Contact: John Rees-Evans, Ext: 6628 email:[email protected]

SUMMARY:

On 23 January 2006, Cabinet considered the Council's response to the Consultation Document prepared by the South East England Development Agency (SEEDA) in connection with the roll forward of the Regional Economic Strategy (RES) to 2006-2016. A Draft RES has now been published to which the Council has been asked to respond by 30 June 2006.

This report reviews the changes made to the earlier document and recommends a response based on the Council's own priorities for Hampshire.

1. Introduction

The draft RES has been issued for Consultation to the key stakeholders in the region, with a deadline of 30 June 2006. Following this consultation SEEDA will be seeking endorsement in the region for the final RES, prior to submission to Government later in the year.

The 90 page document is accompanied by a series of annexes reviewing baseline date and various consultee responses, as well as a Sustainability Appraisal and Strategic Environmental Assessment.

2. Approach

2.1 Vision and targets

The overall vision declares that "by 2016 the South East will be a world class region achieving sustainable prosperity".

The strategy comprises three values:

· building on excellence for global competitiveness;

· investing in potential to improve performance; and

· safeguarding quality of life as a competitive advantage

three headline targets:

· achieve an average annual increase in GVA per capita of at least 3 per cent;

· increase productivity per worker by 30 per cent (from £39,000 in 2005 to at least £50,000 by 2016 at constant prices); and

· reduce the rate of increase in the region's ecological footprint, stabilise it and reduce it by 2016

and three challenges:

· global competitiveness

· smart growth; and

· sustainable prosperity

For each of the challenges an overall goal is identified together with a set of targets to be achieved and actions to achieve success. The leading agency for delivery is also clearly identified. All in all, there are eighty three actions ranging from process ( e.g. continuing to develop a programme of aftercare support for new investors and support sourcing energy from land-based resources in the South East) to delivery (e.g. facilitate funding for the delivery of Airtrack into Heathrow Terminal 5 by 2009-2010 and develop deliverable and pragmatic solutions for regional road, rail and light rail schemes of national and regional significance).

2.2 Area definitions

The earlier Consultation Document set out its actions in relation to the overall generic type of area e.g. farming in the "Outer South East". In the draft RES, there is a continuing reference to types of area:-

"inner South East"

"rural South East" and

"coastal South East"

but the focus for action is related more to "diamonds for growth" and "the string of pearls".

In Hampshire, Basingstoke in the "inner south east" and urban south Hampshire are identified as "diamonds for growth".

The "Rural South East" is allocated a small section of its own with references to priorities which would be very much shared by the Council e.g. market towns, farming, premium food products, traditional crafts, broadband and green tourism.

2.3 Guiding Principles

The Draft RES sets out an agenda closely-linked to the "Lisbon Strategy" as the only effective way of maintaining global competitiveness and acknowledges the importance of co-operating on a European level to meet the threats posed by Asian markets in particular.

"Smart Growth", where existing supply side resources are maximised (e.g. increasing participation in the workforce), is seen as a means to achieve targeted growth while minimising the impacts on the environment.

Infrastructure investment (including broadband) is recognised as vital to avoid a "spiral of decline" or a "slow death".

3. Action Programme

This is now much more clearly set out under the three overall objectives, together with a rationale, an identified lead organisation (or partners) and, in most cases, a clear target.

4. Response to the Council's earlier submission in January 2006

In January, the Council drew specific attention to seven points (see letter from the Leader attached at Appendix A). In general, the draft has clearly taken these views into account:-

· there is a significant and clear role allocated to elected Councils

· recognition is given to the needs of those with few or less-developed skills (Action 39 page 54)

· "Smart Growth" is emphasised in order to alleviate pressures on infrastructure and the environment

· sustainability lies at the heart of Objective 3, with SEEDA proposing to adopt an "Index of Sustainable Well-being" (ISEW) as an additional regional indicator of progress towards sustainability

· rural areas have received significantly more attention in the document with specific actions to promote enterprise (see Actions 18 & 19)

· the Council's concerns about over-generalisation by the use of `banded areas' have been met and the influence of London recognised (e.g. Olympics 2012).

· specific actions are listed to address the needs for European inter-regional co-operation on trade and investment.

The response of SEEDA to the issues raised by this Council and other stakeholders is to be welcomed.

5. General comments

5.1 Growth - the Strategy sets a target of at least 3% average annual increase in Gross Value Added (GVA) per capita. Achieving this in a sustainable way is the key challenge for the next ten years. Whilst a variety of actions is proposed (e.g. to reduce consumption, waste and CO₂ emissions), there is no clear linkage between these actions and the measure of the ecological footprint. It is also important that SEEDA maintains its focus on reducing local disparities and ensuring that `underperforming' areas such as south Hampshire are enabled to punch their weight.

In implementing the Strategy, there is a need for consistent and detailed work to assess the relationships between growth, housing, land-take and migration. The work undertaken by Partnership for Urban South Hampshire (PUSH) on south Hampshire provides a model for this, and demonstrates how it is possible to forecast impacts and plan accordingly.

5.2 Areas/ sub-regions - there will clearly be differentiated economic policies according to the needs of each areas. In a region as large and diverse as the south east, sub-regional strategies are essential. The principle of "diamonds for growth" goes some way towards this, but does not allow the consequential linking of all aspects of the strategy at sub-regional level. It also results in the omission of important areas such as the Blackwater Valley.

The designation of south Hampshire as a `diamond for growth' is broadly consistent with the Council's position though there may need to be some discussion as to the precise boundaries. In the case of Basingstoke there is considerable doubt as to whether the area can absorb substantial levels of growth until the local infrastructure issues are resolved (e.g. drainage).

5.3 Infrastructure

The draft Strategy proposes that a Regional Infrastructure Fund be established as a "revolving loan fund" and estimated to be worth up to £300m annually once `Planning Gain Supplement' and other private and public sector leverage is taken into account. Clear guidelines and mechanics will have to be agreed. It would not, however, be acceptable for SEEDA to intervene in the powers of the Local Authorities to determine, collect and allocate Planning Gain Supplement.

Whilst the strategy does now make more references to specific pieces of infrastructure (Actions 45 & 46 and 11-14), the needs of South Hampshire and the Blackwater Valley do not figure significantly. There is no mention of the Chickenhall Lane Link Road, which is needed to unlock one of the potentially largest employment sites in the South East.

In view of the Government's very specific commitment to allocate infrastructure funding to `growth points', it would be helpful if the Strategy were to make specific reference to the designation of south Hampshire as a `growth point'.

5.4 Specific points:

· There is inadequate appreciation of the significance of tourism to the economy of Hampshire and how these economic benefits can be released (Action 17 needs developing)

· The strategy should refer to the development of localised business clusters (e.g. creative industries) in Action 26 - Sector Consortia.

· The references to quality of life and environment would be strengthened with the addition of actions referring to conservation of natural and historic environment and the development of the cultural infrastructure.

· The public sector can play a key role in promoting flexible work practices and should be included in Actions 62 and 63.

· A number of further detailed comments have been received from the Council's Service Departments, relating to specific actions in the Strategy. It is proposed that these be included as a schedule appended to the Council's overall response.

6. Conclusion

The Draft Strategy has recognised many of the issues raised by the region's stakeholders including the Local Authorities. In its final form, it will be expected to demonstrate stronger links with the South East Plan in terms of planned overall development, and a greater recognition of the role of sub-regional strategies.

The Draft Strategy is very strong on practical actions and the rationale for these, which is welcome. However, there is an absence of rigorous analysis of the interrelationships between supply side factors (labour, land, infrastructure) and the targeted growth. In the final strategy, SEEDA should:-

· clearly set its overall goals within the context of the Regional Spatial Strategy (the South East Plan)

· give clearer estimates of land and labour requirements in the context of growth, so that there are clear benchmarks against which progress can be monitored

· give an indication as to how the Agency will respond to changing factors outside its control.

7. Recommendations:

It is recommended that Cabinet agrees its response to the Draft Strategy as the basis for the Leader of the Council to respond on 29 June 2006 to SEEDA.

In addition it is recommended that the response of the Council include specific statements as follows:

The Council

· welcomes the response of SEEDA to the points made in the Council's comments on the earlier Consultation Draft

· wishes to see further work to assess the development impacts which could arise as a result of the 3% growth target, particularly in the context of the South East Plan

· recommends SEEDA to focus on bringing underperforming areas up to the regional performance and on reducing disparities across the region

· seriously doubts the capacity of Basingstoke to absorb substantial increases in growth until the local infrastructure issues are resolved

· wishes to see specific reference to the economic prospects for the Blackwater Valley sub-region

· whilst welcoming the commitment of SEEDA to `smart growth', wishes to see a parallel commitment to the needs of lower skilled workers

· wishes to see a commitment under `key roles for local authorities' for SEEDA to work to align its resources with targets set out in Local Area Agreements

· broadly welcomes the establishment of a Regional Infrastructure Fund but insists that allocation of Planning Gain Supplement should be at the discretion of the Local Authorities who collect it

· reiterates its view that the growth targets set in the Draft are only achievable in so far as the necessary infrastructure is also provided

· urges the inclusion of a specific reference to the designation of south Hampshire as a `Growth Point' and to specific pieces of infrastructure such as the Chickenhall Lane Link Road in Eastleigh

· proposes to SEEDA that it take account in its action programme of the particular comments attached in the table accompanying the Leader's letter.