Input to CSR 2007 The Advice of the Northwest Region
September 2006
INPUT TO CSR 2007 The Advice of the Northwest Region Page EXECUTIVE SUMMARY
PRIORITIES FOR GOVERNMENT SUPPORT
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MAP OF THE NORTHWEST
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THE EVIDENCE
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HOW THE ADVICE WAS PRODUCED
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ANNEX 1 THE DRIVERS OF PRODUCTIVITY
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EXECUTIVE SUMMARY Introduction This advice has been developed by the region and endorsed by the NWDA Board and NWRA Executive Board. It is based around the principle that the Northwest can work with Government to better utilise current levels of public expenditure over the period 2008/9-2010/11. It specifically focuses on where central government action is required to remove barriers to the effective implementation of agreed regional and national strategies & policy. The Northwest region is a £102 billion economy (12% of England) and home to 6.8 million people, 3 million employees and 230,000 firms. The region’s success - economically, socially and environmentally - is therefore of fundamental importance to the government’s economic performance and regeneration targets. The region is very clear on its economic vision, developed through a comprehensive, evidence based review of the RES and re-iterated in its response to the RFA initiative. The RSS also supports this vision. It is for: A dynamic, sustainable international economy, which competes on the basis of knowledge, advanced technology and an excellent quality of life for all where: 1. Productivity and Enterprise levels are high, in a low carbon economy, driven by innovation, leadership excellence and high skills 2. Manchester and Liverpool are vibrant European Cities and, with Preston, are key drivers of city-regional growth 3. Growth opportunities around the key regional towns and cities of Crewe, Chester, Warrington, Lancaster and Carlisle are fully developed 4. Key growth assets are fully utilised (priority sectors, the higher education and science base, ports/airports, strategic regional sites, the natural environment, and the rural economy) 5. The economies of East Lancashire, Blackpool, Barrow and West Cumbria are regenerated 6. Employment rates are high and concentrations of low employment are eliminated
Despite strong recent economic performance, Northwest GVA per head is 12% lower than the England average, resulting in an output gap of £13 billion. £3 billion of this is due to fewer people working per head of population and £10 billion is due to lower productivity (GVA per employee). The RES identifies three major drivers to improving the Northwest’s economic performance and achieving the overall goals of the vision: • Improving productivity and growing the market (to tackle £10bn of the gap) • Growing the size and capability of the workforce (to tackle £3bn of the gap) • Creating the right conditions for sustainable growth and private sector investment The Northwest faces a fundamental challenge to ensure a sustainable future for our economy, communities and environment whilst driving higher levels of productivity and employment with the region. We are taking this challenge seriously and have begun a strategic response by developing a regional sustainable energy strategy, climate change action plan and supporting businesses in resource, efficiency and waste minimisation. Fundamental to our success is the need to maximise the impact of public and private sector investment and activity.
We are determined that the Northwest should punch its full economic weight and have therefore set 8 headline targets around economic performance and regeneration, including one specifically covering sustainable growth in the region. The overall RES target is: • Over the period 2006-2009, to achieve GVA growth above the England average, and in the longer term to close the GVA/head gap with the England average. Achieving this target and the economic vision will mean that improved prosperity is shared more widely within the region and disparities within the region and with the UK are reduced. This is in line with the government’s REP PSA target.
What we have achieved so far The Northwest is a strong region with many economic assets. We have been working together over a number of years to develop our shared vision for the region and have achieved a great deal. All our major strategies have been aligned by joint working between agencies. The RES was highly prioritised and developed and endorsed by a 25 strong Advisory Group from across the region. We have developed a focused Regional Spatial Strategy (RSS) and Regional Housing Strategy (RHS). At a regional level we have established the Regional Leadership Group of the NWDA Chair and Chief Executive, the NWRA Chair, Executive Chair and Chief Executive, and the Regional Director of GONW. This group oversaw the production of the RFA advice to government and will monitor the progress of RFA schemes. Its role is to represent and promote the interests and priorities of the Northwest, and to show leadership on the tough choices the region faces. We have a strong RDA, achieving the top grade in its recent NAO inspection. The Regional Assembly has recently restructured its Executive Board, and taken on the Regional Housing Board role. The renewed Regional Assembly, working in partnership with the RDA, has significantly developed the region’s capacity to make tough decisions that are credible and enduring amongst local authorities and stakeholders. Both organisations, with their responsibility for the RES and RSS, are essential for a strong strategic region. The region has 5 effective sub regional partnerships, and each of these has recently produced an Action/Investment Plan, linked to the RES and RSS, to prioritise the actions and investments needed to develop the Northwest and meet RES targets. The Northwest has strong and emerging cities, which are vital to the overall economic performance of the region. Each of these City Region’s has produced a development programme, and there are ongoing discussions within these cities about the potential for strengthening future governance arrangements. Local authorities in the region have developed close working relationships within our sub regional partnerships and city regions in setting priorities through sub regional action plans which underpin investment decisions. They have also worked hard to ensure Local Area Agreements and LEGI bids have been aligned to local and regional priorities. We are ambitious for our region and believe we have demonstrated that we can make the tough choices that the region needs at all spatial levels. We have demonstrated what we can achieve by working together, and that a strong region needs strong organisations fulfilling complementary roles and functions at a local, city/sub regional level and at a regional level. As an over-riding
principle we are committed to ensuring that delivery of economic development activities occur at the most appropriate spatial level, and that all such activity should be consistent with the development of a strong Northwest regional economy.
Government Support In preparing our submission we have analysed the 5 drivers of productivity and employment and considered, based on the strong evidence base developed for the RES, RSS and RHS, what the region needs to achieve in each of these areas. We have also considered what the region can achieve itself, based on existing levels of public expenditure. From this analysis (which is included as an annex to this report), we have concluded that, in most areas, the Government has set the broad policy framework required to strengthen the Northwest economy. Our recommendations to Government are under 5 broad areas and focus on where further Government support is needed to ensure effective implementation. These recommendations are summarised below.
Summary of Recommendations 1. ENSURE REGIONAL ECONOMIC PRIORITIES SET THE CONTEXT FOR DISCUSSIONS ON NATIONAL FUNDING STREAMS – PARTICULARLY IN THE AREAS OF WORKFORCE DEVELOPMENT, TRANSPORT AND HOUSING. TO ACHIEVE THIS GOVERNMENT SHOULD: • Extend the scope of RFA to cover a wider range of economic development funding, including skills and rail transport • Seek further ways to more formally use the priorities agreed in each region as a basis for allocating & targeting public sector investment in that region. This could be achieved in a number of ways: - The RES could be formally negotiated and adopted as government policy, perhaps via some form of examination in public, similar to the RSS - Regional priorities could be formalised as a PSA target to which Whitehall departments signed up - Individual departments could be more formally tasked with aligning their expenditure plans with regional priorities • Continue to ensure that national policies create a conducive environment for regional action on climate change, energy and sustainable consumption and production Workforce Development • Ask the LSC to lead work with partners to develop a regional workforce development plan, consistent with RES priorities, delivered in an integrated way with Business Link and building on sub/city regional priorities and plans • Ask Jobcentre Plus to lead work with partners to develop a long term regional investment plan for tackling worklessness, identifying targeted approaches to priority places/groups and bringing together funding from a wide range of sources, linked to City Employment Strategies as a key implementation vehicle • Allow ESF funding in the regions to be used strategically to focus resources on RSP/RES priorities, including some support for intermediate and higher level skills Transport • Provide a national strategic and integrated transport framework which covers all modes and, in this context, encourage the regions to determine regional transport priorities that support and integrate with this national framework, whilst making available the resources for implementation
• Provide the powers necessary for the delivery of quality public transport networks, particularly bus networks, in each region to support the efficient working of our cities and to help tackle worklessness. This could create more certainty for transport authorities over the medium to long term • Deliver the funding required for the key transport improvements agreed as part of RFA, as being fundamental to the region’s economic development • Deliver capacity improvements to the M6 as soon as practicable (before 2017) Housing • Ensure adequate and long term funding commitments to support all of the region’s Housing Market Renewal Initiatives and maintain the Northwest’s share of the current single housing pot • Ensure that any new organisation which emerges from the review of English Partnerships, the Housing Corporation and wider DCLG functions should be represented on the RHB and required to align its investment and delivery programme with agreed regional priorities • Develop, with Northern Regions, the tools required to better deliver on our housing priorities including regeneration, equity release, the further provision of affordable homes through the effective use of s106 and Single Housing Pot resources, and sustainable owner occupation 2. ENSURE INVESTMENT DECISIONS THAT THE GOVERNMENT IS ABOUT TO TAKE WITHIN EXISTING FUNDING LEVELS SUPPORT NORTHWEST PRIORITIES. TO ACHIEVE THIS GOVERNMENT SHOULD: • Continue to support the development of the University for Cumbria • Ensure the strategic regeneration of West Cumbria by supporting delivery of the West Cumbria Spatial Masterplan • Recognise the potential of Blackpool as the national site for a regional casino. This is essential to the regeneration of Blackpool and is the only site offering a true “resort casino” • Ensure the BBC move to Greater Manchester happens irrespective of the level of the licence fee settlement • Support the creation of the National Nuclear Laboratory headquarters in the Northwest and a National Nuclear Skills Academy • Support the Port of Liverpool’s investment plan and the Harbour Revisions Order for the Seaforth in river terminal which is essential for the international trading position of the region and the UK 3. ENSURE GOVERNANCE FOR A STRONG REGION, CITIES AND LOCALITIES. TO ACHIEVE THIS GOVERNMENT SHOULD: • Support a stronger leadership and delivery role for local authorities, particularly operating across administrative boundaries, and further incentivise collaboration amongst economic partners in each city / sub region within the framework of regional and national priorities • Adopt the principle of assumed competence, with automatic delegation and devolution of decision making and delivery to the most appropriate spatial level • Ensure that any new delivery or governance arrangements for city regions are consistent with the overall regional priorities and strategy as expressed by NWDA and NWRA and through the RES and RSS
• Continue to support the development of the Northern Way Growth Strategy and ensure its priorities focus on areas where inter-regional working can achieve more impact in improving the economic performance of the North 4. DEVELOP EXCELLENCE IN SCIENCE AND INNOVATION. TO ACHIEVE THIS GOVERNMENT SHOULD: • Build on the announcement in the 2006 budget that Daresbury is to become a science and innovation campus - for example continue to support funding for 4GLS and its location at Daresbury and support Daresbury as the new home of the Technology Strategy Board (TSB) • Back proposals from Merseyside and Manchester for the location of NHS Research Centres • Work with the region to identify appropriate (possibly local) fiscal or legal incentives to support our key concentrations of science, innovation and related enterprise • Investigate providing incentives to businesses to work with HEIs and encourage collaboration between HEIs. Government also needs to consider how public funding for HE business support activities can be enhanced, without the diversion of resources from research and teaching budgets • Ensure that spin out companies from HEIs benefit from the regulations associated with SME’s and are not penalised by association with the HEI as a large company • Increase the regional availability of funding for R&D and demonstration projects on low carbon energy supply sources 5. DRIVE BUSINESS SUPPORT SIMPLIFICATION. TO ACHIEVE THIS GOVERNMENT SHOULD: • Continue to promote Business Link as the route to market for all nationally driven business support services • Continue to drive the simplification agenda by ensuring that all business support products are focused on delivering agreed regional and national priorities • Develop a stronger national and cross departmental approach to developing enterprise skills and an enterprise culture, both in schools and adult workforce development • Continue Business Resource Efficiency and Waste minimisation (BREW) support and increase the percentage of this funding channelled through regional arrangements • Enhance financial incentives to businesses to implement energy efficient solutions and energy efficiency opportunities
We are committed to achieving the development of the Northwest economy in a sustainable way and adhering to the shared UK Guiding Principles for Sustainable Development in the UK Sustainable Development Strategy. These principles have been integral to our thinking and therefore support from government required to achieve sustainable development is embedded within these 5 areas above.
We urge government to give serious consideration to all these recommendations as part of CSR 2007.
PRIORITIES FOR GOVERNMENT SUPPORT 1. Aligning National, Regional and Local Priorities With limited public funding, we must ensure it is used in the most efficient way in order to deliver our vision. Whilst decisions and delivery should occur at the most appropriate spatial level, it is essential that they are consistent with the overall regional vision. The region has shown its ability to make tough choices and agree a clear set of spatially focussed priorities, via the prioritised RES, the emerging RSS and the RFA process. The Government has noted these priorities via its acceptance of the RES, but does not currently always reflect these in setting priorities and targets for delivery organisations at all spatial levels. This can result in public investment being inconsistent with, or pulling against, agreed regional priorities. In order for these priorities to be delivered there is a need to increase the extent to which public funding is aligned with these priorities. In order to achieve this we recommend that Govenment should: •
Extend the scope of RFA to cover a wider range of economic development funding, including skills and rail transport
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Seek further ways to more formally use the priorities agreed by each region as a basis for allocating & targeting public sector investment in that region. This is particularly important in relation to workforce development (including worklessness), transport and housing and could be achieved in a number of ways: - The RES could be formally negotiated and adopted as government policy, perhaps via some form of examination in public, similar to the RSS - Regional priorities could be formalised as a PSA target to which Whitehall departments signed up - Individual departments could be more formally tasked with aligning their expenditure plans with regional priorities
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Continue to ensure that national policies create the framework for regional action on climate change, energy and sustainable consumption and production, including robust regional data on CO2
This approach is now possible because of the clear priorities developed within the region, based on strong evidence. It would ensure that both national targets and regional priorities are met, allowing each region the flexibility to meet these in the most appropriate way, whilst taking a holistic approach to economic development. The alignment of public investment in the Northwest is made even more important by the significant reduction of European Structural Funds within the region post 2006. The Northwest must become smarter about the way it uses public funding, and ensure it supports delivery of the region’s priorities. As many bodies delivering in the region are driven by national targets we need Governments help to achieve this. There are three areas where increasing alignment of investment would fundamentally improve delivery and implementation in practice: (a) Workforce Development and Skills The region has two major workforce development issues, high levels of worklessness with people lacking basic skills and a low number of people with higher level skills. Relative to the average for English regions the Northwest has 120,000 more people with no qualifications and 80,000 fewer with degree level qualifications. The region also needs to tackle skill disparities amongst BME communities.
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Government has set out a clear skills policy framework at a national level. However, implementation and delivery is not yet sufficiently responsive to regional variations to enable the Northwest to effectively tackle the gaps it faces at both ends of the skills spectrum, coupled with concentrated pockets of worklessness. It is therefore a key example of an area which would benefit from the Government agreeing priorities for the region and using them as the basis for central government investment decisions. Considerable progress has been made via the Regional Skills Partnership (RSP) and evolution of the LSC’s and Jobcentre Plus’s regional approach, but we believe government should support the region in developing this framework further. Building on the establishment of LSC Regional Boards, with stronger employer and HE engagement, the Northwest partners intend to work towards a stronger regional and sub regional approach to planning for skills priorities based on economic priorities. In order to ensure that this approach is effective, we therefore recommend that Government should: •
Ask the LSC to lead work with partners to develop a regional workforce development plan, consistent with RES priorities, delivered in an integrated way with Business Link and building on sub/city regional priorities and plans
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Ask Jobcentre Plus to lead work with partners to develop a long term regional investment plan for tackling worklessness, identifying targeted approaches to priority places/groups and bringing together funding from a wide range of sources, linked to City Employment Strategies as a key implementation vehicle
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Allow ESF funding in the regions to be used strategically to focus resources on RSP/RES priorities, including some room to support the intermediate, technical, professional and higher level skills needs of the region
This approach will strengthen employer and HE engagement in workforce development and outline the contribution of all partners, and be negotiated and agreed with DfES, DWP and DTI. It would clarify and re-inforce the development of joint plans and programmes, joint accountabilities and joint delivery arrangements for tackling employer skills needs and worklessness. Such plans would recognise that worklessness is best tackled at a very local level and that people need support into employment initially and then ongoing support for their development through training. Although such plans are beginning to emerge, this is only happening via informal working between agencies within the region. Government should underpin this approach by supporting the City Employment Strategy submissions from the Northwest and the freedoms and flexibilities recommended within them. It should also consider the potential for a Level 4 attainment target for the region, in order to drive forward increased productivity and the development of the knowledge economy. It will also be important for Government to: •
Strengthen the ongoing support of individuals once they are back in work to provide them the support they need to ensure that they are able to remain in work and consider designing and delivering a new pre and post employment programme which rewards providers for both employment and skills outcomes
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Continue to ensure the benefit system encourages the unemployed or economically inactive to return to the labour market
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Integrate the lessons learnt from the enhanced Pathways to Work pilots as part of the Northern Way into mainstream LSC/Jobcentre Plus provision
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Set a clear policy on the balance of public/employer funding to tackle basic skills gaps in the resident population when compared to the skills needs of migrant workers
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Consider reallocating some or all of the existing national budgets spent on “second” level 2 qualifications to regions based on regional per capita GVA underperformance. This would support those areas of the country under-going most significant industrial restructuring
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Implement the findings of the Higher Level Skills Pathfinders to encourage better models of private sector investment in training
(b) Improving the Transport Infrastructure Creating the conditions for sustainable growth is vital to the economic success of the region. Transport infrastructure is a key element of conditions for growth and the region has clear priorities for investment in our whole infrastructure, linked to economic priorities. Some of these are focused on using existing infrastructure more effectively, rather than delivering new infrastructure. We recognise that effective transport infrastructure is needed to support strategic links in and out of the region, links within the region and ensuring our major cities (as engines of growth) work effectively. The region must have an effective public transport network to support the economy both by providing high-quality commuting opportunities and to tackle worklessness and deprivation. This includes cross boundary ticketing. The RFA process is clearly a step in the right direction and we recommend that the government extends the scope of the process to include rail investment. The region has started to outline clear transport investment priorities, consistent with our economic, social and environmental policies although the decisions still remain with the Department for Transport and Central Government. We recommend that Government should develop a national strategic and integrated transport fromework which sets out the current strategic transport links and identifies those gaps where extra capacity and/or new infrastructure is required based on economic priorities. We therefore recommend that government should:
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Provide a national strategic and integrated transport framework which covers all modes and, in this context, encourage the regions to determine regional transport priorities that support and integrate with this national framework, whilst making available the resources for implementation
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Provide the powers necessary for the delivery of quality public transport networks, particularly bus networks, in each region to support the efficient working of our cities and to help tackle worklessness. This could create more certainty for transport authorities over the medium to long term
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Deliver the funding required for the key transport improvements agreed as part of RFA, as being fundamental to the region’s economic development
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Deliver capacity improvements to the M6 as soon as practicable (before 2017)
In supporting the delivery of an effective transport network for the region it will also be important for the Government to: •
In the longer term, ensure that revenue generated by any road user charging scheme in the region is made available for re-investment in the region by local authorities and the Highways Agency to allow them to improve the effectiveness of the public transport and highways networks
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Consider improved trans-Pennine rail capacity to support the Northern Way Growth Strategy
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Consider, where strong city / sub regional governance models emerge, enabling these areas to develop structures similar to Transport for London
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Consider how additional rail capacity could be provided between the Northwest and London/Channel Tunnel beyond 2015, when the existing WCML could potentially be at capacity. This should include a detailed investigation as to whether a new high-speed line would deliver the desired outcomes
(c ) Improving the Housing Infrastructure The region has set very clear housing priorities in the Regional Housing Strategy, via the Regional Housing Board (RHB). These priorities support the economic priorities of the region in the RES. In order to ensure effective delivery though, all investment in housing needs to be aligned to these priorities. We therefore recommend that government should: •
Ensure adequate and long term funding commitments to support all of the region’s Housing Market Renewal Initiatives and maintain the Northwest’s share of the current single housing pot
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Ensure that any new organisation which emerges from the review of English Partnerships, the Housing Corporation and wider DCLG functions should be represented on the RHB and required to align its investment and delivery programme with agreed regional priorities
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Develop, with Northern Regions, the tools required to better deliver on our housing priorities including regeneration, equity release, the further provision of affordable homes through the effective use of s106 and Single Housing Pot resources, and sustainable owner occupation
2. Supporting Northwest priorities within investment decisions the Government is about to take Within existing levels of public expenditure the government is about to make a number of decisions which could support Northwest priorities. These include the regeneration of West Cumbria and Blackpool and fully utilising key growth assets (including developing the digital and creative sector, the energy and environmental technologies sector, the HE and science base and our ports/airports).
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We therefore request that government: •
Continue to support the development of the University for Cumbria
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Ensure the strategic regeneration of West Cumbria by supporting delivery of the West Cumbria Spatial Masterplan
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Recognise the potential of Blackpool as the national site for a regional casino. This is essential to the regeneration of Blackpool and is the only site offering a true “resort casino”
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Ensure the BBC move to Greater Manchester happens irrespective of the level of the licence fee settlement
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Support the creation of the National Nuclear Laboratory headquarters in the Northwest and a National Nuclear Skills Academy.
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Support the Port of Liverpool’s investment plan and the Harbour Revisions Order for the Seaforth in river terminal which is essential for the international trading position of the region and the UK
These government decisions on funding are particularly important given the significant reduction of European Structural Funds in the region post 2006, which could slow progress in developing the regional economy. There is an important related issue concerning the long term viability of capital programmes particularly those relating to land regeneration and public realm enhancement - both of which are critical to this region. Greater flexibility is required whithin public grant programmes to provide endowment funding for the long-term management of public realm and environmental infrastructure.
3. Governance for a strong region, sub regions, cities and localities The region has set clear spatial priorities through the RES and emerging RSS. The Northwest is clear about the priorities for its major cities as growth drivers, its towns and rural areas, including those areas remote from existing growth, and pockets of deprivation and worklessness within growth areas. The region has developed strong working between organisations at a regional, sub-regional, city and local level. These relationships are essential for a strong economy. It is vital to ensure that all activity in the region is aligned with our economic priorities, and delivered at the most effective spatial level, recognising that each level has an appropriate role in delivery.
We therefore recommend that government:
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Support a stronger leadership and delivery role for local authorities, particularly operating across administrative boundaries, and further incentivise collaboration amongst economic partners in each city / sub region within the framework of regional and national priorities
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Adopt the principle of assumed competence with automatic delegation and devolution of decision making and delivery to the most appropriate spatial level
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Ensure that any new delivery or governance arrangements for city regions are consistent with the overall regional priorities and strategy as expressed by NWDA and NWRA and through the RES and RSS
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Continue to support the development of the Northern Way Growth Strategy and ensure its priorities focus on areas where inter-regional working can maximise the economic performance of the North
4. Developing Science / Innovation in the region The science and innovation base of the region is identified in the RES as a key asset, which we need to use effectively to support the growth of the knowledge economy. Many science priorities are being taken forward via the Northern Way and the advice to government below is consistent with that of the Northern Way. The Northwest’s approach to science and innovation is based on priorities set by the Science Council within the Northwest Science Strategy, which includes focus on science based clusters and the development of major research concentrations and knowledge nuclei. These include Manchester Knowledge Capital/Science City, Daresbury, Alderley Park, Liverpool Science Park, Lancaster Infolab21 and Environment Centre and NHS research programmes. The concentration of excellence in Manchester, especially the Oxford Road corridor, is the largest alternative concentration of science excellence outside the South East. The region also has a concentration of expertise in research and innovative services/engineering in the field of civil nuclear and decommissioning related activity in West Cumbria. Business in the region does not yet make best use of PHD & higher level skills developed within Northwest HEI’s. Stimulating further process and product innovation and creating enterprise is fundamental to ensuring that the region benefits from and retains the high level skills developed here. The region can achieve a considerable amount to maximise its science and innovation base (outlined under the Innovation driver section) and continue to grow its centres of excellence. Publicly procured R&D needs to recognise the assets within these centres of excellence. To support our science and innovation agenda we therefore need the government to: •
Build on the announcement in the 2006 budget that Daresbury is to become a science and innovation campus - for example continue to support funding for 4GLS and its location at Daresbury and support Daresbury as the new home of the Technology Strategy Board (TSB). This will harness the science base in the region and support a higher added value economy
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Back proposals from Merseyside and Manchester for the location of NHS Research Centres
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Work with the region to identify appropriate (possibly local) fiscal or legal incentives to support our key concentrations of science, innovation and related enterprise
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Investigate providing incentives to businesses to work with HEIs and encourage collaboration between HEIs. Government also needs to consider how public funding for HE business support activities can be enhanced, without the diversion of resources from the research and teaching budgets
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Ensure that spin out companies from HEIs benefit from the regulations associated with SME’s and are not penalised by association with the HEI as a large company
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Increase the regional availability of funding for R&D and demonstration projects on low carbon energy supply sources
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5. Improving Business Support via Business Link Driving up levels of enterprise and productivity are a key part of the region’s vision, centred around the need to grow faster high value and productive business, and also to raise overall business density in geographies or sectors of the economy. We are setting up a new Business Link service within the region and making significant inroads in rationalising business support via Business Link to help drive up productivity levels. We need to ensure our new service will be the prime route for engagement with business for public sector funders, and to ensure businesses are clear where they should go to access business support. In addition we are working with sub-regional partners to understand local and sectoral enterprise issues better and to deliver targeted responses at the appropriate level. This will be achieved via a variety of funding sources including LEGI where appropriate. We need government to support these moves and therefore recommend that government: •
Continue to promote Business Link as the route to market for all nationally driven business support services
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Continue to drive the simplification agenda by ensuring that all business support products are focused on delivering agreed regional priorities
•
Develop a stronger national and cross departmental approach to developing enterprise skills and an enterprise culture, both in schools and adult workforce development
•
Continue Business Resource Efficiency and Waste minimisation (BREW) support and increase the percentage of this funding channelled through regional arrangements. This is essential to help business innovation and environmental efficiency, ensuring sustainable growth in productivity amongst our businesses
•
Enhance financial incentives to businesses to implement energy efficient solutions and energy efficiency opportunities
A number of these recommendations relate to environmental efficiency as we have considerable opportunities as well as challenges in this respect, with an environmental economy sector currently worth £2.6bn to the region's GVA. We need to harness the full potential of this sector by maximising global markets. The region is also a large user of energy with a large ecological footprint per person. We need to consider alternative forms of energy and energy efficiency. The region also has a large nuclear sector and is well placed to capitalise on opportunities from nuclear de-commissioning, nuclear waste and any future UK nuclear capacity requirements, should this become national policy. Finally, ongoing government commitment to better regulation is an issue which can positively influence all employers and the enterprise culture within the region.
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MAP OF ENGLAND’S NORTHWEST
Carlisle
Penrith
Workington
GVA Growth (1998-2003) 8.5
Whitehaven
1 2
CUMBRIA
8.6 - 19.7 19.8 - 26.4 26.5 - 31.3
Kendal
31.4 - 37.0 NUTS3 areas 1 West Cumbria 2 East Cumbria 3 1 Lancashire CC
Barrow-in-Furness
4 1 Blackpool
Lancaster
1 Blackburn with Darwen 5 1 Sefton 6 7 1 North Manchester 3
8 1 Liverpool 1 9 East Merseyside
LANCASHIRE
Blackpool
10 1 Halton & Warrington
4
Burnley
111 South Manchester
Preston
1 Wirral 12
Blackburn
1 Cheshire CC 13
5 Southport
Motorways Network Rail Primary Routes
7 Bolton Wigan
6
MERSEYSIDE Birkenhead
GREATER MANCHESTER Salford
St Helens
Liverpool 9 8
10
12
Bury
Warrington
Rochdale
Oldham Ashton-under-Lyne
Manchester 11
Stockport
Runcorn
Macclesfield
CHESHIRE Chester
13 Crewe
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THE EVIDENCE A full and comprehensive evidence base on the regional economy was prepared in 2005 for the RES update. This evidence base, which is fully accessible on the internet at www.nwda.co.uk, drew a number of important conclusions which were instrumental in developing the region’s vision. These have been further supplemented by evidence compiled as part of the review of the RSS and RHS, as well as the RFA exercise.
Key messages from this evidence base in relation to GVA shows that: •
Performance of the regional economy in the period 2000-2003 is better than the England average, with 18% growth in GVA (compared to 16% in England), as well as higher growth in the number of firms, the number of employees and the employment rate
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Despite this growth, the region still has a GVA output gap of £13bn compared with the England average, based on the size of the population
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£3bn of this GVA gap is accounted for by fewer people working, partly due to the age structure, but mainly due to lower employment rates than England, especially among men. Specifically:
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80,000 fewer people working, concentrated in just 6 local authority districts, often close to centres of growth
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120,000 more people with no qualifications
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9% of the working age population (400,000 people) on Incapacity Benefit
£10bn of this GVA gap is accounted for by lower “productivity” (GVA per employee) in the service sector. This is partly accounted for by lower regional prices and lower hours worked, but mainly accounted for by a different mix in terms of the types of work done in the region. Specifically: -
80,000 fewer people with degree-level qualifications
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90,000 fewer people working in the “knowledge economy”
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18% (38,000) fewer companies than the England average
Other key performance data reveals that:
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There has been rapid growth in our major cities, particularly Liverpool and Manchester, but with strong performance in other key regional towns and cities
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The North West contains some of the (NUTS3) areas in England growing fastest (for example East Merseyside, Sefton, Greater Manchester South and Halton and Warrington) and some of the slowest (West Cumbria and Blackburn with Darwen) over the period 2000 to 2003
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Many parts of the region are close to centres of growth, however, there are significant differences in growth rates between parts of the same sub-region such as Greater Manchester and Lancashire
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Rural businesses account for 40% of the business stock, 23% of regional GVA and 25% of employment
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The region still has the third and fourth poorest NUTS2 sub regions in England (Merseyside 73% and Cumbria 76%) as well as the fifth most prosperous (Cheshire 109%)
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Weaknesses in the Housing market have been recognised with four of the nine Housing Market Renewal Areas in England, being in the North West plus recognition of the situation in West Cumbria and Furness. Equally affordability is a problem for parts of the whole region as house prices and income differentials grow. RSS seeks to support the RHS in responding to these challenges
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The region has the highest trunk road congestion of any region outside London
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Between 1995/96 and 2004/05 Northwest rail patronage grew by 52%
HOW THE ADVICE WAS PRODUCED The advice in this document is entirely consistent with, draws on, and reinforces, the advice and strategic priorities of the region contained within: •
The North West’s RFA advice that was submitted to the Treasury on 31st January (especially policy recommendations regarding transport and housing)
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The Regional Economic Strategy, RSS, RHS, Regional Statement of Skills Priorities and emerging CRDPs
It also reinforces many of the points in the responses to the Sub National Review by the English Regions Network, the English Regional Development Agencies and the Northern Way The RES and RSS were both subject to a full sustainability appraisal and there was an assessment of the sustainability impacts of the RFA advice. We are therefore confident that the advice in this document will lead to sustainable growth in the region, and a draft of this advice was subject to a sustainability appraisal. Following this greater acknowledgement has been given to the Government priorities of sustainable consumption and production and the need to live within environmental limits. NWDA and NWRA have consulted widely in putting this advice together. In particular the RES Advisory Group (25 key regional partners with responsibilities for economic development and regeneration) and the NWRA Executive Board members (21 key political leaders and stakeholder representatives) have been crucial in shaping the advice. The advice has been formally considered and endorsed by the NWDA Board and NWRA Executive. GONW have been fully involved at all stages of the process.
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ANNEX 1 THE DRIVERS OF PRODUCTIVITY Enterprise What the region needs to do to grow the economy in a sustainable way The region has lower levels of enterprise than would be expected based on the size of the population (see evidence section above). The RES identifies key actions to address this enterprise gap in a sustainable way, including: •
Transform Business Link to become a key enabler of high productivity and enterprise in the region
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Ensure business start up and survival provision is targeted at high growth knowledge based start ups, underperforming groups and underperforming areas
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Focus business support on priority sectors, potential high growth knowledge based companies, medium sized companies (M-businesses) and businesses in the rural economy
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Support priority sectors (biomedical; energy and environmental technologies; advanced engineering and materials; food and drink; digital and creative industries; business and professional services) to develop higher value activity, improve productivity and identify future growth opportunities from converging markets/technologies
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Exploit opportunities from creating a Media Enterprise Zone linked to the BBC relocation
RES Target: By 2009 to raise the firm formation rate to 21,000 per annum and in the longer term to have the same firm formation rate and business stock as the England average Over the period 2006-2009, achieve GVA growth above the England average, and in the longer term to close the GVA/head gap with the England average What the region can achieve itself between 2008-11 We will have made significant inroads in rationalising business support via Business Link in the region. We can achieve a position where:
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Our new Business Link service will be the prime route for engagement with business for public sector funders in the region. We will be dealing with at least half of the region’s existing businesses, and we will have supported 2-3 times as many companies to enter change programmes than in 2005-06. The resulting increase in GVA will be supporting the above average GVA growth in the North West
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We have developed a clear regional delivery model which is responsive to local needs and opportunities and involves the Business Link service, specialist providers and the private sector
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There has been a step change in quality of support and share best practice between providers
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Businesses are clear where they should go to access business support, and the simplified demand-led portfolio of products and services is proving attractive to businesses in the region. The private sector solutions providers are more closely integrated with the business support infrastructure of the region
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We have coordinated resources for start up support and survival and improved value for money by reducing duplication of support services and making them customer needs-led
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Business start up and support services are focused on priority sectors, as well as supporting high growth businesses and disadvantaged groups, including social enterprise, in line with RES priorities
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The proposed NW Enterprise Forum has been established to coordinate knowledge and strategic actions on enterprise
Skills What the region needs to do to grow the economy in a sustainable way The region has more people with no qualifications and fewer people with graduate qualifications than you would expect based on the size of the population (see evidence section above). The RES identifies key actions to address these skills gaps including: •
Deliver the basic skills required by employers for those without qualifications
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Deliver the skills required by priority sectors
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Deliver the skills required to maximise the economic impact of key growth opportunities
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Develop skills in the current workforce focused on intermediate and higher level skills and linkages to backfill vacancies created as people progress to higher level jobs, from workless people
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Develop world class management/leadership and corporate social responsibility/ environmental management skills
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Develop educational attainment, vocational and workplace learning opportunities, progression routes between school/FE/HE, and high quality careers information, focused on the skills of 1419 year olds
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Develop the role of HE in contributing to the transformation of the economy
RES Target:
By 2009, reduce the number of working age people with no qualifications by 80,000 and ensure no district has more than 29% with no qualifications. In the longer term to have the same proportion of the population with no qualifications as the England average, and to eliminate major sub-regional variations and variations between key groups By 2009, increase the number of people in the workforce with graduate qualifications by 120,000 in order to meet the England average. In the longer term to have a higher proportion of people in the workforce with graduate qualifications than the England average
What the region can achieve itself between 2008-11 Through the key agencies who form the Regional Skills Partnership we will: •
Take a targeted approach to delivering the basic skills needs and skills needs of excluded groups in accordance with RES priorities
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Offer employers an integrated service bringing together business support and skills brokerage
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Ensure that this integrated business support and skills brokerage service develops strong links with services provided directly to employers by others members of the RSP e.g. Jobcentre Plus and Sector Skills Councils
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Place more emphasis on increasing employer investment in skills, and the ability to demonstrate the impact of this investment
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More effectively co-ordinate investment in education, skills and employment facilities across the region
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Increase the proportion of young people with the skills and qualifications needed for employment and fostering progressions to Higher Education
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Equip adults with the skills required for employability, including the Skills for Life of literacy, language and numeracy
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Reduce the percentage of adults in the workforce without a level 2 qualification
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Address employers’ skills needs by equipping individuals with the level 3 and 4 skills required within the economy, particularly in key regional sectors
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Tackle cross-sectoral leadership and management gaps
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Develop innovation and enterprise skills
The RSP is currently revising its skills priorities for 2007-2010. This includes a review of the evidence base for skills development in line with the RES. The revised priorities to be published in the winter of 2006/7, and will establish the regional commissioning framework for European ESF funding and for the first time, will include specific sub-regional focus.
Innovation What the region needs to do to grow the economy in a sustainable way Although statistics on innovation are somewhat poor, it appears that the region has lower levels of innovation than other English regions. It had the second lowest proportion of “innovation active” firms over the period 1998-2000 and overall R&D per capita is 15% lower than the England average. The Northwest attracts less than 4% of government (non HEI) R&D. The RES identifies key actions to address this innovation gap including: •
Enable businesses to understand and implement business process and product/service innovation, both internally and through their supply chains
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Enhance Business/Higher Education Institution (HEI) collaboration and knowledge transfer
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Implement the Northwest Science Strategy
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Support the development of major research concentrations and knowledge nuclei
RES Target:
Over the period 2006-2009, achieve GVA growth above the England average, and in the longer term to close the GVA/head gap with the England average.
What the region can achieve itself between 2008-11 •
Build a legacy in Innovation through support programs for SME’s
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Raise awareness and competency levels of regional organisations to successfully access European and national funding competitions.
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Continue to define regional science innovation priorities and link these to national priorities through the Science Council and the regional science strategy.
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Facilitate business networking and knowledge transfer through regional cluster organisations.
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Develop infrastructure including science and innovation park provision.
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Catalyse added value activities through in depth understanding of regional business needs and knowledge strengths.
Investment What the region needs to do to grow the economy in a sustainable way Overall levels of investment are lower than the England average, partly due a historic static population. Business capital investment per head of population is also 19% below the England average. As the RES, RSS and RFA all identify housing and transport investment are critical to economic success.
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Key actions to address these issues including: •
Capitalise on the strengths and key assets of the cities of Manchester, Liverpool and Preston as key drivers for city regional growth
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Develop plans to capitalise on ongoing private sector investment around Crewe, Chester, Warrington, Lancaster and Carlisle
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Develop and implement integrated economic plans setting out a new economic future for East Lancashire, Blackpool, Barrow and West Cumbria
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Implement plans to ensure ongoing growth in the rural economy as part of the Regional Rural Delivery Framework
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Address housing market restructuring whilst responding to the growing affordable housing problem by building more decent, well designed, energy efficient homes in balanced and sustainable communities
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Improving the quality and provision of public transport, transport investment and network management
RES Target:
Over the period 2006-2009, achieve GVA growth above the England average, and in the longer term to close the GVA/head gap with the England average By 2009, reduce the number of areas in the worst 5% deprived, nationally. By 2020, to have less than 20% of people with a household income of less than 60% of the GB median
What the region can achieve itself between 2008-11 Transport Whilst the North West has an extensive motorway, dual-carriageway and rail network, parts of these networks are now experiencing regular congestion during the peaks which are now extending in duration. Journey-time reliability is of particular concern on the road network, particularly for business, industry and road based public transport. The region will take a number of key actions to address some of these issues: •
Manage the regional highway and public transport networks in a way which reduces congestion, improves journey-time reliability and contributes towards tackling climate change
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Improve the linkages between spatial and transport planning to better align economic and social objectives with the capacity of the transport network
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Making better use of developer contribution and seeking to ensure that maximum benefit for the transport networks can be delivered through this process
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Monitor the delivery of the key transport improvements outlined in the Region’s advice to government on transport investment and management
Housing RFA reinforced key housing spending priorities for the region and the NWRA led Regional Housing Board (RHB) provides the effective body to ensure alignment and decisions are made in accordance with these priorities: •
The first priority for the region is delivering urban renaissance through Housing Market Renewal Pathfinders and other schemes. Housing Market Renewal is of strategic importance to the region for all partners and strategies. Its continuing importance in strengthening the residential offer and in supporting economic growth in the North West will not be underestimated 14
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The second priority for the region is the need to provide affordable homes to maintain balanced and sustainable communities. The need to provide more affordable housing is a major challenge, with a growing mismatch between house prices and income levels, not just in high demand areas but right across the region
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RES, RSS and RHS recognise that by creating better places in which to live, with a higher quality housing offer in better quality environments – with access to services, infrastructure and jobs - creates the right environment for attracting and retaining investment, and supports the region’s economic growth ambitions
Economic Development •
Ensure economic development action plans for each sub each are consistent with the RES and RSS
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Develop policy solutions and or incentives that will increase the level of private business capital investment
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Maximise the levels of European Income through the new structural funds programmes to support the implementation of the RES
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Support and take forward major private sector initiatives for development on strategic regional sites including inward investment
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Support planning applications and other consents for private sector investment in airports, key intermodal freight terminals and ports
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Deliver plans to maximise the opportunities from Liverpool Capital of Culture 2008
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Improve the product associated with Tourism Attack Brands
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Develop the economic benefits of the Natural Environment, including implementing the Lake District Economic Futures Policy Statement
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Invest in quality public realm, green space and environmental quality to encourage the conditions for private sector investment
Competition What the region needs to do to grow the economy in a sustainable way The region is only one of 3 regions’ that contribute positively to the UK balance of trade. GVA data shows that the manufacturing sector in the region is highly competitive, but that the gap lies in the service sector. Evidence suggests that more (service sector) companies are serving a local or regional market than in other parts of the country and therefore less subject to competitive pressures. The RES identifies key actions to address these issues including: •
Raise companies’ awareness about global opportunities/risks to assist them in competing internationally
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Provide specialist business support to improve the region’s exporting performance with an emphasis on helping more companies export
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Target existing business finance at growth potential companies, and address key business finance gaps (small loans to micro-businesses and £0.5-£2million loans and equity for other businesses)
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Continue to support the competitive position of the region’s manufacturing sector, and the move to advanced manufacturing
RES Target:
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Over the period 2006-2009, achieve GVA growth above the England average, and in the longer term to close the GVA/head gap with the England average
What the region can achieve itself between 2008-11 •
Develop and deliver a new Internationalisation Strategy to maximise the opportunities for the regional economy from the global economy
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Strengthen the sources of business finance available within the region
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Support companies to use and harness the benefits of ICT and digital technologies to become more competitive
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Strengthen the representation of the region in Brussels, as a key link for business to the European Union
Employment What the region needs to do to grow the economy in a sustainable way The region has lower employment rates than other parts of the country, particularly in certain areas and amongst men and key deprived groups (for example the employment rate of the disabled and some ethnic minority communities is 6% and 8% points lower than the England average respectively). In addition although the region has been creating many jobs recently these have mainly been part time lower level jobs, which is not sustainable in the longer term. The RES identifies key actions to address this employment gap including: •
Develop sectors with large and widespread employment as key to enabling people from across the region with varying skills levels to access employment and (re-)enter the labour market
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Develop and encourage employment creation in or near deprived areas
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Deliver support to improve people’s prospects of getting a job (employability activities) and reduce the high level of Incapacity Benefit claimants
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Develop and deliver intensive support for those groups with low employment rates compared to England
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Develop job brokerage to link employers with vacancies and workless individuals
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Deliver the Regional Equality and Diversity Strategy
RES Target:
By 2009, create 150,000 net new jobs, 80,000 of which should be in ‘knowledge’ occupations to bring the proportion of people working in these occupations up to the England average. In the longer term to have a higher proportion of people in ‘knowledge’ occupations than the England average By 2009, increase the number of people in the workforce by 83,000 in order to meet the England average employment rate, and ensure no district has an employment rate less than 68%. By 2020, to achieve a regional employment rate of 80%, and eliminate major sub-regional variations and variations between key groups
What the region can achieve itself between 2008-11 •
Tackle worklessness by linking people, jobs and training
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Better link sustainable economic development opportunities to key groups and areas
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Support Jobcentre Plus in delivering the Pathways to Work Programme
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Utilise Northern Way Employment projects to test enhancements, innovation and deliver of services to people on Incapacity Benefit
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Northwest Regional Development Agency PO Box 37 Renaissance House Centre Park Warrington WA1 1XB Tel: +44 (0)1925 400 100 Fax: +44 (0)1925 400 400 e-mail: information@nwda.co.uk
www.nwda.co.uk www.englandsnorthwest.com
North West Regional Assembly Wigan Investment Centre Waterside Drive Wigan WN3 5BA Tel: +44 (0)1942 737916 e-mail: enquiries@nwra.gov.uk
www.nwra.gov.uk
Contact Patrick White, Director of Policy (NWDA) Steve Barwick, Director of Scrutiny, Policy and European Directorate (NWRA)
Designed and Produced by the Northwest Regional Development Agency Marketing Department
September 2006 NWDA G9-28