RDAs AND THE BUDGET

 January 2005

Page

Introduction – Business Commitment to an Entrepreneurial Economy          3

What more can be done to align the regional strategies for economic development, planning, housing and associated funding?                                    4

How can national government more effectively complement and support

local and regional efforts to embed a culture of enterprise in

disadvantaged communities?                                                                                5

How best can RDAs encourage business – university collaboration and the growth of research and development intensive businesses – with particular reference to enabling the development of knowledge based cities with the potential for higher growth?

Views on the main barriers to increased growth of Research and

Development intensive businesses?                                                                    8

What scope is there for the RDAs to deliver the Government's

sustainable development objectives and how might their

effectiveness be enhanced by improved co-ordination between

national and regional policy?                                                                                 10

In light of the wind down of the Single Regeneration Budget and the establishment of the Local Community Sector Taskforce, what role

do you see the Voluntary and Community Sector (VCS) playing

in the delivery of the RDA's key objectives – in particular in the

regeneration of deprived areas?                                                                            11

Transport                                                                                                                   12

Notes                                                                                                                          13

                                                RDAs and the Budget

Introduction – Business Commitment to an Entrepreneurial Economy

An entrepreneurial world class economy for the West Midlands region is the goal for the West Midlands Business Council.

The West Midlands Business Council's work with Advantage West Midlands, UK Trade and Investment amongst others is geared towards realising this shared objective.

We also recognise that the Government is committed to developing proactive regional economic development plans so that each region can improve its GDP ratio and, therefore, the overall economy of the United Kingdom.

We welcome the work of Advantage West Midlands and other regional institutions with the Government in focusing attention on this core issue for business.

In addressing each of the questions that have been presented to the West Midlands Business Council, our objective has been to reduce needless duplication and focus resources on areas that will make the biggest difference to our regional economy.

What more can be done to align the regional strategies for economic development, planning, housing and associated funding?

The West Midlands Business Council views the Regional Economic Strategy (RES) and the Regional Spatial Strategy (RSS) as the core bedrock strategies for regional economic development.

Therefore, the many other strategies that have been produced or are in the process of development, must fit within the RES and RSS. These other strategies must also be clearly seen as assisting to fulfil set objectives as contained in the RES and RSS.

The business community can not accept the emergence of any other strategy that challenges the supremacy of the RES and RSS. Any such development is likely to lead to needless duplication, a diversion of resources from realising core objectives and a loss of business confidence in the devolution process.

We welcome the fact that the RES and RSS are complementary strategies and that the implementation of each strategy is, so far, being co-ordinated together.

We have become aware of some concerns, however, that while the RSS has a legal basis the RES has no statutory footing and therefore a time may come when resources are solely diverted to implementing the RSS at the expense of the RES.

While we have seen no evidence of these fears being realised, we recognise these valid concerns and would therefore encourage the Government, at a suitable legislative opportunity, to ensure the RES has equal legal status with the RSS.

We are aware of the decision by the Government to consult on a process of further devolution of powers to the regional level. The West Midlands Business Council intends to respond in detail to this consultation process. We also believe that for Regional Development Agencies to develop their effectiveness in strengthening regional economies, then there is a need for Government to streamline the number of nationally set targets, RDAs are set – thereby enabling RDAs to focus more on the particular economic characteristics of their region.

Our only comments at this stage is that any decision to grant Regional Indicative Budgets for housing and transport – though welcome at one level, could lead to false expectations and therefore damage business confidence in the devolution process if the indicative nature of the budgets are not realised. 

We also believe that for Regional Development Agencies to develop their capacity in strengthening regional economies, there is a need for Government to streamline the number of nationally set targets RDAs are set – thereby enabling RDAs to focus more on the particular economic characteristics of their respective regions.

How can national government more effectively complement and support local and regional efforts to embed a culture of enterprise in disadvantaged communities?

Low levels of aspiration in many disadvantaged communities inevitably leads to low levels of business start-ups and the corresponding low per capita income levels in those areas.

Clearly, therefore, raising aspirations is critical to addressing this issue. Therefore the first issue that needs to be addressed are the low levels of skills linked to low levels of aspiration and the corresponding lack of an enterprise culture.

In the West Midlands region, the Regional Skills Partnership has been established to tackle this very issue and it needs to be given time to meet this difficult task.

Nonetheless, central Government can assist regional decision making in skills by recognising that leadership and management training will be key to generating an enterprise culture in disadvantaged communities and that such training will require public funding.

Whilst we recognise the increase in Government funding for skills, this would not necessarily assist the development of leadership and management skills as such courses would be at NVQ Level Three while Government funding on skills are currently focused on NVQ Level One and Two courses.

We understand that the Department for Education and Skills has recently indicated that it could respond to effective regional stances on the need for funding for NVQ Level Three courses and we would encourage this approach.

Another critical issue to consider – when analysing the range of policy options to address the lack of an enterprise culture in deprived communities, relates to the level of business support that can be offered.

In the West Midlands region, the Regional Enterprise Board is considering this very issue and we would encourage the Government to support its work.

We also believe that the Government needs to recognise that business support in disadvantaged communities has to take into consideration the likelihood that any development of an enterprise culture will lead to an initial growth of micro businesses. Therefore Government backed business support programmes need to recognise this in the services that are offered and to ensure that business support agencies have the resources to meet the strategic economic development objectives for disadvantaged areas.

The West Midlands Business Council has also identified, in its work in helping to shape the Regional Spatial Strategy, that mixed income housing developments has the potential to raise the general aspirations of people living in that area. Planning rules therefore needs to be flexible enough to allow such mixed income housing developments to be developed.

There is also an onus on Government to ensure that regional bodies have the powers to focus attention on this issue. This should be combined with a greater understanding of entrepreneurialism in disadvantaged communities and whether the spirit of enterprise, which unfortunately can be channelled into illegal activities in some deprived areas, could be utilised for more productive purposes.

How best can RDAs encourage business – university collaboration and the growth of research and development intensive businesses – with particular reference to enabling the development of knowledge based cities with the potential for higher growth?

Views on the main barriers to increased growth of Research and Development intensive businesses?

The pressing need to develop the Research and Development (R&D) capability in the West Midlands region is being actively considered as part of the West Midlands Business Council's policy development programme for a long term strategy in this area and we look forward to sharing the outcome of our work with Advantage West Midlands.

We would, though, propose that in line with implementing the Regional Economic Strategy, that the Regional Development Agency should analyse the regional R&D requirements of the main business sectors in the West Midlands as a precursor to considering whether any effective use of public funds into any particular R&D requirements could lead to added value for the regional economy.

Alongside this analysis, the Agency could develop the region's research base by adopting a clearer understanding of where the region's research strengths lie and how these strengths could be developed. Such an initiative, in collaboration with other RDAs, could span rather than be contained within regional boundaries.

We would also encourage the Government, especially when the United Kingdom adopts the Presidency of the European Union in the latter half of 2005, to ensure that complex European Commission regulations governing how companies can access R&D grants via the EU's FP6 programme are simplified.

The formation of the West Midlands Business Council and the West Midlands Higher Education Association are important steps forward in developing regional collaboration between business and higher education. The West Midlands Business Council is committed to developing this partnership.

Nonetheless, there seems, from the business perspective, to be difficulties in accessing easily understood information on the range of R&D opportunities being offered by universities across the region. We note the work of Advantage West Midlands to address this problem by commissioning a private company – Beta Technology – to provide a match making service for R&D activity.

We also note the excellent work of the Manufacturing Advisory Service in developing co-operation between business and higher education.

Therefore we propose that the RDA's Innovation and Technology Council should consider a central brokerage model to enable businesses to find the right university partner which could be directly linked to business support programmes.

In reference to the proposal for knowledge based cities, we recognise that the development of the knowledge economy is critical for future prosperity. We believe that knowledge based cities can be developed if universities and colleges are viewed as an integral part of the community.

In this respect, we note the excellent example of University College Worcester (UCW) which is developing its facilities in Worcester which will be open to the community as well as to the staff and students of the university. We also note UCW's plans for business support services to be provided on its campus. A number of positive opportunities could arise from these developments in the field of closer business – university collaboration.

Therefore we believe that similar initiatives with other regional universities should be encouraged in this direction.

What scope is there for the RDAs to deliver the Government's sustainable development objectives and how might their effectiveness be enhanced by improved co-ordination between national and regional policy?

Sustainable economic development requires the need for macro-economic stability. Therefore business can clearly see the advantages of the concept of sustainable development.

The dilemma for the West Midlands business community, however, is that it is unclear what sustainable development principles mean in practice. This was particularly highlighted by last year's report by the West Midlands Regional Assembly strategic review of sustainable development. This report stated that there was a clear need for the concept of sustainable development to be clarified.

Therefore we would propose that regional institutions and the Government come to an agreed definition of sustainable development to enable constructive discussions to take place with the business sector.

In light of the wind down of the Single Regeneration Budget and the establishment of the Local Community Sector Taskforce, what role do you see the Voluntary and Community Sector (VCS) playing in the delivery of the RDA's key objectives – in particular in the regeneration of deprived areas?

The voluntary sector, with business, plays a critical role in the regeneration of deprived areas. The positive benefits of the partnership between business and the voluntary sector have been demonstrated in the West Midlands region with the co-operation that takes place within the Regeneration Zones.

The voluntary sector also has a wider role than concentrating on regenerating deprived areas. The Regional Action West Midlands report Mapping the contribution of the Voluntary & Community Sector to the Economy of the West Midlands (1) demonstrated that with the sector's minimum GDP at £335 million pa and its total expenditure at £1.15 billion pa, VCS is a major contributor to the West Midlands economy.

It is the voluntary sector that has the capacity and time to address many of the community based dilemmas that need to be addressed before business can make investment decisions in respect of these areas. In partnership with business both sectors can prioritise, with Government agencies, the areas that require further work to provide added value to the regional economy.

Therefore we would support the continued and proactive engagement of regional institutions and the Government with VCS. We do believe that for the capacity of this sector to be developed, active consideration is required as to whether business support style services can be provided to this sector to enable it to provide a further value added contribution to the regional economy.