It only seems like yesterday that the East Midlands Development Agency closed its doors (only for a load of civil servants to walk in through the back and do something which bears a vague resemblance to some of its work).
Anyway, here we are four months on and Lord Heseltine is announcing proposals which also bear a startling resemblance to things regional development agencies used to do, putting tens of billions of government money in the hands of local organisations and devolving decision-making to local level.
What on earth is going on?
Well, some pigeons are coming home to roost for one thing. The coalition government's decision to scrap all of England's nine regional development agencies was the kind of one-size-fits-all politics which flew in the face of well-established regional variations in the economy.
It assumed, too, that all RDAs were an expensive waste of space. As Ken Clarke privately admitted even before the election, they were not. The RDAs in the north west, south and south west did not cover themselves in glory. Ours, however, grew into something professional and well-run. And the RDAs in Yorkshire and the North East made a vital contribution to their economies.
Whatever the government's numbers may tell us, it is questionable whether any money was really saved by closing them. Besides the costs of getting rid of people and unwinding contracts in some RDAs, these agencies contained valuable expertise about regional economies and an ability to get funding out into the economy (something this government has made a real horlicks of). This valuable asset was allowed to walk out of the door.
Government's theory was that local economies should be weaned off the state spoon and learn to stand on their own two feet. The first sign that this theory was wildly idealistic surfaced when Lord Heseltine (yes, him again) came up with the Regional Growth Fund, an acknowledgment that putting money into pump-priming business growth at regional level might not be such a daft idea after all.
We also had the emergence of Local Enterprise Partnerships, an attempt to encourage business to get involved in initiatives which might help develop their local economies.
And, of course, we've had a team of civil servants responsible for monitoring and advising on the implementation of government policy at regional level taking over the offices formerly occupied by emda.
Now, the eagle-eyed among you might just have spotted a bit of a theme here: organisations and initiatives involved in developing the economy at something other than a national level. We won't say regional because, of course, that has all stopped.
Sort of.
Let's stop being facetious for a minute. Lord Heseltine's announcement today is a big issue for Nottinghamshire and Derbyshire. The brutal truth is that its Local Enterprise Partnership. D2N2, has struggled to make any kind of meaningful impression where it counts. It isn't the go-to organisation for business, councils don't rate it, MPs never mention it and Whitehall wonders what's happened to it.
LEPs were always going to struggle to gain traction because they had a budget around about the size of a packet of KP ready-salted. Yet some have managed to persuade local authorities they were worth backing (Northants got its hands on £2 million). The view is that D2N2 and others have failed to establish any authority.
Lord Heseltine's proposals suggest this needs to happen fast. He has clearly identified these organisations as a route through which government money could be channelled into regional economies. This is a major opportunity, therefore, for a business-led organisation to be in the forefront of investment decisions about their own economies.
D2N2 now has to demonstrate that it can grasp this opportunity and work with city and county councils in Nottinghamshire and Derbyshire to get a fair share of the cash. This hasn't happened so far with the Regional Growth Fund (where the money the East Midlands got was way below other regions).
So D2N2 and our local politicians have some ground to make up.
Lord Heseltine's announcement suggests that government has effectively admitted that the work RDAs did was not a totally unaffordable waste of time, and that city regions can and should be real engines for growth.
Nottingham and Derby have an unfortunate and inglorious history of letting small-town political rivalry get in the way of grown-up cooperation. The view in business is that they need to get over themselves.
While Lord Heseltine's report represents a potentially big opportunity it is also a political headache. Coverage in the national newspapers today has offered an insight into the political nonsenses the report faces: not for the first time, the Guardian went into full-on 'challenge to the prime minister' mode, The Times - bizarrely - suggested the report's most significant finding was about Heathrow airport, the Telegraph reported the politics but not the detail.
Yet in doing so they more or less made Heseltine's point for him: an awful Westminster-centric myopia - there for all to see in the online era - has left political decision-making increasingly distant and increasingly irrelevant to regional priorities.
In other words, we have to grab what we can.
Showing posts with label emda. Show all posts
Showing posts with label emda. Show all posts
Wednesday, 31 October 2012
Monday, 18 June 2012
A manufactured crisis?
The state of manufacturing in the UK is a bit of a bugbear of mine.
This is the sector which was, of course, decimated in the 1980s when that awful Maggie Thatcher went round Britain with a wrecking ball and took down every factory she saw – especially those in places like the North East and the West Midlands.
Which means that, today, Britain doesn’t make anything anymore and we’re all doomed (again).
Except she didn’t, and we’re not.
Putting political rhetoric to one side, a close examination of the history of manufacturing would tell you four things.
1) That traditional manufacturing’s decline began to take hold in the 1960s. It happened because our own manufacturers were, quite simply, under-invested, inefficient, making many poor quality products compared to global rivals, and focusing too heavily on disappearing markets.
2) That manufacturing when Margaret Thatcher came to power represented 25.8 per cent of the UK’s industrial output and had fallen to 22.5 per cent by the time she left Downing Street.
3) That manufacturing’s share of UK GDP began to fall noticeably from the late 1990s onwards.
4) That this fall was in part relative – in other words, its share of GDP became smaller partly because other industries (notably financial services) grew faster.
It’s hard to get that point across because politicians with axes to grind (if they can find a factory to grind them) peddle the myth that the policies of different governments led to the UK’s industrial ruin - which is tosh. For starters, Government doesn’t own any industry it could ruin (it did that in the 1960s and 70s).
Where government unquestionably has contributed to industrial decline is in the recording of it. Whatever you think of the East Midlands Development Agency (RIP), one of the most valuable things it did was record the size and shape of the regional economy.
Its last set of numbers would tell you, for example, that ‘decimated’ manufacturing actually makes up nearly a quarter of East Midlands output. Not bad for a dead industry, eh?
Since emda was consigned to a filing cabinet (the one marked ‘rename this policy and use it again in 10 years’), industrial statistics have been compiled by the Office for National Statistics.
Now, the ONS is a much-maligned body which has been used and abused by politicians for years. It is protected from interference now and churns out useful data by the bucketload.
On the downside, its website is almost impossible for members of the public to navigate and its figures about manufacturing record not GDP but GVA – a similar but subtly different measure of the value of what we all produce. So you’ll get different and slightly confusing analyses of where manufacturing’s at.
To cut to the chase, despite the myth-mongering, manufacturing is worth substantially more to the UK economy now than it was in the past. We’re a world leader in areas like aerospace, automotive, transport, computer processing, pharmaceuticals, biotechnology, nanotechnology etc.
Locally, we have substantial supply chains and multi-million university R&D programmes feeding into manufacturing giants like Rolls-Royce, Bombardier, Toyota, Airbus, Boeing. Alliance Boots and Imperial Tobacco between them employ thousands making things in Nottingham alone.
This is, in other words, something worth pondering over next time you’re on a train. Like, for example, the channel tunnel loco. Its gear sets are fettled right here in Nottingham by ZF Services UK.
We (and especially politicians) continually make the mistake of believing that successful manufacturing must be big, easy to see and employ hundreds if not thousands. Try telling that to Promethean Particles in Nottingham. They are a world-leader in the manufacture of nanoparticles.
There is nothing exceptional about the relative decline of manufacturing in the UK – barring the likes of Japan and Germany, it’s happened in almost all big economies. In our case it may have been accelerated not so much by government policy as our own preference for spending our money rather than saving it, and for our reluctance to do low paid jobs.
This means much of our economy is focused on sating consumer demand and less money is sloshing round in savings accounts waiting to be recirculated as business investment.
Manufacturing now takes a smaller share of GDP in many developed countries because they’ve followed a similar path. And increasing consumer spending is often a sign of a fundamentally wealthy economy which wants to indulge itself. Is that wrong?
But manufacturing isn’t dead. It wasn’t decimated in the 1980s. We still design and manufacture some of the best things in the world. And even in some parts of volume production we can still compete with the best.
Manufacturing is not what it was, we ought to do more of it. A plant which churned out accurate memories of our industrial past might be a start.
This is the sector which was, of course, decimated in the 1980s when that awful Maggie Thatcher went round Britain with a wrecking ball and took down every factory she saw – especially those in places like the North East and the West Midlands.
Which means that, today, Britain doesn’t make anything anymore and we’re all doomed (again).
Except she didn’t, and we’re not.
Putting political rhetoric to one side, a close examination of the history of manufacturing would tell you four things.
1) That traditional manufacturing’s decline began to take hold in the 1960s. It happened because our own manufacturers were, quite simply, under-invested, inefficient, making many poor quality products compared to global rivals, and focusing too heavily on disappearing markets.
2) That manufacturing when Margaret Thatcher came to power represented 25.8 per cent of the UK’s industrial output and had fallen to 22.5 per cent by the time she left Downing Street.
3) That manufacturing’s share of UK GDP began to fall noticeably from the late 1990s onwards.
4) That this fall was in part relative – in other words, its share of GDP became smaller partly because other industries (notably financial services) grew faster.
It’s hard to get that point across because politicians with axes to grind (if they can find a factory to grind them) peddle the myth that the policies of different governments led to the UK’s industrial ruin - which is tosh. For starters, Government doesn’t own any industry it could ruin (it did that in the 1960s and 70s).
Where government unquestionably has contributed to industrial decline is in the recording of it. Whatever you think of the East Midlands Development Agency (RIP), one of the most valuable things it did was record the size and shape of the regional economy.
Its last set of numbers would tell you, for example, that ‘decimated’ manufacturing actually makes up nearly a quarter of East Midlands output. Not bad for a dead industry, eh?
Since emda was consigned to a filing cabinet (the one marked ‘rename this policy and use it again in 10 years’), industrial statistics have been compiled by the Office for National Statistics.
Now, the ONS is a much-maligned body which has been used and abused by politicians for years. It is protected from interference now and churns out useful data by the bucketload.
On the downside, its website is almost impossible for members of the public to navigate and its figures about manufacturing record not GDP but GVA – a similar but subtly different measure of the value of what we all produce. So you’ll get different and slightly confusing analyses of where manufacturing’s at.
To cut to the chase, despite the myth-mongering, manufacturing is worth substantially more to the UK economy now than it was in the past. We’re a world leader in areas like aerospace, automotive, transport, computer processing, pharmaceuticals, biotechnology, nanotechnology etc.
Locally, we have substantial supply chains and multi-million university R&D programmes feeding into manufacturing giants like Rolls-Royce, Bombardier, Toyota, Airbus, Boeing. Alliance Boots and Imperial Tobacco between them employ thousands making things in Nottingham alone.
This is, in other words, something worth pondering over next time you’re on a train. Like, for example, the channel tunnel loco. Its gear sets are fettled right here in Nottingham by ZF Services UK.
We (and especially politicians) continually make the mistake of believing that successful manufacturing must be big, easy to see and employ hundreds if not thousands. Try telling that to Promethean Particles in Nottingham. They are a world-leader in the manufacture of nanoparticles.
There is nothing exceptional about the relative decline of manufacturing in the UK – barring the likes of Japan and Germany, it’s happened in almost all big economies. In our case it may have been accelerated not so much by government policy as our own preference for spending our money rather than saving it, and for our reluctance to do low paid jobs.
This means much of our economy is focused on sating consumer demand and less money is sloshing round in savings accounts waiting to be recirculated as business investment.
Manufacturing now takes a smaller share of GDP in many developed countries because they’ve followed a similar path. And increasing consumer spending is often a sign of a fundamentally wealthy economy which wants to indulge itself. Is that wrong?
But manufacturing isn’t dead. It wasn’t decimated in the 1980s. We still design and manufacture some of the best things in the world. And even in some parts of volume production we can still compete with the best.
Manufacturing is not what it was, we ought to do more of it. A plant which churned out accurate memories of our industrial past might be a start.
Friday, 26 August 2011
LEP faces a turning point
At some stage in the autumn the board of Nottinghamshire and Derbyshire Local Enterprise Partnership, officially called D2N2 but otherwise known as a LEP, will meet to discuss its priorities.
While it has a lot of priorities at the moment, it has no budget and no full-time staff. So those priorities are going to be slimmed down.
There’s something else it is drastically short of, too: widespread support in the business community. Granted, some of the biggest corporate names have given it time (Bombardier’s Colin Walton leads the board), and Derbyshire & Nottinghamshire Chamber of Commerce chief exec George Cowcher has been its main voice.
But there are widespread concerns that the LEP has simply not penetrated the psyche of your average business in the two counties.
I know from conversations I’ve had with civil servants that there are concerns that the wider business community has not bought into the LEP concept on any level.
I’ve seen a report drawn up by consultants which also says there is evidence that businesses don’t ‘get’ what the LEP is about.
In an article in the Post on Tuesday, Glenn Crocker, the chief executive of Nottingham’s BioCity, will say that many see the LEP as a “toothless irrelevance”, though he also says very clearly that he does not believe it should be written off.
There are three problems here.
One was identified by George Cowcher himself: businesses have got to wake up to the fact that the days of the East Midlands Development Agency, which had £150m a year to spend on the regional economy, are dead and buried. Businesses, organisations and sectors which relied on an emda funding stream have got to stand on their own two feet; there will be no grants to chase.
Mr Cowcher also tacitly admitted the second: the LEP needs to work much, much harder at raising its public profile. The £50,000 odd it has been given by government to support the development and maintenance of economic data is all well and good, but what purpose does it serve when the LEP is largely silent between board meetings?
The third is the contradiction at the heart of government economic policy. It wanted rid of emda because, in addition to wanting to save money, it did not believe a government agency should be leading business by the nose. Its view, which does make long-term economic sense, is that a sustainable economy is built around businesses which grow naturally.
But, as we’ve already seen, the central message from the organisation which has stepped into this void boils down to this: ‘We’re not emda’.
And if the mantra now is that businesses should help themselves, why will they vest time and money in the LEP? Look at what happened in the first round of bidding for the Regional Growth Fund (what was that about the death of regional economic policy?): one Notts business, Molecular Profiles, secured funding by making a bid itself. Not one of the 38 bids from the LEP - a body set up by government - was accepted by that government.
That may be because the local authority economic development people who give their time to the LEP were stuck in an emda mindset, wanting money for infrastructure, buildings and projects when the government was looking to back businesses creating jobs quickly.
The same problem cropped up in other LEP areas. So why was the process allowed to go so wrong for so long? All it has done is eat away at potential enthusiasm for the LEP concept.
The consultancy report I referred to earlier does make a powerful case for the existence of an organisation which furthers cross-county economic development activity and whatever government thinks about regional policy, it does believe business should have a powerful say in that.
Whether you feel strongly about government intervention in the economy or not, it seems common sense for businesses and local authorities to talk about what’s happening to the local economy, and for them both to make decisions based on solid evidence about the size and shape of the commercial landscape they operate in.
If the LEP is to mean anything, then it needs to be much more visible. It needs to hold events, to talk publicly, to get in the face of government, to produce the odd report – albeit within a sharply focused brief which avoids duplicating what other bodies already do.
There is another event in the autumn which could prove pivotal for the future of the LEP. It is the day when Government announces the results of the second round of bidding for the Regional Growth Fund (and don't ask when because no-one knows yet).
This time, £900 million is available across the country, and I know the LEP has made some hefty bids related to both business support activity and the tourism industry.
If those bids succeed, then the LEP has its sense of purpose.
If they fail again, then it’s surely back to the drawing board - for the Government as well as the LEP.
 |
| George Cowcher: a key voice on the LEP |
While it has a lot of priorities at the moment, it has no budget and no full-time staff. So those priorities are going to be slimmed down.
There’s something else it is drastically short of, too: widespread support in the business community. Granted, some of the biggest corporate names have given it time (Bombardier’s Colin Walton leads the board), and Derbyshire & Nottinghamshire Chamber of Commerce chief exec George Cowcher has been its main voice.
But there are widespread concerns that the LEP has simply not penetrated the psyche of your average business in the two counties.
I know from conversations I’ve had with civil servants that there are concerns that the wider business community has not bought into the LEP concept on any level.
I’ve seen a report drawn up by consultants which also says there is evidence that businesses don’t ‘get’ what the LEP is about.
In an article in the Post on Tuesday, Glenn Crocker, the chief executive of Nottingham’s BioCity, will say that many see the LEP as a “toothless irrelevance”, though he also says very clearly that he does not believe it should be written off.
There are three problems here.
One was identified by George Cowcher himself: businesses have got to wake up to the fact that the days of the East Midlands Development Agency, which had £150m a year to spend on the regional economy, are dead and buried. Businesses, organisations and sectors which relied on an emda funding stream have got to stand on their own two feet; there will be no grants to chase.
Mr Cowcher also tacitly admitted the second: the LEP needs to work much, much harder at raising its public profile. The £50,000 odd it has been given by government to support the development and maintenance of economic data is all well and good, but what purpose does it serve when the LEP is largely silent between board meetings?
The third is the contradiction at the heart of government economic policy. It wanted rid of emda because, in addition to wanting to save money, it did not believe a government agency should be leading business by the nose. Its view, which does make long-term economic sense, is that a sustainable economy is built around businesses which grow naturally.
But, as we’ve already seen, the central message from the organisation which has stepped into this void boils down to this: ‘We’re not emda’.
And if the mantra now is that businesses should help themselves, why will they vest time and money in the LEP? Look at what happened in the first round of bidding for the Regional Growth Fund (what was that about the death of regional economic policy?): one Notts business, Molecular Profiles, secured funding by making a bid itself. Not one of the 38 bids from the LEP - a body set up by government - was accepted by that government.
That may be because the local authority economic development people who give their time to the LEP were stuck in an emda mindset, wanting money for infrastructure, buildings and projects when the government was looking to back businesses creating jobs quickly.
The same problem cropped up in other LEP areas. So why was the process allowed to go so wrong for so long? All it has done is eat away at potential enthusiasm for the LEP concept.
The consultancy report I referred to earlier does make a powerful case for the existence of an organisation which furthers cross-county economic development activity and whatever government thinks about regional policy, it does believe business should have a powerful say in that.
Whether you feel strongly about government intervention in the economy or not, it seems common sense for businesses and local authorities to talk about what’s happening to the local economy, and for them both to make decisions based on solid evidence about the size and shape of the commercial landscape they operate in.
If the LEP is to mean anything, then it needs to be much more visible. It needs to hold events, to talk publicly, to get in the face of government, to produce the odd report – albeit within a sharply focused brief which avoids duplicating what other bodies already do.
There is another event in the autumn which could prove pivotal for the future of the LEP. It is the day when Government announces the results of the second round of bidding for the Regional Growth Fund (and don't ask when because no-one knows yet).
This time, £900 million is available across the country, and I know the LEP has made some hefty bids related to both business support activity and the tourism industry.
If those bids succeed, then the LEP has its sense of purpose.
If they fail again, then it’s surely back to the drawing board - for the Government as well as the LEP.
Wednesday, 13 April 2011
RGF: Why the trophy projects are struggling
The plot thickens on the Regional Growth Fund.
There was widespread disappointment earlier this week when all but a handful of the bids for money to back projects in the East Midlands was rejected.
There are some sniffs emerging which suggest to me that disappointment may be something we have to get used to.
Of the successful projects, the key question is how it was that bids from business got the nod, but bids from the [government-backed] Local Enterprise Partnership didn’t. So here’s a puzzle: were the private sector bids ones which government was already familiar with because these firms had previously applied for money from other public funding streams?
In other words, was this money they were already going to get, now repackaged under another banner? To be absolutely clear, the businesses involved have done nothing wrong, but there is an interesting political question hanging over the way these decisions were arrived at by Government.
The answer isn’t straightforward. One source involved in the process has told me that the issue is that business found RGF more attractive because there was uncertainty surrounding the other funding streams, which would originally have been dealt with by the now-doomed regional development agencies.
There’s some truth in that. Money previously allocated to the RDAs has been disappearing back into a Whitehall-shaped black hole. Indeed, there’s an argument which says it has re-emerged from that black hole in the slimmed-down shape of the Regional Growth Fund. So what goes around comes around, financially at least.
The other question is whether some of these projects will actually go ahead. You’ll note that all over the country the bids that have got the nod have been accepted ‘conditionally’. This is because they still have to clear a number of legal hurdles – the businesses involved must be able to deliver their side of the financial bargain in a match-funded scheme, they’ve got to be what they say they are (in other words, not a widget company dressed up as an aerospace engineer), and, inevitably, they’ve got to conform to a European Union directive.
These are the EU regulations about government aid to business, the basic rule being that state aid should not distort the market.
So it’s not impossible that some of the projects which have won RGF backing may have to be modified in some way before they can proceed. Or that one or two of them might fall over completely.
It also seems pretty obvious that there IS a regional bias in where the RGF money goes. Most of the bids accepted so far have been tilted towards the north, in areas where the public sector is a big chunk of the economy. So the South East, South West, East and East Midlands had fewer bids accepted. I suspect it will end up being the same in round two, when most of the RGF money will be allocated.
From my inquiries, it seems pretty obvious that in the first round there was an emphasis on schemes which were going to fit the Government’s immediate growth agenda – schemes which directly created jobs rather than encouraged them in the longer-term
This is probably why some of the grander, trophy projects – projects which local politicians can’t resist, because they are seen as monuments to achievement - didn’t make it.
They may still struggle in the second round. We’ll see.
There was widespread disappointment earlier this week when all but a handful of the bids for money to back projects in the East Midlands was rejected.
There are some sniffs emerging which suggest to me that disappointment may be something we have to get used to.
Of the successful projects, the key question is how it was that bids from business got the nod, but bids from the [government-backed] Local Enterprise Partnership didn’t. So here’s a puzzle: were the private sector bids ones which government was already familiar with because these firms had previously applied for money from other public funding streams?
In other words, was this money they were already going to get, now repackaged under another banner? To be absolutely clear, the businesses involved have done nothing wrong, but there is an interesting political question hanging over the way these decisions were arrived at by Government.
The answer isn’t straightforward. One source involved in the process has told me that the issue is that business found RGF more attractive because there was uncertainty surrounding the other funding streams, which would originally have been dealt with by the now-doomed regional development agencies.
There’s some truth in that. Money previously allocated to the RDAs has been disappearing back into a Whitehall-shaped black hole. Indeed, there’s an argument which says it has re-emerged from that black hole in the slimmed-down shape of the Regional Growth Fund. So what goes around comes around, financially at least.
The other question is whether some of these projects will actually go ahead. You’ll note that all over the country the bids that have got the nod have been accepted ‘conditionally’. This is because they still have to clear a number of legal hurdles – the businesses involved must be able to deliver their side of the financial bargain in a match-funded scheme, they’ve got to be what they say they are (in other words, not a widget company dressed up as an aerospace engineer), and, inevitably, they’ve got to conform to a European Union directive.
These are the EU regulations about government aid to business, the basic rule being that state aid should not distort the market.
So it’s not impossible that some of the projects which have won RGF backing may have to be modified in some way before they can proceed. Or that one or two of them might fall over completely.
It also seems pretty obvious that there IS a regional bias in where the RGF money goes. Most of the bids accepted so far have been tilted towards the north, in areas where the public sector is a big chunk of the economy. So the South East, South West, East and East Midlands had fewer bids accepted. I suspect it will end up being the same in round two, when most of the RGF money will be allocated.
From my inquiries, it seems pretty obvious that in the first round there was an emphasis on schemes which were going to fit the Government’s immediate growth agenda – schemes which directly created jobs rather than encouraged them in the longer-term
This is probably why some of the grander, trophy projects – projects which local politicians can’t resist, because they are seen as monuments to achievement - didn’t make it.
They may still struggle in the second round. We’ll see.
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