South East England Development Agency (SEEDA)

MINUTES OF THE 75th MEETING OF THE
SOUTH EAST ENGLAND DEVELOPMENT AGENCY
HELD ON 26 JANUARY 2006 SEEDA GUILDFORD

Present:

James Brathwaite (Chairman), Rob Douglas, Rob Anderson, Liz Brighouse, Poul Christensen, Keith House, Peter Jones, John Peel, Peter Read, Bill Wakeham, Phil Wood.

In attendance:

Pam Alexander, Paul Hudson, Paul Lovejoy, Duncan Straughen, John Parsonage, Simon Walker, Keith Mitchell, Sue Dovey, Donal Galligan, Susan Priest (for items 5 & 6), Graham Tubb (for item 9)

Item 1 Welcome and apologies for absence

1. Apologies had been received from Sarah Hohler, Imtiaz Farookhi and Mary McAnally.
2. The Chairman expressed his deep sadness, echoed by the Board, at Terry Mills' sudden death just after Christmas. The Board wholeheartedly agreed the Chairman's suggestion that the South East Sustainability Award be named in his honour and memory.

Item 2 Minutes of the last meeting (8 December 2005)

3. The minutes of the last meeting were agreed as a correct record of proceedings.
4. Bill Wakeham restated his opinion that the RES needs to be radical rather than incremental; Paul Lovejoy noted that this point is being addressed through the work being done to subject the emerging RES to scenario testing.

Matters arising

5. MPC members thanked Paul Hudson for their informative visit to SEEDA projects in Kent (Ashford, Snowdown Colliery, Margate).
6. The Chairman agreed to take an update on Local Government reorganisation at a future Board meeting when the Government's intentions are clearer.

Item 3 Declarations of interest

7. None.

Item 4 Voluntary & Community Sector (VCS)

8. The Chairman welcomed Sue Dovey, RAISE Chair; Catherine Johnstone, RAISE Chief Executive; and George Matthew, regional co-ordinator of Change Up to the meeting. Sue and her team updated the Board on the work of the VCS in the South East.
9. The VCS in the South East is a diverse sector. There are 28,000-34,000 separate voluntary/community organisations (‘VCOs') in the South East which employ more than 300,000 people. RAISE itself has 8,000 members and 80,000 associates. The labour value of volunteers in the South East is estimated at £930 million. The value of the VCS therefore inheres in its breadth and diversity, the motivation of its workforce, flexibility of employers and its flexible approach to service delivery (working close to target communities/social groups). RAISE can and does act as a valuable partner with SEEDA to help gain increased access to under-represented communities, identify key community leaders, and provide intelligence to aid SEEDA investment decisions
10. The main issue currently facing the VCS is how to deal with the funding gap caused by the upcoming loss of EU Structural Funds and the end of the Single Regeneration Budget. Nevertheless Sue identified a welcome shift in Government attitude to increased service delivery through the VCS, for example through the Change Up programme, and its endorsement of Social Enterprise.
11. Sue welcomed SEEDA's engagement with RAISE and the VCS through the RES consultation process. RAISE sees the following challenges for the RES: the need for a balanced view and understanding of sustainable prosperity that supports the socially excluded or economically inactive; the need to make links to the national social inclusion agenda; the need to maximise the opportunities for the VCS (for example through a level playing field in public procurement); and the need to emphasise workplace accessibility.
12. The Chairman noted SEEDA's current level of investment in the VCS of £3-4 million (on 2004/5 figures). The ongoing focus for SEEDA engagement with the VCS will be on strategic measures to support VCS organisations for example through business support.
13. The Board invited Sue Dovey's comments on the issue of public procurement as it relates to the VCS. Sue emphasised that the VCS would like to see greater adherence to the national funding and procurement code which would give the VCS the consistency it needs. A move to three year Best Value contracts would also be welcome to allow VCOs to plan better and lever in match funding.
14. The Board observed that the VCS is particularly well placed to support Local Authorities in delivering services to hard to reach communities, and suggested that SEEDA could assist by helping to develop model agreements/contracts for Local Authorities to use with VCOs (along the lines of the Lambert model agreements for business engagement with Universities), and by working with VCOs to improve their business engagement capacity and effectiveness. The Board also commented that the Area Investment Frameworks should provide the means to reach the groups that SRB has helped in the past.
15. The Chairman thanked Sue Dovey and her team and commented that the VCS mapping exercise currently underway should assist RAISE and SEEDA.
16. The Board NOTED the update on the Voluntary & Community Sector in the South East.

Item 5 Area Update: Kent

17. Susan Priest updated the Board on SEEDA's work in Kent including its involvement in the regeneration of Margate.
18. Kent is characterised by a diverse economic geography and generally lower socio-economic performance than the South East average, with some areas of serious underperformance. The economic drivers in Kent are largely related to proximity to Europe, potential for business expansion and ease of water-based leisure pursuits. A large area of the county, in Thames Gateway and North Kent, is covered by an ODPM Growth Area designation.
19. SEEDA's interventions in Kent range from town centre improvements in Dartford to significant mixed use developments at Northfleet Embankment and Rochester Riverside, to the Universities at Medway scheme, Chatham Maritime and the regeneration of Queenborough & Rushenden. SEEDA is also closely involved in the Margate Renewal Partnership (chaired by Pam Alexander) which is working to address the serious economic underperformance of Margate and lead the regeneration efforts in Margate town centre.
20. SEEDA has also been closely involved in developing the Thames Gateway economic strategy which sets out the vision of raising the economic performance of the Thames Gateway to the SE average by 2018, which would contribute an additional £28bn and 180,000 jobs to the UK economy
21. The Board agreed that the South East and UK economy would benefit greatly from improving the performance of the Kent economy. Rob Douglas praised the success of the Universities at Medway initiative and suggested exploring potential uses of the Universities Centre model elsewhere in the region. Poul Christensen noted the potential of Imperial College's plans to site its Life Sciences Department at Wye.
22. The Board NOTED the area update on SEEDA's work in Kent.

Item 6 Project Update: Margate

23. Taken with Item 5.
24. The Board NOTED the project update on the regeneration of Margate.

Item 7 Regional Funding Allocation

25. The Chairman welcomed Keith Mitchell, the Chair of the South East England Regional Assembly, and invited him to join the Board's discussion of Item 7 – Regional Funding Allocation.
26. Paul Lovejoy presented, for the Board's endorsement, the near final draft of the Region's advice to Government on the South East Regional Funding Allocation. This has been a major collaborative effort by SEEDA, the Regional Assembly and the Government Office for the South East (GOSE). SEEDA has led on the economic development component of the allocation with the Regional Assembly leading on the transport component through the Regional Transport Board and GOSE leading on the housing component through the Regional Housing Board. The final submission to Government is due on 31 January.
27. The SEEDA Corporate Plan 2005-8 has been accepted by all partners as setting the economic development budget for the next three years. In housing and transport the decision has been taken to honour existing investment commitments which leaves little discretion to accommodate additional regional priorities. Given this the RTB has agreed to submit further evidence to Government at the end of 2006/7 following finalisation of the South East Spatial and Economic Strategies.
28. The region argues strongly in the RFA submission against any cut in regional budgets and in favour of a 10% budget increase. This increase would be focussed on the major centres of economic growth identified in the RES and would help to support a revolving loan arrangement, the ‘Regional Infrastructure Fund', to leverage private investment and bring infrastructure schemes forward faster.
29. Rolande Anderson welcomed the close working between SEEDA, the Regional Assembly and GOSE on the RFA submission and the clarity of message that has been achieved. Keith Mitchell endorsed the submission and noted that its plans for using the extra 10% had generated enthusiasm amongst Regional Assembly members.
30. Pam Alexander emphasised the importance of the RFA submission in the context of CSR07. Whitehall would be looking to the RFA advice from the regions for evidence that regional actors can work together to administer government funding more effectively than Government taking centralised decisions.
31. The Board ENDORSED the proposed advice to Government on the South East Regional Funding Allocation.

Item 8 South East England Regional Assembly

32. Keith Mitchell summarised the Regional Assembly's position on the key issues emerging from the RES and RFA. It supports: the need for economic growth in the South East; the assessment of the skills situation in the South East; the need to increase levels of economic activity; and the need for urgent infrastructure investment to facilitate economic growth. The Regional Assembly takes a different stance on the level of economic growth needed in the South East, the housing numbers to support that growth, airport expansion, differential congestion charging (which it feels can lead to competitive advantage/disadvantage at charging boundaries), and the spatial analysis contained in the RES where it differed from the South East Plan.
33. Keith Mitchell also offered his comments on the Planning Gain Supplement (PGS) proposals from Government due to be discussed under item 10. The Regional Assembly welcomes PGS as a concept to support infrastructure investment, but feel that it should be raised and distributed locally.
34. The Chairman welcomed Keith Mitchell's constructive comments and the joint focus on improving the SE economy, in particular through infrastructure investment. He observed though that the South East needs to perform more strongly in order to maintain and improve its position as a high performing global region. The Board supported local hypothecation of the PGS so long as it was used for appropriate strategic infrastructure.
35. The Board NOTED the update from Keith Mitchell on key issues for the Regional Assembly.

Item 9 Energy: RDA input to Government Energy Review

36. Graham Tubb summarised progress to date in delivering the Energy Action Plan agreed at the September 2004 Board meeting. SEEDA is supporting a range of energy projects across the South East that include: working to develop the wind generation supply chain; working to improve the efficiency of new developments; and working with the rural sector on generation from biomass. SEEDA is also part of the Nuclear Decommissioning Agency (NDA) stakeholder group for the Dungeness A Magnox nuclear power station which is due to close this year. Energy has been identified as part of SESETAC's priorities include Investing in emerging energy technologies, mapping the skills availability and needs of the energy sector, and building an energy Knowledge Transfer Network have all been identified as part of SESETAC's priorities. Highly productive links have been built, and are being maintained, at working and senior levels with officials in DTI's Energy Group.
37. Graham Tubb also summarised the basis for the Government's recently launched Energy Review. The Review will assess progress against the four goals set out in the Energy White Paper 2003: carbon reduction (60% cut in CO 2 emmissions by 2050); security of supply; competitive energy markets; adequate and affordable heating of homes in the UK. It will consider all options for meeting these goals. The Energy Minister Malcolm Wicks will be chairing stakeholder seminars around the country in March/April, the South East seminar is scheduled for 20 March. The deadline for consultation comments is 14 April.
38. The outline South East response covers: security of supply; economic impact of Dungeness A closure this year; regional capacity for renewables needs to be supported and exploited, including offshore wind farms; the transmission system needs to be able to cope with an increase in local generating capacity; government needs to support the Biomass Task Force report and encourage electricity generation from biomass.
39. The Board welcomed the outline South East response adding the following points and observations:
• the drive for increased energy efficiency needs to be maintained;
• energy issues are inextricably linked to the RES goal of sustainable prosperity, SESETAC's work on emerging technologies should be harnessed to tackle this challenge;
• biomass, bio-diesel and local generation technologies should be supported but the Government needs to set a market framework that provides the certainty needed to encourage investment in these new technologies;
• security of supply is the key issue for business in the South East, given this the energy mix needs to be reassessed and the case for nuclear new build seriously considered;
• the South East needs to ensure it has the skills mix to meet the ongoing needs of the energy sector.
40. The Board NOTED the update on the launch of the Government's Energy Review and ENDORSED the outline SEEDA response.

Item 10 Response to Barker Review

41. Paul Hudson presented, for the Board's approval, SEEDA's proposed responses to the housing consultations announced in the pre-Budget Report which form the bulk of the Government's response to the Barker Review of Housing Supply: Planning Gain Supplement (PGS); new PPS3 Housing; Code for Sustainable Homes (CSH); and Real Estate Investment Trusts (REITS). Overall the Government aim is to increase the number of ‘housing starts' to 200,000 per annum.

Planning Gain Supplement

42. In response to the findings of the Barker Review 2004 Government is proposing to implement, by 2008, a levy on the uplift in land values following the grant of planning permission. This would be payable on commencement of development and be used to ‘help finance the infrastructure needed to secure proposed housing growth'.
43. SEEDA's proposed response is to support the principle of a comprehensive approach to land value taxation through a PGS, which will provide the framework for delivering essential infrastructure to support growth in the South East, and to make the following specific comments.
• In order not to discourage potential development PGS must be set at an appropriate level (with sensible thresholds for brownfield and smaller developments) and be accompanied by a revision/scaling back of current S106 obligations.
• PGS revenues should be hypothecated for use in the area they are generated, and should be available for regional, as well as local, strategic infrastructure.
44. The Board queried the interaction between the PGS and the new tariff based systems (that levy a roof tax on new developments) in Milton Keynes and Ashford. Paul Hudson explained that the PGS should not affect tariff based systems as they only apply to defined, residential sites.
45. Pam Alexander summarised the written comments submitted on this item by Imtiaz Farookhi: any PGS would need to be based on a clear condition of hypothecation for local use of the tax, however the consultation document lacks detail in key areas and the proposal is vulnerable to reversal by any future Conservative administration.
46. The Board supported the idea of hypothecation of the PGS for local and regional use, and agreed that whilst the valuation details and level of the PGS need further work and clarification, the aim should be to keep the system as simple as possible.

PPS3 Housing

47. The new PPS3 Housing aims to accelerate delivery of housing by making the planning system more responsive to local housing needs, improving affordability and widening choice.
48. SEEDA's proposed response is to support the new PPS3 Housing provided that the demand for housing development on brownfield sites does not restrict the supply of employment land.
49. Keith Mitchell commented that PPS3 has met significant opposition within Local Authorities who are concerned that it could create a bias towards greenfield development.
50. The Board agreed that the planning process should be flexible enough to take account of market signals.

Code for Sustainable Homes (CSH)

51. The CSH is the key recommendation of the Sustainable Buildings Task Group (SBTG) set up by Ministers in 2003 to advise Government on practical and cost effective measures to improve the sustainability of buildings in the short and long term. The non-mandatory CSH is similar to the ‘EcoHomes' standard. Under it new homes will be awarded a score of 1 to 5 depending on their performance against six key resource efficiency criteria (including energy, water, waste and use of materials).
52. SEEDA's proposed response is to support the principle of a CSH but to state that the proposals as they stand do not go far enough. The requirements for publicly funded homes are lower than that currently required under BRE's EcoHomes standard, and the code is only voluntary for the private sector. This is a missed opportunity to achieve a step change in the sustainability of housing in the region.
53. The Board commented that clarity on sustainability assessments of new housing is vital, and these assessments also need to be applied to existing housing stock (by for example including an energy efficiency rating in the new sellers packs).

Real Estate Investment Trusts (REITS)

54. A REIT is an asset management partnership in which a company's assets must be primarily composed of long term real estate and its revenues should be derived mainly from these assets. REITs are intended to make property investment more attractive for the small investor by providing a unified tax treatment of land holdings and allowing for investment in property without ownership. A full consultation on the REITS proposals is expected in the Spring.
55. SEEDA welcomes the introduction of a tax-transparent property investment vehicle as bringing the opportunity for new and additional investment into the housing market.
56. The Board AGREED the proposed SEEDA responses to the housing consultations announced in the pre-Budget Report.

Item 11 Major Projects & Programmes

Snowdown Colliery

57. Paul Hudson presented conditional proposals for SEEDA to fund the design, construction and fit-out of new commercial and business space on the Snowdown site in the event that English Partnerships (EP) could no longer meet the full cost of regenerating the former Snowdown Colliery, and would only fund reclamation of the site. The scheme had received Board approval in July 2005.
58. It is proposed that if required the delivery structure for the SEEDA investment should be as follows. The existing site freeholder would grant a long lease Dover District Council (DDC) at a market rate. SEEDA would simultaneously enter into a JV development Funding Agreement with DDC to fund the project and act as Project Manager for the site works delivery programme. The rents received from the business units onsite would cover DDC's lease costs allowing SEEDA to withdraw from the JV once all the units have been let. This arrangement would ensure that there are no write down or holding costs to SEEDA.
59. SEEDA's involvement, should EP withdraw from funding the business units development as anticipated, will be essential in achieving the comprehensive regeneration of the site and delivering the outputs SEEDA wants to secure from this project. The Chairman agreed to write to the Chair of EP to express his regret at the situation on funding of Snowdown, and seek a reversal of EP's withdrawal of full funding.
60. Peter Read registered MPC's concerns at the potential for EP renegotiating other redevelopment schemes, and suggested there is a need for clarification of the SEEDA/EP relationship going forward.
61. The Board APPROVED an investment towards the comprehensive regeneration of the former Snowdown Colliery in Kent should EP confirm that it cannot fund the full cost of completing the project.

Action: Item 11 – Major Projects; Snowdown Colliery; paragraph 59

Paul Hudson to draft a letter for the Chairman to send to EP Chair Margaret Ford to register the Board's disappointment that EP should withdraw from full funding of Snowdown and to confirm the situation going forward.

Brownfield Land Acquisition Trust (BLAT)

62. The BLAT programme was approved by the Board in February 2003 as a pilot scheme to test the viability of investing funds in small, derelict urban sites that are the subject of market failure in areas of acute housing need to bring them forward for housing development. External auditors have confirmed the success of BLAT. Therefore it is now proposed to mainstream the programme and, in line with the Board's approval in March 2005 of the formation of companies to deliver property regeneration and redevelopment projects, to create the Brownfield Land Assembly Company (BLACo.) to increase leverage potential, enable recycling of receipts, and minimise SEEDA's exposure to write down and operating costs.
63. If approved by the Board SEEDA will seek consent, in March, for the operation of the BLACo. from DTI under Section 5 of the RDA Act 1998. A business plan to support this application is being prepared. It is proposed that the BLACo. will be a Company Limited by Guarantee, 20% owned by SEEDA, 20% owned by EP and 60% owned by Registered Social Landlords and private developers and contractors.
64. SEEDA's capital funding for the Company would be over three years with an annual contribution to running costs. Private sector members of the company would be invited to make an annual contribution of 60% of the running costs of the Company.
65. Peter Read registered MPC's support for this proposal and was content that the issues raised by MPC (benefit structure for private sector partners, governance arrangements for BLACo.) are being addressed in taking the proposal forward.
66. The Board APPROVED submission of plans for a BLACo. to DTI and if approved by DTI the Board APPROVED an investment of £6,240,000 in BLAT and the full establishment of a Brownfield Land Assembly Company.

Item 12 Financial & Operational Review

67. Duncan Straughen summarised the January Financial and Operational Review. Overall spend to 25 January had been in line with the monthly forecast submitted to DTI in December, and there are signs that the pace of spend is picking up. Nevertheless it remains a significant challenge to ensure SEEDA meets its year end forecast and senior managers are addressing this intensively.
68. The Board NOTED the Financial and Operational Review.

Item 13 Projects

69. John Peel requested further information on Project 1, the Major Sports Event Strategy, and Peter Read requested further information on Project 4, the South East Proof of Concept Fund.
70. The Board NOTED the summary of SEEDA's projects.

Action: Item 13 – Projects

Paul Lovejoy to provide further information on Project 1, the Major Sports Event Strategy (total value and level of partners' contributions)
John Parsonage to provide further information on Project 4, the South East Proof of Concept Fund (outputs from SEPOC to date).

Item 14 Chairman's Report

71. The South East presentation to the Eddington Review and John Prescott's positive visit to the region had been the key events in January. The Chairman thanked the team who organised the DPM's visit, the DPM had been impressed by the cross-boundary partnership working he had seen along the coast from Southampton to Brighton.
72. The Board NOTED the Chairman's Report.

Item 15 Agency Report

73. Pam Alexander noted that a positive meeting of the Hastings & Bexhill Task Force Steering Group had been held with the South East Learning and Skills Council (LSC) to discuss possible use of Station Plaza to implement the Ministerial decision on the review of post-16 education in Hastings and Bexhill. The LSC had presented interesting plans, that would provide a new HE/FE model not seen before in the UK, but further work was needed to ensure fit with the business plan for the regeneration of Hastings & Bexhill.
74. Pam Alexander also noted that work is continuing to prepare for SEEDA taking over leadership of the RDAs in April as the Chair of RDA Chairs (‘Chair of Chairs'). SEEDA's objectives for Chair of Chairs will be to shape the collective RDA input to the Government's Comprehensive Spending Review 2007 (‘CSR07'), to build closer links with Ministers and to get the RDA network operating at optimum levels.
75. On CSR07 it is expected to be a tight spending round in which the value of the RDA single pot will be closely analysed. The ongoing RDA Impact Evaluation Framework study and the RDAs' Independent Performance Assessment by the NAO will be key pieces of evidence for CSR07. RDAs will also be expected to conduct collective Value for Money (VFM) studies as part of CSR07.
76. The Board NOTED the Agency Report.

Item 16 AOB

77. None.

SEEDA BOARD

SUMMARY OF ACTIONS

26 JANUARY 2006 MEETING

Action: item 11 – Major Projects; Snowdown Colliery; paragraph 59

Paul Hudson to draft a letter for the Chairman to send to EP Chair Margaret Ford to register the Board's disappointment at EP's withdrawal from full funding of Snowdown and to confirm the situation going forward.

Letter sent.

Action: Item 13 –Projects; paragraph 69

Paul Lovejoy to provide further information on Project 1, the Major Sports Event Strategy (total value and level of partners' contributions).

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

In progress.

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 be taken in Autumn 2006 to take account of forthcoming Government White Papers on Local Government reorganisation and City Regions (expected Summer 2006).

23 JUNE 2005 MEETING

Action: Item 15, Policy Update: Innovation, paragraph 63

Simon Walker to schedule a Board discussion on strategic science and innovation issues in November.

To be taken as part of the Lead Role update on Science & Innovation in March.

26 MAY 2005 MEETING

Action: Item 6, Project Update – Sustainable Rural Communities, paragraph 20

Valerie Carter to report back to the Board on the innovation and enterprise agenda for rural areas and on the analysis of the Countryside Agency programmes.

Scheduled for May 2006.