http://www.nwda.co.uk/PDF/IPA_Report

Independent Performance Assessment

HELPING THE NATION SPEND WISELY The National Audit Office is the leading independent body responsible for examining the implementation of government activities in order to assess performance, identify good practice and suggest ways in which public services could be improved.

The National Audit Office’s Regions, Regeneration and Renewal Team covers the work of the Department for Communities and Local Government, the Housing Corporation, English Partnerships and the Regional Development Agencies.

The National Audit Office’s work saves the taxpayer millions of pounds every year, at least £8 for every £1 spent running the Office.

For further information please contact: David Corner Director, Room A378 National Audit Office 157-197 Buckingham Palace Road, Victoria, London, SW1W 9SP 020 7798 7529 Email: david.corner@nao.gsi.gov.uk

June 2006

North West Development Agency (NWDA) CONTENTS

PAGE

Preface

2

Executive Summary

3

The context for NWDA’s activities

5

Ambition

7

Prioritisation

9

Capacity

11

Performance management

13

Achievement

15

TECHNICAL ANNEX

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months. Government Offices, as the Government’s representatives in the regions, will support the RDA in their region in its continuous improvement and will alert departments and Ministers to any issues of concern that may arise.

Preface

1.1.

The National Audit Office (NAO) has undertaken this Independent Performance Assessment of the North West Development Agency (NWDA) at the request of the Department of Trade and Industry (DTI), which is the sponsor department for Regional Development Agencies.

NWDA is one of nine Regional Development Agencies established under the Regional Development Agencies Act 1998 to further regional economic development, promote business efficiency and competitiveness, increase employment and the skills base, and contribute to regional environmental sustainability.

1.6.

We would like to thank the Chairman, Board members, Chief Executive, Executive Management Team, and the NWDA’s staff for their help and assistance during this Independent Performance Assessment. We would also like to thank the numerous stakeholders and partners who helped us. We are indebted to Duncan Straughan, Executive Director at the South East of England Development Agency, who gave valuable time to serve on our team.

1.2.

The English Regional Development Agencies vary significantly in size, geography, population, and economy. Each Agency operates within a unique economic environment reflecting the strengths, activities, infrastructure, and character of the region. Regional Development Agencies face diverse challenges with different budgets, so each needs to respond appropriately to its specific circumstances.

1.3.

However, all Regional Development Agencies face a number of common challenges, including balancing the interests of the region with national policy requirements, managing the conflicting demands of different regional stakeholders, looking outwards to promote the region while staying focused on what is happening inside, and responding to new duties imposed by central government from time to time.

The Independent Performance Assessment will assess the organisational performance of each Regional Development Agency as a strategic driver of their region’s economic development and in their lead role with central government department’s representing all Regional Development Agencies.

1.4.

NWDA will review its improvement plan in the light of our assessment report.

The revised plan should be forwarded to the NAO within one month of the date of publication. The NAO will then consider the extent to which the plan addresses the areas for improvement identified in the assessment report and provide the RDA with advice. NWDA will then formally adopt the plan.

1.5.

As part of the IPA process, each RDA will include progress in implementing the improvement plan in its regular performance reports that it puts to its Board, which are shared with Government and are placed in the public domain every six 2

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stages of delivery, and a number of key building blocks are in place to sustain its achievements in the future.

Executive Summary

2.4.

NWDA has led on the review of the North West RES during the last 12 months and was the first RDA to receive ministerial endorsement. The RES consultation process has been very strong and over 6000 people were involved in the consultation process. A RES Advisory group comprising of 25 partners was developed and the group were also involved in the drafting of the report. All the partners from the RES Advisory group signed up to the RES.

2.1.

The North West Development Agency (NWDA) has scored 20 points out of a possible maximum of 24. This is equivalent to performing strongly overall, as set out below. The Technical Annex describes the methodology for arriving at this assessment. Section 3 sets out the context to NWDA’s activities while sections 4 to 8 provide more detail about the five themes.

Theme

Assessment

Ambition

Performing strongly

4

Prioritisation

Performing strongly

4

Capacity

Performing well

3

Performance Management

Performing well

3

Achievement (doubled) Performing well Overall Score

Performing strongly

2.5.

There is a shared vision and ambition for the region that is well developed. These are about making a difference to the economy of a diverse region. There is a robust understanding of the economic conditions of the region which has been developed through the RES evidence base. There is good leadership both within the Agency and across the region at the Executive level; although amongst some partners there is a perception that the role and responsibilities of the Executives and Non Executive Chairman and Board is not clear. The NWDA recognises it needs to improve its engagement and general communication with sub regional partnerships and stakeholders to ensure it is not seen as merely telling them what it has done or intends to do, but includes them in the process.

Score

3 (6)

2.6.

Strong progress has been made in agreeing and identifying the priorities for the region. There are 122 actions identified in the RES and 45 transformational priorities, of which NWDA has responsibility for 11. The RES has identified lead partners for each of the actions and this is a significant improvement from earlier strategies.

20

2.7.

NWDA is good at painting a big picture of what it wants to achieve and how it is working with its partners to deliver this. It has clear ambitions that are understood. The Agency has set a very clear budget allocation through the development of its Strategic Investment Plan (SIP) and this gives clear emphasis to delivering the NWDA priorities.

However the SIP could be communicated more structurally to partners and stakeholders.

2.2.

NWDA has prepared a sound selfassessment of its activities and involved a number of stakeholders in its preparation. The NWDA’s assessment is reasonably balanced and they have been self-critical and picked up on a number of areas for improvements as well as citing some strong achievements. The nature of the selfassessment has also been commented upon by central government departments.

2.8.

The NWDA appears to be working at full stretch and will have difficulty taking on any new challenges until it completes its reorganisation and resolves some capacity issues. It does not currently have a clear workforce plan/skills audit linked to its priorities although this is being planned. Despite a feeling of constant reorganisation amongst staff and partners, the quality and commitment of staff is very high and this, along with the leadership shown

2.3.

NWDA has a clear vision of what it wants to achieve as an organisation and works in partnership with others to achieve this. It has a track record of success in many areas and has good and effective managerial leadership to drive it forward.

NWDA has recognised that it cannot stand still and needs to continually improve. It has embarked on a change programme that is in early 3

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by the Chief Executive helps to keep the organisation moving. Whilst there are training and development programmes in place and good internal communication mechanisms, a revised management training process is essential and this is being addressed. Financial control is now strong, after some major issues 3 years ago (which are covered later), and there is clear evidence of good corporate governance.

2.9.

There are improvements that need to be made in the way NWDA manages its performance, although good progress is being made. The NWDA has a good track record of achieving outputs and there is regular reporting of performance to board and government, but some partners feel that communication is still not as good as it could be.

There is history of poor communication around the appraisal process which is beginning to be addressed. Partners had not been kept informed of where projects were in the appraisal process and projects could take months to approve. This led to a presumption with partners that the RDA had something to hide. The roll-out of the Systems and Process Improvement Programme (SAPIP) to partners will help to address this and progress is already being made. Although the NWDA has developed a strong pre-appraisal process to stop unsuitable projects or initiatives much earlier in the process, this has not been communicated to all partners. There is a feeling with partners that contracts could be much clearer to specify expected timescales on monitoring reports.

2.10. Some early evaluation work has been done at a project level, and more recently on Rural Regeneration and Manufacturing activities. The lack of evaluation on projects and programmes means that appraisals and resultant approvals are made without the benefits of lessons learnt. Whilst the RDA is now working with the DTI Evaluation Framework and submitted initial evidence in March, the Agency does need to build on the evaluation process which has been embedded as quickly as possible to improve its programme of continuous learning and improvement.

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3.7.

NWDA is the largest of the nine Regional Development Agencies across England with a budget of £450.3m (gross) (2005/06) and 380 staff.

The Agency’s overheads are approximately £50m per annum (9%) which is comparable with other RDAs. The region is estimated to receive about £55bn per annum of public resource and of this, £24bn is for economic development and regeneration through the budgets of the RDA, LSC, Higher and Further Education, Neighbourhood renewal, rural, transport and economy related social protection.

The context for NWDA’s activities

3.1 The North West of England is a diverse region with an £98bn economy and 6.8 million head of population. It is home to 230,000 firms and has a predominance of small-medium enterprises. The region has two major cities, Liverpool and Manchester, large urban settlements in Blackpool and Preston (which are part of a city region) but also has a large rural hinterland in Cumbria, Lancashire and parts of Cheshire.

3.8.

Like every Regional Development Agency, NWDA has to respond to a variety of challenges, including balancing the economic priorities of the region with national policy requirements, managing the conflicting demands of different regional stakeholders, looking outwards to promote the region while staying focused on what is happening inside, and responding to new duties imposed by central government from time to time. All these challenges are common to Regional Development Agencies; the vital question is how well each responds to them.

3.2.

The region is home to the largest media hub outside of London (Manchester), the largest concentration of advanced manufacturing and chemicals production in the UK (Lancashire and Cheshire) and to one of Europe’s leading national parks (The Lake District). The rural economy accounts for 23% of the regions GVA and 40% of all firms.

3.3.

The region has been through a major period of restructuring and underperformance and despite concerted efforts in 2000-2003 when it grew faster than England (GVA); the region is still not contributing its full potential to the UK economy. The gross value added (GVA) per head is 12% lower than the England average, resulting in an output gap of £13bn.

3.9.

The NWDA has gone through considerable reorganisation over the past couple of years. The current Chairman appointed the Chief Executive in 2003 in a period where the RDAs internal processes and controls were not fit for purpose of control.

At that time the RDA did not fully understand the level of commitments it had entered into, there were inadequate financial management controls, staff were not fully aware of the role they should be playing, and the perception amongst partners was that the Agency did not understand its role or remit. Both the Chairman and Chief Executive have subsequently appointed a new Executive management team that have steadied the Agency and allowed it to adopt robust internal controls and procedures to ensure accurate and timely management information and data is produced. Some of the new processes have meant that the Agency has had to deal with areas of conflict with some partners, but these have been handled robustly yet sensitively in order to retain good partnership working

3.4.

Despite a net 150,000 new jobs, the region compared to England as a whole has; 80,000 fewer people working, 120,000 more people with no qualifications, 80,000 fewer people with degree level qualifications, 90,000 fewer people working in the knowledge economy and 38,000 fewer companies.

3.5.

The region has world class centres of excellence in 14 Higher Education Institutions which is 11% of the England total. It is also home to internationally competitive sectors in biomedical, advanced engineering and materials, energy and environmental technologies, food, creative and digital industries, business and professional services.

3.10. In response to the Deputy Prime Ministers request in 2002, the three northern RDAs of Yorkshire Forward, One North East and North West Development Agency have come together to unlock the potential for faster economic growth and bridge the £29bn output gap between the north and the rest of the UK. In order to meet the challenge, the three RDAs have set themselves an ambitious vision which will see the achievement of national UK average GVA per head within 25

3.6.

The region is served by the largest motorway network outside of London, and is also second behind London in congestion. The region has a strong tourism industry worth £3bn with 18 million visits a year. The region also has major international gateways through both Manchester and Liverpool John Lennon Airports and through the docks at Liverpool.

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years.

The three RDAs have developed the “Northern Way growth strategy� which is now published and they have a steering group which is chaired by Neville Chamberlain (a former NWDA Board member) and has representatives from all three RDAs (at Chair level) and also from government departments and other interested bodies.

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The majority of partners interviewed expressed that their initial feedback on the RES was taken into account in the submitted document. The final document provides a good overview of the issues affecting the north-west region and recognises that these actions are appropriate for the region.

Ambition

Key Sources: Regional Economic Strategy, Regional Housing Strategy, Regional Spatial Strategy and Regional Funding Allocations paper

4.4.

Furthermore, to ensure the document was owned and supported by all partners, NWDA set up a writing sub group, in which the RES Advisory group partners were involved. This has led to a regionally owned report being produced, and all 25 partners signed the final submission that went to Ministers in January 2006.

NWDA is performing strongly in terms of ambition.

(SCORE 4)

•

Through the Regional Economic Strategy, has NWDA set clear and challenging ambitions for the region?

•

Are ambitions based on a shared understanding amongst NWDA and partner organisations of regional needs and opportunities?

•

Does NWDA provide strategic economic leadership across the region and ensure effective partnership working?

•

Does NWDA, with its partners, have an integrated and cohesive approach to improving regional economic performance?

4.5.

The RES sets out 21 objectives under five themed chapters which it believes are necessary to achieve sustainable economic growth – Business, Skills and Education, People and Jobs, Infrastructure and Quality of Life. The NWDA undertook research to collect detailed statistical evidence across all areas and sectors to gain a sound understanding of the whole region.

4.6.

To achieve these key objectives the RES Advisory Group had identified 122 actions and 45 regional transformational priorities on which resources should be focussed to deliver growth.

Although 45 transformational actions are still seen by some partners to be too many, to move to this level of prioritisation has meant that the region has made tough choices. All partners will focus on these transformational actions when developing their own business or strategic plans.

4.1.

NWDA has been leading on reviewing the North West RES during the last 12 months and the RES received Ministerial endorsement in March 2006 (the first RDA to achieve this in the current round of RES reviews). The new RES 2006-2009 was launched on 28 March 2006.

4.2.

The RES has 3 main drivers, improving productivity and growing the market; growing the size and capability of the workforce and creating and maintaining the conditions for sustainable growth. Improving productivity and growing the market will build on areas of success to increase GVA per person employed and therefore reduce the £13bn gap by £10bn. Growing the size and capability of the workforce will aim to close the remaining £3bn gap due to fewer people in the region not working.

4.7.

The RES clearly identifies lead partners for each of the 122 actions and 45 transformational actions, for which NWDA has responsibility for 11.

This is a significant improvement on earlier strategies for the region. In addition, the RES Advisory group has identified over 50 key performance indicators and agreed 8 which will have targets set and be monitored at regional and sub regional level on an annual basis. Whilst the RES has a three-year timescale, the longer vision for the RES is 20 years. Some partners are not clear about whether the targets are looking for short-term GVA improvement, or whether the RES measures relate to medium to long term investments for the region – despite clarity within the RES document.

Also there are concerns that the driving force for some actions is to meet national rather than regional objectives and that these are a reflection of NWDA’s ambitions rather than those of the Region.

4.3.

There is a general consensus from partners and stakeholders that the consultation process has been very strong and is much improved from the same process 3 years ago.

Improved communications by the NWDA has allowed key partners to play key and active roles in understanding and developing the new RES. To facilitate this, NWDA set up a RES Advisory Group which was made up of 25 key partners. Each partner consulted more widely on the drafts of the RES with their appropriate stakeholders, to gain agreement for the final submission. Over 6,000 people were involved in the consultation process.

4.8.

The Agency has developed a robust sustainable development framework which has underpinned the RES which is widely available for partners use. The framework was developed, based 7

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amongst some of the existing Business Link partners of the way in which the new support mechanisms will work, it will offer a much better choice of customer interface, improve customer satisfaction and deliver a much better service which will be aligned more closely with the RES. This radical approach is supported by many partners in both the public and private sector and by the evidence seen by the team in support of the proposed new service.

on a sound and robust evidence base and is being embedded into the process to ensure that future sustainability issues are addressed as a priority and at an early stage.

4.9.

The NWDA has worked closely with the Regional Assembly and the Government Office North West to achieve synergy between the Regional Spatial Strategy, the Regional Housing Strategy and the RES. There was also excellent collaborative working with the North West Regional Assembly to agree the priorities for the Regional Funding Allocation 2006 submission to Government.

4.12. Whilst the Agency has developed much stronger relationships with key partners through the RES consultation process, there are no mechanisms available yet to share best practice which is built on the evaluation of past interventions.

The evaluation framework for the Agency is developed but now needs to be actioned routinely.

4.10. The Agency’s key partners (Sub Regional Partners (SRPs) and Urban Regeneration Companies (URCs)) have aligned their strategies and delivery of economic priorities at the sub regional level to the RES. However, there is an issue about delegations across the URCs where the NWDA has been inconsistent in its approach. The NWDA is in the process of reviewing its relationship management to strengthen the day to day working with the key partners and the external roll out of SAPIP later in 2006 should also address this.

4.11. The NWDA took on responsibilities for Business Link in 2005. After consultation, the NWDA decided to completely review the provision of business support across the Region and has just gained Board agreement for a complete overhaul of the process. This will result in a single region wide entity through which a flexible resource model to maximise synergies with other providers of business support and utilise best practice of existing providers. Whilst there are severe reservations Summary:

Strengths

Areas for improvement

• The RES is based on sound statistical information which has a robust evidence base and reflects a general understanding of regional issues

• Sharing of best practice, both internally and externally, based on the evaluation of past interventions

• There were high levels of consultation, across the region on RES from early concept to final draft. Many partners undertook further detailed consultations within there own organisations and networks to obtain more details comments

• Despite a high level of buy-in from partners, some private sector partners still see the RES as a RDA document, rather than a regional one – this could probably be addressed by enhanced communication

• As a result of the detailed consultation process and the use of separate Advisory and writing panels the RES ambitions have buy-in and support from partners and stakeholders • The consultation process allowed Partners to agree and recognise that the ambitions are right for the region • Partners have developed their own ambitions and these are clearly linked to those of the Agency

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5.3.

Through the SRPs and URCs, regional priorities are aligned with and linked to sub regional and local priorities. These key partners have also submitted business and delivery plans for 2006/07 which clearly demonstrate how they will translate the priorities and deliver them in the round.

Prioritisation

Key Sources: Corporate Plan, Business & Delivery plans, Risk Management Strategy NWDA is performing prioritisation. (SCORE 4)

strongly

in

terms

of

•

Are there clear economic priorities within the ambition for the region?

•

Is there a robust corporate strategy expressed within NWDA’s Corporate Plan to deliver the priorities?

•

Is robust action taken to deliver the Regional Economic Strategy?

5.4.

The NWDA’s Corporate Plan is ambitious yet realistic and sets out the contribution to delivering the RES and nationally set priorities and targets. The NWDA has set targets against the DTI tasking framework and has also supplemented with additional indicators to show greater impact across the region. Tasking targets are also reflected in partners business and delivery plans.

Whilst NWDA has been able to set target ranges for the core indicators under the tasking framework, the actual indicators have been agreed at a national level and are not open for further debate at the moment.

5.1.

The region has agreed on 45 transformational priorities for the period 2006/09.

Of these, 11 actions will be directly delivered by the NWDA the remainder by key partners. These priorities are clearly described in the refreshed Corporate Plan which was agreed by the Board in March 2006. There have been some criticisms from partners that the NWDA could have played more of a leadership role within the RES Advisory Group to prioritise these transformational actions or reduce the number of priorities further – although it has been acknowledged that 45 priorities is a tremendous improvement on previous years. These criticisms are slightly harsh – the RES Advisory group agreed on the priorities, and there were several partners on this group as well as the NWDA. There have also been some criticisms from partners as to the reasons behind the prioritisations. The RES Advisory group could have improved its communications of its decision making process.

5.5.

The NWDA has set organisational development indicators through its Corporate Plan and has also set clear budgets and financial priorities for the next 3 years through both the Corporate Plan and the Strategic Investment Plan.

The Corporate Plan is shared widely with partners and stakeholders and currently the SIP is shared with SRPs. Business planning is integrated with corporate planning and the RDA regularly reports on progress through a variety of mechanisms with partners and stakeholders.

5.6.

The Agency has undertaken a review of its own structure to align itself to the revised RES. By doing this, teams will effectively integrate priorities and resources to the priority areas. Whilst this is an effective approach for the Agency, some key partners are unsure as to why the Agency constantly seems to be changing its structure and there is a worry that continuity of knowledge and relationships may be lost.

5.2.

NWDA has a clear risk management framework and risks are assessed at both project and corporate level.

Whilst the NWDA has assessed its own priorities through the Corporate Planning process, no fundamental risk assessment has been undertaken on the RES regional priorities.

The RDA could have shown more leadership and initiative in using its Risk Management framework to do this – e.g. Through the RDAs work on risk management, and using the orange book as guidance, partners should be encouraged to adopt the RDAs risk management framework to assess their activities and initiatives. This leads to more effective working and a better understanding of the risks involved in supporting activities at a regional level. This would help to share best practice amongst key stakeholders and partners.

5.7.

NWDA has reviewed its relationships with SRPs with a view to strengthening the relationship and is in the process of overseeing the formation of a new partnership in Cumbria which will bring together the existing URC (Westlake Renaissance) and Rural Regeneration Cumbria together with elements of the NWDA own area office at Penrith to form Cumbria Vision. This new company has been planned for over 2 years and there is criticism from some partners that the Agency should have been stronger in leading the process to put it in place sooner. The logic behind the new company is sound but it will take time to discover whether the new SRP will be able to deliver on the ground.

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5.8.

The NWDA has adopted a strong risk management framework and risks are considered at all levels across the Agency from Corporate Planning down to individual projects and initiatives. There is little evidence that the NWDA shares its risk management framework with partners to encourage best practice and ensure that partners have strong risk frameworks themselves, but this will be addressed as part of the external roll-out of SAPIP. Summary:

Strengths

Areas for improvement

• RES 2006 has moved on significantly from previous version with 45 transformational priorities being identified, a significant reduction from previous years

• Communications with key partners about prioritisation is not always clear and therefore rationale behind the decision making process is not always understood

• The Project Review Group process provides sound information around the prioritisation of project approvals ensuring they are aligned around the current RES • Difficult decisions have been made Revised Corporate Plan clearly identifies the priorities for action • There is clear business planning within the Agency linking priorities from the RES to the Corporate plan and into detailed projects and activities • Process of business planning with SRPs is robust and transparent and follows the threads through the RES and the RDAs corporate plan. The SRPs have aligned their plans with the RES

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energies from its prime function of delivering growth to meet these internal challenges. Staff are concerned with their own futures rather than the Region’s priorities and are concerned that it may be driven for economic rather than effectiveness reasons. Stakeholders and partners also point to a lack of continuity and loss of corporate knowledge as a weakness and a risk to delivery.

Capacity

Key Sources: Corporate Plan, HR Strategy, Annual Performance Reports, Business & Delivery Plans NWDA is performing well in terms of capacity.

(SCORE 3)

•

6.4.

The Agency has a robust personal appraisal system and all staff participate on an annual basis.

Appraisal performance is linked to pay.

Is there clear accountability and decision making to support delivery and continuous improvement?

•

Is capacity used effectively and developed to deliver ambitions and priorities?

•

Does NWDA, with its partners, have the capacity to achieve change and deliver its priorities?

6.5.

Generally the Board works effectively.

Board members have a wide range of expertise, bringing both private and public business skills and experience to the meetings. In addition the Agency maintains a number of sub groups to consider specific issues. Whilst the Board agenda is wide and extensive, there is little debate on issues, most being agreed beforehand or for information. The sub groups are smaller, and are able to effectively review and address many issues and encourage debate. The Agency has put in place sound Corporate Governance procedures which are monitored and adhered to at all levels. Unlike some other RDAs, the Chief Executive is the only executive member to attend the Board, other members being called and attending as and when required. Whilst this is a different approach, it seems to work well within the Agency and the Chairman feels he makes better use of the Executive’s time.

We did not receive any comments to contradict this argument.

6.1.

NWDA has made a number of organisational and management changes and has plans for further improvements in the future to address issues raised by both staff and some of its partners. However, there are some concerns as to how these changes will impact on the Agency’s ability to deliver and on its existing staff, especially in retaining a skilled and committed workforce.

6.2.

The Agency reorganised a key directorate, the Enterprise, Innovation and Skills Directorate, in 2004/05 to improve its capabilities for delivery. In order to align the Agency to enable effective delivery of the RES, but also to change the way that policy is provided, and to strengthen partnership management, the Agency is reviewing its management structure across the rest of the organisation. Taking account of the lessons learned from the previous reorganisation and the change management processes adopted, the current review is being professionally managed, minimising the disruption of staff and functions. Staff that will be directly affected by the changes are being briefed, and all staff are informed of general changes and timescales. It is planned for the new structures to be in place by June 2006 so as not to hinder the Agency’s delivery targets as outlined in the Corporate Plan.

6.6.

The Chairman and Chief Executive have a high profile across the Region, and show strong leadership in setting the targets and direction of the Agency. Both are generally respected and most partners and stakeholders consider them to be good communicators and focussed on the objectives of the Region. Some stakeholders however, consider there is some blurring of responsibilities between the Chief Executive and the Chairman.

6.7.

Each project and programme has a dedicated senior responsible officer allocated to manage and be responsible for it. Where projects are large in size or complexity, a Director will take responsibility for it. The Board members are also encouraged to champion themes across the Agency.

6.3.

However the current reorganisation is not seen as a necessity by all partners and stakeholders, especially so soon after that last one in 2005.

Some staff and external stakeholders considered that the last reorganisation did not go as smoothly as it could have done and was not considered a success in terms of process, communications and effectiveness.

The process of reorganising consumes resources and could deflect the NWDA’s

6.8.

The strategic capacity of the sub regional partners has been increased in order to improve the effective of the organisations. The NWDA have funded additional posts or seconded staff where necessary. Memorandums of understanding have been drawn up with all SRPs. 11

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Agency is addressing these issues. There are plans to undertake a comprehensive staff skill and experience audit and a post of Head of Training and Development is proposed to ensure training is more focussed of both the organisation’s needs and those of its staff.

6.9.

There have been a number of changes in key posts with the NWDA bringing in skilled staff and experts at all levels to become more effective in delivering their objectives, e.g. in HR and Legal Services. Training in key skills, e.g. ICT, key systems and SAPIP has been provided and all relevant staff attended. The NWDA has also undertaken a major communication exercise with staff on the rationale of the organisational review and its effect on them. The Agency has run a series of training events on the RES, its focus and priorities and its role in delivering transformational changes.

Where the Agency is lacking is in the provision of management development training and providing specific training for staff to progress their individual careers. Most staff felt that the Agency allowed them to attend training when requested, but there was little evidence to track whether such training linked to staff development or benefited the organisation. Staff felt there was little opportunity to progress in the organisation, due to lack of appropriate training and a lack of knowledge by the organisation as to what skills were available. The Summary:

Strengths

Areas for improvement

• The Agency has strengthened its management team during 2005/06 and will realign the organisation to align itself to the priorities in the RES

• The organisation is seen as constantly reorganising itself to the detriment of continuity of working with external partners – communications need to explain the rationale and the emerging structure to address this.

• The Agency exhibits strong leadership through the Chair, the Chief Executive and senior management team and this is respected and acknowledged across the region • The Agency has adopted memorandum of understanding with key partners to clarify roles and responsibilities in delivering change • Partnership working has been improved and made more effective through increased capacity at sub regional level • Although the Agency is going through a difficult period with re-organisation, it is being handled very professionally, learning from the lessons of previous changes. Staff are clear about timelines and responses and are generally supportive of the changes

• There has been no workforce skill audit undertaken though there are plans to address this • Whilst training for specific areas is provided (e.g. on SAPIP and ICT) management training for career and personal development has not been a priority in the past.

This is reflected in some managers not actually managing staffing issues • Ad-hoc training is undertaken, but we have not seen any evidence to show how this links to priorities • Perceived lack of clarity around role and responsibilities of Exec and Non Exec members

• Despite constant change, the Agency has a skilled and dedicated workforce that appears highly motivated and respected • The Board works effectively, delegating tasks and issues to appropriate sub committees. The corporate governance procedures in place are sound.

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national level in initiatives which help to share and disseminate learning and best practice across the RDA network. Some examples of this include: Chairing the Performance Management Group for 2 years – including the development of the Tasking Framework and input into Corporate Planning Guidance, working closely with the Office of Project Appraisal Training to develop the Single Programme Appraisal Guidance, being part of the initial task group which led on the development of the single pot, and learning from SRB partnerships and evaluation.

In addition, NWDA have improved their pre-appraisal process and the Project Review Group brings together staff from across the Agency who can share their learning and experiences to improve the projects being assessed.

Performance management

Key Sources: Corporate Plan, Performance Management Framework, Project Appraisal system, Annual Performance Report, Risk management strategy, evaluation framework, communications strategy, Business & Delivery plans NWDA is performing well in terms of performance management. (SCORE 3)

•

Is there a consistent, rigorous and open approach to performance management?

•

Do NWDA and partner organisations know how well they and each other are performing against planned / expected outcomes?

•

Is knowledge about performance used to drive continuous improvement in outcomes and learning?

7.4.

NWDA have acknowledged that they can do more to share experiences and best practice and the formation of the new SRP (Cumbria Vision) and some of the URCs, will ensure the Agency is well placed to share the learning from other companies and pass this on to the new ones. There is an opportunity to improve this area of activity within the new structure of policy and partnership directorate.

7.1.

The Agency undertakes routine monitoring and review to ensure that both financial and output targets will be met. Key partners also contribute to national tasking targets and this is clearly documented in business and delivery plans. It appears that most of the partners have developed their own frameworks to monitor progress. NWDA has developed SAPIP to pull together financial and programme management systems with the addition of guidance, toolkits and evaluations embedded within it. This was rolled out to all staff during 2005/06 and it plans to roll it out to its partners during 2006 for a more consistent approach.

7.5.

Until 2003, project management procedures were very weak and led to an overcommitment of projects against allocation. This in turn led to some conflicts with partners and the Agency was seen to be secretive and not at all transparent about what it was doing. The new Executive team under the direction of the Chief Executive have worked hard to address this, and one of the new processes, SAPIP, addresses project management issues across the whole organisation.

Whilst SAPIP has still to be rolled out to partners, the benefits of the system can be seen and it is being cited as best practice within the DTI. In addition, the Agency is also quick to respond to queries or actions identified in the NAO financial management letters, and the NAO financial team have confirmed that the financial controls are strong.

7.2.

The Agency has fully embedded evaluation into its processes, as part of the SAPIP toolkit. As part of the national guidance from DTI, all RDAs need to adopt the new evaluation framework and were asked to submit evidence of recent evaluation

by March 2006. Whilst some project evaluation is undertaken, there is only a limited amount of programme level evaluation currently available – although this is being addressed.

Where programme level evaluation has been undertaken, we do not have evidence of the learning from this being applied at the project appraisal stage yet.

Whilst there is little evidence of continuous improvement through learning taking place from evaluation, there is learning taking place through other methods.

7.6.

Without external SAPIP in place, there is still a lack of transparency from partner’s perspectives about the Agency’s appraisal process.

Whilst there are project champions in each of the area teams who work closely with the key partners, once applications for funding are submitted communications appeared to stop. Of the 20 or so partners we spoke to, the majority said there were not aware of any timescales for approving projects and they did not know how far projects had got through the process. This is an issue which is already being addressed through SAPIP.

7.3.

There is clear evidence that the NWDA is good at sharing and encouraging best practice and then applying that as learning in its activities. The NWDA have consistently been involved at a 13

Independent Performance Assessment

7.7.

The Agency has adopted a new preappraisal process which has reduced the time being spent in developing projects which do not meet the RES objectives. A Project Review Group (PRG) has been set up and all projects from initial conception to approval are required to be approved by this Group. The overriding criteria adopted by the PRG for project approval is whether it meets RES objectives and Corporate Plan priorities. This is a sound process which will help the effectiveness of the Agency. However, partners are not yet fully aware of this, and whilst most of them recognised that it would help they were not briefed on how it will work in practice.

7.8.

The Agency has not yet started benchmarking either internally or externally, apart from cost per job through major project appraisals.

This is scheduled for 2006 and will form part of the programme office objectives in 2006/07.

7.9.

Like seven other RDAs, NWDA has adopted Portfolio Director (PMS) to manage its programmes and projects and this appears to be working well for the Agency. This is linked to the financial system so ensures consistency of reporting of project spend forecasts. NWDA have also adopted a new reporting tool to maximise management information from the system (Business Intelligence Solution). The introduction of SAPIP has provided a single overarching project management tool which will improve information

June 2006

and hence decision making.

7.10. Since the appointment of the Chairman and Chief Executive in 2003, there has been greater financial rigor in budgeting, management and reporting. Financial profiling has been tightened up and now provides a realistic picture of likely spend.

Monthly financial profile reports are produced for the Board for information although it has been noted that the spend profile for February was 40% under target – so we feel there is still an issue with casework officers being overly optimistic when forecasting project spend on an individual basis.

The recently adopted Project Kia will provide the Executive team with up to date information on the top projects and risks affecting the Agency and this will also strengthen the overall control on the Agency’s activities.

7.11. Regular reporting takes place within the Agency, but the published performance reports tend to focus on factual reporting of progress, achievements and targets and do not have much qualitative assessment of key corporate risks or much critical self-awareness. The Agency has a good track record of achieving its national targets.

The self-assessment for the IPA showed greater selfawareness and maturity in publicly accepting areas for improvement.

Summary:

Strengths

Areas for improvement

• The SAPIP programme has been developed and introduced to address key weaknesses identified in the project management processes of previous years.

It will allow the agency and its partners to understanding and monitor Commitments

• SAPIP has yet to be fully rolled out to SRPs and URCs. Currently, there is a lack of awareness of the process, its aims and benefits

• Project Kia will provide up to date financial, risk and project information for all the senior management team on an immediate basis • Agency has sound track record in achieving national performance targets • Agency produces regular reports internally, and for government, on activities and interventions, focussing on progress and achievement of targets • The Agency has strong financial controls, evidenced by the NAO Financial team • The Agency consistently shares best practice and improves learning by participating nationally through steering groups, and relevant forums such as Project Appraisal training and performance management

• There has been poor communication and a lack of transparency on the criteria and decision making process around project appraisals once applications have been submitted for approval. Partners are not currently clear on Agency’s new pre-appraisal process – to be addressed through SAPIP • Following approval, partners and sponsors consider there is a lack of clarity on project timescales and the monitoring procedures. More needs to be done to inform partners of the process • Now the evaluation process is embedded through SAPIP there needs to be programme of evaluation undertaken routinely.

This will help for lessons learnt being incorporated into the future project development and decision making processes • No evidence of benchmarking either internally or 14externally, though there are plans for it to be introduced in 2006/07

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centre for Accelerator science. Daresbury was recognised in the budget 2006 as being one of the UK’s two, major national science and innovation sites.

Achievement

Key Sources: Annual Report and Accounts, Annual Performance Reports, Achievements brochure, Sustainable development framework, and Lead Role reports.

8.3.2. Speke – the Agency has invested £30m in the national bio-manufacturing centre in Merseyside. The centre will perform the initial manufacture of biopharmaceuticals which could be used in early trials to speed up the transfer from research to commercial exploitation.

NWDA is performing well in terms of achievement.

(SCORE 3)

•

Has NWDA delivered its contribution to achieving the ambitions identified in the Regional Economic Strategy as set out in the Corporate Plan for the timescales covered by the assessment?

•

Has NWDA made progress in achieving its ambitions in sustainable development?

•

Has NWDA made progress in levering investment into the region against the priorities set out in the RES and has it influenced the resource allocation of partner organisations?

•

Has NWDA made progress towards achieving its ambitions and priorities for its lead role for skills and learning?

8.3.3. Good relations have been formed with the Higher Education institutions and this has led to greatly improved collaborative working between education providers and industry across the region.

8.4.

In addition, the following projects also show noticeable achievements: 8.4.1. Urban regeneration companies – the Agency has played an instrumental role in developing the region’s URCs in Liverpool, Manchester and Cumbria. It has also supported the newest URCs in Blackpool and Salford. The Agency is likely to commit over £200m across the URCs in the next 3 years. See paragraphs below for actual URC achievements.

8.1.

The Agency has made year on year progress against its ambitions and priorities set out in the Corporate Plans in 2003/06 and 2005/08.

The Agency has generally achieved its targets in relation to the previous Tier 3 framework, with an over achievement against most targets. Although some of the targets from the tasking framework 2005/06 may not be achieved there is clear explanation for this which has been agreed by the Board. Whilst the NWDA does not have control over the national indicators, it has set its own targets, and these seem to be reasonably challenging on an annual basis.

8.4.2. To increase its profile and to raise awareness of achievements and projects the Agency has a policy of “branding”. Signboards highlighting the Agency and its partners have been erected prominently around many ongoing and completed projects.

8.4.3. Project Access – the Agency’s broadband project which will see 100% coverage in Cumbria has been commended as has the Agency’s innovative approach on promoting the digital challenge.

8.4.4. For a number of years NWDA has supported Raising Our Game, a successful development programme for public sector staff working in inward investment, economic development and regeneration. Since the launch of RENEW Northwest by the Agency at the Sustainable Communities Summit in Manchester in February 2005, “Raising Our Game” has been integrated into RENEW's wider mission to improve the quality of regeneration practice in the region.

RENEW Northwest is working with a wide range of region partners to improve the quality of design and the built environment, improve public/private sector delivery skills (focusing on partnership skills, community engagement and successful commissioning). An important part of RENEW's remit is to identify and promote good practice in

8.2.

The Agency currently has traditional delivery arrangements, although new ideas are being explored with the formation of new special entities (Cumbria Vision and Business support).

8.3.

The Agency has exhibited strong leadership in developing knowledge based science projects which have been instrumental in their success in delivering a significant impact on the economic conditions of the region.

A few examples include; 8.3.1. Daresbury – the Agency has invested £50m in a site of international importance in science and medical research. The site includes an incubation centre and the Cockcroft institute – the national 15

Independent Performance Assessment

June 2006

new jobs and safeguarded a further 16000 with capital investment of £2.5bn. The URCs have also attracted significant amounts of private sector funding for some of the major regeneration schemes in Manchester, Liverpool and West Cumbria. Whilst progress has been made on strategy alignment, government departments recognise that more still needs to be done to align investment and delivery with key partners. They feel that more could be achieved through reducing complexity and ensuring that activity is mutually supportive and focused on the region’s key priorities, although this is not within the sole control of the RDAs.

sustainable communities and it runs master-classes, workshops and training events which, in 2005/06 were attended by over 4,000 practitioners and decision makers from the region's public, private & voluntary sectors.

8.4.5. The Agency has realigned its tourism work to match its sub regional areas. This had led to a much closer working relationship between the SRPs and the Tourist associations and a more structured approach to tourism as a whole across the region.

8.4.6. The Agency was the first in the UK to establish a Science Council.

The strategy recognised explicitly the importance of the region’s strengths in science and innovation in meeting the challenge of improving its productivity against the background of a steady shift from manufacturing to lower productivity service industries.

8.8.

The working relationship between NWDA and the North West Regional Assembly has improved over the last couple of years, but NWRA feel there is a way to go on coordination and them properly being involved in the policy area of the region. However, steps are being taken to form a Regional Executive involving the RDA, the Regional Assembly and Government Office.

8.4.7. The Agency has taken on numerous responsibilities for encouraging the sharing of best practice and learning across the RDA network. It chaired the Performance Management Group for over 2 years. It is currently hosting the RDAs National Secretariat in terms of payroll, staff and HR, IT and Health and Safety. It is also leading on the RDAs input to an element of CSR 2007.

8.9.

The NWDA has widespread support for its lead role activities. There is positive feedback from DfES where they acknowledge that the Chairman is an effective champion for skills on behalf of all the RDAs in various forms and skills issues regularly feature on the agenda of Chairs meetings. They also confirm that there is excellent operational links between the DfES and the other RDAs. The Agency has had a positive and constructive approach to building Regional Skills Partnerships in all regions.

The Learning and Skills Council is realigning its structure and delivery to complement the NWDA’s actions. The North West RSP is commended in bringing the various partners together to address skills, employment and business support issues within the social and spatial context of the RES. Comments from the other RDAs are also very supportive of the approach of the NWDA in its skills lead.

8.4.8 NWDA has led the development of a crossagency approach to the challenges greeting the Nuclear Sector across all relevant organisations in the region. The Agency has led a detailed analysis of the future skills and business support requirements of a successful nuclear sector and led regional partners in developing proposals to meet these requirements gaining national government support.

8.5.

Sustainable development is key to the Agency and over the past five years, it has reclaimed over 2000 hectares of derelict and neglected land and restored it for effective use.

One example is Newlands where a joint venture between the Agency and the Forestry Commission will see the transformation of 430 hectares of brownfield land into community woodlands.

8.10. Comments from central government reflect on the achievements of the RDA. It has helped to build capacity, provided strategic leadership and provided support to a range of investment projects in the region.

8.6.

The Agency has developed a robust sustainability tool which is now applied to appraisals and is included as in the SAPIP toolkit.

Monitoring also includes elements of sustainability, although this has yet to be included in the evaluation framework.

8.11.

Whilst there are many positive achievements, some partners criticise the Agency’s approach to the rural agenda. The Agency has a Market Towns initiative which was launched in 2003. Perception is that the initiative has taken far too long to gather momentum and the outcomes are not seen to be addressing the priorities in the RES. The same criticism is also levied at the rural renaissance programme – where rural is not seen to

8.7.

The Agency has secured significant investment across a range of priorities. Over 280 Foreign Direct Investments have been attracted to the region and these have generated over 21000 16

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be treated as a strategic issue – but more of a general theme. Whilst there is some evidence of rural proofing, more could be done to make rural activities cross cutting – rather than separate activities.

Summary:

Strengths

Areas for improvement

• Progress on addressing issues and developing its lead role on Skills across the whole RDA network is nationally recognised

• Ensuring the Market towns initiative and the rural renaissance programme gather momentum to achieve the priorities in the RES.

• Project Access acknowledged by Central Government as being particularly successful in Cumbria

• Aligning investment and delivery with key partners

• Strategic leadership evidenced through work on HE/FE and links to business • Strong leadership on knowledge based sciences and clusters have been instrumental in their successful delivery • A new and robust sustainability framework has been developed and is now applied to all appraisals relating to the revised RES • Significant attraction of private sector and foreign finance through inward investment and regeneration initiatives • The Regional branding initiative highlighted the profile and image of the Agency, raising awareness of its achievements and partnerships • Work at Daresbury and gaining national recognition of science work in Budget 2006

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Independent Performance Assessment

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TECHNICAL ANNEX

•

Independent Performance Assessment Methodology

1.5.

The theme scores combine to give an overall score that gives equal weight to the three headings. This is achieved by doubling the score for the single achievement theme, adding all the resultant scores together and assigning an overall score according to the table below.

Background 1.1.

The National Audit Office (NAO) has undertaken this Independent Performance Assessment of the North West Development Agency (NWDA) at the request of the Department of Trade and Industry (DTI), which is the sponsor department for Regional Development Agencies.

The NAO is responsible for advising Government and Parliament about financial management in public sector bodies. NWDA is one of nine Regional Development Agencies established under the Regional Development Agencies Act 1998 to further regional economic development, promote business efficiency and competitiveness, increase employment and the skills base, and contribute to regional environmental sustainability.

1.3.

The Independent Performance Assessment is structured under three headings:

•

activities (covering the two themes of capacity and performance management) and

•

achievement (covering the single theme of achievement)

performing inadequately (score 1)

•

performing adequately (score 2)

•

performing well (score 3)

Performing inadequately

6 to 8

Performing adequately

9 to 14

Performing well

15 to 19

Performing strongly

20 to 24

1.7.

In analysing each triangulated information source, we referred to detailed questions underlying each of the five assessment themes, set out at the start of each report section. We drew observations from each source for as many of the questions as were relevant and balanced this against evidence collected from other sources. In arriving at a final score for each theme, we compared the weight of evidence collected against illustrative examples of different performance levels

1.4.

We have assigned a score for each theme on the basis of guidance which we prepared in agreement with the Regional Development Agencies. The range of possible scores for each theme are:

•

Weighted theme total

1.6.

We reviewed a wide range of information sources for our assessment, including existing documents, observed routine meetings, site visits and tailored interviews and focus groups with internal and external stakeholders. We tested NWDA’s awareness of its own position by referring to the self-assessment and improvement plan that NWDA prepared before we undertook our assessment. We sought views from other Regional Development Agencies and the Department for Education and Skills on how well NWDA has conducted its lead role. We obtained information from the Department of Trade and Industry giving a collective view of NWDA from a range of central government organisations. We invited external stakeholders to respond to a survey. We consulted our colleagues who visit NWDA every year to audit the accounts, developing insights over an extended period. We triangulated all these different information sources to give a rounded view of NWDA and, as a further check, our assessment team included a senior director from another Regional Development Agency.

Approach

aims (covering the two themes of ambition and prioritisation)

Overall score

Evidence

1.2.

The NAO’s Independent Performance Assessment is covering the eight Regional Development Agencies outside London by March 2007. The Audit Commission published its Initial Performance Assessment of the London Development Agency in November 2004. We are grateful to colleagues at the Audit Commission for their help in designing our Independent Performance Assessment and to colleagues in the Regional Development Agencies for their help in tailoring our approach to their activities.

•

performing strongly (score 4).

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for each question, agreed in advance with the Regional Development Agencies.

1.8.

During our assessment, we have:

•

used over 100 information sources, including documents, site visits, interviews and focus groups;

•

drawn over 400 observations from these sources against individual assessment questions;

•

met over 90 external stakeholders in interviews and focus groups;

•

met over 80 internal stakeholders in interviews and focus groups;

•

made site visits, meeting further internal and external stakeholders; and

•

received 38 responses (50% response rate) to our stakeholder survey. The distribution was drawn from the list of stakeholders provided by the Agency and supplemented by the NAO.

Consistency 1.9.

A consistency panel, chaired by a member of the NAO Management Board, was held on 24 April 2006. The panel, comprising of an independent consultant, senior National Audit Office staff experienced in audit methodology, performance management and financial analysis and a representative from the DTI, examined our work in detail to ensure that we have applied the Independent Performance Assessment guidance appropriately, used evidence in a consistent manner and applied the same standards across use of evidence.

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