House of Commons - East Midlands Development Agency and the Regional Economic Strategy

East Midlands Development Agency and the Regional Economic Strategy - East Midlands Regional Contents

7 Sustainability

106. Contributing to sustainable development is one of emda's five statutory functions as embodied in the Regional Development Agency Act and reflected in the collective mission of RDAs to "transform England's regions through sustainable economic development."[131] They work within the definition of sustainable development which is concerned with "meeting the needs of the present without compromising the ability of future generations to meet their own needs."[132]

107. In its written evidence, the Government Office for the East Midlands states:

The Government expects emda to contribute to sustainable development across its statutory, corporate, regional influencing and grant-making and investment functions to promote a strong, healthy and just society, and ensure we live within environmental limits.[133]

emda's statutory obligations in this area include: carbon reporting[134]; having regard to conserving biodiversity[135]; the duty to promote equality; and the forthcoming requirement to monitor and manage effectively equalities and diversity impacts.[136] emda also has a devolved responsibility for the design and management of the European Regional Development Fund Operational Programmes and for reporting on the ERDF OP cross-cutting theme of environmental sustainability.

emda's Progress on Sustainable Development

108. In its written evidence, emda highlighted projects in which it had invested which are delivering the sustainable development agenda. Examples include:

Development of a new sustainable eco-visitor centre at the Attenborough Nature Reserve, providing new facilities to support the financial sustainability of the nature reserve;
Genesis Social Enterprise Centre in Alfreton, a mixed development of managed work space, educational and community facilities designed to enhance local service delivery and create new economic opportunities for local people;
Supplier Diversity East Midlands, an innovative business support programme working with large multi-national household brands (including PepsiCo, ExxonMobil, Eversheds, KPMG, and IBM) to open up their supply chains to the region's black and minority ethnic business community; and
National Energy Technologies Institute hosted at Holywell Park, Loughborough University, a partnership between Government and the private sector to invest up to £1 billion in the development and deployment of new energy technologies to support the UK's emergence as a world leading low carbon economy.[137]

109. emda did not highlight equality in their initial presentation to us, although they have a statutory duty to promote equality. Questioned by the Committee, emda told us about their equalities impact assessment process and said they were working on an integrated equalities scheme. emda highlighted that "on every business support product that we have, we require the partner to monitor the customer base that they are dealing with from a diversity point of view".[138] They also noted that:

we have seen a growing trend in terms of penetration into areas like black and ethnic minority businesses and gender-based businesses, in terms of women's businesses. So we are actually already seeing a quite significant swing in the impact of our programmes in these areas.[139]

110. We were disappointed that emda's presentation did not mention equality issues, and their success or otherwise in fulfilling their duty to promote equality. We would have liked further analysis assessing the impact of their programmes, and of economic change, on diverse communities in relation to race, gender, disability, socio-economic background and other areas covered by the duty.

Environmental Expertise

111. While witnesses recognised the work that emda had done towards sustainable development, some felt that the sustainability ethos was not embedded within emda. The East Midlands Environment Link stated:

emda's corporate culture creates barriers to sustainable development. The SD [sustainable development] ethos does not yet appear to have become an integral part of the corporate culture and board members with SD responsibilities have not had the necessary expertise or seen the bigger SD picture.[140]

112. Witnesses noted that while emda has a statutory responsibility to contribute to sustainable development, at present there is no requirement to have environmental expertise on emda's board. East Midlands Environment Link noted, "We have argued consistently, as have our national organisations, that there should be a requirement to have environmental expertise on the emda board, which currently there is not."[141] emda commented that, although board members brought with them their own interests, such as an interest in the environmental agenda, this was not a requirement.[142]

Lead on Sustainable Development in the Region

113. Witnesses commented on the absence of a body leading on sustainable development in the region. The East Midlands Regional Assembly stated that "emda do not consider themselves to be the lead organisation in the region on sustainable development,"[143] while Natural England commented that "emda's reluctance to own the RES on behalf of the region or explicitly champion the RES's role to deliver sustainable economic development, was disappointing."[144]

114. Sarah Fowler, Area Manager, East Area, Environment Agency, highlighted the lack of a champion body for sustainability in the East Midlands:

It is stark that, in the East Midlands, there is no champion body. For example, there is sustainability North East, Sustainability South West and Sustainability West Midlands. […] A part of what is lacking in the East Midlands is that senior voice provided by all partners working together.[145]

Anthony Payne, Executive Director of Strategy and Communication, emda, commented that following a review in the region, regional parties concluded that sustainable development needed to be embedded "with Sub-National Review frameworks going forward and strategies rather than a specified SD [Sustainable Development] body."[146]

115. emda has a statutory responsibility to contribute to sustainable development. While we congratulate emda on its work towards sustainable development, we are not convinced that it is embedded as a priority within all aspects of the organisation. We are concerned that there is no requirement to have environmental expertise on emda's board. We recommend that the Department for Business, Industry and Skills and the Regional Minister examine the criteria for appointment on emda's board and seek to include representation from the environmental sector.

116. We are concerned that no one body takes the lead on sustainable issues in the region. We urge further discussion in the region to establish whether that is a role best suited for emda or another body. We also encourage that this discussion revisits the need for the establishment of a sustainable champion in the region, similar to that already established in other regions in England.

Tensions between Economic and Sustainable Development

117. Increasing GVA is a key performance indicator for RDAs and witnesses commented on the difficulties this created between economic and sustainable development. Bettina Large, East Midlands Environment Link, commented:

The key performance indicators are not sustainable development indicators, rather they are an increase in GVA and GDP, which are very conventional economic indicators. As far as we understand it, those indicators are structurally incapable of reflecting whether or not the environmental side and to some extent even the social side of sustainable development is being advanced or hindered. So that is the fundamental problem.[147]

East Midlands Environment Link developed this argument further in written evidence to the Committee:

There is a clear tension between emda's SD (sustainable development initiatives) and the continued commitment to economic growth almost for its own sake, between emda's wellbeing focus and GDP/GVA performance indicators—a tension between aspects of emda's work and central government requirement, the latter shared by parts of emda. [148]

118. Witnesses recognised that emda was originally set up to have an economic focus and could not be criticised for having a focus on economic development. Indeed, Groundwork Greater Nottingham stated that:

emda had been 'hogtied' by the requirement to demonstrate economic impact for every environment project. My assertion is that each project does generate positive economic impact but it is sometimes difficult to evidence these precise outcomes.[149]

REGIONAL INDEX OF SUSTAINABLE ECONOMIC WELFARE (R-ISEW)

119. The Index of Sustainable Economic Welfare (ISEW) is an economic indicator intended to replace the gross domestic product. Rather than simply adding together all expenditures like the gross domestic product, it balances consumer expenditure with such factors as income distribution and cost associated with pollution and other unsustainable costs.

120. emda were "leaders in developing"[150] a regional variant of the ISEW, and incorporated the R-ISEW into their Regional Economic Strategy as the top level indicator of progress towards their vision of a "flourishing region."[151] In the National Audit's 2007 performance assessment of emda, the development of R-ISEW was welcomed as a positive and innovative step. Jeff Moore, Chief Executive, emda, stated:

[the ISEW is an] unique and groundbreaking index […] What ISEW seeks to do, as well as measuring the capital benefits from investment, is to take account of the costs of crime and pollution, and the benefits and advantages of volunteering, labour, caring and those sorts of things. So this tries to bring a more comprehensive index together.[152]

121. In its written evidence, Natural England welcomed the development of the R-ISEW as a measure for regional performance. However, they commented that it still needed development as "this still only values the environment in an economic context and as a limited range of negative costs."[153] East Midlands Environment Link also recognised that, having been previously weak on economic indicators, the ISEW was now "approaching more meaningful indicators."[154]

122. Jeff Moore acknowledged that R-ISEW was still relatively new and was a developing measurement index with the possibility of learning more about developing, "the measurement of crime, the impact of crime, the benefits of volunteering, the impact of accidents and things like that."[155]

123. Jeff Moore detailed the interest R-ISEW had received throughout England and commented that "it had been taken on by a number of politicians as a key element of how to develop. Other regions have started to address it, look at it and show an interest in it."[156] Sarah Fowler, Area Manager, East Area, Environment Agency, stated that "the index has great potential value."[157]

124. We congratulate emda for leading the development of the Regional Index of Sustainable Economic Welfare, and its incorporation into the Regional Economic Strategy. We look forward to its further development to give greater emphasis to environmental indicators. We are concerned that the emphasis on economic indicators and the need to demonstrate economic impact for every environment project is detrimental to emda's ability to deliver sustainable development. We recommend that the Government use the Regional Index of Sustainable Economic Welfare as an alternative to the traditional GVA-only measurement of the RDAs' economic performance.

Sub-National Review

125. Under the Local Democracy, Economic Development and Construction Bill, as currently drafted, emda will have a responsibility to ensure that the new Regional Strategy delivers sustainable economic growth which contributes to sustainable development.

126. Witnesses welcomed this proposal.[158] In its written evidence, the East Midlands Regional Assembly stated that, "it supports a single regional strategy based upon sustainable development." [159] However it noted that, "RDAs single objective is economic growth. How emda and local authorities can work together in the production of the Single Regional Strategy will be a key test of these new arrangements."[160]

127. In its written evidence, emda emphasised the need for the Bill to protect and enhance the benefits of the business-led RDA model when addressing sustainable economic growth:

Business leadership of RDAs, clear decision making based on our capacity and expertise in key areas, and our financial flexibility have been critical factors in the progress we have made to date .[161]

128. We welcome the responsibility contained in the Local Government, Economic Development and Construction Bill to ensure a single regional strategy based upon sustainable development. We recognise emda's concerns but urge them to continue to work towards sustainable development in the region.

Rural, Semi-rural and Urban Divide

129. The East Midlands is predominantly a rural region, with a number of principal urban centres. The RES notes that it is England's third most rural region with over 30% of the population living in rural areas—almost ten percentage points higher than the England average.[162]

130. Witnesses expressed concern regarding a perceived focus of emda's investments in urban areas. The Federation of Small Businesses East Midlands commented that, "Lincolnshire, Rutland and South Northamptonshire often feel that they are on the periphery of public investment, with emda's funding being largely focussed on the three core cities of Derby, Nottingham and Leicester."[163] While Stephen Woolfe, former Chair of the East Midlands Chamber of Commerce, felt the debate was not simply about rural versus city, he commented that, "I certainly agree that Leicester, Nottingham and Derby dominate."[164]

131. In evidence to the Committee, emda highlighted that their approach was one of 'rural mainstreaming,' and that no specific rural strand or budget was reflected in the Corporate and Business Plans. In practical terms, "that means that we rural-proof all our programmes, priorities and policies, as well as every project."[165]

132. emda outlined in both its written and oral evidence that it did not seek to spread its funding equally across all parts of the region. As Jeff Moore clarified, "we are not about making sure that each of the 42 or 44 districts in the region gets one forty-second, as it were, of our total budget."[166] Instead emda looked to prioritise activities that deliver the greatest impact or tackle specific geographical needs and challenges within the region. The East Midlands Regional Assembly gave their support to this policy.[167]

133. We agree that the interests of rural parts of the East Midlands should be a mainstream concern for emda. However, this should not mean that rural areas do not receive targeted resources. emda must also ensure that its support is suitable for areas that are "semi-rural", with towns and villages interspersed with countryside, and that such areas do not fall through the gaps.

BROADBAND

134. A specific concern raised by witnesses regarding those living in rural communities was the lack of access to broadband.[168] John Hardwick, Chair, Area Policy Unit, Federation of Small Businesses East Midlands, highlighted that there were areas in the region where broadband was more or less non-existent, with Lincolnshire a particular area of concern:

Everybody from the Government down is saying that we should take advantage of new technologies, but that is difficult if the companies and providers basically say that they will concentrate on the areas that give them the biggest return, and will get to other areas eventually.

135. In oral evidence to the Committee, emda highlighted that projects they had run had significantly increased the opportunities for people to have access to broadband.[169] They commented that they were not responsible for delivering broadband infrastructure, which was the Government's role, but delivered e-adoption policies and products to try and encourage people to use the facilities available, "because you can take the horse to water, but you've got to find a way of making it drink to make our businesses competitive with broadband."[170]

136. The availability of broadband is an essential tool for business. While we recognise that much has been done in the region, there are still areas, particularly in the rural parts of the region, where availability is patchy, if not non-existent. We urge the Government to invest in broadband infrastructure and coverage in the East Midlands to allow businesses to take advantage of new technologies. We look to emda to continue to lobby Government on this issue.

MARKET TOWNS

137. The Federation of Small Businesses East Midlands raised concerns regarding the lack of appropriate space units in declining market towns, where they "were not seeing the major support."[171] It commented that while the cost of work premises was cheaper in less urban areas, the availability of suitable business premises outside of the region's cities and principal towns was severely limited.

138. In written evidence to the Committee, emda highlighted their proactive work in supporting the demand for higher quality employment land within rural localities, giving the example of Cransley Park in Kettering. As they specified in their evidence, "this development will generate 32,000sqm of new commercial floor space and has the potential to create a further 900 jobs for the country which will support the Northamptonshire Growth Agenda.[172]

139. We welcome the work emda has done towards supporting the demand in appropriate work space units in market towns. We congratulate them on the initiative they have shown in the development of Cransley Park, and encourage them to continue to work to support small businesses in rural areas.

131 http//:www.englandrdas.com/who_we_are/mission Back

132 Brundtland Commission Back

133 Ev 123 Back

134 Energy White paper 2007: Meeting the Energy Challenge Back

135 Section 40 of the Natural Environment and Rural Communities Act (2006) states that 'every public authority must, in exercising its functions, have regard, so far as is consistent with the proper exercise of those functions, to the purpose of conserving biodiversity.' Back

136 Equality Bill 2009 Back

137 Ev 102 Back

138 Q 270 Back

139 Q 271 Back

140 Ev 121 Back

141 Q 147 Back

142 Q 233 Back