Archived decisions

Contact: Roger Lawes, ext 6743 email: [email protected]

1. Summary

1.1 A major, region-wide exercise is underway to assist the South East England Development Agency (SEEDA) with its review of the Regional Economic Strategy (RES). As part of that process views are sought on how best to ensure the continuing prosperity and quality of life for people across the South East, particularly in areas where low skills and expectations are holding back individuals and communities. This report explains the significance of the Regional Economic Strategy, summarises the existing Strategy, outlines the process of the review and recommends a series of comments to SEEDA reflecting the key economic matters that the Cabinet would expect to be addressed in the Review.

2. The Significance of the Regional Economic Strategy

2.1 Regional Development Agencies (RDAs) are responsible for promoting sustainable economic development. The priorities for achieving this are set out in RES which look forward ten years and are reviewed every three years. The RES is a statutory plan which sets out the context for both specific actions by the RDA under its various investment programmes and its involvement in the development of other strategies, such as the Regional Housing and Regional Transport Strategies. The Regional Spatial Strategy (eg the emerging South East Plan) both shapes and, in itself, is expected to be shaped by the RES. The significance of the document should not, therefore, be underestimated.

3. The Regional Economic Strategy for the South East

3.1 The first RES for the South East was prepared in 1999 and set out clearly the Development Agency's aspirations to be recognised as a world class region. The criticism of that Strategy was that it focussed on economic aspirations without any reference to the other social and environmental conditions necessary for economic success. The first review of the Strategy was published in 2002. Significant alterations were made to the

style and content of the RES. It provided a more integrated strategy, for example by addressing transport, social and health issues and, subject to one or two minor local concerns, was generally supported by the County Council.

3.2 The aim of the current RES is that by 2012 the South East will be recognised as one of the world's top performing regional economies as measured against a broad range of economic, social and environmental indicators. It identifies five priorities for the region: competitive business; successful people; vibrant communities; effective infrastructure; and sustainable use of natural resources, which together contribute towards the overarching aim of sustainable development.

3.3 The sub-regions identified in the existing RES have been instrumental in the allocation of SEEDA's resources, which have been directed at raising performance in the weaker sub-regions while nurturing the success of the stronger sub-regions and supporting the rural economy. The extent to which the objectives of the current RSS have been achieved is the subject of ongoing work the results of which are yet to be reported. The initial conclusions are that good progress has been made in delivering the RES targets in quantitative terms but that there is still more work to be done to explore, amongst other things, the contribution of the RES to the observed trends and the impact of the changes at a sub-regional level, ie have some parts of the region benefited from the RES more or less than others and has SEEDA's investment been in the best place.

4. Reviewing the Current Regional Economic Strategy

4.1 The review of the RES was launched on 15 July. The launch explored the key issues for the review (competitiveness, vibrant communities, successful people, natural resources and infrastructure) to help scope the agenda for a series of more detailed seminars over the summer and early autumn. Fifteen themed seminars were programmed for July, September and early October to explore both specific topics: for example competitiveness, regeneration, innovation and sustainable development; and economic sub-regions, including the rural economy. A final event, `Bringing It All Together', will be held on 10 October 2005 with the draft RES published for consultation sometime in November. Consultation on the draft will continue into January 2006 with the final draft submitted to Government in March/April 2006.

4.2 The review will consider the threats and opportunities facing the economy in the South East as it grapples with local, regional, national and global pressures. SEEDA's aim is to raise productivity levels across the whole region by encouraging high value jobs; improve skills to raise Gross Value Added (GVA) per head for everyone; and create opportunities to attract back into the workforce those who, for whatever reason, are currently not employed. Mechanisms to achieve this will be discussed and debated at the seminars. SEEDA will be considering all the comments made at these events as part of the review process. It has also invited written submissions.

5. Commentary

5.1 The current consultation on the review of the RES for the South East of England is, in part, an acknowledgement that the Strategy will only succeed with the commitment of the stakeholders. In that regard the exercise provides an early opportunity for the County Council to influence the underlying objectives of the Strategy before the details are developed and action plans formulated. Although there might be concerns about some of the finer points when the draft RES is published for consultation later in the autumn, at that time it may be too late to influence the broad thrust of the strategy.

5.2 The priorities in the current RES: competitive business; successful people; vibrant communities; effective infrastructure; and sustainable use of natural resources, remain pertinent to the sustainable development of the regional economy. The main issues are how the review will apply these priorities and how well the final strategy integrates with other regional and local delivery mechanisms to ensure a seamless delivery of support and services. In that respect, although there are welcome agreements about the priority need for improvements to infrastructure, there are already tensions appearing between the emerging South East Plan which sets sustainable economic growth within the wider context of quality of life and the RES which sets sustainable economic growth within the context of wealth creation and continuing prosperity.

5.3 By any conventional measures the South East is the UK's most successful region. However, beneath the headlines and averages lie substantial variations in performance, with concentrations of deprivation and exclusion made all the more unacceptable by the prosperity that surrounds them. Hampshire mirrors all those characteristics.

5.4 In the areas of economic success come the challenges of labour shortages, lack of affordable housing and congestion: it is also the case that areas of high economic activity such as Hampshire are also generally areas of high environmental quality and high pressure on natural resources. In areas of deprivation come the challenges of enhancing expectations and providing opportunities for both individuals and businesses to develop and adapt.

5.5 The recent Institute for Public Policy Research report (`The Commission on Sustainable Development in the South East: Final Report') concludes that, if the South East is to maintain its economic success while enhancing the environment and improving the wellbeing and quality of life of all its citizens, it will need to develop a new approach to growth and consumption. It recommends that policy-makers need to develop measures that influence the behaviour of individuals and firms to enable and encourage the more efficient use of natural resources that results in less pollution and waste; and that there will need to be investments in infrastructure, particularly public transport improvements for helping to reduce car dependency.

5.6 Reflecting these pressures on both environment and infrastructure, the current RES introduces the concept of "smart growth" (quality as opposed to quantity) rather than the more traditional land, labour and capital solution (quantity to provide opportunity). This approach, which focuses on skills, innovation, enterprise and business support, is reflected in the economic policies being developed for the sub-regions as part of Hampshire's contribution to the emerging South East Plan. However, clearly in an area as large and diverse as Hampshire (itself a microcosm of the South East) the concept requires local application: in some areas the issues of land supply and infrastructure provision will be different and more or less constraining. The need for a strategy that reflects local circumstances and priorities has been one of the key themes of contributions from Hampshire officers to the review process so far and should be reinforced by Cabinet.

5.7 At both a regional and local level, the Review should recognise the increasing number and variety of business opportunities that will emerge as environmental standards and pollution controls become tighter and more widespread. Opportunities will arise to develop new products, new processes and new technologies: to increase the efficiency with which energy and other resources are used and to reduce, re-use and recycle wastes. The County Council should therefore give particular support to the identification of initiatives to support the sustainable use of natural resources: an approach that would chime with its own, developing Material Resources Strategy.

5.8 The RES cannot, by itself, ensure the support of sustainable economic prosperity of the South East. Indeed, the need for an integrated approach is recognised in each of the five priorities in the existing Strategy. It is important, therefore, that all the partners which will be involved in the process are signed up to and support the final Strategy. In that respect the Hampshire Economic Partnership is specifically testing the five priorities to identify key action points and organisational responsibilities to ensure effective delivery in the county.

5.9 The new RES also provides the opportunity to review and improve business support networks so that they deliver professional services to businesses in a streamlined, customer-focused manner; and to rationalise the myriad of funding streams to ensure more coherent and effective programme delivery.

5.10 Finally, if trade-offs need to be made it is important that there is equity in the choices made. The single-minded pursuit of economic growth might not always be the appropriate response to achieving sustainable economic prosperity for the region overall.

5.11 SEEDA therefore must make it clear in the revised RES how the objectives and priorities of other plans and strategies, particularly the regional housing and transport strategies and the emerging South East Plan, have been taken into account and where, if at all, there might be conflicts that

need to be resolved. SEEDA's concern over the proposed housing provision in the South East Plan and the need for more affordable housing has already been clearly and publicly aired.

5.12 Ministers have, in the past, declined on successive occasions to clarify which strategy is pre-eminent - the RES or the Regional Spatial Strategy (South East Plan). A hierarchy is important in terms of resolving any conflicts between the two strategies: particularly as they are prepared by different agencies responsible to different Government departments. The County Council has advanced strong arguments in favour of the pre-eminence of the Regional Spatial Strategy: it is a more integrated document, taking an overall view of economic, social and environmental issues; it looks longer term (20 years compared to the 10 years of the RES), and it has greater legitimacy due to more extensive public consultation and scrutiny at a public inquiry. The County Council could usefully re-state its view that, for these reasons, the South East Plan should be the pre-eminent strategy and that in the event of any conflict between the two strategies, the South East Plan should prevail.

6. Impact Assessments

6.1 The principles of equal opportunities and diversity are considered by SEEDA to be integral to the Review process. The consultation process is developing engagement with minority communities as the exercise develops. A full impact assessment will be undertaken of the draft strategy both as it evolves and when it is completed.

Recommendation

That the Cabinet informs the South East England Development Agency that, without prejudice to any detailed comments that Hampshire County Council might wish to make on the Review Regional Economic Strategy when it is published in November 2005, it:

(i) welcomes the South East England Development Agency's extensive stakeholder approach to the review of the Regional Economic Strategy;

(ii) considers that the priorities in the current Regional Economic Strategy: competitive business; successful people; vibrant communities; effective infrastructure; and sustainable use of natural resources, remain pertinent to the sustainable development of the regional economy;

(iii) would support and welcome initiatives that recognise the increasing number and variety of business opportunities arising from the sustainable use of natural resources;

(iv) considers that the Regional Economic Strategy should fit within the development framework established in the South East Plan and therefore expects the Review to make it clear how the emerging Plan has influenced the strategy, particularly in relation to the link between sustainable economic growth and housing;

(v) suggests that the Review should clearly differentiate the roles of individual sub-regions in contributing towards the overall achievement of sustainable development; and

(vi) would like to see a review and rationalisation of the roles of the various stakeholders in the implementation of the strategy.

576Rpt/RL