,000. During this period
AWM specifically created or safeguarded nearly 78,000 jobs of
which 47% were additional at the regional level; helped to create
just over 3,000 businesses of which 45% are additional; and supported
over 28,000 businesses of which 30% are additional.
20. RDAs have assisted over 400,000 people
to improve their skills and cleaned up and brought back into use
an area of land equivalent to around 800 football pitches..AWM
has specifically remediated over 670 hectares of land, of which
58% are additional; and assisted more than 183,000 people to improve
their skills, of which 44% of these are additional.
21. AWM has a successful track record of
attracting and retaining international investors. In 2008-09,
AWM worked with 54 overseas companies to invest in the West Midlands,
a record year since AWM was established in 1999. A number of these
investments, such as the Australian software company PelicanCorp,
were attracted by the Bridge To Growth initiative which is aimed
specifically at innovative SMEs.
22. RDAs spend their money wisely: they
exceeded their efficiency savings target of £144 million
in 2005-08 and are on track to deliver the value for money savings
target in 2008-11.
23. The Agency continues to progress well
in its role as the Managing Authority for the 2007-13 ERDF Programme.
It continues to deliver the programme in a well managed way and
has met its 2009 target for N+2.
24. The 2007 Independent Performance Assessment
Report conducted by the National Audit Office (NAO) assessed AWM
as performing strongly (the highest category possible). AWM is
fully committed to continuous improvement and is working activlely
on its IPA Improvement Plan (which is based on the Business Excellence
model) agreed with the NAO. AWM achieved "Investors in Excellence"
standard at the first attempt in 2007, and were also selected
as one of the finalists at the Midlands Excellence Awards in 2008-09.
The Agency is entering the 2009-10 Midlands Excellence Awards.
AWM's 2009 annual independent stakeholder survey showed continuing
improving trend, except for consultation with partners, which
AWM is now addressing. The 2009 survey results were benchmarked
by Ipus Mori against 18 other Government Bodies on Advocacy and
AWM was ranked four out of 18.
25. Like all RDAs (outside of London) during
2009-10 AWM will be subjected to the National Audit Office Independent
Supplementary Review (ISR), the ISR process started in November
2009.
SUPPORTING THE
GOVERNMENT'S
AGENDA
26. RDAs work across Government departments
helping to deliver a wide range of projects.
27. Working with CLG, RDAs have helped regenerate
cities across the Midlands and the North, and provided an economic
future for communities blighted by the demise of old industry
and mines. Here in the West Midlands for example, AWM is helping
to bring a new economic future to areas such as North Staffordshire
where working with partners, it has contributed to North Staffordshire's
£100 million Chatterley Valley project, a major regeneration
project featuring a new generation of environmentally friendly
developments—one of which, the £40 million G.Park Blue
Planet building, is ranked amongst the most sustainable buildings
in the world. Additionally, AWM has provided over £9 million
of financial support for major infrastructure improvements at
Keele Science Park, linked to Keele University. This underpins
the success of the emerging medical cluster at the Science Park,
creating high-value jobs and encouraging graduates to stay in
the area. The Agency is also investing over £30 million in
the regeneration of the University Quarter in Stoke, which is
expected to create 1,300 direct education jobs. A major focus
for the University Quarter will be to drive up aspirations and
skills to meet the needs of local employers.
28. The RDAs also work with DEFRA, acting
as a bridge between the urban and rural economies, delivering
significant economic programmes focused on market towns as well
as responding to economic shocks such as flooding and foot and
mouth disease. To help the rural economy in the West Midlands
AWM has established a Rural Regeneration Zone, as a key delivery
mechanism. This is the only one of its kind in England. The Zone
area covers nearly all of Herefordshire, most of Shropshire and
parts of Worcestershire. It is delivering, with its partners,
projects and programmes to create an economic environment that
attracts high-technology, knowledge-based jobs, while at the same
time, helping the Zone's current and future workforce to improve
its skills to take advantage of the new opportunities. The Agency
has also implemented a successful Market Towns Initiative which
has been independently evaluated. The most recent evaluation report,
published in September 2009, concluded that the Market Towns Programme
has generated significant direct and indirect economic benefits
as well as a range of non-economic benefits in the supported towns.
Examples of projects supported through the Rural Zone include
the recently launched wireless connected "E-Pods" in
Carport, Telford, to be rented out for use by mobile professionals
and business nomads who are seeking "hot desking"',
"downsized office space" or luxury "workstation"
premises, and through its RE:think Energy programme the Zone provides
grant funding to businesses in the Zone seeking to invest in renewable
energies.
29. AWM takes a lead role on behalf of all
the RDAs with regard to transport issues, liaising with DfT on
key issues.
30. RDAs play a key role alongside JobCentre
Plus and the LSC in responding to large scale job losses. AWM
has played a leading role in responding to large scale redundancy
and closure announcements, working with its partners to provide
a co-ordinated and professional response to the businesses and
the people affected. AWM's leadership in managing the regional
response to the closure of the MG Rover at Longbridge is regarded
as a major success for the Agency. The Committee recognised, in
its first inquiry, which AWM's leadership in working with regional
partners in mitigating the effects of the closure of MG Rover
has helped inform its approach in the current downturn. It has
also provided a template for the way that other regions and agencies
respond to economic shocks. Further examples include Peugeot in
Coventry, Jaguar Landrover at Browns Lane and more recently with
Wedgwood and LDV.
31. Earlier in 2009 Government asked all
RDAs to review their Corporate Plans and develop a more strategic
mix of interventions, informed by the results of the Price Waterhouse
Independent Evaluation work and to take account of the reduction
in RDA budgets. Government asked RDAs to focus on:
— in the short-term, giving immediate priority
to assisting business;
— for the medium-term, stimulating the
recovery and growth; and
— for the longer-term, restructuring and
developing each region's strengths, addressing its market failures
and supporting its growth and competitiveness in the future.
32. In revising its Corporate Plan, AWM
decided to review all its projects which were not already legally
contracted. This was to ensure that its investments were targeted
on activities that would deliver the greatest benefit to the region.
33. AWM endeavoured to be open and transparent
about the review process, keeping partners and applicants informed.
In total 306 projects were reviewed and the outcome, announced
at the end of June 2009, was that 184 projects of the original
306 were allocated funding. The total investment in these projects
and the Agency's 600 existing projects over their lifetimes will
be around £1.1 billion.
34. The revised AWM Corporate Plan for 2009-11
was approved by BIS Ministers in August 2009. Meanwhile, AWM has
continued to work with unsuccessful applicants to explore alternative
funding and delivery arrangements for their projects.
35. In refocusing its resources, AWM has
sought to take a balanced approach, remaining sighted on the "long
game"of addressing the challenges facing the region as set
out in the Regional Economic Strategy Connecting to Success.
SUPPORTING BUSINESS
THROUGH THE
RECESSION
36. RDAs are delivering vital help and support
to businesses during the recession. They play a lead role in the
Regional Economic Fora, which assess and respond to the impact
of the recession in each region. Here in the West Midlands AWM
has been a leading partner on the Regional Minister's Economic
Taskforce. It has provided the Minister with the necessary support
to make the Regional Economic Taskforce an important and effective
body in the region, as the Committee has previously commented.
37. AWM appointed a Director with strategic
leadership responsibility for the Taskforce and has provided the
leadership for the Co-ordination group that supports it. In addition,
as recorded in Government evidence provided for earlier Inquiries,
AWM has provided the Taskforce with the help and support to develop
a comprehensive response to the economic downturn, develop new
services and adapting others to better align with the changing
needs of the region, including, for example, sector specific proposals
for automotive, construction and retail.
38. RDAs deliver and finance a range of
support on the ground. Over 51,000 free business health checks
have been delivered by the RDA-funded Business Link service between
October 2008 and May 2009. At 31 October 2009, 95,343 unique businesses
have benefited from the Business Link "Health Check"
in England. Of that total, 12,013 Health Checks have been undertaken
in the West Midlands.
39. West Midlands business users' satisfaction
with Health Checks delivered by Business Link in the region has
seen a considerable increase since Quarter 1 2009-10. More customers
are responding that the depth and breadth of support and advice
being offered is appropriate to their business. The volume of
Health Checks being delivered is continually increasing—although
this is more supply led than demand led. In terms of responsiveness,
adviser appointments continue to be available within an average
of five working days—with immediate support being offered
via telephone based Duty Advisers. In emergency situations appointments
can be made for the next day, although the demand for this level
of response is minimal.
40. The Business Link Regional Performance Report
for Quarter 2 2009-10 reports that West Midlands Business Link
Partnership over achieved on its usage target by 5%. The overall
usage continues to be steady as a result of development and improvement
of services offered for marketing, promotion, events and the adviser
role. Customer satisfaction has improved significantly as a result
of new processes and systems, staff becoming better trained and
a concerted effort across the company to improve service following
the implementation of an organisation-wide action plan.
41. Government introduced Transition Funds
as a short term measure while broader fiscal measures including
the Enterprise Finance Guarantee Scheme were put in place. AWM
led the way by establishing very early on the highly successful
Advantage Transition Bridge Fund. This fund had, by mid November,
advanced £10.672 million, via 68 loans to 64 companies, safeguarding
3,832 jobs.
42. BIS is currently undertaking an evaluation
of the Transition Loan Funds which will be available at the end
of the financial year. All the RDA transition funds, including
the Advantage Transition Bridge fund closed at the end of November
as announced in the 2009 Budget. In the West Midlands, AWM is
convinced that there is a continuing need as businesses are still
reporting difficulties in obtaining commercial finance. AWM has
therefore announced that it will be launching a successor to the
Advantage Transition Bridge Fund (the Mezzanine Fund) as part
of a £44.8 million business support fund which includes:
— An Early Stage Equity fund of £8
million;
— A Growth Equity fund of £9.2 million,
matched by the same amount from the private sector, and;
— A Mezzanine fund of £9.2 million,
also matched by the private sector.
43. The public sector parts of the fund
to be provided by AWM and the European Regional Development Fund.
44. The Early Stage Equity fund is now operational
and actively in the market to make investments. Preferred fund
managers have been appointed for the Growth Equity Fund and it
is expected to be operational by early 2010. A Preferred fund
manager for the Mezzanine Fund has yet to be appointed, but AWM
hopes to do so soon.
45. As the Advantage Transition Bridge Fund
(ATBF) finished making loans at 30 November 2009 and, in view
of the delay in implementing the Mezzanine Fund, AWM is actively
looking at ways of producing some continuity of finance in this
area of activity. In the mean time ATBF continues to log applications
and, where appropriate, applicants are being re-directed to other
lenders such as Investbx (who are operating a loan project on
behalf of Birmingham City Council) and the Capital for Enterprise
Funds. In the meantime the Advantage Enterprise and Innovation
Fund and the Mercia Technology Seed Fund continue to invest and
support for Business Angels continues.
46. In total RDAs have brought forward £100
million for regeneration projects to boost the economy during
the recession and have provided £110 million to fund national
business support schemes. In the West Midlands AWM has, for example,
been able to bring forward:
— £11.2 million to allow early commencement
of work to redevelop Birmingham New Street station, creating up
to 400 new jobs; this is part of a total investment of £100
million; and
— £1.8 million to accelerate the redevelopment
of the former MG Rover site at Longbridge Birmingham, enabling
an early start to the relocation of Bournville College, securing
250 construction jobs; this is part of a total investment of £37
million.
PLANNING FOR
GROWTH IN
THE REGION
47. RDAs are supporting the UK's economic
recovery by providing economic leadership and investing in emerging
sectors. They are working with the Department for Business Innovation
and Skills (BIS) to shape the development of future growth sectors,
such as high-tech manufacturing, aerospace, bioscience, digital
communications and low carbon technologies. These are integrated
into the RDAs' revised corporate plans.
48. RDAs are investing £1 billion between
2008-11 in programmes to support tomorrow's innovative businesses
and are leveraging investment from both the public and private
sectors, as well as working with UKTI to attract overseas investment
to the regions. AWM is, for example, supporting the world class
Manufacturing Technology Centre (MTC), to be built at Ansty Park
research and development site outside Coventry with a joint £40
million with the East Midlands Development Agency (emda)—one
of the largest public sector investments in manufacturing for
many years. The MTC has the backing of some of the UK's major
global manufacturers and will support UK manufacturing companies,
and their supply chains, to bring about major improvements in
their manufacturing competitiveness. It is a new model of collaborative
partnership between industry, universities and research and technology
organisations (RTO).
CONCLUSION
49. The West Midlands economy and people
have suffered the impact of the recession more acutely than the
other English regions in terms of redundancies, business closures
and unemployment and it is important that we recognise this in
an evaluation of AWM's work and future plans.
50. Much has been done by Government through
fiscal stimulus and "Real Help Now", to respond to the
immediate needs of businesses in the recession. At regional level,
a wide array of West Midlands partners came together through the
Regional Minister's Taskforce to develop an effective and timely
response to the downturn. AWM has played the key leadership role
in the Taskforce since its inception, undertaking targeted activity
in close consultation with businesses to help them survive and
protect valuable jobs where possible. The Regional Minister has
recently re-positioned the Taskforce to focus on supporting long
term recovery and improving the region's resilience to future
economic shocks. AWM will continue to provide leadership to the
Taskforce helping to ensure that it's planning for the upturn
is effective.
51. AWM is well regarded by regional leaders,
businesses and other stakeholders. The Stakeholder survey shows
good overall satisfaction rates. Further evidence of the high
regard for AWM is the unusually high number of high calibre applications
received for the 2009 Board vacancies. In total there were 94
applications for the four vacant board positions producing an
exceptionally strong field.
9 December 2009
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