South East England Development Agency (SEEDA)

MINUTES OF THE 79th MEETING OF THE
SOUTH EAST ENGLAND DEVELOPMENT AGENCY
HELD ON 20 JULY 2006 SEEDA GUILDFORD

Present:

James Brathwaite (Chairman), Rob Anderson, Liz Brighouse, Poul Christensen, Rob Douglas, Imtiaz Farookhi (left at 10.30), Keith House, Sarah Hohler, Peter Jones, John Peel, Mary McAnally, Phil Wood.

In attendance:

Jeff Alexander, Rolande Anderson (for items 1-7), Stella Bellem (for item 5), Donal Galligan, Paul Lovejoy, Keith Mitchell and Paul Bevan (for item 8), John Parsonage, Lewis Scott (for item 4), Duncan Straughen, Peter Taylor (for item 10), Simon Walker.

Item 1 Welcome and apologies for absence

1. Apologies had been received from Pam Alexander, who was on a Treasury fact finding trip to the USA, Peter Read, Bill Wakeham and Imtiaz Farookhi.

Item 2 Minutes of the last meeting (15 June 2006)

2. The minutes of the last meeting were agreed as a correct record of proceedings.

Matters arising

3. Peter Jones updated the Board on the possible merger and reorganisation of police forces and informed the Board of a possible federation between the police forces of Sussex, Kent and Surrey.
4. Imtiaz Farookhi drew the Board's attention to the announcement of the potential merger between English Partnerships and the Housing Corporation and requested an update from the Executive team on the implications for RDAs.
5. Jeff Alexander agreed to update Poul Christensen on the progress being made on setting up a horticulture sector consortia.
6. Further to his update at the June Board meeting, Rob Douglas informed the Board that Chris Banks, Chief Executive of the Learning & Skills Council, had been asked by Ministers to oversee the reorganisation of the National Learning & Skills Council at the national level.
7. Phil Wood relayed to the Board that Margaret Hodge had attended a recent meeting of RDA Trade Union members, where she had stressed the importance of RDAs justifying the added value their work contributes.

Action: Item 2, Matters arising

Pam Alexander to provide the Board with an update on the implications of the review of English Partnerships and the Housing Corporation.

Jeff Alexander to update Poul Christensen on progress made in setting up a horticulture sector consortia.

Item 3 Declarations of interest

8. Peter Jones in respect of item 9, Priory Quarter, Hastings Gap Site, as a member of Seaspace.
9. John Peel in respect of item 10, LEAN Implementation Plan, as President of EEF South, and item 12, Projects, for project 29 as a Director of West Sussex Economic Partnership; project 2 as Chair of Central Sussex College and project 15 as President of EEF South.

Item 4 Policy Update: Global Regions

10. Jeff Alexander presented to the Board on the opportunities for Trade and Investment in the United Arab Emirates (UAE). The Chairman noted that the rise of the UAE, especially in the aerospace sector, had taken most people by surprise, but that this was an opportunity that the South East should make the most of.
11. It was admitted by Jeff Alexander that the Middle East had not previously been a priority for SEEDA until the announcement at the Singapore Air Show of the setting up of the Dubai Aerospace Enterprise (DAE). It was explained that Dubai is the commercial capital and driving force of the Emirates, which has a relatively small population but a large expatriate community. At £55 billion its GDP is one of the highest in the world and there is a deliberate strategy to diversify away from its former dependence on oil towards tourism, services, construction, high-tech manufacturing and re-export – 60% of China's overseas trade flows through Dubai. An element of this is the thriving free trade zones where there is 0% tax on income and profit.
12. The UAE is the UK's largest export market in the Middle East and in 2005 was its 9 th largest export market globally. UK companies are increasingly participating in the UAE's property and construction sectors, and the Emirates are investing in the UK through mergers and acquisitions, most notably the buy out of P&O by Dubai Ports World earlier this year (which will continue to trade under the P&O brand).
13. The opportunities in Dubai are manifold, especially as their consortias in Infrastructure, Aerospace, Information Technology and Healthcare match almost exactly with those of the South East. In infrastructure, where UK companies are already involved, £150 million will be spent on each project per year over the next 5 years. In aerospace, which is a large element of their diversification, there will be a $15 billion investment over the next 10 years through the DAE in aircraft leasing, training, manufacturing, maintenance repair & overhaul and the setting up of an Aerospace Institute in Dubai with help from the University of Cranfield. The Information Technology market is thriving and the UAE is now the Middle East's biggest per capita healthcare spender.
14. The Board were informed that the Farnborough Aerospace Consortium (FAC) had visited Dubai on a scoping mission in June and that the Chairman had met with the DAE at the Farnborough Air Show on 19 th July to discuss further collaboration. Jeff Alexander pointed out that as with China, high level engagement was crucial and the Chairman's planned visit to Dubai in autumn would be followed up in December by a UKTI/SEEDA Trade Mission, including companies from the healthcare, aerospace and environment sectors. Plans were also underway for SEEDA representation in Dubai, including the possibility of a ‘bridgehead' placement in the British Embassy.
15. Lewis Scott highlighted further opportunities for two way trade and investment in the Gulf States, such as in renewable energy and technology as Abu Dhabi look to establish themselves as the world leader in the field.
16. The Chairman expanded on his meeting with the DAE, highlighting that their plans did not just include making Dubai an international hub but also to build airports throughout the world in China, India and Brazil. It was also pointed out that the Emirates were now the worlds largest land developers and that although their money had previously been invested mainly in the US, the fallout from the P&O takeover meant that the UK may become their new focus.
17. Peter Jones reiterated this by pointing towards the purchase of Northeye prison in Bexhill which is now used as a staging post for students coming from the Emirates to the UK. The Board were informed that courses were being developed at the University Centre Hastings to support the new students.
18. Rob Douglas offered to assist by drawing on his previous experience of working in the Middle East.
19. Mary McAnally drew attention to the role sport, especially sailing, cricket and tennis, could play in this process and agreed to be the liaison in her Sport England role.
20. There was a full discussion around the need to work through UKTI and to avoid alienating the Embassy through our actions, including the dangers of becoming tied down in bureaucracy and the moral issues of working within what is in reality a feudal state. There was also reference to the sensitivities regarding the proliferation of RDA offices in China. The Chairman pointed out that he had reassured Rashid Malik of the DAE that where SEEDA was the sector lead the Agency would pass on contacts to other RDAs and Jeff Alexander noted that there would be a review of overseas representatives through the CSR progress.
21. The Board NOTED the progress being made and the Chairman requested a full discussion on international trade with the BRIC countries ( Brazil, Russia, India and China) at a future meeting, recognising Russia as the next priority for investigation following China and India.

Action: Item 4, Global Regions

Jeff Alexander to lead on a full discussion on SEEDA's international trade policy with the BRIC countries.

Item 5 2012 Olympics regional action plan

22. Stella Bellem updated the Board on the progress that has been made to ensure that the South East maximises the opportunities that will arise from London hosting the Olympics and Paralympics in 2012, to inspire people and businesses and catalyse activity which otherwise would be difficult to bring forward.
23. The Nations and Regions Group (NRG) has been set up to ensure that the benefits of the Games will not solely be restricted to London. Mary McAnally, as Chair of Sport England and SEEDA Board member, is the South East's representative on the NRG and Pam Alexander chairs the Regional Olympic Coordinating Group.
24. The NRG had invited each region to complete a pro forma business plan. The main themes in the ‘South East offer' are to: use the South East's strengths in environmental technologies to create a truly low carbon Games; exploit the potential of 2012 being the first digital Games to improve and use Broadband connectivity across the region; harness the regions diversity to link communities and encourage links between young people; build on the Olympic values of excellence to inspire and raise standards in various areas; showcase the South East as the gateway to London and improve transport infrastructure; utilise those who are inspired by the Games to volunteer to promote and strengthen the network of community sports clubs across the region; promote learning and skills development by making the link between sport, creativity and skills apparent to 14-19 year olds and promote the health benefits of regular sports activities.
25. Mary McAnally highlighted the importance of the South East representing all RDAs on the skills agenda on the Inter Regional Group. The Board's attention was also drawn towards the need to focus both on the period leading up to 2012 and the post-Games period if we are to maximise the benefits of the Games themselves. In respect of this the Chairman requested a clear time line and action plan listing what we want to achieve and by when. Jeff Alexander promised to report to Mary McAnally the progress that had been made with Business Clubs.
26. Sarah Hohler pointed out that the Games would provide the opportunity to encourage people back into work through volunteering, to showcase the South East as a business development opportunity for those looking to relocate and to create a tourism legacy, but highlighted that the region as a whole needed to improve its customer relations skills to fully benefit. Rob Anderson noted that the South East could take a more ambitious view than London, which may become weighed down with logistical questions, to encourage behavioural change in the region. Rolande Anderson noted the role that Strategic Health Authorities could play in this.
27. Rob Douglas highlighted that the WordSkills 2011 needed to be more integrated into the 2012 Games and the opportunity that the Games presented to better integrate public transport in the region.
28. The Chairman drew attention to Lord Coe's comments that agriculture was crucial to the Games sustainable procurement policy in terms of food. Poul Christensen cautioned the Board not to underestimate the difficulty of this considering the lack of progress in the past 3 years.
29. The Board NOTED the progress made on the regional action plan.

Action : Item 5, 2012 Olympics regional action plan

Paul Lovejoy to provide the Board with a timeline for implementing the regional action plan.

Item 6 RES: Ministerial Submission

30. Paul Lovejoy took the Board through the revised outline of the core vision of the Regional Economic Strategy (RES) and the proposal for the process of signing off the final version.
31. The Board were informed that the core strategy takes into account the 180 consultation responses that were received and that the response from central Government did not raise any substantial differences. Of the concerns that were raised at the Regional Assembly plenary on 12 July, it was noted that the major areas of concern were aviation policy (which remains a known area of difference between the draft RES and the draft South East Plan); economic growth rates (where sensitivities appeared to be linked to concerns regarding impact on housing growth rates); and the relationship between the proposed Diamonds for Growth and spatial designations in the South East Plan (heightened by uncertainties and tensions ahead of the forthcoming Local Government White Paper).
32. On the issue of a 3% per capita GVA target, Board members highlighted that although SEEDA had always been explicit about this target, this was the first time in discussions that economic growth and housing provision had been explicitly linked. It was pointed out that public perception is that economic growth is only achieved through large scale in-migration and a drop in quality of life. It was agreed that SEEDA needed to address this misconception, and also correct the view that the RES is focused on economic issues to the detriment of the environment and social issues and that in fact it is not ‘housing led growth' that is being sought.
33. The Chairman drew attention to the need to compare the South East's GVA growth with that of other high performing global regions, citing Greater Washington's 7% and China's 11%, while at the same time stressing that what we are seeking in the South East is 'smart' growth.
34. Peter Jones felt that the impact of individual RES actions on growth should be spelt out, with the 3% target as a baseline and using the transformational actions as springboards to higher growth. It was also mentioned that we should highlight iconic issues such as the SEEDA Professorial Fellows.
35. John Peel pointed out that the Diamonds that have been highlighted will be very different from the Gatwick Diamond, as the latter was business led whereas the former will be local authority led.
36. There was a discussion around the issue of the horticulture sector relying on imported foreign labour and that local workers were being undercut by those accepting minimum wages. It was noted that if it could be identified which agencies were providing the workers, those agencies could then be used to get local people back into work.
37. Board members congratulated staff on the progression of the document and confirmed their happiness to promote the document. The Chairman asked for a campaigning strategy for Board members to be produced. Paul Lovejoy confirmed that the document would come back to the Board for final endorsement in September and that Ministerial endorsement would be received before the launch of the new RES at the Open Public meeting on 31 October.
38. The Board APPROVED the proposal in the paper.

Action: Item 6, RES: Ministerial submission

Paul Lovejoy to produce a strategy for Board members to promote the RES.

Item 7 GOSE

39. Rolande Anderson updated the Board on the reorganisation of the Department of Communities and Local Government (DCLG). The Board were informed that there were likely to be job cuts at the department and that adverts had been placed for Director General level jobs, including the newly acquired Equality unit from DTI.
40. Joe Montgomery will head up a new Group around ‘Place' which will pull together the different strands of Government policy in an area to make sense of the impact policy has on the ground, for example how the work of PUSH links into the Local Area Agreements.
41. Phil Wood pointed out that the term ‘place' meant very little to the vast majority of the population, whose main desire would be for a clear and simple structure
42. The Board NOTED the Government Office's update.

Item 8 Regional Assembly

43. Keith Mitchell addressed the Board setting out the Assembly's views on local government reorganisation and the Regional Economic Strategy.
44. Keith Mitchell felt that the process of the Banham Review had severely weakened working relationships between district authorities and county councils for a prolonged period and that a similar review would finish them off. He also pointed out that the public was aware that 75% of the funding and decision making in local government was controlled by Central Government and that if local government had more control over their affairs, involvement in local elections may increase.
45. In relation to the RES it was highlighted that the Assembly held a different position to SEEDA on three issues. The Assembly did not feel it could support SEEDA's position on the expansion of airports and was concerned about the target of at least 3% per capita growth GVA per annum, as it felt this would result in increased migration into the region and a subsequent growth in housing numbers, whilst there was also concern that the Diamonds for Growth were a duplication of work already being undertaken at sub-regional level. But it was highlighted that there were more similarities in opinion than differences. There was also concern expressed at the RDAs position that the RES should be the primary document for each region, as the Assembly felt this might put primacy on economic growth above environmental and social issues.
46. The Chairman pointed out that the position in the RES was that growth in the economy did not necessarily equate to a growth in people, as this would in fact lower the 3% per capita growth rate, and that the desired aim was to have ‘smarter' growth. It was also highlighted that SEEDA's position on social inclusion is to achieve it though economic inclusion and that it was in fact SEEDA that had put the environment at the top of the agenda.
47. Phil Wood noted that it was important that those who lived outside the Diamonds recognised that they existed as it was there that economic activity takes place. He also drew attention to the fact that in the South East the number of people who chose to work from home once a week is 8 times that in any other region and challenged the Assembly to provide homes that would accommodate this trend. Keith Mitchell responded that because of the increased density many homes were now smaller but that they would look into the possibility.
48. It was also noted that the supremacy of plans was not what was important, but that they all link up. The Chairman highlighted that some of the differences could be explained by the fact that the RES focuses on the next 10 years, while the SE Plan takes a longer view of the next 20 years.
49. Keith Mitchell confirmed that the Regional Executive would have the remit to approve the RES but that a form of words would be needed to refer to stance on airports.
50. The Board NOTED the Regional Assembly's views.

Item 9 Major Projects & Programmes

Priory Quarter, Hastings 'Gap Site'

51. Duncan Straughen introduced for the Board the proposal to approve the granting of up to £13,804,528 from the Hastings grant allocation to complete the ‘Gap site' development project, a 3,348m 2 office and retail scheme in the town centre.
52. John Peel reminded the Board that they had visited the Gap Site before the June meeting and commented that Major Projects Committee (MPC) had approved the proposal, having seen the project for information at their previous meeting.
53. Responding to questions, John Parsonage informed the Board that SEEDA's total investment in Hastings would be £57 million by 2008.
54. The Board APPROVED the grant allocation for the ‘Gap Site' subject to the project being endorsed by CPRG.

Harts Farm Way and Southmoor Park, Havant

55. Duncan Straughen presented for the Board's approval the request to increase the approved level of expenditure of the projects by a combined total of £1.6 million to complete the construction of the teardrop junction improvement works.
56. It was explained that work undertaken by the original project consultants had severely underestimated the costs. The consultants had since been replaced and legal advice was currently being sought as to the case for recovery of the increased expenditure.
57. The Board were informed that the Development and Infrastructure Division had recognised and accepted some responsibility for the management weaknesses related to this project. It was accepted that the development manager had focused too much on development issues rather than fulfilling a project management role, relying too heavily on consultants for risk assessments, estimates and contingencies. This will be addressed in part through training to enable managers to challenge consultants' recommendations more robustly in the future, and the recognition of the need for much closer involvement in all aspects of the project from an early stage.
58. The Board's attention was also drawn towards local opposition to the project because of its proximity to the Langstone Harbour mudflats and any potential disturbance that the excavation and noise might cause to the nesting birds. An Appropriate Assessment report was underway that would need to be agreed with English Nature before work went ahead.
59. John Peel commented that MPC recommended the Board approve this increased expenditure, but Poul Christensen highlighted his irritation that costs had risen by £2 million and noted that SEEDA had responsibility to remove any contaminated waste from the site. Reassurance was given that the level of spoil was much lower with the final piled solution, and that adequate contingency was included in the budget for any unforeseen additional costs. Reference was also made to the Brighton Ice Arena which had been discussed at MPC, which Mary McAnally confirmed Sport England favoured.
60. The Board APPROVED the additional expenditure whilst noting that changes needed to be implemented in the way projects are managed. It was reiterated that despite the problems with the junction, this was a very successful project that was already attracting developers to the area. The Chairman concluded that although the Agency needed to be aware of any potential problems with projects that they took on, it needed to be remembered that projects would not be passed to SEEDA unless there were substantial and often complex issues to be addressed.

Item 10 SEEDA LEAN – Implementation plan

61. Peter Taylor presented to the Board a brief update on the implementation of the LEAN process, which SEEDA had been providing to businesses, in SEEDA itself. It was made clear that LEAN is not process improvement for its own sake, or something that could be done and then discarded, but a continuous way of life of how to achieve more for less.
62. The Board was informed that processes had been identified to reduce paperwork and speed up the approval process for projects that could amount to savings well above the minimum savings set by the Gershon review and the higher target set by the Board.
63. The Board agreed that SEEDA should be more proactive in this area and lead by example, noting that once it has been implemented in SEEDA it should be cascaded in the organisations that are represented on the Board. The Chairman noted that this is a good example to show the Regional Assembly how output can be increased without growing in numbers.
64. The Board NOTED the update on the LEAN plan and welcomed its forthcoming implementation.

Item 11 Financial & Operational Review

65. Duncan Straughen summarised for the Board the progress made against budget and profiled expenditure, which was slightly below forecast.
66. A report was also presented to the Board on administration costs within SEEDA and a comparative analysis of cross-RDA administrative spend for 2005/06. The Board were informed that a clean comparison was difficult because of the various anomalies between the regions, for example some RDAs paid high office rents whilst others owned their office buildings. It was pointed out that although there had been an increase in SEEDA staff numbers, this was linked to taking on responsibility for Government programs and still left the Agency with a lower head count per population than some other RDAs.
67. Rob Douglas commented that straight comparison with other RDAs was less important than ensuring that whatever work the Agency did was done efficiently.
68. The Board NOTED the financial review.

Item 12 Projects

69. The Chairman requested the Executive team to look into how we can rationalise the number of projects the Agency runs, through the LEAN process. Duncan Straughen informed the Board that long term behavioural change would reduce the number of projects as for example staff started to raise three stages of the same project as a single project rather than three separate ones.
70. The Board NOTED the summary of projects.

Item 13 Committee report: Remuneration

71. Peter Jones, who had chaired the Remuneration committee in Rob Douglas' absence, summarised to the Board the main outcomes, which included the approval of the Chief Executive's objectives for 2006/07 and support for the proposal that Executive Directors' salary increases be split 50:50 between individual and corporate performance.
72. The Board NOTED the committee report.

Item 14 Chairman's Report

73. The Chairman gave an overview of his recent meetings as Chair of Chairs of the RDA network noting that the quality of engagement with Whitehall had been very good and that the Comprehensive Spending Review debate was fully underway. Also mentioned was that Caroline Flint had asked RDA Chairs to consider how RDAs could assist the NHS and vice versa, particularly in encouraging the economically inactive back into work.
74. The Board's attention was drawn to the Chairman's meeting with two Kent businessmen who are interested in developing the area around Manston Airport into a business park, and in the possibility of funding for Ramsgate Port.
75. The Chairman informed the Board of the Greater South East's meeting with Yvette Cooper, and the RDAs request for greater powers in the Thames Gateway. Also mentioned was the recent visit of Ian Pearson, the Defra Minister of State, to Hampshire and their successful discussion around water conservation and local food production. The Chairman will also be meeting with David Miliband in the Autumn, and will pursue these issues further.
76. The Board NOTED the Chairman's report.

Item 15 Agency Report

77. Jeff Alexander informed the Board that the Agency had been particularly focused on four branches of ongoing work over the past month: the review of the RES; the Comprehensive Spending Review; Chair of Chairs work and the Independent Performance Assessment (IPA).
78. Duncan Straughen updated the Board on progress with the IPA, with SEEDA having submitted their evidence to the National Audit Office (NAO). NAO officials would attend the MPC and Board meeting in September to observe proceedings. It was explained that the NAO had also attended the recent Audit Committee and SESETAC meetings because the committees were not meeting in September when the NAO were shadowing the organisation.
79. John Peel referred to the recent discovery of live ordnance at Rochester Riverside and highlighted the positive role that MPC had played in foreseeing the problem and building in a contingency in the funding.
80. The Chairman congratulated the Business and Investment team for their successes in World Class Innovation in the previous month.
81. The Board NOTED the Agency report.

Item 16 AOB

82. John Peel reported to the Board that he had recently visited four Enterprise Gateways and would be feeding back his findings shortly.
83. Paul Lovejoy informed the Board that the 7 th December Board meeting in Brussels would also include a full day's agenda of meetings on the previous day, Wednesday 6 th December.
84. Rob Douglas reported back to the Board on his visit to the GROW Conference in Krakow, Poland, noting that he was surprised by the level of cynicism and tension in Poland since accession to the EU.
85. Jeff Alexander drew to the Board's attention the retirement of Lesley Williams, who had been with the Agency since its inception, thanking her for her years of service. The Chairman informed the Board that Simon Walker's secondment was due to finish at the end of August, and that Donal Galligan would be taking on the role of Board Secretary. The Board thanked Simon for all his hard work over the past 16 months.
    

SEEDA BOARD
SUMMARY OF ACTIONS
20 JULY 2006 MEETING

Action: Item 2, Matters arising

Pam Alexander to provide the Board with an update on the implications of the review of English Partnerships and the Housing Corporation.

To update at September Board meeting.

Jeff Alexander to update Poul Christensen on progress made in setting up a horticulture sector consortia.

Valerie Carter to meet with Poul Christensen to update him.

Action: Item 4, Global Regions

Jeff Alexander to lead on a full discussion on SEEDA's international trade policy with the BRIC countries.

To be taken at the January 2007 Board meeting.

Action: Item 5, 2012 Olympics regional action plan

Paul Lovejoy to provide the Board with a timeline for implementing the regional action plan.

To be provided at the December Board meeting, following the Nations and Regions Group meeting in November.

Action: Item 6, RES: Ministerial submission

Paul Lovejoy to produce a strategy for Board members to promote the RES.

To bring to the September Board meeting.

23 MARCH 2006 MEETING

Action: item 11 – Major Projects

Paul Lovejoyto provide further information on other CHP projects.

A CHP carbon equation for the South East is being worked up and will be reported to the Board in October.

26 JANUARY 2006 MEETING

Action: item 13 –Projects; paragraph 69

John Parsonage to provide further information on Project 4, the South East Proof of Concept Fund (outputs from SEPOC to date).

Jeff Alexander to report back orally at the September Board meeting.

27 OCTOBER 2005 MEETING

Action : Item 3, Matters Arising, paragraph 3

Paul Lovejoy to bring a paper to the Board on public sector reorganisation in the South East.

To come to the September Board meeting.