Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

1.1. The purpose of this paper is to agree the future workstreams to be developed, arising from the Board's terms of reference, discussions of the economic profile at the previous meeting of the Board and wider considerations of the economic and organisational context.

1.2. This paper seeks to:

· state the key drivers for economic prosperity to inform the future work programme

· consider the role of other organisations making interventions to support the economy

· outline the impact the workstream may have in developing a sustainable economy for Hampshire

· begin defining sustainable economic development

· briefly explore resourcing issues

· set out the next steps.

2. Contextual information

2.1. The terms of reference of the Board agreed at the previous meeting encompass a mix of:

· analytical work and strategy development

· negotiating activities and resource deployment with other public sector bodies engaged in economic development activity

· developing delivery plans for improvement.

2.2. The Local Development, Economic Development and Construction Bill has now passed into law, confirming the statutory requirement for principal authorities to undertake an Economic Assessment for their area from April 2010.

2.3. The drivers of economic growth can be defined as:

· Land and property

· Transport and communications technology

· Access to finance

· Skilled workforce

· Innovation and entrepreneurship.

2.4. The County Council scale, budget, geographic size, its employment status and the nature of the public services it provides ensures that it is in a unique position to influence economic development in the County Council and beyond. Using these characteristics, developing workstreams round each of the above seem sensible and would give the County Council an immediate foothold on a range of very important issues. For example, the process has begun to look at how the County Council could use its land to support affordable homes in urban and rural areas and how it might think of using its strategic land holdings in relation to employment opportunities. Similarly, the County Council is well placed in relation to infrastructure and both its design and implementation to use and join up with others its capacity to promote sustainable economic development. Access to finance for both the public and private sector in the current and future economic climate is bound to be harder. Work has begun in looking how future business growth, tax incentives, potential funding devices and the like can be used to provide finance to infrastructure projects. Again, looking at the sensible involvement of the private sector on a basis that allows infrastructure to be provided, but with operating costs providing future income flows, could also be a model that takes forward the work that underpinned Project Integra.

2.5. In relation to skills there are many people currently operating in that landscape. The Council has begun work with Jobcentre Plus and on apprenticeships and skills opportunities. This work can be aligned with the forthcoming responsibilities that the Council will have across Hampshire for the 14-19 agenda and gives an opportunity to think how the Council could influence future training and development opportunities in the wider workforce and also exploit its capacity as one of the largest employers in the region. Work on the latter has already begun.

2.6. Later on in this report it is therefore suggested that the Hampshire Economic Board work its way through a series of workstreams and opportunities, joining these up with other agencies as appropriate but always focusing on more immediate and near term outcomes. Alongside this, some longer term thinking can begin to be developed about shaping the future Hampshire economy and workforce.

2.7. For example, the level and type of growth we want to take place in Hampshire needs to be considered, notwithstanding the current targets and aspirations in the South East Plan. It is perhaps time for a paradigm shift in the country's approach to economic growth. A report by the Sustainable Development Commission in March 2009 suggests that there is only a narrow time window for shifting from growth dependency to a sustainable and stable economy and that the timescale to achieve this is short because of the rate of depletion of fossil fuels.

2.8. Sustainable economic development balances the need for continued economic growth against the carrying capacity of the natural environment and the wider determinants of quality of life. But in our market led economy, if sufficient jobs are to be created to keep us at full employment, it is necessary to create new economic activity to create new jobs, to compensate for increased productivity in existing economic activity, otherwise unemployment emerges. Growth is needed to maintain stable economic conditions. However that growth will almost certainly add to our use of finite resources, carbon emissions and impact on ecosystems. At the moment there is no evidence that our greater efficiency in resource use is resulting in absolute reductions in resource use and emissions.

2.9. Most manufacturing is carried out overseas and finished goods imported, however estimates have been made that the south-east exceeds three-fold what the country can sustain. According to the report, while there is evidence that there is some decoupling of economic growth from resource use, the absolute use of resources continues to rise in the UK.

2.10. Recent reports have shown that Britain does not score highly in satisfaction levels despite steadily rising affluence since the second world war and relatively high income per capita. Britain is only halfway up the Happy Planet Index (HPI), calculated by the New Economics Foundation (NEF), in 74th place of 143 nations surveyed. This measures resource depletion as well as Quality of Life factors. Last year a report on children's contentment across Europe ranked Britain quite low. Britons work longer hours, drive further and have higher personal debt than many other European countries. Their family relationships tend to be less strong than other countries and they may move often in chasing better jobs, thereby weakening their community links. These may all be contributing to the lower levels of satisfaction reported. Whilst such reports should be treated with caution, being highly sensitive to the factors chosen, we might all instinctively think just focusing on GDP or GVA is insufficient.

2.11. Demographics mean that there will be fewer people of working age to support the retired population, which will grow significantly over the coming years. The personalisation agenda means there will likely be a need for new, niche local provision to provide care services and this might be integrated with other publicly funded services - for travel, health care, leisure. There is opportunity to create social capital and social enterprise which can help to meet these needs.

2.12. The recession has increased unemployment in Hampshire and the young are particularly adversely affected. This is a rational market response to the availability of surplus labour - why choose someone without experience when costs are similar? Anecdotally, there is also criticism from business that young people are not `work ready', with criticisms of their work attitude, communication skills, literacy and numeracy. However, evidence on the scale of the problem, and the age and qualifications profile, is lacking.

2.13. The Audit Commission has commented on the relatively high proportion of the Hampshire workforce with skills below NVQ Level 2. Future forecasts for the economy suggest a move to an `hourglass' economy with much fewer requirements for people at intermediate skill levels, where technology advances mean that far fewer people will be needed in future. Likely future growth sectors - marine, electronics and defence - will all need a skilled workforce and, anecdotally, some companies have moved away from Hampshire because of the difficulty of finding suitably skilled labour. Until the recent recession, public services have also experienced areas of significant skill shortage, notably in the County Council for care workers, engineers and other technical professions.

2.14. However, perhaps some of the attributes and skills that young people today do have are insufficiently recognised- they are overwhelmingly IT capable and many of them maintain virtual social networks. There may not yet be recognition of the fit that these may have for the future economy. Whilst there are undoubtedly areas of shortage, for example in science, technology engineering and mathematics (STEM), the skills indicators used may not be sufficiently sophisticated or accurate to reflect what the aim should be. In addition, people can have skills without them being accredited by some qualification. The learning opportunities that young people have - in schools, colleges, universities and jobs - may need to change too, as technology facilitates other ways of becoming skilled.

2.15. There is much enthusiasm for growing the `green technology' sector as a replacement for traditional manufacturing activity, to reduce carbon emissions, particularly from energy use and to create new jobs. Continued growth of housing and economic activity in Hampshire has created a strong focus on planning development in more sustainable locations, imposing sustainable design standards and supporting skills training in sustainable construction techniques. More recently, attention has been turning to the retro-fitting of the existing housing stock. Hampshire is reasonably well placed to attract such business in terms of location of ports and airports, supply chains, sustainable development culture and housing and economic growth opportunities. However its roads are congested, house and commercial property prices are high and its skills offer is insufficiently strong at the skilled technician level. Graduates trained in Hampshire are attracted to work in London and other parts of the south-east by higher salaries.

2.16. In rural areas, productivity in the agricultural sector has meant that it now supports relatively few jobs. This relatively low wage part of the economy is finding it difficult to attract sufficient students, although this year Sparsholt College attracted record numbers of students on agriculture courses. Looking longer term, it is known that farming as currently practised is highly dependent on oil and therefore unsustainable in its current form. Sustainable agriculture skills need to be developed and there is a necessity for people to have the skills to be able to start their own businesses.

2.17. Many small local retail businesses reliant on local patronage are also in decline. Pubs, village shops and post offices are closing and often it is only if the local community takes responsibility for them that they will survive long term.

2.18. There has been compensatory growth in jobs in other parts of the rural economy, mostly micro-businesses. As reported elsewhere on this agenda, these are often critically dependent on broadband access to develop and run their business, but a large number of Hampshire postcodes do not even have the most basic level of broadband provision. Such provision is also vital for social networking.

2.19. More generally, while the UK has a wide spread of broadband coverage and high take up by residents and business, plans to expand higher speed broadband in some urban areas are weak and provision in the UK apparently compares badly with countries such as Korea, Latvia and Lithuania. Except for goods that need to be manufactured and/or transported, internet-based business creates opportunities to reduce the carbon footprint of economic activity, with people working more from home or local enterprise hubs. New skills are needed to exploit the opportunities that the technology provides.

2.20. This is not an exhaustive list of issues and the depth of understanding of them will increase over time. There are some issues that are pressing where there are already interventions underway or planned, such as support for independent retailers in rural areas, modern apprenticeships, and affordable housing. However, over the coming couple of years, it is necessary to look at these issues in more detail, create a realisable vision for Hampshire's economy over the next 20-50 years, analyse how the public sector can best help shape the realisation of that vision and seek to influence and align public sector resources that directly or indirectly support the economy to common purpose. A diagram which seeks to capture the process of action oriented strategy development around the economic drivers is attached at Appendix 1, with a draft schedule for the Board's work over the next year set out below.

3. Finance

3.1. There are no immediate financial implications arising from this report.

3.2. The speed at which this agenda can be developed will depend on the capacity of the Council to deploy resources to develop the strategy and subsequent interventions.

4. Performance

4.1. This report does not look at the Council's current performance targets for the economy. The work highlighted in this report is a mechanism through which future performance ambitions will be created.

5. Future direction

5.1. This will emerge from the work to be undertaken by the Board. The proposed programme for initially considering key themes at future Board meetings over the next year is set out below, together with a timetable for developing an overall strategy. Once each theme has had its initial discussion, further reports will be brought back to the Board which will develop further thinking and to consider new interventions. Other organisations which support the economy will be asked to attend the Board as appropriate.

5.2. The Board will be discussing how to engage with the business community. There may be merit in engaging business representative organisations to provide intelligence on specific themes as well as providing them an opportunity to address the Board on their overall perspective and concerns.

5.3. This approach turns on its head the traditional idea of having a broad economic plan or strategy, followed by the development of activity, but suggests in its place a more outcome focused set of workstreams which can be joined up at a later date. This approach therefore focuses attention and resources on outcomes and opportunities rather than some of the difficulties that come from setting out an ambitious economic strategy or plan that quickly has to be re-written as events beyond its control rapidly change.

6. Recommendations

6.1. That the workstreams set out in Section 2 and illustrated in Appendix 1 be approved.

6.2. That the outline future work programme set out at paragraph 5.1. be agreed.

2241Rpt/1106/AQ

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

Other Significant Links

IMPACT ASSESSMENTS:

7. Equalities Impact Assessment:

7.1. Young people, those without skills and those disadvantaged in the labour market are most adversely affected by the recession and the consequential increase in unemployment.

8. Impact on Crime and Disorder:

8.1. There is a link between wide differences in economic prosperity and crime levels.

9. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

This report outlines how a sustainable economic development strategy needs to balance social, environmental and economic needs. Climate emissions are one of the natural resource indicators that will need to be taken into account.

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

Not applicable.